94 F. 801 | 5th Cir. | 1899
after stating the case as above, delivered the opinion of the court.
It is to be observed that the petition in this case was presented before the general orders and forms in bankruptcy were prescribed by the supreme court. The general orders were adopted and established November 28, 1898, to take effect January 2, 1899. The forms in bankruptcy were not promulgated until December —, 1898. The attorneys who prepared the petition and schedules and their verification in this case had to use such forms as seemed to them to fit the provisions of the statute and the conditions of the estate. It is made the duty of referees to examine all schedules of property and lists of creditors filed by bankrupts, and to cause such as are incomplete or defective to be amended. Bankruptcy Act, § 39 (2). In this case the honorable referee has not on his own motion caused to be amended the schedules attached to the appellee’s petition. The appellants, who were the only creditors that have appeared before the referee to
“1 Living knowingly and fraudulently (1) concealed while a bankrupt, or after bis discharge from Ms trustee, any of the property belonging to his estate in bankruptcy: or (2) made a false oath or account íd, or in relation to, any proceeding in bankruptcy; (3) presented under oath any false claim for proof against the estate of the bankrupt or used any such claim in composition personally or by agent, proxy, or attorney, or as agent, proxy, or attorney.” Section 2i>b.
The appellee in this case has not presented under oath or otherwise any claim, true or false, for proof against his estate. Hence this third subdivision under which a bankrupt may commit an offense, because he is allowed to bring certain claims against the bankrupt estate, cannot be applied here.
The first, third, and fourth errors assigned are too general to require or permit any special consideration of them. We therefore confine our attention to the second, which is:
*808 “That the court erred in not sustaining the objections filed to the discharge of said Willis Y. Bell, as shown by the record.”
The character of these objections is such that it is more convenient to take them up without regard to the order in which they stand as they were presented. The last (which was filed subsequently to the others, and on what date it does not appear) we think is fully disposed of by a sentence or two in the testimony given before the referee by the appellants Sellers and Jones. Sellars says:
“Mr. Bell never offered me at any time anything not to oppose his discharge.” Jones says: “I have had no conversation with W. Y. Bell since he went into bankruptcy. He never made me any offer or offered any inducement not to oppose his discharge in bankruptcy.”
The eleventh objection is not only not proved, but is clearly disproved by all the testimony in the case. It is to the effect that Bell had paid D. M. Snow & Co. in full, or compromised that claim and settled it in full before he filed his petition in this case. This is not only not sustained by the evidence, but is clearly disproved. The remaining part of this objection, as stated, is embraced in objection 10, which is to the effect that the firm of D. M. Snow & Co., which firm appears in Schedule A as a creditor, was not a creditor at the time the petition to be declared a bankrupt was filed. The proof on this subject abundantly shows, and the fact is not disputed by the appellants, that at the time of the failure of the appellee in business the firm of D. M. Snow & Co. was a creditor of his, and sued its debt against him to judgment, and it now appears (like the 20 others shown in the schedule) in the record books of the court rendering the. judgment. The proof indicates that the part of Schedule A which gives the list of the judgment creditors was prepared from data obtained in the court house. It appears that the books and records of the courts were, and for some years had been, those from .which this bankrupts true condition might best be ascertained. It does appear from the testimony that, at some time subsequent to the rendition of this judgment, another one of the creditors of the bankrupt (his chief creditor) had purchased (not on the bankrupt’s account) this judgment of D. M. Snow & Co. It further appears that the bankrupt had such information with regard to this purchase as gave him every reason to believe — in popular language, to know — that the purchase had been made. He had legal personal knowledge of the fact that that firm had extended-credit to him, that he had not paid them, and that they had recovered judgment against him. His Schedule A showed that the residence of this firm was Montgomery,. Ala.,— the place where the appellant firm resides and does business. The referee rightly refrained from causing to be made any amendment of the schedules to meet the suggestions of the proof on which this objection is based, and the judge of the court of bankruptcy did not err in refusing to sustain it.
The ninth objection had better be considered in connection with the first seven.
The eighth has been sufficiently noticed in what was said earlier in this opinion, showing that the second statutory ground for refusing a discharge in bankruptcy has no application to this'case.
