168 Iowa 318 | Iowa | 1915
I. The stipulation, or agreed statement of facts, made at the trial states the case as concisely as it could be stated. It is as follows:
It is admitted that on May 13th, 1896, Sarah P. Maxson and husband deeded to Blanche Bennett and Larnard Maxson the premises described in Exhibit “A,” attached to plaintiff’s petition.
That Blanche Bennett and Larnard Maxson were brother and sister.
That on March 28th, 1901, Larnard Maxson purchased from Blanche Bennett and her husband her undivided one-half interest in said land, and thereafter was the owner of the whole of said land until the same was conveyed, as hereafter appears in this admission.
That on November 2nd, 1907, Larnard Maxson and wife executed a warranty deed to C. W. Yan Orsdol'of the premises described in Exhibit “A” attached to plaintiff’s petition.
That the only consideration mentioned for said deed was that C. W. Yan Orsdol was to pay off and discharge certain mortgages and judgments that were against said premises, two of the mortgages having been foreclosed at the time, and execution issued thereon.
. That on the same date', to wit, November 2nd, 1907, that the deed from Larnard Maxson and wife was made to C. W. Yan Orsdol, C. W. Yan Orsdol gave back a contract to Ethel Maxson, the wife of Larnard Maxson, a copy of which contract is attached to plaintiff’s petition and marked Exhibit “A.”
That the said Larnard Maxson and wife Ethel remained in the possession of said premises, and continued to farm the land as before, and have remained thereon until this date, and are now in possession of said land.
That on March 26th, 1908, Ethel Maxson and Larnard Maxson filed their voluntary petition in the United States District Court of the Northern District of Iowa, to be adjudged bankrupts, and they were each of them adjudged bankrupts on the 26th day of March, 1908.
That in the petitions of bankruptcy the Peoples National Bank, the plaintiff in this case, was scheduled as a creditor holding a judgment in the District Court of Buchanan County, Iowa, being the judgment that the plaintiff is seek
That the said Ethel Maxson also scheduled as an asset belonging to her estate the contract held by her from C. "W. Van Orsdol, being the contract a copy of which is attached to plaintiff’s petition and marked Exhibit “A.”
That thereafter, at a meeting of the creditors duly called by the referee, M. W. Harmon, C. M. Roberts, who was at the time cashier of the Peoples National Bank, was elected trustee of the estates of Ethel Maxson and Larnard Maxson.
That the said C. M. Roberts as trustee at no time filed in the office of the recorder of deeds of Buchanan County a certified copy of the decree of adjudication of the bankruptcy of either Ethel or Larnard Maxson.
That the said C. M. Roberts as trustee of Ethel and Lamard Maxson set apart upon the petition of the said Larnard Maxson and Ethel Maxson, as a homestead in said premises the property described in paragraph 6 of the plaintiff’s petition.
That the said C. M. Roberts as said trustee, closed up said estate, made his final report, and was discharged as trustee in both estates.
That Ethel Maxson was discharged September 19th, 1908, and her husband on the third day of April, A. D. 1911, from all debts and claims which are made provable by the Acts of Congress against their estates, and which existed on the 26th day of March, A. D. 1908, upon which day the petition for adjudication was filed by them, excepting such debts as are by law excepted from the operation of a discharge in bankruptcy, as appears from the certified copy of the discharge in bankruptcy given by Lee McNeely, Clerk of the United States District Court, witnessed and certified on the 2nd day of May, 1913, and which is hereby introduced in evidence, and it is agreed that the discharge granted to Ethel Maxson is in all respects the same, and in the same words and figures
That since the adjudication in bankruptcy Ethel Maxson has made permanent improvements upon the premises described in plaintiff’s petition of the value of $1,292.95, all of which are on the homestead forty, except the following items:
$86.40 for woven wire fence, 700 posts, $92.50, 700 pounds of barbed wire, $22.75, all of said improvements being in the nature and kind as shown in defendant’s Exhibit “B,” which is introduced in evidence.
That on January 7th, 1913, Ethel Maxson and her husband assigned to the Northern Iowa Land Company all their right, title, and interest in and to the contract existing between said Ethel Maxson and C. "W. Van Orsdol, a copy of which contract is attached to plaintiff’s petition and marked Exhibit “A.”
