by a verbal agreement, made in good faith and with the knowledge of the bankrupt's creditors, is valid.144 145 146 (2) ATTORNEY'S LIEN.-An attorney's lien on the papers of his client,1 or on a judgment,' or on a chattel mortgage which came into his possession before the filing of the petition,147 or on other property coming into his hands,148 may be enforced notwithstanding bankruptcy. Liens of attorneys on the proceeds of litigations instituted prior to bankruptcy, have been recognized, as where an attorney foreclosed a mechanic's lien for a debtor prior to his bankruptcy, and the amount recovered was turned over to his trustee, it was held that the attorney was entitled to reasonable compensation out of the proceeds of the recovery.149 A voluntary surrender of the papers or property to the trustee in bankruptcy amounts to a waiver of the lien,150 (3) BANKER'S LIEN.-A bank's lien on securities of a customer coming into his possession,151 or on the dividends to its stockholders who are debtors, 152 is valid. R. 497; In re Standard Laundry Co. (C. C. A., 9th Cir.), 8 Am. B. R. 538, 116 Fed. 476, affg. 7 Am. B. R. 254, 112 Fed. 126; In re Klapholz (D. C., Pa.), 7 Am. B. R. 703, 113 Fed. 1,002; Clark v. Iselin, 21 Wall. 360; In re Hutto, Fed. Cas. 6,960; In re N. Y. Mail, etc., Co., Fed. Cas. 10,209; In re Dunkerson, Fed. Cas. 4,156; Gardner v. Cook, Fed. Cas. 5,226. 144. Goodnough Mercantile & Stock Co. v. Galloway (D. C., Oregon), 19 Am. B. R. 244, 136 Fed. 504, holding that a lien on certain logs and lumber, created anterior to the four months' period to receive money advanced for labor and supplies, is valid. 145. Rogers v. Winsor, Fed. Cas. 12,023; In re N. Y. Mail, etc., Co., Fed. Cas. 10,200; Matter of Brown & Fleming Co. (Ref., N. Y.), 21 Am. B. R. 662; Matter of Luber (D. C., Pa.), 44 Am. B. R. 292, 261 Fed. 221. See cases digested Am. Bankr. Dig. § 446. 146. Matter of Pennell (D. C., N. J.), 18 Am. B. R. 909, 159 Fed. 500. Attorney's lien.-A creditor's attorney, who has successfully prosecuted a claim, has a lien for his services which may be enforced in the bankruptcy court. In re Rude (D. C., Ky.), 4 Am. B. R.. 319, 101 Fed. 805. 147. Matter of Enrich's Fort Hamilton Brewery (D. C., N. Y.), 19 Am. B. R. 798, 158 Fed. 644, holding that where an attorney, who had represented an alleged bankrupt in certain transactions, claims a lien for services upon certain chattel mortgages which came into his hands prior to the filing of the petition, the court may order that the mortgages and the assignments thereof be turned over to the receiver, subject to the lien of the attorney, who may have its amount determined either in the bankruptcy court or any other court of competent jurisdiction. 148. Hartman v. Swiger (D. C., W. Va.), 33 Am. B. R. 369, 215 Fed. 986. 149. Matter of Coney Island Lumber Co. (D. C., N. Y.), 34 Am. B. R. 563, 199 Fed. 803. 150. Matter of Luber (D. C., Pa.), 44 Am. B. R. 292, 261 Fed. 221. 151. Goodwin v. Barre Sav. Bank & Trust Co. (Vt. Sup. Ct.), 39 Am. B. R. 153, 100 Atl. 34. 152. In re Dunkerson, Fed. Cas. 4,156; Matter of Gesas (C. C. A., 9th Cir.), 16 Am. B. R. 872, 146 Fed. 734. (4) EQUITABLE LIENS.-An equitable lien to be valid must relate to some specific property or thing capable of segregation and identification.153 Prior to the amendment of § 47-a (2) in 1910 it was well settled that equitable liens, established in good faith in respect to any particular property, were cognizable in courts of bankruptcy and would be sustained against a holder who was not a purchaser for value and without notice and against trustees in bankruptcy, on the theory that the trustee had no better right than the bankrupt.154 Most of the cases decided since that date have followed the same rule without apparently taking into consideration the effect of the amendment which gives to the trustee the rights of a lien creditor as of the date of filing the petition,155 but there are cases expressly holding that the right of an equitable lienor are inferior to the See also interesting case of Hutchinson v. Otis (C. C. A., 1st Cir.), 8 Am. B. R. 382, 115 Fed. 937. 