In an action by lien-holders a judgment may be rendered limiting the plaintiffs to a sale of the land, where it appears that, by reason of their discharge in bankruptcy, the defendants are released from personal liability on the judgment. (Reed v. Bullington, 11 N. B. R. 408.) The docketing of a transcript of judgment on a holiday is not void, in the absence of state legislation to the contrary, and establishes a lien on the real estate of the debtor in the county where filed (In re Worthington, 16 N. B. R. 52; 7 Biss. 455; 1 N. W. Rep. (O. S.) 109; 9 Chi. Leg. News, 346; 4 Law & Eq. Rep. 78; 16 Alb. Law J. 63; 23 Int. Rev. Rec. 233; 2 Cin. Law Bul. 189; Fed. Cas. 18051); but a judgment creditor cannot claim the jurisdiction of the bankrupt court for the collection of his debt, fully secured by the only lien on real estate. (In re Avery v. Johann, 3 N. B. R. 36; 2 Amer. Law T. Rep. Bankr. 92; 4 N. B. R. 143; 1 Chi. Leg. News, 261; Fed. Cas. 675.)

Under the act of 1867, where an execution creditor was sought to be restrained in the circuit court, and during the proceedings the adjudication of bankruptcy was made, and the property levied upon was delivered by the sheriff to the assignee, subject to such lien as might be sustainable, it was held that the execution creditors might proceed summarily in the district court in bankruptcy upon their asserted right of priority, or they might require the assignee to proceed to sustain his asserted adverse right (In re Hafer et al., 1 N. B. R. 163; 6 Phila. 474; 25 Leg. Int. 164; Fed. Cas. 5897); and that a levy of an execution made by indorsing the levy upon the writ, placing a custodian in charge of the goods, and receiving a key to the store in which the goods were kept, was a good levy and consummated the lien of the execution creditors, and they were entitled to be paid the amount of their claim out of the proceeds arising from the sale of the goods afterwards taken by the marshal in bankruptcy. (In re Hughes et al., 11 N. B. R. 452; 7 Chi. Leg. News, 162; Fed. Cas. 6843; Swope et al. v. Arnold, Ass., 5 N. B. R. 148; Fed. Cas. 13702.)

d. Liens given or accepted in good faith and not in contemplation of or in fraud upon this Act, and for a present consideration, which have been recorded according to law, if record thereof was necessary in order to impart notice, shall not be affected by this Act.

[Act of 1867. SEO. 14. That no mortgage of any vessel or any other goods or chattels, made as security for any debt or debts, in good faith and for present considerations and otherwise valid, and duly recorded, pursuant to any statute of the United States, or of any State, shall be invalidated or affected hereby.]

No distinction between various kinds of liens.-The bankrupt law makes no distinction between the different kinds of liens. If the law of the state recognizes a lien by judgment, or in favor of a mechanic, or by mortgage, or in any other form, each is respected in the bankrupt court according to its dignity. Whenever the creditor has the legal right to have a debt satisfied from the proceeds of property, or before the property can be otherwise disposed of, it is a lien on such property for the security of the debt. (Meeks v. Whatley, 10 N. B. R. 498.) All valid liens which exist on the property of a bankrupt when the proceedings in bankruptcy are commenced are preserved and will be respected by the bankruptcy court, and enforced and allowed to be paid out of the proceeds of the property on which they are liens. (In re Grinnell & Co., 9 N. B. R. 35; 7 Ben. 42; 21 Pittsb. Leg. J. 82; Fed. Cas. 5830.)

Mortgages valid against bankrupt's estate.- While the present law is more or less different from the act of 1867, the following decisions are given as showing the position then taken by the courts: Security by mortgage out of the usual course of business, given to creditors who are innocent, with reasonable cause to be so, of the insolvency of the debtor, will be valid (In re Lee v. Savings Institution, 3 N. B. R. 53; 1 Chi. Leg. News, 370; Fed. Cas. 8188), or a mortgage to secure a debt and to secure mortgagee as surety for mortgagor (Milner v. Meek, Ass., et al., 17 N. B. R. 83; 95 U. S. 252), or a mortgage executed by an insolvent debtor, to secure an actual loan, made and taken in good faith (Campbell, Ass., v. Waite et al., 16 N. B. R. 93; 9 Ben. 166; Fed. Cas. 2374); and, unless the mortgagee of property to secure present or future advances is guilty of some fraud or preference, he may hold his security against the assignee, however insolvent the mortgagor may have been at the time the mortgage was given. (Ex parte Ames, In re McKay and Aldus, 7 N. B. R. 230; 1 Lowell, 561; Fed. Cas. 323.)

