where Assignment of Rents and Agreement Not to Seh or Encumber Real Property contained no hint of any power of foreclosure and none of the covenants purported to create a hen, document was held not to create an equitable hen upon the property
How later courts described this case
- where Assignment of Rents and Agreement Not to Seh or Encumber Real Property contained no hint of any power of foreclosure and none of the covenants purported to create a hen, document was held not to create an equitable hen upon the property
Written by the judges who cited it.
The opinion
ON PETITION FOR REHEARING
The Bank suggests that because Mrs. Browne’s equity in her property was substantially less than its $25,-000 face value or the $20,000 maximum exemption, the property is totally exempt and Lockwood bars the bankruptcy court from jurisdiction. While factually correct, we cannot accept the Bank’s legal conclusion. First, in the seventy years since it was decided, Lockwood has been severely criticized as “the result of overly technical construction of section 6 and . . . not in accord with the general philosophy of the Bankruptcy Act.” 1A Collier’s |[ 6.05, p. 815. Second, the fundamental question involved here is not the effect of the homestead exemption but rather the effect of Mrs. Browne’s discharge in bankruptcy. Compare Sims v. Jamison, 67 F.2d 409 (9th Cir. 1933). Local Loan and not Lockwood controls this case. Whether or not Mrs. Browne’s property is totally exempt as a homestead, the bankruptcy court has ancillary jurisdiction to prevent the Bank from circumventing its decree.
The petition for rehearing is denied.