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Preface To This Volume
In this volume, an attempt has been made to gather the chief law relating to creditors and debtors in relation to the rights of each which spring out of the contract or the general law. The different sorts and forms of indebtedness, the important subject of liens, the payment, settlement and compromise of the debt, the manner of collecting a debt through the means of legal machinery and, finally, the law of bankruptcy under the National Bankruptcy Act, are all considered. The volume ought to be helpful to business men in a very practical way. The author is not familiar with any other volume which attempts either in a small or large way to bring together the law relating to debtor and creditor in its various aspects.
In a few instances, the logical order as first worked out by the author has given way to considerations of convenience and space; for instance, the law of assignments for the benefit of creditors has been placed wholly in the chapter upon fraudulent conveyances; and a section in reference to interest and usury has been placed in the chapter on payment.
The National Bankruptcy Law is set out in Appendix A.
Table Of Contents
THE LAW OF DEBTOR AND CREDITOR
INCLUDING
FASTI.
INTRODUCTORY.
Chapter 1. Nature Of Relationship Of Debtor And Creditor
Sec. I. Indebtedness defined.
Sec. 2. Debts mature and immature.
Sec. 3. Debts liquidated and unliquidated.
Sec. 4. Indebtedness growing out of breach of
contract or commission of tort.
Sec. 5. Secured and unsecured indebtedness.
Sec. 6. General creditors and judgment, attachment and execution creditors.
Sec. 7. Liens. *
Sec. 8. Order of treatment.
10 Ambmoan Commbboial Law.
PABTH.
THE LIENS OF A CREDITOR UPON THE PROPRTY
OF HIS DEBTOR.
Chapter 2. Liens Arising Out Of Contract — Chattel
MORTGAGES
A. Nature of a Chattel Mortgage.
Sec. 9. Definition.
Sec. 10. Mortgage distinguished from pledge.
B. The Form of a Chattel Mortgage.
Sec. II. Usual form that of conveyance. Sec. 12. Oral and partially oral mortgages.
C. The Subject Matter of a Chattel Mortgage.
Sec. 13. Tangible and intangible personal property.
Sec. 14. Existing and future and after acquired
goods.
Sec. 15. Crops and fixtures.
Sec. 16. Stock in trade.
D. The Debt Secured.
Sec. 17. Past Indebtedness.
Sec. 18. Present indebtedness.
Sec. 19. Future advances.
Debtob and Cbeditob; Bankbuptgt. 11
E. Drafting and Executing the Mortgage.
Sec. 20. Describing the parties.
Sec. 21. Describing the property mortgaged.
Sec. 22. Statement of the consideration and reference to the evidences of indebtedness.
Sec. 23. The security clause.
Sec. 24. Signature and attestation.
Sec. 25. Drafting the notes.
F. Perfecting the Lien In Respect to Third Persona.
Sec. 26. Two ways of perfecting the lien. Sec. 2^. By attestation, acknowledgment and recordation.
Sec. 28. By possession.
Q. Rights and Remedies Under the Mortgage.
Sec. 29. Right to possession.
Sec. 30. Right of mortgagee to take possession
under security clause.
Sec. 31. Foreclosure.
Chapter 3. Liens Arising Out Of Contract — Reservation Of
TITLE IN CONDITIONAL SALE.
Sec. 32. Conditional sale defined.
Sec 33. Conditional sale as between seller and
purchaser.
Sec. 34. Rights of seller against third persons.
12 Amebigan Commebgial Law.
Chapter 4. Liens Arising Out Of Contract — ^real Estate
MORTGAGES.
Sec. 35. Real estate mortgage defined. Sec. 36. History of real estate mortgage.
Chapter 6. Liens Arising Out Of Contract — Pledges
Sec. 37. Hedge defined.
Sec. 38. The subject matter of a pledge.
Sec. 39. Form of pledge.
Sec. 40. Right and duty of pledgee with reference
to possession.
Sec. 41. Remedies of pledgee.
Sec. 42. Formalities of the sale.
CHAPTER 6.
LIENS ARISING OUT OF CONTRACT — ^THOSE BY WAY OF
ASSIGNMENT.
