Travis v. Bixler Vapor Dry Cleaning Co.

California Court of Appeal Apr 8, 1937 No. Civ. 1808Published

Before: Marks

AI Brief

AI-generated · verify before citing

Holding. The court held that a bankrupt defendant cannot assert the invalidity of an attachment lien under the Bankruptcy Act, as that right belongs solely to the trustee, and that the defendant failed to prove insolvency at the time the lien was acquired.

Issues

Whether a bankrupt defendant may assert the invalidity of an attachment lien under the Bankruptcy Act.
Whether an adjudication in bankruptcy creates a presumption of insolvency at the time a lien was obtained.
Whether a defendant must prove insolvency at the time an attachment lien was acquired to invalidate it.

Disposition. reversed

Quotations verified verbatim against the opinion

“the section confers no right on the bankrupt to assert the invalidity of an attachment lien but vests that right solely in the trustee of the bankrupt estate.”

“To invalidate the lien the person challenging it must show that the debtor was insolvent when it was obtained.”

“an adjudication in bankruptcy in no way determines whether or not the debtor was insolvent at the time a lien was obtained through legal proceedings against him”

MARKS, J.

This is an appeal from a judgment rendered in favor of defendants in an action on a promissory note.

Action was filed on the note on Deecmber 6, 1934. A writ of attachment was issued and personal property was duly attached. An undertaking to release attachment was given and the property redelivered to defendants. On March 4, 1935, L. B. Bixler, doing business as Bixler Vapor Dry Cleaning Company, was adjudged a bankrupt. Defendants admit due execution and nonpayment of the promissory note. They defended the action solely upon the ground of the bankruptcy occurring within four months from the levy of the writ. The trustee in bankruptcy was not made a party to the action nor has he appeared in it.

At the trial of the case, no facts being controverted, counsel for plaintiff moved the trial court for a qualified judgment against defendants with a perpetual stay of execution against their properties. Under such circumstances it has been held that the entry of such a judgment is the right of a plaintiff so that he may proceed to collect from the bondsmen.

(Tormey

Miller,

31 Cal. App. 469 [160 Pac. 858];

Higgins

Brainard,

214 Cal. 647 [8 Pac. (2d) 135].) (See, also,

Pue

Wheeler,

78 Mont. 516, [255 Pac. 1043] ;

Wheeler

Pue,

275 U. S. 483 [48 Sup. Ct. 19, 72 L. Ed. 385].)

[281]

To escape the effect of these decisions respondents point to an amendment to the Bankruptcy Act made by Congress in 1934 whereby there was interpolated into subdivision “f ” of section 107 (title 11, IT. S. C. A.) the provision that “any bond which may be given to dissolve any such lien so created” by levy of an attachment on the property of an insolvent within four months prior to the time of filing a petition in bankruptcy against him, “shall be deemed null and void in case he is adjudged a bankrupt, . . . ”. It seems evident that the general effect of the section and the interpretation put upon it by the courts was not changed by the amendment, except in so far as its scope was enlarged to include the invalidity of bonds given to release attachments, which was not theretofore included within its provisions.

Travis v. Bixler Vapor Dry Cleaning Co.

AI Brief

MARKS, J.

More from California Court of Appeal

Related research

AI Brief