Gilbank v. Benton

WOOD, J.

Defendant obtained a judgment in November, 1933, against Ruether-Graham Feed Co., Ltd. (hereinafter referred to as the Feed Company). He secured a writ of execution and on February 21, 1934, the sheriff levied upon certain property of the Feed Company which defendant claims to be not capable of manual delivery. A keeper was placed in charge of the property and on February 24, 1934, one Wheeler filed with the sheriff his verified third party claim to the property levied upon. The sheriff promptly notified defendant of the third party claim and demanded that an undertaking in the sum of $40,000, twice the alleged value of the property, be delivered to .him. Defendant did not present the undertaking nor furnish further funds to the sheriff to pay the expenses of the keeper. The sheriff withdrew the keeper on February 26, 1934, and on the same day defendant filed with the court a petition for an order to determine title under the provisions of section 689 of the Code of Civil Procedure. The court issued its order fixing March 15, 1934, as the date for the determination of title. The court further ordered that pending the determination of title “no transfer or other disposition of the property hereinabove described be had”. On March 2, 1934, a copy of the order of the court was served on Wheeler and on the Feed Company. There

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after upon the hearing of the order for determination of title the court rendered judgment that the Feed Company was the owner of the property in question, subject to certain rights of Wheeler as assignee of conditional sales vendors. On April 9, 1934, the property was sold to defendant at sheriff’s sale. The Feed Company, upon filing its voluntary petition in bankruptcy, was on July 5, 1934, adjudged a bankrupt. This action was commenced by plaintiff as trustee in bankruptcy of the estate of the Feed Company against defendant for the purpose of recovering the property in dispute for the benefit of the bankrupt estate, claiming that defendant had no lien senior to the rights of the other creditors of the Feed Company. The trial court found the value of the property to be $7,500 and rendered judgment in plaintiff’s favor for the return of the property or, in the alternative, for damages in the sum of $7,500.

In prosecuting this appeal defendant contends that the proceedings taken by him pursuant to the provisions of section 689 of the Code of Civil Procedure were in the nature of a creditor’s bill, which subjected the assets of his judgment debtor to the lien of his judgment and that he thereby obtained an equitable lien upon such assets prior to March 5, 1934, and consequently more than four months prior to the adjudication of the Feed Company as a bankrupt. Plaintiff concedes in his brief that “a judgment creditor by filing a creditor’s bill to subject the assets of his judgment debtor to the lien of his judgment thereby obtains an equitable lien upon such assets” and that “the equitable lien created by filing of a creditor’s bill is superior to the claim of the trustee in bankruptcy of the judgment debtor where the petition in bankruptcy is filed more than four months after the filing and serving of the creditor’s bill”. Plaintiff, however, vigorously takes issue with the contention of defendant that the proceedings taken under section 689 of the Code of Civil Procedure constituted a statutory creditor’s bill. He concedes that * ‘ proceedings under section 720, Code of Civil Procedure, under the decisions of the courts of last resort of this state, constitute a statutory creditors’ bill”, but he argues that the same rule does not apply to proceedings under section 689 of the Code of Civil Procedure, fie frankly states: “If it is conceded, and it certainly is not, that a ' Petition to Determine Title Under Section 689, Code of Civil Procedure, ’ has the