We appreciate the gracious forbearance which constrained the appellants to resist the temptation to accompany the first of the objections just above noted with the equally patent, and not less valid, one, “(hat the list of creditors filed by said Bell is willfully and knowingly incorrect and false in this: that it does not include the name of Freeman Kush ion, of Montgomery, Alabama, from whom the said Bell borrowed $50, just before presenting his petition, to be adjudged a voluntary bankrupt.” It taxes judicial gravity to consider seriously this objection. The bankrupt law provides that the court shall order the trustee to pay all taxes, national, state, and municipal. These charges occupy a position above classification. It is provided:
“The (lews 1o have priority except as herein, provided, and to be paid in full out of bankrupt’s estate, and the order of payment shall be (1) actual and necessary cost of preserving the estate subsequent to the filing of the petition; (2) the filing fees paid by creditors in Involuntary cases; (3) the cost of administration, including ~ * * one reasonable attorney’s fee, for the professional services actually rendered * * * to the bankrupt in voluntary cases, as the court may allow.”
It is to be observed that in ordinary caaes, whether in involuntary or in voluntary bankruptcy, the actual and necessary cost of preserving the estate subsequent to the filing of the petition and up to the qualification of the trustee will usually, and always should where he is exercising good faith, devolve upon the bankrupt himself, not at his charge and expense, but as a charge of the first rank against the estate which he is required or has volunteered to surrender. The charge of the second rank is the filing fees paid by creditors in involuntary cases. The reason for restricting this to fees paid by creditors in involuntary eases is obvious, because where such fees are paid in voluntary eases they may be paid by the bankrupt himself out of the estate which he has to surrender, and therefore no account need be taken of them. The charge next in rank and to he paid in full out of the bankrupt estate is the cost of administration, including a reasonable attoi ney’s fee, such as the court may allow for services actually rendered to the bankrupt in voluntary cases. This clearly shows that, where there is no surrenderable estate in the bankrupt’s hands out of which he could pay either in money or in property a reasonable attorney’s fee, and therefore has to obtain credit therefor either from the attorney or from some other person, the reasonable value of the services actually rendered becomes a charge in favor of the bankrupt or of tbe attorney on all of tbe bankrupt estate equally with the other costs of administration. This view is in harmony with, and strongly supported by, the provision that a debtor may, in
“The words ‘personal property’ include money, goods, chattels, things in. action and evidences of debt, deeds, and conveyances.” Chapter 1, § 2.
It has been repeatedly and uniformly decided by the supreme court of Alabama that the exemption laws are founded in a spirit of humanity and benevolence, and are to be liberally construed, and that such a rule of construction requires them to attach to the phrase “personal property,” as used in those laws, a signification so comprehensive as to embrace everything which is the subject of ownership, not being realty or an interest in realty. Enzor v. Hurt, 76 Ala, 595. In a general sense and within comprehensive signification attached to the phrase “personal property,” as used in the Alabama exemption laws by the supreme court in the case just cited, that phrase includes
“Any person l>y an inslrument in writing may waive his right to an exemption in any property exempt from levy and sale under execution or other X>i'oeess.” Section 2] 04.
As to personal property, the waiver may be made by a separate .instrument in writing, subscribed by the party making the same, or it may be included in any bond, bilí of exchange, promissory note, or other written contract executed by him. Section 2105. That “a, waiver of exemptions as to personal property” written in a promissory note will subject wearing apparel to levy and sale under execution is by no means clear. As was said in Enzor v. Hurt, supra, the exemption laws are founded in a spirit of humanity and benevolence, and should be, and uniformly have been, liberally construed. We have not found it said or suggested in the opinions of the supreme court of Alabama that the provision for waiving exemption as to personal property made by section 2105 should receive like liberal construction. It would seem to be the better Anew that, as the Avaiver operates as an exception to the general rule, as such exception it should be construed strictly, — not so strictly as to destroy or diminish the force of the exception, hut so as not to extend “a Avaiver of exemption as to personal property” to Avearing apparel. The question whether, a watch of reasonable value, habitually worn by a debtor, is a part of his wearing apparel, within the meaning of those terms as used in exemption statutes, has been considered by the courts of several of the states, and answered affirmatively or negatively by them, according to the general scope of their respective exemption laws and the particular circumstances of the case in which the claim to the exemption was made. 29 Am. & Eng. Enc. Law, pp. 39, 40, notes. The phrase “Avearing apparel,” as used in exemption laws, has its popular sense, and includes all the articles of dress generally worn by per
