itor can share in the property of a bankrupt, affected by a chatte】 mortgage not duly refiled as provided in the New York statute, i. e., that the trustee is a judgment creditor only so far as he represents judgment creditors, the New York law denying to creditors whose debts are not reduced to judgment the remedy of a suit to set it aside.39 This case has, however, been disapproved by the Court of Appeals of New York, which has held that the general rule that creditors cannot attack such a chattel mortgage until after the recovery of a judgment and the issue of an execution is simply one of procedure and does not affect the right, and, therefore, where the recovery of a judgment is impracticable it is not an indispensable requisite to enforcing the rights of creditors, and, hence, the mortgagor's trustee in bankruptcy may attack such mortgage, though if a creditor seeks that relief in his own name it would be necessary that his claim be first put in judgment.40 There can be no doubt about the trustee's power to sue to set aside a transaction which amounts to a fraud in fact, whether on the law or on the creditors; and that, too, irrespective of whether any of the creditors had obtained judgments. Where, however, the wrong on creditors is purely constructive, and the remedy is denied until certain statutory preliminaries are observed, the case may be different. Such a distinction would harmonize with the doctrine that the trustee takes the assets in the "plight and condition" they were the day of the bankruptcy.41

6. Valid liens, in general; subs. d.-This subsection is also declaratory of the law. It is the converse of subsections c, e, and f, and is emphasized by subsection b, the saving clause in the body of subsection e and the proviso clause at the end of sub

39. In re Economical Printing Co., 6 Am. B. R. 615, 110 Fed. 514 (C. C. A.). Compare In re Schmitt, 6 Am. B. R. 150, aff'd In re Shirley, 7 Am. B. R. 299.

40. Skilton V. Coddington. 185 N. Y. 80, 15 Am. B. R. 810. But see

In re Burnham, 15 Am. B. R. 548.

41. This rule has been held not to apply to liens which, although valid as to the bankrupt, are invalid as to creditors. First Nat. Bank v. Staake, 202 U. S. 141, 15 Am. B. R. 639.

section f. It is much broader than the corresponding clauses of the act of 1867, which protected liens by mortgage only.2 The supreme test of validity is, of course, "good faith." 43 Want of present consideration or failure to record where record is necessary to impart notice are also important. These are often elements of proof on the question of bona fides. Where the lien is through legal proceedings, however, bona fides is not material. The rule, in general, seems to be that where the lien does not contravene the bankruptcy law, and is recognized by the State law, it will be preserved.45 The Bankruptcy Act protects all statutory liens which have been properly perfected, before or after the adjudication in bankruptcy, in accordance with the statute or pro vision of law which gives it birth.46 A statutory lien filed within the time prescribed by the statute is protected if otherwise valid, although not filed until after the debtor's adjudication as a bankrupt.*7

§ 7. Mechanics' liens.-Here there was some question under the former law.48 There is now none under the present." Such

42. Section 14, R. S., section 5052. 43. In re Soudans Mfg. Co., 8 Am. B. R. 45, 113 Fed. 804.

44. Compare subs. a; In re Durham, 8 Am. B. R. 115, 114 Fed. 750; In re Soudans Mfg. Co., supra.

45. Compare In re Grevy, 7 Am. B. R. 459, 461, 112 Fed. 957. 959; In re Alverson, 5 Am. B. R. 855; In re Lowensohn, 4 Am. B. R. 79, 100 Fed. 776; In re Byrne, 3 Am. B. R. 268. In re West Norfolk Lumber Co., 7 Am. B. R. 648, 112 Fed. 759; McNair v. McIntyre. 7 Am. B. R. 638, 113 Fed. 113; Evans v. Rounsaville, 8 Am. B. R. 236. Compare also Harvey v. Smith, 7 Am. B. R. 497; In re Standard Laundry Co., 8 Am. B. R. 538, 116 Fed. 476; In re Klapholz, 7 Am. B. R. 703; Clark v. Iselin, 21 Wall. (U. S.) 360; In re Hutto, Fed. Cas. No. 6,960; In re N.

