Sieg v. Greene, 225 F. 955

225 F. 955 | 8th Cir. | 1915

LEWIS, District Judge

(after stating the facts as above). [ 1 -4J 1. One of the defenses was that the deed from Size to Sieg could not be avoided on either ground 'stated in the bill or for any other reason, because the property conveyed was at the time of its conveyance the homestead of Size and his family who at that time and for many years theretofore had continuously resided on it.

The Iowa statute on the subject may be epitomized: Exemption of the homestead from judicial sale; requirement that husband and wife- join in the conveyance to render it valid; embraces the house used as a home by the owner, and if he has two or more houses thus used he may select which he will retain, and if not within a city or town plat it must not contain in the aggregate more than forty acres, and must not embrace more than one dwelling house. Code of Iowa 1897 and Supplement thereto 1907, §§ 2972-2978. Under this statute the homestead claim attaches to the undivided interest of a tenant in common. Thorn v. Thorn, 14 Iowa, 49, 81 Am. Dec. 451; Bolton v. Oberne, 79 Iowa, 278, 44 N. W. 547. A voluntary conveyance of the homestead is not fraudulent as to creditors. Delashmut v. Trau, 44 Iowa, 613; Officer v. Evans, 48 Iowa, 557-560; Foreman v. Bank, 128 Iowa, 661, 105 N. W. 164; Bank v. Glick, 134 Iowa, 323, 111 N. W. 970; Dettmer v. Behrens, 106 Iowa, 585, 76 N. W. 853, 68 Am. St. Rep. 326; Wheeler, etc., Co. v. Bjelland, 97 Iowa, 637, 66 N.. W. 885; Green v. Root (D. C.) 62 Fed. 191. The grantor in such a case need not receive full value. His creditors cannot take it, and have no concern about what he gets. Griffin v. Sheley, 55 Iowa, 513, 8 N. W. 343; Aultman v. Heiney, 59 Iowa, 654, 13 N. W. 856. The state statute and decisions control here. Bank v. Glass, 79 Fed. 706, 25 C. C. A. 151; Bankruptcy Act, § 6; Vitzthum v. Large (D. C.) 162 Fed. 685. The trustee cannot recover it. It was not an asset of the bankrupt estate, was beyond the reach of creditors and likewise of the trustee who represents them. But the right did not attach to that part of the tract used as a brickyard and its appurtenances. That was not a part of the farm, nor appurtenant thereto, and was not used as a part of the home. Mouriquand v. Hart, 22 Kan. 594, 31 Am. Rep. 200. At the time of the conveyance the entire tract contained 97.68 acres. The claim to the homestead right was confined to the undivided half interest in eighty acres. The other dwelling house and its appurtenant grounds occupied by Carpenter and family could- not be included in the homestead of| Size. The homestead exemption as claimed should have been sustained, and set off in eighty acres of the farm lands including the dwelling occupied by Size and family, and excluding the brick plant and yard, together with needed appurtenant ground, also the Carpenter dwelling and appurtenances, and also1 such additional acreage, if necessary, to1 bring the exemption within the limited area.

[5] Registration and récord of the deed was required and this was not done until within the prohibited four months period; it was therefore' voidable as to the excess over the homestead right. It follows that Sieg’s liability for rent would also be confined to what he received on one-half of, the excess.

[6, 7] 2. The issue as to Sieg’s claimed liability for the value of the brick turned over to him within the four months period by the bankrupts, is more difficult. In its consideration we confine the inquiry to whether that transaction operated to effect a preference rendered voidable by section 60a and b of the Act; and this, because the, eridence entirely fails as a sufficient basis on which any claim that Ike transaction was in fact fraudulent, as charged in the bill, couid be rested, and additionally there is no finding of fact that way by the trial court which might relieve us iu part from a wholly independent consideration and conclusion in the matter. Thus coining to the question: Was it a preferential transfer voidable under the acc by fhe trustee?, we first note our conclusion that nothing appears to cause us to doubt that the agreement covering the manufacture a ul advanced payments therefor was in entire good faith—we so accept it. It was complete in its terms, nothing was left open for further negotiation and settlement by the parties. It was final and. biuuiug on them, and each could have enforced performance, or obtained damages for its breach. The property which Sieg received was produced with the money which he advanced under the agreement, a,rid when he received it no creditor of the bankrupts had acquhed any right in it or against it under local law. He took possession ui it not as a purchaser of that date, but iu virtue of his right which was created by the contract at the time it was made with the bankrupts, to have the property subjected to the payment of his claim. He took over a product which his money had wrought, and in doing so satisfied an equitable lien, which he had long before acquired under the contrae! and the facts and circumstances surrounding the transaction. Advancements made on the faith of certain property may give rise to the lien. Howard v. Delgado, 121 Eed. 26, 57 C. C. A. 270; Hauselt v. Harrison, 105 U. S. 401, 26 L. Ed. 1075. It may attach to property to be created and not in esse at the time of the agreement. Mitchell v. Winslow, 2 Story, 630, Fed. Cas. No. 9,673; Wright v. Bircher, 72 Mo. 179, 185, 37 Am. Rep. 433. It does not depend upon possession, The Menominie (D. C.) 36 Fed. 199. It may exist by implication growing out of facts and circumstances which create the equitable right. Soc. of Shakers v. Watson, 68 Eed. 730, 739, 15 C. C. A. 632.