Sec. 43. Definition.
Sec. 44. Parties concerned.
Sec. 45. Various purposes of assignment.
Sec. 46. What contractual rights can be assigned.
Sec. 47. What expectancies and future interests
can be assigned.
Sec. 48. How assignment accomplished.
Sec. 49. Title of assignee.
Sec. 50. Notice to debtor.
Sec. 51. Generally.
Debtob and Cbeditob; Bakkbuptcy. 13
Chapter 7. Liens Independent Of Cxdntract — Common Law
LIENS AND STATUTORY LIENS IN THE NATURE
OF COMMON LAW LIENS.
Sec. S3. Lien of common carrier.
Sec. 54. Lien of warehouseman.
Sec. 55. Lien of innkeeper.
Sec. 56. Lien of agister.
Sec. 57. Lien of livery stable keeper.
Sec. 58. Lien of bailee spending money or services
on goods.
Sec. 59. Lien of vendor.
Sec. 60. Lien of landlord.
Sec. 61. Common law lien is good against third
persons.
Sec. 62. Loss of lien.
Sec. 63. Enforcement of lien.
Chapter 8. Liens Independent Of Contract — ^the Statutory
mechanic's LIEN.
Sec. 65. The mechanic's lien defined.
Sec. 66. Who can claim mechanic's lien.
Sec. 67. Priority of mechanic's liens.
Sec. 68. Proceedings to enforce lien.
14 AmBEICAN CoHMEBCIAIi LaW.
Chapter 9
LIENS INDEPENDENT OF CONTRACT — ALIENS ACQUIRED THROUGH JUDICIAL PROCEEDINGS.
Sec. 70. Lien by judgment.
Sec. 71. Lien by attachment before judgment.
Sec. 72. Lien of execution.
FABT m.
PAYMENT, SETTLEMENT AND COMPROMISE.
Chapter 10
PAYMENT AND TENDER OF PAYMENT OF A LIQUIDATED DEBT — STATUTE OF LIMITATIONS.
Sec. 74. Medium of payment.
Sec. 75. Payment by negotiable paper.
Sec. 76. Tender of payment — "legal tender."
Sec. 77 , Rights of parties in regard to over payment or under payment through mistake.
Sec. 78. Interest on the debt; usury.
Sec. 79. The debt barred by lapse of time; statute
of limitations.
Dbbtob and Cbbditob; Bankbxtptot. 15
Chapter 11. Sittlement And Compromise Between Debtor And
CREDITOR.
Sec. 80. Claims liquidated, unliquidated and doubtful.
Sec. 81. Settlement of liquidated claims.
Sec. 82. Compromise of liquidated claims — ^accord
and satisfaction.
Sec. 83. Compromise of claims whose entire validity
is doubtful.
Chapter 12. Compositions With Creditors
Sec. 84. Composition defined.
Sec. 85. Elements of composition.
Sec. 86. Consideration.
PAETIV.
THE JUDICIAL REMEDIES OF THE CREDITOR TO
SUBJECT HIS DEBTOR'S PROPERTY TO
SATISFACTION OF HIS DEBT.
Chapter 13. The Remedy Of An Ordinary Suit At Law
S6C. 87. General statement.
16 Amebigan Commbbcial Law,
A. Proceedings Prior to Judgment.
Sec. 88. The pleadings.
Sec. 89. The trial.
Sec. 9a New trial.
Sec. 91. The judgment.
B. Proceedings Subsequent to Judgment.
Sec. 92. Appeal.
Sec. 93. Execution, levy and sale.
Chapter 14. The Remedy Of A Creditor To Set Aside A Fraudulent Conveyance
A. Introductory.
Sec. 94. General statement.
Sec. 95. History of law of fraudulent conveyances.
B. Gifts as Fraudulent Conveyances.
Sec. 96. When a gift is fraudulent.
Sec. 97. Gifts void as to future creditors.
Sec. 98. Conveyances to members of family.
Sec. 99. What conveyances are not voluntary.
C. Conveyances for Value as Fraudulent.
(a) In general.
Sec. 100. When good.
(b) What constitutes value.