153. Matter of Imperial Textile Co. (D. C., N. Y.), 43 Am. B. R. 209, 255 Fed. 199, citing Grinnell v. Suydam 5 N. Y. Super. 132; Willetts v. Brown, 42 Hun (N. Y.), 140; Porter v. White, 127 U. S. 235, 8 Sup. Ct. 1217, 32 L. Ed. 112; Wright v. Ellison, 1 Wall. (U. S.), 16, 17 L. Ed. 555; National City Bank v. Hotchkiss, 231 U. S. 50, 31 Am. B. R. 291, 34 Sup. Ct. 20, 58 L. Ed. 115; In re Stiger (C. C. A., 3d Cir.), 31 Am. B. R. 634, 209 Fed. 148, 126 C. C. A. 96. 154. In re Hanna, 5 Am. B. R. 127, 105 Fed. 587; McDonald v. Daskam, 8 Am. B. R. 543, 116 Fed. 276; Godwin v. Murchison Nat. Bank (N. Car. Sup. Ct.), 22 Am. B. R. 703, 145 N. Car. 320; Goodnough Mercantile & Stock Co. v. Galloway (D. C., Ore.), 22 Am. B. R. 803, 171 Fed. 940; Baker Motor Vehicle Co. v. Hunter (C. C. A., 2d Cir.), 39 Am. B. R. 122, 238 Fed. 894. An oral agreement to insure will operate as an equitable assignment of the proceeds of fire insurance policies taken out in the mortgagor's own name. Hanson v. Blake & Co. (D. C., Me.), 19 Am. B. R. 325, 155 Fed. 342. 155. In re Dunn & Co. (D. C., Ark.), 28 Am. B. R. 127, 193 Fed. 212; Gage Lumber Co. v. McEldowney (C. C. A., 6th Cir.), 30 Am. B. R. 251, 207 Fed. 255; Matter of Plantation Co. (D. C., Pa.), 46 Am. B. R. 318, 270 Fed. 273; Root Manufacturing Co. v. Johnson (C. C. A., 7th Cir.), 34 Am. B. R. 247, 219 Fed. 397, citing Walker v. Brown, 165 U. S. 654, 41 L. Ed. 865, 17 Sup. Ct. 453; Sexton v. Kessler, 225 U. S. 90, 28 Am. B. R. 85, 56 L. Ed. 995, 32 Sup. Ct. 657, affg. 21 Am. B. R. 807, 172 Fed. 535; Van Iderstine v. Nat. Discount Co., 227 U. S. 575, 29 Am. B. R. 478, 57 L. Ed. 652, 33 Sup. Ct. 343, affg. 23 Am. B. R. 345, 174 Fed. 518; Greey v. Dockendorff, 231 U. S. 513, 31 Am. B. R. 407, 58 L. Ed. 339, 34 Sup. Ct. 166; Matter of McGarry & Son (C. C. A., 7th Cir.), 39 Am. B. R. 224, 240 Fed. 400; Page v. Old Dominion Trust Co. (C. C. A., 4th Cir.), 43 Am. B. R. 26, 257 Fed. 402; Matter of Pemberton (D. C., Fla.), 43 Am. B. R. 149, 260 Fed. 521. Lien on fund deposited to pay for goods. Where a person contracted with a mannufacturer who later became bankrupt, to buy certain tents for a foreign government, and was to receive a certain portion of the sum paid for such tents, when the remainder of a fund established by the foreign government to pay the seller was paid into court, his interest in such contract established a lien to the extent rights of a trustee in bankruptcy.156 The lien of a partner upon the partnership property for the surplus which may be due to him after the partnership debts have been paid, will be recognized by the bankruptcy court; and if prior to the proceedings in bankruptcy a receiver has been appointed in an action to dissolve the partnership and procure an accounting and has taken possession of the property, the possession of the State court through its officers will not be disturbed.157 A general promise to give security on demand does not constitute an equitable lien against the estate of the promisor.158 An agreement made, while negotiating for a loan, to make repayment out of a certain fund, or the proceeds of a particular enterprise, does not create a lien upon the fund or the proceeds of the enterprise.159 Where a person borrows money of another for the purchase of real of the sum due him under the contract, and such lien also attached to a part of the fund so established, which had been paid to the third party, who took it having knowledge of such lien, and such lien having been acquired over four months before the beginning of bankruptcy proceedings against the manufacturer, was good against his trustee in bankruptcy. Archibald v. Panagoulapoulos (N. Y. Ct. of App.), 48 Am. B. R. 610, 135 N. E. 857. Equitable lien on lumber in possession of trustee. Where claimant furnished bankrupt with logs, under an agreement providing that the claimant should be promptly paid $3 per thousand, stumpage, for any