Cottrell v. Pierson. MCCRARY, Circuit Judge.- By the law of Nebraska a judgment rendered by the district court of that state is a lien upon the real estate of the defendant in such judgment, situated within the county where rendered. Assuming that a judg ment of the United States district court is a lien in like manner and to the same extent as if rendered by a state court of general jurisdiction, it follows that the judgment of the Springfield Manufacturing Company, being earliest in date, is the first lien unless it has been divested or displaced by the proceedings in bankruptcy against Cameron, the judgment debtor, or is held subordinate to the latter judgment upon the ground that the latter is a judgment in favor of the United States and entitled to priority on that account. It will be observed that the judgment of the Springfield Manufacturing Company was obtained over two years before the commencement of the proceedings in bankruptcy, and that there is no charge of fraud or collusion in obtaining the rendition thereof. Did the failure of the plaintiff in said judg ment to prove its claim in the bankruptcy court deprive it of its lien? I think not. There is high authority for the proposition that the lien of a creditor on the real estate of a bankrupt is not lost by his failure to prove his debt. Assignee of Wicks & Co. v. Perkins, 1 Woods, 383; 13 B. R. 280. The creditor in such a case may rely upon his security and omit to prove his claim in bankruptcy, and by so doing he will lose only his claim against the general estate of the bankrupt. The law did not require the lien holder to prove his debt in order to save his lien. Having a judgment in the state court by which his lien was established, he had no occasion to apply to the bankruptcy court for aid in its enforcement. Whether the judgment creditor in this case could have caused execution to issue and had his judgment enforced by sale pending the bankruptcy proceedings may admit of some question, since the estate was in a certain sense in custodia legis. In the case above cited, Judge Woods expressed the opinion that the lien could have been enforced either before or after the end of the proceedings in bankruptcy. However this may be, I Cottrell v. Pierson. am clearly of the opinion that after the proceedings in bankruptcy had terminated, there was nothing in the way of the enforcement of the lien of the judgment in the state court by execution and sale. Freeman on Judgments, 28, 29; Second National Bank v. National Bank, 14 Am. Law Reg. 281. The question remains whether the judgment in favor of the United States, under which complainant purchased, was a lien prior and paramount to that created by the earlier judgment in favor of the Springfield Manufacturing Company. The affirmative of this proposition must be maintained, if at all, under the provisions of secs. 346 and 5101 of the Revised Statutes of the United States. The first of these provides that "whenever any person indebted to the United States is insolvent * * * the debts due the United States shall be first satisfied," and this priority is declared to extend to cases in which an act of bankruptcy is committed. Section 5101 provides that in the order for a dividend in a bankruptcy proceeding after paying certain costs and expenses, "debts due the United States shall have priority." It may now be regarded as settled that the priority of the United States, given by these statutes, "does not overrule any liens upon the debtor's property which existed before the event occurred which gives the statutory priority, that is, before the insolvency." United States v. Lewis, 13 N. B. R. 38; Conrad v. Ins. Co. 1 Pet. 438; Brent v. The Bank, 10 Pet. 596. In so far as the early case of Thelluson v. Smith, 2 Wheat. 396, may have asserted a different doctrine, it is overruled by the later decisions of the supreme court of the United States above cited. As the lien of the judgments in favor of the Springfield Manufacturing Company existed more than two years before the insolvency of Cameron, it follows by the rule above laid down, that it is not displaced by the subsequent judgment in favor of the United States. The exceptions to the answer are overruled, and its averments being admitted, there must be decree for respondents. Bowman v. Wilson, Assignee. 1. INTEREST BOWMAN v. WILSON, Assignee. (Western District of Missouri.) WHEN ALLOWED-FUND IN COURT.