95 FEDlnRAL REPORTER.
for the petitioners, p'nt in interrogative form in the brief, is as follows: i, ' : '
'''AssumIng, then, both that Richard!rwas insolvent iurd that the petitioners knew'H,,"the question is" carl an insolvent borrow money and give a valid security? Shall advances in good faith to pay debts be protected? Will the court support securities given by an insolvent upon a bona fide advance of llloney to pay debts,where the transaction does not in any way injure the bankrupt 01' lessen bis,estate?" ' ,
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questionBmight perhaps be I1nswered by asking another: a ba,nkrupt law good for,l,one leading object,of whil'h is to diyipe the insolvent's estate equally between creditors, if OiJe <:reditqr.i seven months after the law has gone into effect, can obtain' a judgment against the debtor, levy upon and sell his entire stOck ofgQods, a,nd leave the ofher creditors helpless? Upon equiit is, difficult to see what advantage these petitionersshould have (IVeT other creditors. They have never sold hiW lil,ny goods or put Ii dollar into his business, and two of them, John;Richards and Thomas Ol:\ygill, in paying, the bankrupt's debt, obligations. They were held as surety upon his' o1ficial bond, and, with ,Samuel T'reloar, paid each one-third th,e amount of the defalcation to discharge the claim. ,of the town ll,gainst them and the bankrupt ,joiptly and severally. Treloar's name.»,as DQt on the bond, and a separate mortgage of the bankrup't's ,homestead was given to him to secure t4e $450 which he advanced to pay one;-third of t}1e indebtedness to the town. What superiorrequity, then, have John Richards Thomas Oaygill over the .other creditors who sold. Richard T,!Richards the goods that. enabled him to carryon his business,-perhaps the very goods which were seized under the execution, and which would have been sold to pay the petitioners' debt had it noLbeen for the injunctional order issued by this court? If it were a question of superior equities, I cannot see the petitioners have better or strongerfooting than the other creditors. But it seems quite clear to me that, under the bankrupt law, these creditors, so far as they are unsecured, should share pro rata with the other unseeured creditors. The prayer of the petitioners is therefore denied.
In re WOODARD. (District Court, E. D. North Oarolina.
June 28, 1899.)
Under Bankruptcy Act 1898, § 6, providing that "this act shall not affect the allowl\nce to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing. of the petition," the extent and the duration of a homestead allotment made i.n a court of bankruptcy are the same as prescribed by the law of the state. The bankruptcy actineither enlarges nor diminishes the exemption under the laws of the .state.
SAME.,-AsSETS OF ESTATE-REVERSIONARY· INTEREST IN HOMESTEAD.
Where .the exemptic,)ll law of the state (Const. K. C. art. 10, §§ 2, 3) provides that every homestead, not excee,ding a certain value, shall be exempt from sale on execution or other final process, and shall continue exempt
IN RE WOODARD.
from the payment of any debt, after the death of the <1WIler. the minority of any of his children, the reversionary Interest or tl'Ue 112. land set apart to a bankrupt all his homestead, to accrue upon the termination of the homestead estate, is assets of his estate in bankruptcy. and must be sold by the trustee in bankruptcy.
In Bankruptcy. On review of decision of referee in bankruptcy. A. J. Feild, for creditors. PURNELL, District Judge. It is worthy of mentio!!, and a source of regret, that though many briefs were promised, and a decision delayed for this reason, only one brief has been filed. Even the attorneys have not favored the court with an argument of the questions involved in this proceeding. A petition and answer being filed, and the cause heard before the referee, an order was entered directing the trustee to sell the reversionary or remaining interest of the bankrupt in the land allotted to him as a homestead, after the tel" mination of such estate or interest or title. From this order the bankrupt appealed, and the question is certified for review. Section 6 of the act of July 1, 1898, entitled "An act to establish a uniform system of bankruptcy," etc., provides:
"This act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing of the petition in the state wherein they have had their domicile for the six months or the greater portion thereof immediately preceding the filing the petition."
This is essentially different from the provisions of the act of 1867 on the same subject. Hence the decisions construing that ad do not apply. The section quoted provides the exemption allowed by the laws of the state where the bankrupt has his domicile shall not be affected. This means shall not be enlarged, as well as shall not be diminished. The section contemplates a conformity, as near as may be, to the statutes and decisions of the several states, when conformity is possible in carrying out the provisions of the act of congress. Nor can the decisions in other states, even ill' the courts of bankruptcy, control in a proper determination of questions of exemptions; for, while the system of bankruptcy is uniform, the exemptions are necessarily diverse and different, since they conform to the laws of the different states. To properly determine the question at bar, therefore, it is necessary to ascertain what exemption a citizen of North Carolina-call it "right," "title," or "estate"-is entitled to as a homestead. The state constitution (articlp. 10, § 2) provides:
"Every homestead, and the dwellings and buildings used therewith, not exceeding In value one thousand dollars to be selected by the owner thereof, or In lieu thereof, at the option of the owner, Ilny lot In a city, town or village, with the dwelling and bulldlng used thereon. owned and occupied by any resident of this state, Ilnd not exceeding the vnlue of one thousand dollars, shall be exempt from sale under execution or other final process obtained on any debt."