49

Y. Mail, etc., Co., Fed. Cas. No. 10,209; In re Dunkerson, Fed. Cas. No. 4,156; Gardner v. Cook, Fed. Cas. No. 5,226.

46. In re Franklin, 18 Am. B. R. 218.

47. In re Lillington Lumber Co., 13 Am. B. R. 153, 132 Fed. 886; Fehling v. Goings, 13 Am. B. R. 154, 67 N. J. Eq. 375, 58 Atl. 642; Crane v. Smythe, 11 Am. B. R. 747, 86 N. Y. Supp. 711, 87 N. Y. Supp. 917; Matter of Roeber, 9 Am. B. R. 778, 121 Fed. 444; In re Mero, 12 Am. B. R. 171, 128 Fed. 630.

48. Sabin v. Connor, Fed. Cas. No. 12,197; In re Cook, Fed. Cas. No. 3.151; In re Dey, Fed. Cas. No. 3,871; In re Coulter, Fed. Cas. No. 3,276.

49. In re Emslie, 4 Am. B. R. 126, 102 Fed. 291, rev'g 3 Am. B. R. 282,

A

a lien is not one through legal proceedings 50 and, unless so, cannot be attacked, save for intention to hinder, delay, or defraud, an element not likely to appear in liens of this class. It seems even that such a lien may be perfected after bankruptcy.51 laborer's or materialman's lien for labor performed for, or materials furnished to, a subcontractor is not affected by the bankruptcy of the subcontractor.52 In determining the validity of such liens the law of the State will control.53 Akin to this subject are all liens which or whose priority rests on special statutes.54

§ 8. Landlords' liens.-In some of the States, the lessor is given a lien, either after or before distraint for rent. The requirements of the State statute must be strictly observed or the lien will not be recognized.5 55 If distraint is necessary and has not been resorted to, there is no lien.56 Where a landlord's lien

97 Fed. 929; In re Kirby-Dennis, 2 Am. B. R. 402, 95 Fed. 166, aff'g 2 Am. B. R. 218, 94 Fed. 818. See also In re Coe-Powers Co., 6 Am. B. R. 1; In re Beck Prov. Co., 2 N. B. N. Rep. 532.

50. Howard v. Cunliff (Mo. App.), 10 Am. B. R. 71; In re Emslie, supra.

51. In re Huston, 7 Am. B. R. 92. 52. Kane Co. v. Kinney, 174 N. Y. 69, 66 N. E. 619, 9 Am. B. R. 78, note; Crane Co. v. Smythe, 11 Am. B. R. 747, 94 App. Div. (N. Y.) 53; In re Cramond, 17 Am. B. R. 22; Matter of Grissler, 13 Am. B. R. 508, 136 Fed. 754, where a mechanic's lien has been perfected as provided by a State statute, an action to enforce it will not be stayed by the bankruptcy court; Fehling v. Goings, 13 Am. B. R. 154, 67 N. J. E. 375. Contra, Matter of Roeber, 9 Am. B. R. 303 (C. C. A.), 121 Fed. 449, rev'g 9 Am. B. R. 778, a trus

tee in bankruptcy takes title to the money due to a bankrupt under a building contract, free from the liens of subcontractors for labor and materials furnished for the building, although the notices of liens were filed pursuant to statute, but after the contractor had filed his petition in bankruptcy.

53. Morgan v. First Nat. Bank, 16 Am. B. R. 639, 145 Fed. 466.

54. For example, in cases like In re Matthews, 6 Am. B. R. 96, 109 Fed. 603; In re Gosch, 9 Am. B. R. 613, 121 Fed. 604. But see In re Falls City Shirt Co., 3 Am. B. R. 437, 98 Fed. 592.

55. In re McIntire, 16 Am. B. R. 80, 142 Fed. 593; Marshall v. Knox, 16 Wall. (U. S.) 551. Compare In re Consumers' Coffee Co., 18 Am. B. R. 500.

56. In re Ruppel, 3 Am. B. R. 233, 97 Fed. 778.

is not recognized by statute, a lien under a distress warrant is avoided by subsection f.57 Where a lease provides that the landlord shall have at all times the right to distrain for rent due, and shall have a valid and first lien upon all the property of the tenant, the lien thus created, though it did not attach by the levy of a distress warrant until two days before the filing of the petition in bankruptcy against the tenant, is preserved by section 67d.58 A landlord may not enforce by distraint a claim for rent after his tenant has been adjudicated a bankrupt.59 Where a landlord's lien is given by statute, it is waived. by the landlord taking a chattel mortgage for the rent.60 And where a landlord consents to the sale of the property to which his lien has attached in bulk with other property not affected thereby he loses his lien, since under such circumstances it would be impossible to determine how much of the proceeds of sale was the product of the property covered by his lien.61 Cases under the law of 1867 are cited in the note below.62