That thereupon the said Northern Iowa Land Company tendered to C. W. Van Orsdol and demanded a deed from him to said premises, and that there was found due at said time and paid over to the said C. W. Van Orsdol a sum of money that was between seventy-six hundred and seventy-seven hundred dollars, and that thereupon the said C. W. Van Orsdol executed a deed to the said Northern Iowa Land Company for said premises, and the Northern Iowa Land Company is at present the owner of said premises.
That the indebtedness on which the plaintiff’s judgment referred to in paragraph 2 of the petition was based arose prior to November 2nd, 1907, namely June 8th, 1907.
That C. M. Boberts as trustee of the estate of Ethel Maxson, bankrupt, made no transfer of the premises described in Exhibit “A,” except that he set apart to the bankrupt as her homestead the premises set forth in paragraph 6 of the petition.
That the plaintiff’s judgment was obtained in the usual manner of a suit at law, and the notice regularly served.
The one witness in the case, H. T. Lynch, testified that
The contract between Van Orsdol and Mrs. Maxson is, in substance, that Van Orsdol agrees to sell the land to Mrs. Maxson on the performance of the agreements by her to be performed, for $5,615.44, payable in different amounts and at different times from November 2, 1908, to November 2, 1912, with interest, which was the amount due on a mortgage on the land; when all but $3,500.00 had been paid, and if the other payments had been made as agreed on November 2, 1912, Van Orsdol agreed to convey to her and receive back a mortgage for $3,500.00. She was to have possession of the premises from and after the execution of the contract. If she sold the premises within five years, Van Orsdol agreed to accept from her all sums of money due him by virtue of the contract. She was to pay the taxes. Time was made the essence of the contract. If she made default in any of the payments or agreements, the contract was to be void, and Mrs. Maxson was to forfeit all her rights, but if all sums of money were paid according to the agreement, Van Orsdol was to execute a deed. Plaintiff obtained judgment against the Maxsons March 6, 1908, on an indebtedness contracted June 8, 1907.
Appellant cites Code Sec. 3801 and Blain v. Stewart, 2 Iowa 378, which, as they say, subjects both legal and equitable estates in real property to the lien of judgments, and Code Sec. 2976, which subjects the homestead to debts antedating the purchase of the homestead. They also cite Secs. 70 and 6 of the Bankruptcy Act, providing, as they claim, for setting aside the homestead of the bankrupt and leaving the liability of the homestead to the debts of the bankrupt, to be decided by the state laws and by the state courts.
Defendants contend that the deed from Maxson and wife of November 2, 1907, conveying the title from Maxson to Van Orsdol, and the contract between Mrs. Maxson and Van Orsdol was one transaction, and that no new homestead was
See. 6 of the Laws of Bankruptcy provides that the laws of the state shall govern in questions of exemptions.
Sec. 2972 of the Code of Iowa reads as follows: “The homestead of every family, whether owned by the husband or wife, is exempt from judicial sale, where there is no special declaration of statute to the contrary.”
See. 2974 of the Code of Iowa reads as follows: “No conveyance or incumbrance of or contract to convey or incumber the homestead, if the owner is married, is valid, unless the husband and wife join in the execution of the same joint instrument, whether the homestead is exclusively the subject of the contract or not, but such contract may be en
Sec. 70 of the Laws of Bankruptcy provides that the trustee shall be vested by operation of law with the title of the bankrupt, “except in so far. as it is property which is exempt.”
The exemption laws are to be liberally construed to accomplish the purpose of exemption.
The question then comes back to, what are the rights of the Maxsons under the Iowa law as to the homestead ? In the ease of Green v. Farrar, 53 Iowa 426, it was held that the conveyance of the homestead by a husband to his wife does not render it liable for the debts of the wife contracted prior to such conveyance, the exemption being for the benefit of the family. The homestead character, which it properly possessed while owned by the husband, is not divested by such transfer. And the supreme court in that case used this argument, as found on page 430: ‘ ‘ The parties might have sold this homestead, and with the proceeds acquired a new one in the name of the wife, which to the extent of the value of the old homestead would have been exempt in all cases in which the old homestead would have been exempt.”