It is further objected that the appellee did not include in the schedule of his property a debt of. about $600 which his wife owed him. For “a long time” the appellee was engaged in the mercantile and the planting business, carried on in connection with each other,' in the country, in the manner that such associated business is conducted in the cotton-growing states. He had sons who sometimes wore the gold watch which he usually wore. In 1890 he married the wife referred to in this objection. At the time of their marriage she owned several lots in the town of Earner, in Montgomery county, and a small farm near that town, from which property she has been getting an annual rent of about $200. She seems to have had also $400 or $500 in money. The year after their marriage she bought a farm from Webster for the price of $1,400, of which she paid $-500 in cash, and the balance in the fall of that year. The rent of this farm for that year was not included in her purchase. For the subsequent years this place brought her an annual income of from $250 to $350. Some timé in the summer or early fall she got a small amount of money from her husband to pay on this purchase, and, at the time of making the last payment, in the fall of 1891, he let her have about $500. The number and character of his creditors and the amount in face value of credits extended to him show that he had enjoyed good standing as a business man for some time previous to his failure, in the fall of 1894. It is matter of common knowledge that in 1891 cotton, the chief staple farm product grown in the state of Alabama, brought in the market a good price. It was at this time that the appellee let his wife have the money. From all that the record shows we must conclude that, if at that time he had given her this money outright, the appellants could not then have complained or now complain. After this transaction with his wife the appellee gave one of these appellants a note containing “a waiver of exemptions as to personal property.” This waiver created no lien on any property. Craft v. Stoutz, 95 Ala. 245, 10 South. 647. The note was not put in judgment until March 8, 1898. On October 5th (if never before) the appellants obtained full knowledge of these transactions had between the appellee and his wife in 1891. The appellee took
• “A court of bankruptcy bas no jurisdiction over exempt property other than to hear and determine the claims of the bankrupt, if disputed. ■ It may restrain its own officials from interfering with it; but that is a jurisdiction over them, not over the property. It will not give any aid to the bankrupt in enforcing his rights as to the exempt property beyond preventing the trustee from interfering with it. To the state courts is left the decision of all questions that may arise between parties as to such property. The bankruptcy court cannot properly entertain a proceeding to enforce a lien upon such property.” Coll. Bankr. pp. 74, 75.
There is lurking through all the record made in this case by the appellants from their first appearance before the referee an implied suggestion that much of the property now nominally owned and held by the appellee’s wife and by the appellee’s brother, N. J. Bell, is in fact the property of the appellee. It is now more than four years since the appellee’s failure in business and the transfer of his assets real and personal to his brother, N. J. Bell. The bankrupt law does not open any door for inquiry into such transactions as occurred before the passage of the act, or into such transactions occurring after the passage of the act, but more than four months before the beginning of proceedings in bankruptcy. Moreover, it appears that these parties and the appellants reside in the same county; that the wife and the brother have real estate more than sufficient to satisfy the claims of the appellants; and, if the wife and the brother have been and continue to be parties to the fraudulent concealment of the ap-pellee’s property, there exists in the state of Alabama a court of chancery clothed with power to search the conscience of each of these parties and strip the veil from their simulated dealings, and make discovery of the property of the appellee, if he has any in the hands of these near kindred. Code Ala, §§ 819, 822.
The only objection remaining to be considered is that the appellee willfully and knowingly swore falsely when he stated in the affidavit which accompanied his petition that he was without, and could not obtain, the money with which to pay the fees of the clerk, referee, and trustee. Another statute of the United States provides that any citizen entitled to commence any suit or action in any court of the United States may commence and prosecute to conclusion the same without being required to prepay fees or give security therefor before or after bringing the suit or action, upon filing in the court a statement under oath, in writing, that, because of his poverty, he is unable to pay the costs of the suit or action which he is about to commence, or to give security for the same, and that he believes he is entitled to the redress he seeks by such suit or action; setting forth briefly the nature of his alleged cause of action. 27 Stat. 252. The bankruptcy act provides that any person who owes debts, except a
“In any case in wliicli the fees of the clerk, referee, and trustee a.re not required by the act to be paid by a debtor before filing his petition to be adjudged a bankrupt, the judge, at any time during the pendency of tlie proceedings in bankruptcy, may order those fees to be paid out of the estate; or may, after notice to the bankrupt, and satisfactory proof that lie then has, or can obtain, the money with which to pay those fees, order him to pay them within a time specified, and. if he fails to do so, may order his pefifion to be dismissed.” Gen. Order 35, par. 4 (32 C. C. A. xxxiv., 89 Fed. xiv.).
“Before incurring any expense in publishing or mailing notices, or in traveling, or in procuring the attendance of witnesses, or in perpetuating testimony, the clerk, marshal, or referee may require, from the bankrupt or other person in whose behalf the duty is to be performed, indemnity for such expense. Money advanced for this purpose by the bankrupt or other person shall be repaid him out of the estate as part of the costs of administering the same.” Gen. Order 10 (32 C. C. A. xiii., 89 Fed. vi.).
