UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
FRANKFORT DIVISION
IN RE:
ARROW ROOFING & SHEET METAL, INC.
DEBTOR CASE NO. 92-30190
MEMORANDUM OPINION
This matter is before the Court on the trustee's Objection to Claim, filed herein on May 24, 1994. The Objection states that the claim is not secured, or it should not be given priority over properly perfected liens of record, because the claimant's lien is an unperfected execution lien. The Objection was heard on June 17, 1994, and taken under advisement.
The record in this case shows that Joel C. Morgan filed a Proof of Claim on June 5, 1992, for $9,158.40 plus interest at 12%. The claim was identified as secured, based on a judgment for unpaid services. Attached to the Proof of Claim were copies of the Execution Form and Order, and Judgment entered on January 22, 1992, in Manus, Inc. v. Arrow Roofing & Sheet Metal Company, Inc., Fayette Circuit Court No. 91-CI-3747.
The Execution Order has a list of vehicles and office equipment attached to it and indicates that the property was levied upon but was not seized. The trustee maintains that because none of the items upon which the lien is claimed were seized, the lien is unperfected. The court in In re Wilson, 38 B.R. 940 (Bkrtcy.W.D.Ky 1984), discussed the requirements under KRS Chapter 426 for proper enforcement of judgments:
KRS 426.010 authorizes execution against property to recover a personal judgment against debtor for a sum certain of money. At the time the writ of execution is delivered to the proper state official, the debtor's estate is bound thereby. KRS 426.010(1). The proper official, or sheriff, is then commanded in KRS 426.020 to recover the judgment amount from debtor's estate.
Kentucky's statutory provisions provide little guidance regarding the sheriff's duties in attempting to execute on the debtor's property. KRS 426.340 does mandate that:
(2) 'No officer shall fail to return by the return day thereof any writ of execution or attachment for not performing a judgment in chancery or equity which is placed in his hands to execute.'
[T]he procedure for enforcing a writ of execution is not further detailed statutorily....Case law .... establishes that the lien arising from delivery of execution to the sheriff is not perfected unless the sheriff makes such levy and adequately described (sic) the property subject to levy on the return writ.
At page 942. The court cited Stephens v. Miller, 429 S.W.2d 384, Ky. (1968), in support of these interpretations.
The Stephens court quoted from an earlier case, McBurnie v. Overstreet, 47 Ky (8 B Monroe) 300 as follows:
'But to constitute a valid levy upon such property, the general rule is, that the officer must do such acts as would subject him to an action of trespass but for the protection of the execution. He has a right to take property into immediate possession, or he may leave it in the possession of the debtor or any other person, but the person holding possession after the levy, would hold it as the bailee of the officer.'
The court further stated that "it has been held that a lien was not perfected unless the officer made the levy and took actual or constructive possession, or exercised some control over the property." The property must also be adequately described. Stephens v. Miller, at p. 385. It seems clear, however, that actual possession is not necessary to perfect the execution lien.
The documents which are of record in this case concerning the execution upon the debtor's property indicate that the mandates of KRS Chapter 426 have been met. The list of the debtor's property is sufficiently detailed to adequately describe it. This Court therefore concludes that the claimant's lien on the debtor's property was properly perfected even though the sheriff did not take physical possession of the property.
As concerns the vehicles on the list, the trustee has alleged that no lien notation appears on any certificate of title. Lien notation is not an issue in this matter. The lien related to the purchase of a vehicle is a voluntary, consensual lien. An execution lien is a judicial lien, and notation on the certificate of title is not required. If it were, one could virtually never execute upon a vehicle in the hands of a reluctant debtor.
In consideration of all the foregoing, it is therefore the opinion of this Court that the trustee's Objection to Claim should be overruled as to all property on the list of property levied upon by the sheriff. An order in conformity with this opinion will be entered separately.
Dated:
By the Court -
____________________________
Judge
Copies to:
Debtor
Mark T. Miller, Esq., Trustee
Joel C. Morgan, Esq.
U.S. Trustee