Where a man makes a settlement upon his wife in fraud of his cred. itors, and his wife mortgages the property, for value, to one innocent of the fraud, though the settlement be afterwards set aside, the mortga gee's rights will be protected. (Sedgwick v. Place, 10 N. B. R. 28; Fed. Cas. 12621.) The Bankrupt Act does not prohibit a person from loaning money at legal rates to one whom he has reason to believe to be insolvent, and taking security for such loan, provided it be made bona fide and without intent, or participation in any intent, to defraud creditors or defeat the Bankrupt Act. (Darley v. Boatman's Sav. Inst., 4 N. B. R. 195; 4 Amer. Law T. Rep. 117; 1 Leg. Op. 146; 1 Amer. Law T. Rep. Bankr. 251; Fed. Cas. 3571.) A debtor was charged, on petition of creditors, with having executed a mortgage with intent to prefer other creditors. The mortgage was security for personal property obtained from the mortgagees, with which he furnished a spacious mansion which he had leased and converted into an infirmary and bathing establishment. It was held a valid mortgage. (Potter et al. v. Coggeshall, 4 N. B. R. 19; Fed. Cas. 11322.)

A chattel mortgage was executed by a debtor in favor of his creditor. Afterwards the debtor indorsed on the back of the mortgage an agreement that it should cover property acquired after the execution of the mortgage. It appeared that the indorsement was procured for the purpose of delaying creditors. It was held that the indorsement was void, but did not deprive the mortgagees of their rights under the mortgage. (Whithed et al. v. Pillsbury et al., 13 N. B. R. 241; Fed. Cas. 17572.) A bankrupt within four months before bankruptcy borrowed some money, and gave therefor a mortgage on his stock in trade, which secured this loan, also a prior note which was already secured, and third, an overdue note, which was taken up and held by the indorser, at whose request it was included in the mortgage. The stock was sold by the assignee. The court held that the mortgage could be severed, and the valid part was ordered paid. (In re Stowe, 6 N. B. R. 429; Fed. Cas. 13513.) A. executed a mortgage to B., the condition being that the former should within nine months pay all the notes on which the latter was liable as indorser, and any and all notes given for A.'s accommodation, on which B. might be so liable "during the pendency of the deed." B. still retained the mortgage when A. was adjudicated bankrupt. The mortgage was security for notes outstanding at that time. (In re Griffiths, 3 N. B. R. 179.)

A bankrupt sold bonds which were in his hands, owned by his sister, and took up a mortgage note with the proceeds and used the balance himself. He was indebted to his sister at the time, and he held other bonds owned by her. These bonds he pledged for his debts. Money was paid by him to her from time to time during six years following, and this was charged against the interest on the bonds. The court held that the sister was entitled to a lien equivalent to a mortgage lien, and that she was entitled to a decree of foreclosure. (Dewey v. Kelton, Ass., 18 N. B. R. 217; Fed. Cas. 3850.) Where a mortgage is executed by a bankrupt to his nieces eighteen days before filing of petition in bankruptcy, but in pursuance of a parol agreement between the bankrupt and the guardians of the infants made fifteen months before, such agreement, based upon a valuable consideration, will be treated in equity as a mortgage. (Burdick, Ass., etc. v. Jackson et al., 15 N. B. R. 318.)

Invalid mortgages. See subdivision e, post, p. 396.

Enforcement of mortgagee's rights.—Where no just cause for questioning the validity of the mortgage exists, the court in bankruptcy will entertain the summary petition of a mortgagee for the sale of the premises (In re Sacchi, 6 N. B. R. 497; 43 How. Pr. 252; Fed. Cas. 12200); and a court of equity in selling mortgaged premises free from incumbrances, remitting the lien-holders to the proceeds, at the suits of subsequent incumbrancers or other parties having a right in the equity of redemption, is only applying a principle frequently exercised in bankruptcy. (Sutherland et al. v. Lake Superior Ship Canal, R. R. & Iron Co., 9 N. B. R. 298;

1 Cent. Law J. 127; Fed. Cas. 13643.) An action to foreclose a mortgage is not a doubtful remedy, and will not unreasonably delay the party or materially injure or prejudice his rights, and if a creditor has a mortgage on the bankrupt's homestead he may be required to exhaust that remedy before he can enforce his other remedies against the bankrupt's estate. (In re Sauthoff & Olson, 14 N. B. R. 364; 7 Biss. 167; 5 Amer. Law Rec. 173; 8 Chi. Leg. News, 370; 3 Cent. Law J. 544; 3 N. Y. Wkly. Dig. 96; Fed. Cas. 12379.) The court may grant leave to a mortgagee to foreclose in the usual way, making the assignees parties, or take upon itself the duty of ascertaining and liquidating the lien by a sale of the property mortgaged, and applying the proceeds in payment, and, if the latter course is pursued, is authorized to adjust the costs of the proceedings necessary to give effect to the specific lien. (In re Ellerhorst et al, 7 N. B. R. 49; 2 Sawy. 219; Fed. Cas. 4380.) It may direct the sale of property free from all incumbrances, but the right of a mortgagee who is not made a party to proceedings in the district court to sell the property is not affected by the proceedings. (Ray v. Brigham et al., 12 N. B. R. 145.) Where a mortgagee, having a valid claim by his mortgage against the property of the bankrupt, by petition to the bankrupt court asked an order that the assignee make sale of simply his right of re demption, the petition was dismissed. (Ferguson v. Peckham, 6 N. B. R. 569; 29 Leg. Int. 285; 6 Alb. Law J. 291; Fed. Cas. 4741.)

