McGready v. Harris

Napton, Judge, delivered the opinion of the court. This was an action of ejectment. The plaintiff was the purchaser of the lands sued for, at a sale made in August, 1872, by the trustee under a deed of trust made in 1868. In April 1872 (Apr. 8th) proceedings in bankruptcy had been instituted in the District Court of the United States against the debtor and grantor in the deed of trust, but the trustee, although apprised of such proceedings by the grantor on the day of the sale, proceeded with the sale, and the plaintiff became the purchaser, and the only question is, whether the institution of the proceedings in the U. S. District Court rendered the sale void. There, was no order from the District Court restraining, or otherwise interfering with, the sale, nor'had the proceedings therein terminated in any adjudication whatever. It was an [140] attempt on tire part of defendant’s creditors to have him de dared a bankrupt. The Circuit Court, before which this case was tried, declared the sale null, and that the plaintiff had no title. We do not so understand the decisions of the Federal Courts interpreting the Bankrupt Act. That law was not designed to invalidate or destroy bona fide liens on the estate of the bankrupt, nor does it reserve exclusively to the District Court the power to have them enforced in all cases, and under all circumstances. They may be enforced in [the] mode provided for by the contract of the parties, or by the action of State courts or State officers. Doubtless the District Court might have intervened in this case, but it did not, and therefore we cannot see that the mere fact of a proceeding being instituted would destroy the legal title of plaintiff as he received it from the trustee. So far as the rights of an assignee in bankruptcy are coñ cerned, it may well be that the whole transaction could be, bn. presentation to the court, examined and declared fraudulent or void, if the facts warranted. But no assignee has been appointed in this case, nor so far as the record shows has there been any adjudication whatever in the proceedings in the District Court. Should such adjudication occur, and an assignee be appointed, we are unable to perceive why the assignee cannot deal with the purchaser as well as the mortgagor, if he seeks to question the validity of the deed or of the sale thereunder. With these questions however we have no concern. In this action of ejectment the simple question is, who has the legal title, the purchaser at the sale or the defendant ? The deed gave the trustee a power to sell and convey the legal title. Whether this sale was made under such circumstances as to authorize a Court of Equity to set it aside in a direct proceeding for that purpose, is another question, which is not presented by this case. The court below simply declared the sale a nullity. It may be, that the land was sacrificed, and [141] that the trustee should have deferred the sale under the circumstances, but the court below did not pass on that point and it is not therefore before this court. The j udgment is reversed and the cause remanded. The other judges concur.