Sec. 10 1. The adequacy of the value.
Debtor and Cbeditob; Bankbuptoy. 17
Sec. I02. Pa)rment of money or exchange of property as value.
Sec. 103. Promise to pay money as value.
Sec. 104. Promises to render services, furnish support, etc.
Sec. 105. Pre-existing indebtedness.
(c) The participation in or notice of the fraud
by the purchaser.
Sec. 106. In general.
Sec. 107. Actual notice.
Sec. 108. Constructive notice.
(i) Inadequate consideration.
(2) Bulk sale of all of stock in trade.
(3) Knowledge of grantor's insolvency.
(4) In generd.
(d) Beiges of fraud.
Sec. 109. Introductory.
Sec. no. Retention of possession by seller as a
badge of fraud.
Sec. III. Inadequate consideration.
Sec. 112. Conveyance pending suit.
Sec. 113. Consideration fictitious in part.
Sec. 114. Sale of entire stock in trade.
D. Property which May Be Reached on Proceeding to Set Aside a Fraudulent Conveyance.
Sec. 115. General statement.
Sec. 116. Life insurance policies.
Sec. 117. Life insurance premiums.
Sec. 118. Money or property invested in exempt
property.
7 Bays — 2
E. Assignments for the Ostensible Benefit of Creditors
as Fraud uient Conveyances.
Sec. 119. Assignments for benefit of creditors
defined.
Sec. 120. Assignments of part of one's property.
Sec. 121. Assignments for benefit of part of creditors.
Sec. 122. Assignments containing reservations in
favor of debtor.
PAET V.
THE RIGHTS OF THE DEBTOR.
Chapter 15. Exemptions
A. Introductory.
Sec. 123. General statement.
B. Certain Exemptions Considered.
(a) Homestead.
Sec. 124. Homestead defined.
Sec. 125. Text of Illinois Homestead Law, as illustration.
Sec. 126. Homesteader as head of family. Sec. 127. How homestead waived.
(b) Exemptions in personal property. Sec. 128. What personal property is exempt.
Debtob and Cbeditor; Bankbxjptoy. 19
Sec. 129. Waiver and loss of personal property
exemptions.
(c) Exemptions in income.
Sec. 130. Wages or salary exempt.
PAET VI.
BANKRUPTCY.
THE HISTORY AND PURPOSE OF BANKRUPTCY
LEGISLATION.
Sec. 131. The term "bankruptcy" defined. Sec. 132. History of bankruptcy law in other countries.
Sec. 133. Legislative jurisdiction of the subject of
bankruptcy in the United States.
Sec. 134. History of bankruptcy laws in United
States.
Sec. 135. First purpose of bankruptcy act to benefit
creditors.
Sec. 136. Second purpose of bankruptcy act to
benefit the debtor.
Sec. 137. Discharged bankrupt still under moral
duty to pay his debts.
Sec. 138. Bankruptcy discharges only obligations in
the form of money debts.
Sec. 139. Brief view of proceedings in bankruptcy
under present law.
(i) Filing the petition.
(2) Appointment of a receiver.
(3) Adjudication in bankruptcy.
(4) Filing of schedules.
(5) First meeting of creditors.
(6) Examination of bankrupt. (7^ Election of trustee.
(8; Collection of assets.
(9) Proof of debt.
( 10^ Declaration of dividends.
(11) Application for discharge.
(12) Objection to discharge. . (13) Discharge.
Chapter 17. Who May Be Bankrupt
Sec. 140. Introductory.
A. In Respect to Bueiness or Calling.
(a) Of natural persons.
Sec. 142. Wage earners.
Sec. 143. Persons engaged chiefly in farming or
tilling the soil.
Sec. 144. Occupation considered as of what date.
(b) Corporations,
Sec. 146. Moneyed, business or commercial corporations.
Sec. 147. Municipal, railroad, insurance and banking corporations.
B. In Respect to Legal Status,
Sec. 148. Minors.
Sec. 149. Insane persons.
Sec. 150. Estates of deceased persons.
Sec. 151. Aliens.
C. In Respect to Amount of Indebtedn
Sec. 152. Voluntary bankruptcy.
