In re Peasley

ALDRICH, District Judge (after stating the facts as above). The question here is whether Mr. Everett, who held the bankrupt’s bond for a deed of lands in New Hampshire, was entitled to have his claim for part payment of the purchase money under the bond allowed against the bankrupt estate as a lien claim. The creditor’s position is that, having paid a certain sum of money under the bond contract, and the obligor having been prevented from performance by reason of bankruptcy, that his claim should be allowed as a claim secured by an equitable lien resulting inherently from the situation. As the creditor’s position involves a question relating to an interest in real estate, under a familiar rule, we must be governed by New Hampshire law in respect to lands, if it can be ascertained that there is any positive expression of New Hampshire law in respect to a question like the one presented here. The views of couns^' have been expressed with care, and apparently upon full research. It is conceded by counsel who argues against the lien, and it is unquestionably true, that, under the general law of equity as administered in England and in many of our [192] states, a lien results in favor of the vendee who pays money under a contract like the one presented here. This is upon the ground, as said in Washburn on Real Property (4th Ed. vol. 1, *509), that, “where the contract is executory, as fast as the purchase money is paid in, it is a part performance of such contract, and to that extent the payment of the money, in equity, transfers to the purchaser the ownership of a corresponding portion of the estate.” See, also, Story’s Eq. Jur. § 1217, and’note; Pomeroy’s Equity, §§ 167, 1263; Jones on Liens, §§ 1061, 1105. It is also unquestionably true that there is no positive expression by the Supreme Court of New Hampshire upon the subject, so we must accept the question as one not controlled by legislative act or by judicial decision in New Hampshire. Indeed, it is expressly treated as an open question in this state in Arlin v. Brown, 44 N. H. 102, as well as in the later case of Sawyer v. Peters, 50 N. H. 143, 144. In view of the fact that such lien has never been held to result in New Hampshire, and in view of the. strongly reasoned case of Ahrend v. Odiorne, 118 Mass. 261, 267, 19 Am. Rep. 449, I hesitate about applying the English equity rule to this situation. It must be borne in mind, however, that Massachusetts courts administer a limited equity system, rather than the comprehensive chancery system of England, and that the case of James v. Gray, 131 Fed. 401, 65 C. C. A. 385, decided by the Court of Appeals for the First Circuit, not only holds that equitable claims are provable under the present bankruptcy law, but that federal courts administering the general law of equity, as accepted in England and as generally accepted in this country, will recognize and establish an equitable cláim within the purview of the general rules of equity, though, under the decisions of the state court, it has no status under the local law. From that extreme view I dissented, but the authority of the case is one by which I must be governed, and, while it is not necessary in this case to put the decision upon tliat extreme ground, in view of the universally accepted principle that federal courts administer the general law of equity with respect to a subject upon which there is no positive or express rule of local law, I have concluded to hold that this claim should have the status of a claim secured by an equitable lien. The money was advanced by the vendee in reliance upon the bond. There is no question made against that proposition, and, whether it safeguarded the vendee’s interest or not, he attempted to give notice of his interest to the world by having his bond recorded, and performance under the contract was suspended by the arm of the bankruptcy law. Under New Hampshire law, assignees, as, for instance an administrator of an insolvent estate, are neither attaching creditors nor purchasers for value (Adams v. Lee, 64 N. H. 421, 422, 423, 13 Atl. 786), and an obligee in a bond for a deed has an equitable interest in the land which the bond covers (Marston v. Osgood, 69 N. H. 96, 97, 38 Atl. 378). . While New Hampshire is a state in which interests in land are generally required to be set out in the records by way of mortgage, it excepts from the operation of its statutes such trust interests “as [193] may arise or result by implication of law.” Pub. St. 1901, c. 137, § 13. In view of the New Hampshire statutes, and what would seem must be accepted as a strong intimation in Arlin v. Brown, 44 N. H. 102, that a resulting lien upon land might be held to exist in New Hampshire in a proper case, I do not consider that I am offending any settled policy or principle of New Hampshire law by the conclusion that I reach. If the parties fail to adjust the matter of interest, the question of interest will first be passed upon by the referee. The decision of the referee directing that the claim be allowed as an unsecured claim is reversed, and there should be further proceedings not inconsistent with this opinion.