In White v. Kinley, 92 Iowa 598, the case was this: John D. White owned a farm in Delaware county, which had constituted’his homestead. This farm was sold and soon thereafter a house and lot in Marion, Iowa, was purchased with the proceeds of the Delaware county farm. Judgments against the wife antedating the time she acquired the homestead in Marion were sought to be satisfied by levying upon that property. It was held that the Marion property taken in the name of the wife was exempt from judgments against her existing prior to her becoming possessed of the title to said property.
And Foster v. Rice, 126 Iowa 190, was a case where one Bice, the owner of a homestead, with his wife, mortgaged the same. The mortgage was foreclosed, and it was sold in
In McClure v. Braniff, 75 Iowa 38, it was held that a deed of a homestead, designed only to secure a loan from the grantee, the grantors continuing in possession, does not divest the grantors of their homestead rights.
¥e think the transaction of November 2, 1907, between the Maxsons and Van Orsdol, was in the nature of, or in effect, a mortgage on the premises to Van Orsdol to secure him for advance of the money to pay off the incumbrances upon the land. The Maxsons remained in possession of the land all the time, and the contract provided they might do so. Further, the transaction was not different than it would have been if Maxson had deeded the premises on November 2, 1907, directly to his wife. The effect of the transaction was to
There is a conflict between Secs. 67-e and 67-f of the Bankruptcy Act, and a conflict in the decisions as to their construction, and whether Sec. 67-f applies to judgment liens. Some of the eases are cited by appellant. The matter reached the Supreme Court of the United States, and in C. B. & Q. R. R. Co. v. Hall, 229 U. S. 511, 512, 57 L. Ed. 1306, the Supreme Court, referring to the decision In re Forbes, 186 Fed. 79, says: “That that case holds that See. 67-f annuls all liens, both as against the property which the trustee takes,
We ought to follow the holding of the Supreme Court on this question. Under that holding, the lien of the judgment of the plaintiff, as it was obtained only twenty days before the filing of the petition in bankruptcy, was annulled. By the deed and contract, there was nothing done in fraud of any right possessed by plaintiff at the date the deed to Yan Orsdol was made.
As bearing upon the question of the contradiction and conflict in the different provisions of the Bankruptcy Act and the conflict in the decisions, the following citations may be given, which we do without further discussion: 5 Cyc. 365-369, 401-403; 3 E. C. L. 290-294.
Section 67-f of the Bankruptcy Act, in so far as it applies to the instant case, provides: “That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien, shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien, shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. ’ ’
It has been held that it is not only a right, but a duty of the trustee to refuse to take possession of property that is scheduled as an asset, unless it will be beneficial to the general creditors. In re Dillard, 2 Hughes 190, 7 Federal Cases 703; Glenny v. Langdon, 98 U. S. 20, 25 L. Ed. 43.
And that if the trustee renounces and abandons assets, the title to the same reverts to the bankrupt. The creditors are estopped from thereafter insisting that the property which was abandoned shall be considered a part of the estate. Sparhawk v. Yerkes, 142 U. S. 1; Sessions v. Romadka, 145 U. S. 29, 36 L. Ed. 609; Taylor v. Irwin, 20 Fed. 615.
As before stated, counsel for plaintiff contend that the Bankruptcy Act only avoids the lien in favor of the trustee, and cites cases to support the contention. But, as shown, the Supreme Court of the United States, in the Hall case, supra, holds that the effect of the statute is to annul the lien as to non-exempt, as well as to exempt property. When the lien was annulled, it east the title to the property upon the trustee, and the trustee represents the creditors. In re Kreuger, 27 A. B. R. 440.
Afterwards the creditors must work out their claim through the trustee. If the trustee refuses to take possession of any property because he thinks it is a burden, the court, upon application of a creditor, could investigate the .question. The trustee may act wisely or unwisely in so doing, but once he acts, the creditors are bound by his action, unless they ask a review by the court. Glenny v. Langdon, supra; In re Dillard, supra.
The trustee represented the plaintiff and other creditors
We are of opinion that the decree of the district court Was right, and it is, therefore, — Affirmed.