Sec. 153. Involuntary bankruptcy.
Chapter 18. Who May Be Petitioning Creditors
Sec. 154. The general rule.
Sec. 155. Amount of claims and number of creditors.
Chapter 19. Acts Of Bankruptcy
A. Introductory.
Sec. 157. Insolvency defined; when an essential
element in bankruptcy.
Sec. 158. Within what time the act of bankruptcy
must be committed.
B. The Particular Acts of Bankruptcy Considered.
Sec. 159. A fraudulent transfer as an act of bankruptcy.
Sec i6o. Preferential payments or transfers.
Sec. i6i. Preferences secured through legal proceedings.
Sec. 162. General assignments for benefit of creditors and receiverships as acts of bankruptcy.
Sec. 163. Admission of insolvency and consent to
bankruptcy proceedings an act of bankruptcy.
Chapter 20. The Receiver In Bankruptcy
Sec. 164. Character of receiver.
Sec. 165. Powers and title of receiver.
Chapter 21. The Trustee In Bankruptcy
A. In General.
Sec. 166. Nature of trustee's office.
Sec. 167. How trustee elected.
Sec. 168. Bond of trustee.
Sec. 169. Compensation of trustee.
Sec. 170. Who may be trustee.
B. To What Property Trustee Takes Title.
Sec. 171. As to what date in respect to ownership
by bankrupt.
Sec. 172. As to nature of property.
Debtob and Cbeditob; Bankbtjftcy. 23
Sec. 173. Property transferred or money paid as a
preference.
Sec. 174. Fraudulent conveyances.
Sec. 175. Insurance policies.
Sec. 176. Property held by bankrupt claimed by
third persons.
(i) Property which bankrupt holds as bailee.
(2) Property which bankrupt holds as
trustee.
(3) Property which bankrupt has ob-
tained under a conditional sale.
(4) Property owned by bankrupt sub-
ject to chattel mortgage.
Sec. 177. Property held by third persons claimed
by bankrupt.
Sec. 178. Rights to sue.
Sec. 179. Burdensome property.
Sec. 180. To what liens trustee's title is subject.
(i) Judicial liens secured within four months.
(2) Judicial liens acquired prior to the
four months period.
(3) Liens arising out of contract at
the inception of the indebtedness.
(4) Liens arising out of contract after
the inception of the indebtedness.
(5) Liens given by the law independ-
ent of contract and of judicial proceedings.
Chapter 22
claims.
Sec. i8i. Scope of chapter.
A. What Claims Provable in Bankruptcy.
Sec. 182. In respect to whether due or not. Sec. 183. In respect to whether owing before or
after the petition is filed.
Sec. 184. Claims based upon judgments. Sec. 185. Fixed liabilities as evidenced by written
instruments.
Sec. 186. Qaims founded on open accounts and
contracts express or implied.
Sec. 187. Unliquidated claims.
Sec. 188. Alimony not §1 provable debt. Sec. 189. Fines.
Sec. 190. Rent to accrue.
B. Proof and Allowance of Claimt.
Sec. 191. How claims proved.
Sec. 192. Allowance of claims.
0. Secured and Lien Claims.
Sec. 193. The standing of a secured creditor. Sec. 194. Other lien claims.
D. Claims Having Priority.
Sec. 195. How a claim having priority differs from
a secured claim.
Sec. 196. What claims have priority.
(i) Taxes.
Debtob and Cbbditob; Bankbuptoy. 25
(2) Qaims for cost of preserving the
estate.
(3) Filing fees.
(4) The costs of administration.
(5) Wages due workmen, clerks, trav-
eling and city salesmen.
(6) Debts having priority by the laws
of the state.
E. Claims of Preferred Creditors.
Sec. 197. Preferred creditor must surrender preference.
F. Dividends on Claims.
Sec. 198. How payable.
G. Compositions with Creditors.
Sec 199. Composition may be offered by the bankrupt.
Sec. 200. Condition of the composition.
(i) Conditions of the offer. (2^ Conditions of the acceptance. (3) Conditions of the confirmation.
Sec. 201. How compositions set aside.