The principle under consideration and the facts necessary to constilute a right to an equitable lien are fully considered and aptly illustrated by this court in A., T. & S. F. Ry. Co. v. Hurley, 153 Eed. 503, 82 C. C. A. 453. The railway company advanced money for coal to be delivered in the future. The coal company was put into bankruptcy and did not deliver the coal for which advancements were made. The railway company asked for an order directing the trustee to return to it the money so advanced as a preferential claim. This court, speaking through Judge Adams, said (153 Eed. 507, 82 C. C. A. 457):

“The money paid iu advance entitled the railway company to an amount ot coal winch the money so advanced would pay for according to the terms of the original contract. We think lire Inevitable meaning of the new arrangement, interpreted in the light of the conditions surrounding the parties and as necessarily inrended iiy them, was to set apart a sufficient amount oí coal after it should bo mined as security for the payment of advances made. This result is not expressed in the conventional form of a mortgage or pledge, but the method of producing it was devised for the purpose of acquiring the needed money by the coal company and of furnishing security for its repayment. If the parties intended the arrangement to be one for borrowing and securing the repayment of money, we ought, as between them, to so regard it and to treat it as creating an equitable charge or lien, however inartificially it may have been expressed,” and again (153 Fed. 509, 82 C. C. A. 459): “In the light of these authorities we have no hesitation in holding that the equitable charge created by the parties before the bankruptcy of the coal company should be enforced against the estate in the hands of its trustees.”

This ruling was affirmed in 213 U. S. 126, 29 Sup. Ct. 466, 53 L. Ed. 729.

In Thompson v. Fairbanks, 196 U. S. 516, 25 Sup. Ct. 306, 49 L. Ed. 577, the rights of a mortgagee to after-acquired chattel property which, according to local law, did not come under the lien of the mortgage until possession should be taken, were involved. Possession was taken within the four months’ period. In sustaining the right of the mortgagee to the property it was said (196 U. S. 523, 25 Sup. Ct. 309 [49 L. Ed. 577]):

“It can scarcely be said that the enforcement of a lien by the taking possession, with the consent of the mortgagor, of after-acquired property covered by a valid mortgage is a conveyance or transfer within the Bankrupt Act.”

Again (196 U. S. 524, 25 Sup. Ct. 309, 49 L. Ed. 577):

“The principle that the taking possession may sometimes be held to relate back to the time when the right so to do was created, is recognized in the above case. Sabin v. Camp [(C. C.) 98 Fed. 974]. So in this case, although there was no actual existing lien upon this after-acquired property until the taking possession, yet there was a positive agreement, as contained in the mortgage and existing of record, under which the inchoate lien might be asserted and enforced, and' when enforced by the taking of possession, that possession under' the facts of this case, related back to the time of the execution of the mortgage of April, 1891, as it was only by virtue of that mortgage that possession could be taken. * * * Although this after-acquired property was subject to the lien of an attaching or an execution creditor, if perfected before the mortgagee took possession under his mortgage, yet if there were no such creditor, the enforcement of the lien by taking possession would be legal, even if within the four months provided in the Act.”

The Sabin-Camjp Case there quoted and approved, is very much in point. See also Humphrey v. Tatman, 198 U. S. 91, 25 Sup. Ct. 567, 49 L. Ed. 956; Sexton v. Kessler & Co., 172 Fed. 535, 97 C. C. A. 161, 40 L. R. A. (N. S.) 639; affirmed 225 U. S. 90, 32 Sup. Ct. 657, 56 L. Ed. 995; In re Bird (D. C.) 180 Fed. 229; M’Donald v. Daskam, 116 Fed. 276, 53 C. C. A. 554; In re Wittenberg Veneer & Panel Co. (D. C.) 108 Fed. 593; Tiffany v. Boatman’s Institution, 18 Wall. 375, 388, 21 L. Ed. 868.

There is no evidence that the brick ever came “into the custody of the bankruptcy court” (Bankruptcy Act July 1, 1898, c. 541, § 47, 30 Stat. 557 [Comp. St. 1913, § 9631]), nor that at the time the petition in bankruptcy was filed they could have been transferred by the bankrupts or levied upon as their property (section 70 [section 9654]), but to the contrary, they had all been taken over by Sieg more than thirty days prior thereto. Galbraith v. Bank, 221 Fed. 386, 392, -C. C. A.-.

We think the transaction did not operate to effect a preferential transfer voidable by the trustee, and that the court erred in so holding and adjudging that Sieg account to the trustee for the value of the brick.

[8] 3. It appears that iSieg immediately after talcing possession of the brick plant in June, 1911, made large expenditures in putting in new machinery and otherwise improving the plant. Of¡ course, any property thus added at the sole expense of Sieg was no part of the estate in bankruptcy.

The decree of the court below is reversed with costs, and the cause remanded with directions to proceed in accordance with the views herein expressed.

It is so ordered.