It has been held that a sale under a deed of trust in the nature of a mortgage, with a power of sale in a third party as trustee, executed by a debtor afterwards adjudicated a bankrupt, to be valid, must be by permission of the court after the creditor therein secured has proved his debt in the bankruptcy proceedings. (In re Davis, Ass., et al., 2 N. B. R. 125; 2 Amer. Law T. Rep. Bankr. 52; 1 Chi. Leg. News, 171; Fed. Cas. 3618.) A mortgagee must prove his debt in the bankruptcy court as a secured claim before he is entitled to apply to such court for leave to foreclose his mortgage in another court (In re Sabin, 9 N. B. R. 383: Fed. Cas. 12193); but if he does not prove his debt, he may enforce his mortgage in a state court, although the property be duly set apart to the bankrupt as exempt (Cumming v. Clegg, 14 N. B. R. 49; Hatcher v. Jones, 14 N. B. R. 387); though in an early case it was held that a creditor who holds a mortgage lien on real estate belonging to a bankrupt will be restrained from maintaining a foreclosure suit in a state court pending proceedings in bankruptcy (In re Snedaker, 3 N. B. R. 155); and a mortgagee may proceed to foreclose his mortgage in a state court if the assignee does not seek to redeem the mortgaged property, and the proceeding to foreclose is not absolutely void (Brown v. Gibbons, 13 N. B. R. 407); and where a mortgagee brought an action to enforce his lien after the mortgagor had been discharged in bankruptcy, the debt not having been proved in bankruptcy, it was held that the lien was not lost, but might be enforced. (Assignee of Wicks & Co. v. Perkins, 13 N. B. R. 208; 1 Woods, 383; Fed. Cas. 17615.)

The taking possession of property by a mortgagee and omission to sell within a reasonable time operates as a satisfaction of the debt to the extent of the value of the property at the time the mortgagee took possession. (In re Haake, 7 N. B. R. 61; 2 Sawy. 231; Fed. Cas. 5883.) A judgment creditor whose mortgage becomes a legal lien upon the whole interest of the mortgagor in such premises may buy and sell and purchase under his judgment, obtain a perfect title to the land, and may then enjoy the same as fully as the judgment debtor might have done had he continued to be the owner. (In re Williams, 14 N. B. R. 132; Fed. Cas. 17706.)

Rights of pledgees.- Under the act of 1867 it was held that the rights of a pledgee were not impaired or affected by any provisions of the bankrupt law (Yeatman v. New Orleans Sav. Inst., 17 N. B. R. 187; 95 U.S.764); nor could proceedings in bankruptcy deprive creditors of their just possession of property held as security for a debt without discharging the debt (Davis et al. v. Railroad Co. et al., 12 N. B. R. 253; 1 Woods, 661; Fed. Cas. 3648); but that a pledgee's right to dispose of the property pledged was suspended from the filing of the petition in bankruptcy of the pledgor until the appointment of an assignee, in the same manner as if the pledgor had died intestate; the pledgee must wait for representatives to be appointed. (In re Grinnell & Co., 9 N. B. R. 29; 7 Ben. 42; 21 Pittsb. Leg. J. 82; Fed. Cas. 5830.) Where stock is pledged to secure call loans, leave of the court need not be obtained by the pledgee, on the pledgor's bankruptcy, to sell the pledged stock and pay the surplus into court. (In re Grinnell, 9 N. B. R. 137; Fed. Cas. 5829.)

Landlord's lien.- The Bankrupt Act makes no provision for a preference in favor of a landlord, but in its administration it is the court's duty to recognize and enforce any lien that he may have by virtue of the state law. (In re McConnell, 9 N. B. R. 387; 10 Phila. 287; 31 Leg. Int. 61; 21 Pittsb. Leg. J. 107; Fed. Cas. 6712.) It has been held that a landlord does not acquire a lien for rent on the goods of a bankrupt found on the demised premises. (Bailey, Ass., v. Loeb & Bro., 11 N. B. R. 271; 2 Woods, 578; 2 Cent. Law J. 42; Fed. Cas. 739.) When sufficient goods remain on the premises occupied by the bankrupt to satisfy the rent on distress, the assignee should pay the full amount due up to the time of his surrender to the landlord. (Longstreth v. Pennock et al., 7 N. B. R. 449; 9 Phila. 394; 30 Leg. Int. 29; 20 Pittsb. Leg. J. 107; Fed. Cas. 8488.) An assignee in bankruptcy is bound to respect the landlord's lien for rent (In re Trim v. Wagner et al., 5 N. B. R. 23; 2 Hughes, 355; Fed. Cas. 14174); and if a note taken for rent is not paid at maturity, the landlord is entitled to all his remedies for the security or collection of his claim in the same manner as if the note had never been given. (In re Bowne & Ten Eyck, 12 N. B. R. 529; 1 N. Y. Wkly. Dig. 100; Fed. Cas. 1741.)

A judgment was obtained by a creditor before the beginning of pro