lumber manufactured therefrom upon shipment thereof, any of such lumber coming into the hands of the trustee in bankruptcy is impressed with an equitable lien in favor of the claimant although under the laws of the State, the claimant may have had no statutory lien on such lumber because the contract in question entrusted to the bankrupt the shipment and sale of the lumber. Wallen Land & Timber Co. v. Runyan (C. C. A., 5th Cir.), 46 Am. B. R. 251, 269 Fed. 128. Chattel mortgage on after acquired property. Matter of Roseboom (D. C., N. Y.), 42 Am. B. R. 437, 253 Fed. 136. Equitable lien of surety of government contractor.-Cox v. New England Equitable Ins. Co. (C. C. A., 8th Cir.), 40 Am. B. R. 793, 247 Fed. 955. Failure to record chattel mortgage. -Under sections 67-d and 67-e, a bank which, notwithstanding knowl edge which its officers had of the financial difficulties of a mortgagor, deliberately kept the existence of the mortgages secret and refrained from putting them on record, is not in a position to claim an equitable lien. National Bank of Bakersfield v. Moore (C. C. A., 9th Cir.), 41 Am. B. R. 409, 247 Fed. 913. 156. Matter of Sullivan Co., Inc., (D. C., N. Y.), 41 Am. B. R. 189, 247 Fed. 139, affd. 42 Am. B. R. 530, 254 Fed. 660; Hayes v. Gibson (C. C. A., 3d Cir.), 48 Am. B. R. 571, 279 Fed. 812. Assignment of accounts.-Matter of Imperial Textile Co. (D. C., N. Y.), 43 Am. B. R. 209, 255 Fed. 199. 157. Clark v. Bininger, 38 How. Pr. 341, 3 N. B. R. 518. 158. Mechanics' & Metals Nat. Bank v. Ernst, 231 U. S. 60, 31 Am. B. R. 302, 58 L. Ed. 121, affg. 29 Am. B. R. 289, 201 Fed. 664. 159. Torrance v. Winfield Nat. Bank (Kan. Sup. Ct.), 11 Am. B. R. 185, 66 Kan. 177. estate and pledges the property as security before bankruptcy, the equity of the lender in the property is superior to the claims of the trustee in bankruptcy of the borrower.160 (5) FACTOR'S LIEN.-A factor's lien, if valid and effectual under a State law, must be recognized and may be enforced; but it is absolutely essential to the validity of such a lien for advances, that the property consigned shall be delivered by the consignor to the consignee.161 Where a bankrupt consigned its entire stock in trade to a factor under an agreement whereby he was to conduct the business. and receive certain commissions and the factor took immediate possession of the business, and duly advertised the fact, a lien exists in favor of the factor, valid as against the bankrupt's trustee.162 162 (6) LANDLORD'S LIEN.-At common law, before distraint, the landlord has no lien on any particular portion of the goods of his tenant, and is only an ordinary creditor, except that he has the right of distress by reason of which he may place himself in a better position." In some States a landlord is given a statutory lien, either after or before distraint for rent. Such statutory liens must be treated as having been given in good faith and independently of the bankruptcy act, and are not affected by such act.164 Such a statutory lien for rent is entitled to priority of payment over the claims of general creditors,165 and will attach to such portion of the bankrupt tenant's property and will accrue as to such portion of the unpaid rent, as may be prescribed by the statute creating the lien.166 The require 160. In re McConnell (D. C., N. Y.), 28 Am. B. R. 659, 197 Fed. 438; Parker v. Bates (D. C., Ga.), 30 Am. B, R. 198, 203 Fed. 294. 161. Ommen v. Talcott (C. C. A., 2d Cir.), 26 Am. B. R. 689, 188 Fed. 401. 162. Boise v. Talcott (D. C., N. Y.), 38 Am. B. R. 838, 212 Fed. 268, affd. 45 Am. B. R. 117, 264 Fed. 611. 163. Henderson v. Mayer, 225 U. S. 631, 28 Am. B. R. 387, 56 L. Ed. 1233, 32 Sup. Ct. 699. 164. Courtney v. Fidelity Trust Co. (C. C. A., 6th Cir.), 33 Am. B. R. 400, 219 Fed. 57. Lien under unrecorded lease.