CHAPTER 23. THE bankrupt's PERSONAL STANDING IN THE COURT
OF BANKRUPTCY — HIS RIGHTS, HIS DUTIES, HIS
OFFENSES, HIS PROTECTION, HIS EXEMPTIONS.
Sec. 202. Scope of this chapter.
A. The Duties of the Bankrupt.
Sec. 203. Sundry affirmative duties. Sec. 204. Duty to submit to examination. Sec. 205. Questions which the bankrupt must answer.
B. The Protection and Detention of the Bankrupt.
Sec 206. Protection from arrest in civil cases. Sec. 207. Detention of the bankrupt.
C. Offenses by the Bankrupt.
Sec. 208. Offenses created by the bankruptcy act.
D. The Bankrupt's Exemptions.
Sec. 209. The bankrupt has the exemptions allowed by the law of his state.
Chapter 24. The Discharge Of The Bankrupt
Sec. 210. Preliminary statement.
Sec. 211. Within what time discharge must be applied for.
Sec. 212. The petition for a discharge. Sec. 2*13. Objections to discharge. Sec. 214. Grounds for refusing discharge.
Dbbtob and Cbeditob; Bankbuptoy. 27
Chapter 25. Debts Not Released By Discharge In Bankruptcy
Sec. 216. Debts not released.
Sec. 217. New promise to pay.
AFPEHSIX A.
FORMS.
APFEBSIZ B.
THE FEDERAL BANKRUPTCY ACT.
AFFENDIZ 0.
INTEREST TABLE.
APPENDIX D.
EXEMPTION TABLE.
APPENDIX E.
QUESTIONS AND PROBLEMS.
THE LAW OF DEBTOR AND CREDITOR
INCLUDING THE SUBJECT OF
FAST I.
INTRODUCTORY.
Chapter 1. Nature Of Relation Of Debtor And Creditor
Sec. 1. INDEBTEDNESS DEFINED. An Indebtedness exists where a person is under a present legal obligation to pay at a present or future time to another person a sum of money. The first person we call a debtor; the second, a creditor.
We are concerned in this volume with the legal rights of debtors and creditors. A person is "in debt" when he owes money, whether or not he is able to pay. One may have various sorts of legal obligations which in course of time either through performance or breach may develop into debts or obligations to pay money. Until one is under a present legal obligation to pay money, either at the
30 Amebican Commeboial Law.
present or some future time, he is not a debtor. Thus suppose that A contracts to build a house for B, for which B agrees to pay $5000. Neither in common nor technical parlance do we regard A as B's debtor or B as A's debtor. They are simply parties to an executory contract. A's obligation is to perform work; B's is to pay money if that work is done. A may break his contract and a judgment for damages be had against him. A is now B's debtor because now he owes B money. So B becomes A's debtor if A instead of breaking his contract, performs it. B then owes A, $5000.
Sec. 2. DEBTS MATURE AND IMMATURE. While a debt Is a present obligation to pay money, that obligation may be either to pay now or at a future time.
We have already indicated that one is a debtor if he owes money whether due or yet to fall due. It is enough that the money be owing. Thus when A builds B's house, B owes A $5000. But the terms of the contract may call for payment one year after the house is done. During that year B is A's debtor. Or, again, A applies to the bank for a sixty day loan. During this sixty days A is the bank's debtor. And so our National Bankruptcy Law speaks of debts owing but not due. There must be a sum of money which is owing and due or bound to become due. If that is true we have what we call a debt. We may speak, therefore, of debts which are mature and those which are immature.
Sec. 3 DEBTS LIQUIDATED AND UNLIQUIDATED. A debt is liquidated when its amount Is certain and not open to bona fide dispute. Otherwise It Is called unliquidated.
Dbbtob and Cbeditob; Bankbuptoy. 31
If one may be said to owe money, yet it is impossible for either side to state the amount thereof correctly, and that amount cannot be arrived at by mere computation or calculation, but must be arrived at by an agreement between the parties, or the finding of a court, or the verdict of a jury, it is unliquidated. If it is a certain sum owing which cannot in good faith be disputed, then the indebtedness is spoken of as being liquidated.
