Alexander & Co. v. Mercantile Trust & Deposit Co.

Simmons, Chief Justice. The original petition in this case was an equitable one, and shows clearly that it was brought under section 3149(d) et seq. of the Code of 1882. Civil Code, §2719 et seq. The original plaintiffs had no equitable rights except those given under .these sections of ithe code. Without these code sections they would have had to reduce their claim judgment and have the entry of nulla bona thereon, before they could have resorted to equity. These sections give them a right to resort to the equity side of the court without judgment or lien, by showing that the corporation owes them ■debts which it failed to pay at maturity, that they demanded payment thereof and ilt was refused, and that the corporation •is insolvent. All these allegations were made in the original petition, and the court took jurisdiction and appointed a receiver under the petition thus filed. The petition being [538] brought under the code, the distribution of the assets of the* insolvent corporation must be governed by the terms of the-code. Section 3149 (d) provides in substance that no creditor shall acquire any preference, by any judgment or lien, on any suit or attachment, after the filing of the bill, and all assignments and mortgages to pay or secure existing debts,, made after the filing of the bill, shall be vacated, and the assets be divided pro rata among the creditors, preserving all existing liens. Thus it will be seen that no creditor Avithout' a lien at the filing of the petition can obtain one after it is filed in preference to any other creditor, but a creditor Avhohas a valid lien when the petition is filed is not interfered with. His lien is not displaced but preserved. He occupies the same place, as far as the lien is concerned, as if no petition had been filed and no receiver appointed. The priority and dignity of Ms lien stand upon the same plane they occupied before the commencement of the proceedings. Whatever may be the effect of a comparatively recent equitable-doctrine announced by the Federal and some of the State courts in regard to certain preferential claims of certain creditors in 'the distribution of the assets of insolvent railroad companies, under creditors’ bills filed in those courts, we are clear that in a proceeding commenced under the above sections of our code, no such preferential claims can exist. These preferential claims are not such liens as those mentioned in the above cited section. That section means legal liens, liens accrued by contract or by judgment of the court or those arising under a special statute. The defendant in error in this case before the filing of this bill had a valid, subsisting, mortgage lien on the property of the railroad company. That lien, we have seen, must under the code be preserved. It cannot be displaced by creditors Avho have-no legal lien but who> rely solely upon wlmt they call a preferential equity. These are the Adevre announced by this court in the case of Central Trust Co. v. Thurman, 94. Ga. 735. In the ar [539] guiuent of the present case, permission was given to counsel to review that case, and upon consideration thereof it is-affirmed by four of the Justices of the present court. Judgment affirmed,. All concurring, except Fish, J.,. disqualified.