The evident intent and spirit of the general law which secures all citizens entitled to bring any suit or action in the courts of the United States, the right to commence and prosecute the same, though they have not the means to pay or secure the costs, and the careful mention, four times repeated in the bankruptcy act, that the prepayment -of fees is not required from a debtor who is without, and cannot obtain, the money with which to pay the same before filing his petition to be adjudicated a voluntary bankrupt, show that this class of litigants is not viewed with disfavor by the laws of this country. The last paragraph but one of the present law shows that petitions for voluntary bankruptcy are not disfavored. On the contrary, they might be filed after the expiration of one month from the passage of the act, while no petition for involuntary bankruptcy was permitted to be filed within four months of the passage thereof. In cases of voluntary bankruptcy, a schedule showing all of the property of the petitioner must accompany the petition. Upon the filing thereof, the right of the petitioner to sell or charge any part of the property embraced therein, and not excepted from that the title to which will be vested as of the date of the adjudication of bankruptcy in the trustee when appointed and qualified, immediately ceases. Although the courts may appoint receivers, or the marshal upon application of parties in interest, when absolutely necessary for the preservation of estates to take charge of the property of bankrupts after the filing of the petition and until it is dismissed or
The record in this case shows that the clerk of the court of bankruptcy where this proceeding is pending was examined before the referee, and was asked by the counsel for the appellee:
“Q. Was there what is known as the ‘inability oath’ made in this ease? A. There was. Q; Do you know, as a matter of information connected with your office, that the judge of this district, as well as judges in other districts, have stated judicially that they would refuse to allow a discharge in bankruptcy to a man who has taken that oath? A. I do not understand clearly about this proposition. I have not looked into the question very closely. Once I heard some discussion about the question in a vague, hazy way. We have discharged one man who has made that oath without paying his fees.”
We find in a text-book, from which we have received much assistance in our effort to construe the provisions of the bankruptcy act, this paragraph:
“In various districts, we are informed, rules have been promulgated which tend to expedite the cases in which the fees have been paid in preference to those which .are prosecuted in forma pauperis. We believe it may be safely asserted that a bankrupt, by paying the small fees im*817 posed by Ihe law. not only will fee paying a debt morally as well as legally due. — the payment of wiiieli any person, iiowever insolvent be may be, can accomplish by borrowing from his friends, — but he will undoubtedly find that, by paying such fees, he will be advancing his own interests.” Coll. Bankr. p. 570.
Jf these ideas are to find permanent lodgment in the minds of the judges of the courts of bankruptcy and become active, the carefully expressed provisions of the bankruptcy act granting the right to insolvent debtors to present their petition for relief in some cases in forma pauperis will not only be denied, but this humane and benevolent bounty from ihe government will be tortured into a most malignant snare. It is manifest that paragraph 4 of general order 35 ridal.es only to cases in-voluntary bankruptcy, and the language shows that there may be such cases in which the petitioning debtor is not required to pay the fees of the clerk, referee, and trustee before or at the time of filing his petition, although he presents a schedule of property in excess of the exemptions allowed by the law of the state of his domicile and surrenders an estate in bankruptcy. Otherwise, it would be futile to provide lhat “the judge at any time during the pendency of the proceedings in bankruptcy may order those fees to be paid out of ihe estate.” The terms of the affidavit, as prescribed by section 52, are “that he is without, and cannot obtain, the money with which to pay such fees.” This affidavit may well be made in cases in -which there is an (‘state to be surrendered, consisting not in money or in property that has a. market value or can be converted into money by the petitioning debtor without substantial sacrifice of its value, and from which, therefore, he could not obtain the money in (lie exercise of perfect good faith towards the court and his creditors. IJpon the presentation of his petition and schedules, accompanied by the affidavit in the terms of the statute, the clerk has no option as to filing,the petition and taking the action thereon prescribed by the law. The judge of the court of bankruptcy, on the motion of parties interested, or on his own motion, after notice to the bankrupt, may have satisfactory proof that the bankrupt has not made a full surrender of his assets, and that he then has, or can obtain, the m'oney with which to pay those fees. There is nothing in this paiagraph 4 in the nature of an amendment of the bankruptcy act or out of line with our construe! ion of its provisions. It does not require the petitioning debtor to use, sell, or pledge his exempt X>roperty, for that would he repugnant to section (5, Bankruptcy Act. It does not require that he should apply to his kindred or friends to furnish him the money, at the peril of being charged with and convicted of making a false oath should he tender the statutory affidavit, and having his prayer for a discharge refused on that ground, or having it indefinitely delayed on Quit account, for this would be a refinement oil our former laws prescribing imprisonment for debt. It does not impose any humiliation on a citizen to accept the bounty of the government in providing that he may obtain the benefit of the act without the prepayment of any fees; but it would inflict a humiliation on any citizen to require that he solicit or accept alms of his kindred or friends. The judgment of (he court of bankruptcy granting the appellee his discharge is affirmed.