See. 4. INDEBTEDNESS GROWING OUT OP BREACH OF CONTRACT OR COMMISSION OF TORT. Indebtedness may grow out of the commission of a tort or the breach of contract. In such case It Is unliquidated, until It has been rendered definite by agreement or Judgment. For practical purposes we may often ignore unliquidated Indebtedness of this sort, owing to its uncertainty in amount or the uncertainty of its ever being rendered certain. But such Indebtedness becomes fixed and certain through agreement or Judgment.
Indebtedness arises usually out of a contract which then or through its operation creates an indebtedness. But indebtedness arises also out of breach of contract or the commission of a tort. For practical purposes, we must usually eliminate these classes of indebtedness, certainly those growing out of tort, until they have been reduced to judgment or some agreement has been entered into reducing them to certainty. Thus suppose that a person is injured through a defective sidewalk; he may or may not sue the city. If he does so it is often problematical whether he will recover, and it is certainly problematical what the amount of the verdict will be. But when a judgment is secured against the city, then we must place this liability among its indebtednesses just as much as an indebtedness upon one of its bonds. The same is to an extent true in regard to the unliquidated liability for breach of contract. Thus the A House contracts to deliver goods to the B House. It fails to do so whereby the B House loses a profit. Yet the B House may never sue.
Sec. 5. SECURED AND UNSECURED INDEBTED- NESS. Indebtedness Is said to be secured when some property of the debtor has been appropriated by agreement to the debt so that the debtor's right to such property becomes subject to the payment of the debt.
A secured indebtedness is one in which the debtor and creditor have by agreement either at the inception of the debt or some time thereafter, appropriated to it certain property, so that if the debtor fails, the creditor may realize his debt out of the property. In order to accomplish this result, there must be such an appropriation of the property to the debt that the debtor cannot sell it or encumber it, except subject to this debt, or affect its value as security by his bankruptcy. There must be more than a mere agreement between debtor and creditor in respect to certain property ; there must be also the added e lement of notic e to third4)jersons. This notice may be accomplishecl In two well-known ways, either by taking possession or by recording.
We will consider hereafter these classes of secured indebtedness :
(i) Pledges.^ A pledge exists where the creditor takes for security possession of personal prop-
1. See Chapter 2.
Dbbtob and Cbbditor; Bankbtjptcy. 33
erty of the debtor and holds it subject to the debt In such case we often say that the debtor has taken coUaijeraL If the debtor fails to pay, the creditor nfciysell the collateral and reimburse himself from the proceeds.
(2) Chattel Mortgages? In a chattel mortgage, property is subject to a written agreement which is usually acknowledged in a particular way and recorded. A chattel mortgage is good against third persons when recorded or when possession is taken by the chattel mortgagee.
(3) Real Estate Mortgages,^ A mortgage of real estate is often made to secure a loan. By the mortgage the creditor has the right to have the property sold. He must duly record the mortgage in order to be protected against those who might subsequently deal with the debtor.
These three forms of secured indebtedness we will notice more at length. We may here make a few general remarks concerning secured indebtedness.
In the first place, the creditor is not confined to^ his security. He may sue and have judgment. Thus one owning a note secui;ed by real estate mortgage could either foreclose ^^sue on the note.
Again, the creditor is not limited to the worth of the security. If it fails to bring the amount of the debt he still has his right to sue for the balance. In the same way if it brings more than the debt he must return the balance after reimbursing himself for his necessary expenses.
2. See Chapter 4.
3. See Chapter 5.
7 Bays — 3
34 Amebican Gommebciaij Law.
Again, the security has no existence as such apart from the debt. When the debt fails the right to the security fails.
For another thing, future attempted sales, encumbrances, etc., cannot affect the creditor provided he has taken the proper possession of the property or had the transaction duly recorded. jV Again, ^ mhvpfny cann ot affect the creditor's ^ight to his security. Perhaps the chief purpose of taking security is to guard against the possible insolvency or bankruptcy of the debtor.
