a good and valid lien against the property so sold by the former
The United States of America having obtained its judgment and
recorded it in the office of the Clerk of the Court, as
aforesaid, was required to take no other action to constitute it
a lien on all the real estate of the bankrupt located in the same
county as the Court. The law is well settled that a lien claimant
may rely on his security and not appear to press his claim in the
The question before the Court is whether or not the former
trustee had the duty of affirmatively ascertaining the existence
of the judgment in order to make certain that he would notify all
necessary parties. Under the facts of this case, I feel that he
did. Judgment being properly recorded under the statute was
notice to all the world of its existence. It was on file in the
same court and with the same Clerk as was the bankruptcy itself
in the same county where the land was located and where the
bankrupt, the former trustee and his attorneys all reside and
have their place of business. It would surely involve no great
hardship for former trustee under these circumstances to
ascertain whether there were any judgments on file against the
real estate that he was selling free and clear of liens, and it
is the opinion of the Court that he had a definite duty to do so.
It is the further opinion of this Court that the former trustee's
failure to comply with that duty under the circumstances of this
case amounted under the law to negligence.
General Order 17(1), 11 U.S.C.A. following section 53, makes it
a duty of a trustee to "prepare a complete inventory of all the
property of the bankrupt or debtor that comes into his
possession." A complete inventory must, of course, set forth
whether the bankrupt's title to a piece of property is clear or
merely in equity subject to encumbrance. Section 70, sub. f of
the Act, 11 U.S.C.A. § 110, sub. f, requires that the bankrupt's
property be appraised and obviously a correct appraisal of the
bankrupt's interest is impossible without knowing whether his
title is encumbered.
The United States of America had a lien which was duly
recorded. The former trustee's sale "free and clear of liens"
produced more than enough to pay all liens then outstanding but
the lien of the United States of America was ignored. The United
States of America's failure to receive its lawful share of the
sales proceeds was a direct result of the former trustee's
disregard of his duty under the general orders in bankruptcy to
search the title, ascertain the liens thereon, and give notice to
the holders thereof.
The former trustee, therefore, rendered himself personally
liable to the United States of America by distributing the fund
in disregard of the Government's lien.
Wherefore, it is hereby ordered and decreed that Ralph Van
Beuning, the former trustee of the bankrupt estate of Claude R.
Prather d/b/a Prather Electric Company, shall pay to the United
States of America the sum of $445.30. being the total of the