1 "The provisions of the Bankruptcy Act, preventing an insolvent from giving or the creditor from securing preferences for pre-existing debts, apply not only to mortgages and transfers voluntarily made by the debtor, but also to those preferences which are obtained through legal proceedings, whether the lien dates from the entry of the judgment, from the attachment before judgment, or, as in some States, from the levy of execution after judgment. But the statute was not intended to lessen rights which already existed, nor to defeat those inchoate liens given by statute, of which all creditors were bound to take notice and subject to which they are presumed to have contracted when they dealt with the insolvent. "Liens in favor of laborers, mechanics and contractors are of this character; and although they may be perfected by record or foreclosure within four months of the bankruptcy, they are not created by judgments, nor are they treated as having been 'obtained through legal proceedings,' even when it is necessary to enforce them by some form of legal proceeding. The statutes of the various states differ as to the time when such liens attach, and also as to the property they cover. They may bind only what the plaintiff has improved or constructed; or they may extend to all the chattels of the debtor, or "all the property involved in the business." In re Bennett, 153 Fed. Rep. 673. "In some cases the lien dates from commencement of the work, or from the completion of the contract. In others, prior to levy they are referred to as being dormant or inchoate liens, or as 'a right to a lien.' In re Bennett, 153 Fed. Rep. 677; In re Laird, 109 Fed. Rep. 550. But the courts, dealing specially with bankruptcy matters, have almost uniformly held that these statutory preferences are not obtained through legal proeedings, and, therefore, are not defeated by Sec. 67f, even where the registration, foreclosure or levy necessary to their completion or enforcement was within four months of the filing of the petition in bankruptcy. "Similar rulings have been made where the landlord has only a common law right of distress. In re West Side Paper Co., 162 Fed. Rep. 110. This is often referred to as a lien, but it is "only in the nature of security." 3 Black. Com. 18. The pledge, or quasi-pledge, which the landlord is said to have is, at most, only a power to seize chattels found on the rented premises. These he could take into possession and hold until the rent was paid. Doe ex dem Gladney v. Deavors, 11 Georgia, 79, 84. But before the distraint the landlord at common law has 'no lien on any particular portion of the goods 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.' Sutton v. Reese, 9 Jur. (N. C.) 456. A right fully as great is created by the Georgia statute here in question. For while giving the owners of agricultural lands a special lien on the crops, there was no intention to deprive the proprietor of urban and other real estate of the lien for rent which there, as in other states, is treated as an incident growing out of the relation of landlord and tenant. "The Code (Sec. 2787) expressly 'establishes liens in favor of landlords.' It (Sec. 3124) gives them 'power to distrain for rent as soon as the same is due.' It declares (Sec. 2795) that landlords 'shall have a general lien on the property of the tenant liable to levy and sale which dates from the levy of the distress warrant to enforce the same.' It is true that prior to levy it covers no specific property, and attaches only to what is seized under the distress warrant issued to enforce the lien given by statute. But in this respect it is the full equivalent of a common law distress-the lien of which is held not to be discharged by Sec. 67f. In re West Side Paper Co., 162 Fed. Rep. 110; Austin v. O'Reilly, 2 Wood, 670. "The fact that the warrant could be levied upon property which had never been on the rented premises does not change the nature of the landlord's right, though it may increase the extent of his security. The statutory restrictions as to date, rank and priority may be im portant in a controversy with other lienholders, but was wholly immaterial in this contest between the landlord and trustee, where the latter was only representing general creditors. As against them the landlord had from the beginning of the tenancy the right to a statutory lien, which had completely ripened and attached before the filing of the petition in bankruptcy. The priority arising from the levy of the distress warrant was not secured because Mayer had been first in a race of diligence, but was given by law because of the nature of the claim and the relation between himself as landlord and Burns as tenant. In issuing the distress warrant the justice acted ministerially. Savage v. Oliver, 110 Georgia, 636. The sheriff was not required to return it to any court, and no judicial hearing or action was necessary to authorize him to sell for the purpose of realizing funds with which to pay the rent. Such a lien was not created by a judgment nor 'obtained through legal proceedings.' "Decisions to the same effect were made under the Bankruptcy Act of 1867 (14 Stat. 517, 522, Sec. 14), which dissolved attachments or mesne process within four months prior to the filing of the petition. In Austin v. O'Reilly, 2 Wood, 670, decided in 1875, it appeared that in Mississippi the landlord had no lien, but as in Georgia was authorized to seize (but by attachment) the tenant's goods wherever found. Justice Bradley, presiding at Circuit, said that the landlord's right to a distress at common law was not a strict lien, 'but being commonly called a lien, and being a peculiar right in the nature of a lien, the Supreme Court of the United States, and most of the District and Circuit Courts have regarded it as fairly to be classed as a lien, within the true intent and meaning of the Bankrupt Act,' and that the statutory attachment being in the nature of a common law distress was not nullified or discharged by the bankruptcy proceedings. * "There is nothing in the act of 1898 opposed to this conclusion. On the contrary, its general provisions indicate a purpose to continue the same policy and an in tent, as against general creditors, to preserve rights like those given by the Georgia statute to landlords, even though the lien was enforced and attached by levy of a distress warrant within four months of the filing of the petition in bankruptcy. "Affirmed." (Note: The lien secured through judicial proceedings, as by attachment, judgment, execution or levy, (which are dissolved by the bankruptcy proceedings if arising within four months prior to the bankruptcy petition) must be carefully distinguished under the bankruptcy act from liens given by general law, as liens of landlords, mechanic's liens, labor liens, and the like, which exist independent of judicial proceeding, (which are not dissolved by the bankruptcy proceedings) although, as for instance in case of a mechanic's lien a judicial proceeding may be necessary to enforce the lien. Thus under Illinois law a mechanic's lien is given to contractors and sub-contractors upon the real estate of a debtor for material supplied or labor furnished for the improvement of the real estate. This lien exists for a period of time after material furnished or labor done, without any record, and thereafter a record must be made. Such a lien if such time has not expired is not dissolved by bankruptcy proceedings. It is not a lien obtained by judicial proceedings, although to enforce it, judicial proceedings are necessary. Generally a landlord has no lien until he levies a distress warrant. Creditors obtaining liens by judgment have priority over the landlord, although their judgment liens would be dissolved by bankruptcy proceedings if less than four months old when the bankruptcy proceedings are begun. Held, in Watkins v. Alexander, 283 Fed. 968 (C. C. A. 5th Cir. 1922), that under the Georgia statute, a lien of a landlord is not good in bankruptcy if he has not levied a distress warrant prior to the bankruptcy proceedings.) CHAPTER 109 CLAIMS AGAINST BANKRUPT ESTATE A. What claims provable in bankruptcy. B. Proof and allowance of claims. C. Secured and lien claims. D. Claims having priority. F. G. Compositions with creditors § 851. (Bankruptcy, Sec. 61.) In general. Case 818. Bankruptcy Law, Sec. 63. Debts of the bankrupt may be proved and allowed against his estate which are (1) A fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) Due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) Founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in an action to recover a provable debt; (4) Founded upon an open account, or upon a contract express or implied; and (5) Founded upon provable debts reduced to judg |