An unsecured debt is one in which the creditor has not taken the precaution of requiring the protection described. The great majority of mercantile accounts are unsecured. It is not practicable in such cases to take security. In the sale of a $5000 printing press, a security may be required — ^probably a mortgage of the press itself; so, in the sale of a soda water fountain, chairs for a hall, or any equipment. But in open accounts between merchants in the regular way of trade, the buyer's general reputation is relied upon. Upon his standing in the community depends his ability to get credit. That standing may be indicated by the investigations and reports of mercantile agencies, as Dun's and Bradstreet's. It can be seen that it is of high importance to any merchant to have a good rating. If his rating is good he may purchase without trouble up to any amount which is reasonable in respect to his assets.
Sec. 6. GENERAL CREDITORS AND JUDGMENT, ATTACHMENT AND EXECUTION CREDITORS. A general creditor le one who has not made use of any process of the law whereby he may seize the property ot his debtor in satisfaction of his debt. If one secures
Debtob and Cbeditob; Bankbuptct. 35
a Judgment, brings attachment proceedings or takes out execution upon Judgment he is Icnownnis a Judgment,
After a debt arises it may of course be collected by legal process provided there are assets out of which its amount may be made. If suit is brought and is successfully prosecuted it culminates in a judgment The holder of the judgment is a judgment creditor. He now has a much higher grade of evidence than he ever had before, first, because it represents a trial, and therefore stands as an expression of the law upon the merits of his case, and secondly, because it is the basis for legal process. Appeal from the trial court to reverse the judgment may be taken provided it is taken within a certain time. Except upon such an appeal the judgment cannot be questioned, for the time for discussing the merits of the case has gone by with the trial.
^ ^^^^gr"*nt Ug^^^^ly fTivp*? n r<>rt^in lign upon t he r
ju dgment debtor's proper ty. The extent and duration of that lien depends upon local statutes. As ah example a judgment of the Circuit Court of the State of Illinois constitutes a lien upon the resil estate
of th^ ^(^\\\( ^r for one year. If execution Vi taken
out the lien is extende d.
A judgment in itself, though it may give a lien, will not otherwise result in bringing about a collection except it is voluntarily paid by the debtor. The creditor must now go about to enforce his judgment. He sues out the ""ritt^'f ^^^^"^*^^ upon his judgment. He is then known as an execution creditor. This gives him larger rights and more extensive liens. The sheriff may proceed by virtue of such execution to seize the property of the debtor.
36 Amebican Commeecial Law.
This is called a levy. This subject is discussed more
at length hereafter.* ^ ^
An attachment creditor is one who^l^efopc judgment sues out the writ of attachment whereby, pending judgment, he holds the goods of the debtor.
Sec. 7. LIENS. A Men Is a "hold" which a creditor has upon the goods of his debtor. Liens may arise by l%ontra(^%as where security Is given, or by the rules of /the common law, or t»y statute.
One is said to have a lien when he has upon all or certain of his debtor's property a charge so that he may hold that property for his debt or subject it to the pa)mient of his debt. One may classify liens into those which arise by the common law independently of contract ; those which arise by contract, and those which are statutory, and statutory liens may be subdivided into those which e xist in depeji de nt of lega l pr oceedings and those whictT arig fijgf are perfec ted b y legal proceedings. As these are discussed hefeafter we need not dwell upon them further here.
From the mere fact that one is a creditor he does not necessarily have a lien upon any of the property of his debtor. The debtor may sell his property and give a good title thereto and other later creditors may secure liens which will be prior to liens, if any, afterward secured by this creditor.
Sec. 8. ORDER OF TREATMENT.
Having now defined the chief terms to be hereafter used and having indicated in a general way the
4. Chapter 12.
nature of the indebtedness, we are in a position to enter into a more extended consideration. We will first consider the liens which a creditor has upon the property of his debtor, discussing the various sorts of liens at some length. Then we will consider the jud jeial re medies of the creditor whereby he may collect his credit. The rights of the debtor must then be considered, chiefly his exemptions. And then we will consider the discharge of the relation which will introduce us to the important subject of bankruptcy.
FABT n.
THE LIENS OF A CREDITOR UPON THE PROPERTY
OF HIS DEBTOR.
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