-Interest is allowed upon the ground that the debtor is in default and has the use of claimant's money. It is not, as a rule, allowed where payment has been prevented or suspended by the order of a court of competent jurisdiction to await settlement of controversy among several claimants. Bill of review. The complainant is a judgment creditor of William James, bankrupt, of whose estate respondent is the assignee. Prior to the bankruptcy complainant had caused execution to issue upon his judgment, and the same had been levied upon certain real estate.of the bankrupt. By an order of the district court complainant, with other judgment creditors, was enjoined from proceeding any further under said judgment, and required to bring his judgment for settlement and payment before said district court. The said judgment was a lien upon the real estate of the bankrupt, and as such a preferred claim, and was duly allowed on the eighteenth of June, 1878. Afterwards, by an order of said district court, made on the fourteenth of February, 1879, the assignee was directed to sell the real estate of said bankrupt, freed and discharged from all lien and incumbrance. Under said order the real estate was sold July 7, 1879, for $20,000, out of which sum complainant's debt was payable. September 11, 1879, there was paid on said claim $418. A controversy arose as to the fund out of which the taxes upon the real estate should be paid. This controversy having been decided by the district court, the assignee filed his bill of review in this court, and upon final hearing the order of the district court was affirmed on February 10, 1881. These proceedings delayed the distribution of the fund until March 26, 1881, when the district court made an order of distribution allowing complainant interest on his claim only to July 7, 1879, the date of the sale of the real estate, and the payment Kellogg v. Miller. of the fund into court. Complainant claims that he is entitled to interest to the final payment, and files this bill to review and correct the alleged error of the district court in this respect. L. F. Parker, for complainant. B. B. Kingsbury, for respondent. -- MCCRARY, Circuit Judge.- Interest is allowed upon the ground that the debtor is in default and has the use of claimant's money. It is never allowed where by the order of a court of competent jurisdiction, or by the interposition of the law, or the act of the creditor, payment of the debt has been prevented. During the continuance of such prevention the interest does not run. If a fund is in the custody of the law in the possession of a court- and cannot be paid out without the order of such court, it does not ordinarily bear interest. I know of no principle of law or equity upon which the interest claimed can be allowed at the expense of the general unsecured creditors, who are certainly in no wise responsible for the delay in making the final order of distribution. 1 Am. Lead. Cases. (3d ed.) 516 et seq. Demurrer to bill sustained. Decree for respondent. 1 1 KELLOGG V. MILLER. (District of Nebraska. January, 1881.) 1. CONSTRUCTION OF CONTRACT - USURY.-The law will not so construe a contract as to make it void if it will reasonably bear a different construction making it valid; and the defense of usuary, especially where the penalty is the forfeiture of the whole debt, must be established by a clear preponderance of testimony. 2. SAME-SAME-CONTRACT MADE WITH REFERENCE TO LAW OF A PARTICULAR STATE.- A contract fairly and honestly made between a citizen of Nebraska and a citizen of New York, whereby the latter agrees Kellogg v. Miller. to loan to the former a sum of money at a rate of interest lawful in Nebraska, to be secured by mortgage on lands in Nebraska, is a valid contract, even if actually executed in New York, where the rate of interest named is unlawful. 3. SAME-SAME-PLACE OF PERFORMANCE.-The general rule is that the law of the place where the contract is made is to govern in expounding and enforcing it; but an exception to this rule arises where a citizen of one state loans money to a citizen of another state, and the parties in good faith contract for the rate of interest allowed by the law of the latter; and especially where the money is to be used in the latter and is secured by a mortgage upon lands located there. In equity. On exceptions to master's report. Suit to foreclose mortgage. Defense, usury. The material facts, as well as the master's conclusions of law, appear in his report as follows: "First. That in the year 1871, and long prior thereto, the complainant, Smith Kellogg, resided in the state of New York, and the defendants, Jason G. Miller and his wife, Mary P. Miller, resided in Saunders county, in the state of Nebraska, and were each bona fide residents of the places named. "Second. That in the month of January, A. D. 1871, the defendant, Jason G. Miller, went in person to the state of New York for the purpose of selling a portion of his lands situate in Nebraska, or obtaining thereon a loan of money. "Third. That on or about January 30, 1871, the defendant, Jason G. Miller, negotiated with complainant at Le Roy, in the state of New York, for a loan of $15,000 at ten per cent. interest per annum, to be secured by a mortgage upon defendants' lands in the state of Nebraska, Miller agreeing that he would return to Nebraska and there make and execute the bond and mortgage, transmit the same to complainant for inspection, and then record said mortgage in the clerk's office of the proper county. "Fourth. That Miller represented to Kellogg that ten per cent. was the legal rate of interest in Nebraska; and I find as a matter of fact that said contract was honestly made and en |