§ 9. Other valid liens.-Mortgages given in good faith by way of continuing collateral are valid to the amount advanced before the petition in bankruptcy is filed.63 So also, it is thought, of mortgages purporting to cover property to be acquired.64 A chattel mortgage covering after acquired property in the possession of the mortgagor valid under the laws of the State where

57. In re Dougherty, 6 Am. B. R. 457, 109 Fed. 480.

58. In re Robinson v. Smith (C. C. A.), 18 Am. B. R. 563.

59. In re Bishop, 18 Am. B. R. 635.

60. In re Wolf, 3 Am. B. R. 558, 98 Fed. 84.

61. Keyser v. Wessel, 12 Am. B. R. 126, 128 Fed. 281, aff'g 10 Am. B. R. 586, and distinguishing Carroll Young, 9 Am. B. R. 643, 119 Fed. 577.

V.

62. Trim v. Wagner, Fed. Cas. No. 14,174; In re Bowne, Fed. Cas. No.

1,741; Bailey v. Loeb, Fed. Cas. No. 739.

63. Marvin v. Chambers, Fed. Cas. No. 9,179. See Matter of United States Food Co., 15 Am. B. R. 329; Stedman v. Bank of Monroe, 9 Am. B. R. 4, 117 Fed. 237; In re Williams, 9 Am. B. R. 731, 120 Fed. 542; Davis v. Turner (C. C. A.), 9 Am. B. R. 704, 120 Fed. 605.

64. Barnard v. Norwich, etc., Co., Fed. Cas. No. 1,007; In re Sentenne & Green Co., 9 Am. B. R. 648, 120 Fed. 436. Compare Brett v. Carter, Fed. Cas. No. 1,844.

given, is effectual as against the mortgagor's trustee in bankruptcy, and the taking possession of the property by the mortgagee after conditions broken within the period of four months prior to filing the petition against the mortgagor is not a preference. 65 The validity of a chattel mortgage on after acquired property as against a trustee in bankruptcy depends upon the laws of the State wherein the property is situated; such a mortgage is held invalid in New York.66 In Rhode Island such a mortgage is valid.67 A chattel mortgage is not void for indefiniteness of description which purports to be upon all property now being and remaining in the possession" of the mortgagor.68 Nor does an agreement therein permitting the mortgagor to sell the mortgaged goods and use the proceeds thereof invalidate the mortgage, where no fraudulent intention is found; the only effect of such agreement is to withdraw the goods sold from the operation of the mortgage.69 In New York, while permission given the mortgagor to sell mortgaged chattels, the proceeds thereof to be applied in payment of the mortgage or to the acquisition of new property, does not render a chattel mortgage

66

65. Thompson v. Fairbanks, 196 U. S. 516, 13 Am. B. R. 437; In re Rogers, 13 Am. B. R. 75.

66. In re Marine, etc., Co., 16 Am. B. R. 325; In re Adamant Plaster Co., 14 Am. B. R. 815, 137 Fed. 251; Zartman v. National Bank, 16 Am. B. R. 152, 109 App. Div. (N. Y.) 406. Compare In re Burnham, 15 Am. B. R. 548.

67. In re Chantler Cloak & Suit Co., 18 Am. B. R. 498.

68. In re Beede, 11 Am. B. R. 387, 126 Fed. 853; Davis v. Turner, 9 Am. B. R. 704 (C. C. A.), 120 Fed. 605. Under the settled rule in Iowa, that all descriptions of mortgaged chattels should be considered in determining whether or not a third person, aided by inquiries which the mortgage itself suggests, would be

able to identify the property, a description, "125 head of three and four-year-old dehorned steers, all branded on the right side with the reverse four, and kept on full feed on section 16, township 82, range 40," is insufficient, and the mortgage is not a valid lien upon the property, and where, after the bankruptcy of the mortgagor, the "125 head of three and four-year-old dehorned steers" were placed upon another section in the same range, the mortgagee, by virtue of previous mortgage covering after-acquired or afterlocated property, acquires no equitable title to the steers. Des Moines Nat. Bank v. Council B. Sav. Bank, 18 Am. B. R. 108.

69. In re Ball, 10 Am. B. R. 564, 123 Fed. 164.