In re Monarch Acetylene Co.

HAZEL, District Judge. Substantially the same question here submitted for decision on review was this day decided in Matter of George Zeis, Bankrupt, 229 Fed. 472; but counsel for petitioning creditors urge that the facts herein are essentially different from those of that case. It appears that prior to filing the petition in bankruptcy herein, on March 18, 1914, five executions on judgments recovered in the state court were issued to the sheriff, to wit, in October and November, 1913, which severally remained unsatisfied. The judgment creditors claim to be entitled to priority of payment on the ground that their judgment liens attached four months prior to the bankruptcy and were in actual force at the time of filing the petition. The trustee contested such judgment liens, claiming that they were dormant and invalid as to him. The record shows that the first sale on execution was advertised to be held on November 28, 1913, but that seven different adjournments followed, each time by and with the consent of attorney for the judgment creditors. In opposition Lo the claim of dormancy it was testified that the bankrupt, after the sheriff had levied on his property, endeavored through his attorney to obtain money to reorganize the business, and that negotiations were pending during the entire period of adjournments for effecting a compromise on the judgments. It is true the sheriff received no specific instructions from the creditors, Beals & Co., the petitioners, to adjourn the execution sales; but it is nevertheless shown that the attorney was consulted in advance and consented thereto. It also appears that the bankrupt at all times was in possession of the property and assets levied upon and that no custodian was in charge. Under the circumstances I think the doctrine of Excelsior Co. v. Globe Cycle Works, 48 App. Div. 304, 62 N. Y. Supp. 538, applies. In that case the learned court said: “The law, therefore, seems to be settled that any direction by the execution creditor to the sheriff, which suspends the lien or delays the enforcement of the levy, renders the execution dormant against subsequent creditors or bona fide purchasers. However veiled may he the direction, however much it may be founded on a humane desire to protect the debtor, if it is tantamount to a mandato or instruction to the sheriff to withhold the execution of his process during the interim that he accedes to this demand, tile levy ceases to be effective. That doctrine rests on public policy, and is necessary to prevent fraud, and it should receive a fairly rigorous enforcement.” Hence I hold that petitioner’s claim was dormant against the trustee in bankruptcy, who had the right to assail its validity. Matter of Lane Lumber Co., 213 Fed. 587, 130 C. C. A. 167, 32 Am. Bankr. R. 469; Matter of Pittsburgh, 215 Fed. 703, 132 C. C. A. 81, 32 Am. Bankr. R. 452; section 47a of the Bankruptcy Act, as amended 1910. The report of the referee is approved.