- Under the law of Rhode Island a lease, giving the landlord a lien on personal property on the premises, although not recorded, gives to the lessor an equitable lien good against attaching cred itors, and, hence, the trustee in bankruptcy of the lessee takes such property subject to the equitable lien, although the lease was not recorded until six days before bankruptcy, when the lessor had reasonable cause to believe that the lessee was insolvent, and that the lien claimed would constitute a preference. Matter of Floyd-Scott Co. (D. C., Mass.), 35 Am. B. R. 463, 224 Fed. 987. 165. See under section 64, ante, subtitle "Landlords' claims." 166. Under the statute of Louisiana, giving a landlord a lien for rent and providing that in case of the failure or death of a lessee of a building used wholly or in part for mercantile purposes, the right so given "shall not extend in such a way as to receive rent for a term of more than 169 ments of the State law must be strictly observed or the lien will not. be recognized.167 If distraint is necessary and has not been resorted to, there is no lien.168 But it has been held that the lien is valid although the distress warrant was levied within four months prior to bankruptcy." Where a lien is given for the "current contract year," the landlord may enforce such lien against the trustee for rent due after the adjudication of the tenant, and for the remainder of such year." 170 Where a landlord's lien is not recognized by statute, a lien under a distress warrant is avoided by subsection ƒ as a lien obtained by legal proceedings. But where a statute gives a general lien to a landlord on the property of his tenant, which dates from and is enforceable by a levy of a distress warrant, such lien is not one created by a judgment nor "obtained through legal proceed 171 one year after such failure or death," a lease, having more than a year to run at the date of the bankruptcy of the lessee, mercantile company, gave the landlord a lien for the accrued rent and for the rent for one year after the bankruptcy, and said lien is saved by section 67-d of the Bankruptcy Act, from being affected by the act. Fudickar P. Glenn (C. C. A., 5th Cir.), 38 Am. B. R. 237, 237 Fed. 808. 167. Marshall v. Knox 16 Wall. 551; In re McIntire (D. C., W. Va.), 16 Am. B. R. 80, 142 Fed. 593; Preetorius v. Anderson (C. C. A., 5th Cir.), 38 Am. B. R. 93, 236 Fed. 723. Lien under unrecorded lease of real estate.-A lease of real estate in the State of Rhode Island, containing a reservation of personal property on the premises as security for rent to become due, need not be recorded in order to render the lien valid. Hence, the trustee in bankruptcy of the lessee is not entitled under section 47-a (2) of the Bankruptcy Act, as amended in 1910, to the personal property in question, although the lease was not recorded until within four months of bankruptcy. Dellinger v. Waite Thresher Co. (C. C. A., 1st Cir.), 35 Am. B. R. 802, 228 Fed. 506. 168. In re Ruppel (D. C., Pa.), 3 Am. B. R. 233, 97 Fed. 778; In re Bay ley (Ref., Pa.), 22 Am. B. R. 249; In re German (Ref., Pa.), 2 Am. B. R. 170; Matter of Printograph Sales Co. (D. C., Pa.), 31 Am. B. R. 539, 210 Fed. 567. Under the Maryland statute a landlord who fails to exercise his right to distrain before insolvency proceedings are begun has no right to preferential payment. In re Chaudron & Peyton (D. C., Md.), 24 Am. B. R. 811, 820, 180 Fed. 841. 169. In re Robinson & Smith (C. C. A., 7th Cir.), 18 Am. B. R. 503, 154 Fed. 343; Bird v. City of Richmond (C. C. A., 4th Cir.), 39 Am. B. R. 1, 240 Fed. 545, affd. 249 U. S. 174, 43 Am. B. R. 260, 39 Sup. Ct. 186, 63 L. Ed. 543; Matter of Abbruzzo (D. C., Pa.), 47 Am. B. R. 581, 276 Fed. 404. 170. Martin v. Orgain (C. C. A., 5th Cir.), 23 Am. B. R. 454, 174 Fed. 772, arising under Texas Stats., Art. 3,251; In re Meyer & Blueler (D. C., La.), 28 Am. B. R. 17, 195 Fed. 653, arising under Louisiana Civil Code, Art. 2,705; Matter of Southern Hardware, etc., Co. (D. C., Ala.), 32 Am. B. R. 92, 210 Fed. 381, citing Collier on Bankruptcy (9th ed.), 946; Lontos v. Coppard (C. C. A., 5th Cir.), 40 Am. B. R. 575, 246 Fed. 803. 171. In re Dougherty (D. C., Ga.), 6 Am. B. R. 457, 109 Fed. 480. |