Chauncey v. Dyke Bros.

Citations

• 119 F. 1
• 55 C.C.A. 579
• 1902 U.S. App. LEXIS 4633

Syllabus

<p>1. Bankruptcy—Jurisdiction—Conflicting Liens.</p> <p>Where the bankrupt court has acquired the lawful custody of property to which conflicting liens attach, it has jurisdiction to determine the priorities of such liens, though the trustee has no interest in such question.</p> <p>2. Same—Waiver of Objections.</p> <p>A trustee in bankruptcy filed a petition asking for permission to sell, free of incumbrances, certain real estate of the bankrupt which was incumbered both by a mortgage and by mechanics’ liens, and that the proceeds of the sale should stand in lieu of the property. Thereupon the mortgagees and lienholders agreed to submit the priority of their liens to the decision of the referee, and that the sale should be postponed until after such priorities had been disposed of. Held, that such stipulation operated as a consent on the part of the mortgagees that the property might be sold free of all liens, and gave the bankrupt court lawful custody of the same and the proceeds realized therefrom.</p> <p>8. Mechanics’ Liens—Mortgages—Priority on Improvements—Use of Borrowed Money.</p> <p>Acts Ark. 1895, p. 217, § 3, provides that a mechanic’s lien shall attach to the buildings in preference to any prior incumbrances existing upon the land: provided, however, that where the prior incumbrance was executed to raise money with which to make such improvements then the lien should be prior to the lien given by the act. Section 10 provides that contractors for the erection of improvements must, on request, furnish to a mortgagee a full list of the claims of those laboring. on an improvement or furnishing material therefor. A mortgage, was executed for the purpose of securing money for improvements, but only a portion thereof went to pay for labor or material, the balance being turned over to the mortgagor, who diverted it from such purpose. Held, that the liens of laborers and materialmen on the improvements would be superior to that of the mortgagees, as to such portio