In re Durham

104 F. 231 | E.D. Ark. | 1900

TIÍTEBEK, District Judge

(after stating the facts). While the exemption laws of the state of Arkansas are very liberal to debtors, they specially provide that there shall be no exemption of any property from seizure on attachment or sale under execution or other process issued from any court for the recovery of money due for the purchase of the property as long as it is in the possession of the vendee. If this property had been seized under execution, attachment, or other process of any court, the debtor could not have included it in his schedule as against a judgment for the purchase money, but the same would be subject to seizure and sale. By section 4728, Sand. & H. Dig., it is provided that the order for the seizure of this property may be issued on the petition of the plaintiff at or after the commencement of the action; but, under section 4729, the defendant is permitted to retain the property by executing a bond therefor, as in actions of replevin, which means within 48 hours after the sheriff serves the writ on him. Bankr. Act, § 6a, merely adopts the exemption laws of the state in which the bankrupt resides at the time of the filing of the petition, from which it follows, as of course, that the bankrupt is entitled to no exemptions except such as he could claim under the laws of the state. It is not contended by counsel for tbe bankrupt that, if no bankruptcy proceedings had been instituted, the property would not have been subject to seizure and sale in pursuance of the judgment of the state court, nor that it could be claimed as exempt by the bankrupt; but it is urged that, as the bankruptcy proceedings will result in discharging the bankrupt from all of his provable debts, including that of petitioner, the property cannot be subjected to the judgment of the state court. I cannot agree to this proposition, afe the right of a bankrupt to exemptions under the bankrupt law depends entirely upon the laws of the state; and while it is true that this right of the vendor to subject the property to the payment of his debt due for the purchase money, regardless of the exemption laws, is not, strictly speaking, a lien on the property, still it is a right given to him by the laws of the state, which the bankrupt law does not attempt to deprive him of. The rule might be different if the title to this property would vest in the trustee for the benefit of the creditors, for it would then cease to be in the possession of the bankrupt (Bridgeford v. Adams, 45 Ark. 136); but. where the property is claimed as exempt, no title passes to the trustee, and he is only entitled to the possession thereof for the purpose of ascertaining, by proper appraisement, whether the value of the property does uot exceed that allowed as exempt under the laws of the state. As soon as that is ascertained, it is the duty of the trustee to deliver it to the bankrupt. Thus, in those states where the rule prevails that individual members of a partnership can each claim exemptions out of tbe partnership estate, the bankruptcy courts are bound to follow this rule. In re Friedrich, 40 C. C. A. 378, 100 Fed. 284; In re Beauchamp (D. C.) 101 Fed. 106; In re Wilson (D. C.) 101 Fed. 571. And, where the state law declares that a debtor shall forfeit his right to the exemption allowed if he is guilty of willful fraud in concealing from his creditors any part of the property of which he is possessed at the time he seeks the benefit of the exemption, a bankrupt who does not make a full and fair disclosure of all the property owned by him at the time of the filing of his petition in bankruptcy will be denied exemptions by the bankrupt court. In re Waxelbaum (D. C.) 101 Fed. 228. Nor will bankruptcy protect a debtor from arrest in a civil proceeding for the collection of debts fraudulently contracted, where the state laws provide for such a proceeding. In re Lewensohn (D. C.) 99 Fed. 73.

It might just as well be contended that a bankrupt could claim his personalty exempt against a judgment for a tort, although the constitution of the state provides that there shall be no exemption of personal property as against a judgment for a tort. Congress, in enacting the bankrupt lav/, did not see proper to provide for exemptions by special provisions, but accepted the laws of each state as suitable provisions for the protection of unfortunate debtors; and as the laws of this state expressly provide that a debtor shall not have the enjoyment of property not paid for as against his vendor, and the bankrupt act merely adopts the exemption laws of the state, it necessarily follows that the petitioner is entitled to subject the property which, by the judgment of the state court, has been declared subject to execution ■under his judgment, to the payment thereof, and the trustee will be directed to turn the property over to the bankrupt, and leave is granted to the" petitioner to have the same seized by the sheriff of Garland county under the process of the state court.