Section 3 of the same article exempts the homestead from tha payment of any debt, after the death of the owner thereof, during the minority of his children, or anyone of them. The provisions of the constitution exempt from sale under execution real estate not exceeding in value $1,000, but do not confer Qr pretrnd to confer any title in addition to that which the debtor already has; nor can it be distorted into meaning that the· debtor
95 FEDERAL REPORTER· .. r.' ','- " .-"
s9.I;lJI hl.l.ye $l,OOO,):mt it shall lfo,t .exceed that .· It is an call it by whatever may ,suit thestic#ler for words, and terminable at the happening of certainevents,snch as the death of the party to whom it is secared; and the arrival of his youngest child at the age of maturity, when it may be sold under judgments in the superior court which are liens from their test. This is in' accord with the statutes, and decisions of the supreme court, of the stai! Vanstory v. Thornton, 112 . C. 196, 17 S. E. 566; v. Rock))'.ell, 117 N,C. 320, 23 S. E. 488, and cases cited. A. dockpted judgment during the existence Qf this exemption is not blirre9,by the statute of limitations during the .existence of the homestead after it is laid off or aJlotted. Formeyduval v. Rockwell, supra. The extent and duration of a homestead allotment made in the bankrupt c()m'tare the same as that prescriQed by the law of the state. The state. court gives efficacy to the homeste.ad allotment when ,made in the bankrupt court, but the creditors of.l.l. bankrupt must prosecute t4eir claims and enforce their liens in the bankrupt court, and not in the state court. Blum v. Ellis, 73 N. C. 293; Withers v. Stinson, 79 N. C. 341; Dixson v. Dixson, 81 :No C. 323; Lamb v. Chamness, 84 N. O. 379; Windley v. Tankard, 88 N. C. 223. It will be seen from these authorities t4at creditors have some rights, shadowy and may be, against debtors, even under the homestead provisions of the state constitution. .They may obtain judgments and acquireliens.-liens they may not live:to realize, but which may benefit tbeirheirs or estatewbentbe exemption terminates under the law. Section 2, cl. 11, confers on cpurts of bankruptcy jurisdiction to de.termine .all claims of bankrupts,to their exemptions, restricted by tbeprovisions of section 6, before quoted, which contemplates that this ,sball be done without enlargement or diminution of such exemption as..is allowed by tbe laws of the state where the bankrupt has bis dqmicne. There is no provision of law, after an adjudication in bankruptcy, under which the lien of a judgment creditor can be preserved until the termination of the exemption. Such debt is provable in bankruptcy (section 63a), and upon the granting of a discharge the bankrupt would not only be relieved of the debt, but the judgment lien wOl1ld be removed from his property. Only four classes of debts (tho.seUJentioned in section 17) are excepted, and not affected by a dischal'ge in bankruptcy, and a judgment or judgment lien is not one of these four. To preserve the judgment lien which the creditor has under the fltate law, the bankruptcy proceedings would, of necessity, be kept <'ypen and pending indefinitely, awaiting the falling in of the homestead exemption. To discharge the bankrupt from the judgment and the lien incident thereto would be to enlarge the exemption. To retain the proceeding awaiting the terminatiou of the exemption would be,a denial of the relief intended to be given insolvent debtors by the banIuupt law. One would be an injustice to the creditor; the other,' an equal or greater injustice to the bankrupt. The law does not c6t1template either, but is intended to be fair and just to both. There are other contingencies which may arise, not necessary to con8ider,-other rights of the cl'editors and debtors connected with the homestead exemption.
IN HE ALnrAN.
It is alleged in the petition that there are judgments against the bankrupt, and this is not denied in the answer, but it is claimed by the bankrupt that these judgments are not liens on the homestead. This is what may be termed "sticking in the bark," and "begging the qnestion." It can make no material difference how this question is determined,-even if it had raised an issue of fact as to the existence of the judgments. The land allotted as an exemption is the property of the bankrupt, and, by operation of law, when the adjudication in bankruptcy was made all of his property was put in custodia legis, and became vested in the trustee, when appointed. The bankrupt is entitled to the enjoyment of the land until by the operation of the state law the exemption terminates. Simply this, and nothing more. If discharged of his debts, he is vested with a fee, or such title as he may have, relieved of the liability to, or annoyance of, creditors. 'l'his would be to appreciate his exemptions, and deprive his creditors of the right to obtain judgments and acquire liens. Thus, the exemption would be increased or enlarged, and the bankrupt given more than is contemplated in the state law, or intended by the act of congress. It is the duty of the trustee to collect and reduce to money all property of the estate (section 47a), and to set apart the bankrupt's exemptions. The interest or title of the bankrupt in the land allotted as a homestead exemption after the termination of the time for which such property is exempted. from sale is proper·t.v. Hence it is the duty of the trustee to reduce to money, by sale, such property or title or reversion, and apply the proceeds to the payment of debts 'proved according to law. The order of the referee is affirmed, and the trustee herein will proceed, in accordance therewith, to reduce to money the property of the bankrupt in the land allotted as a homesteade!X:emption, after the termination of such exemption according to law,asherein decided.
al. July 8, 1899.),
(District Court, N. D. :\'ew York.
BANKRUPTCY-PAWrNERSJIlPPETITION-N01,JOINDEH OF PARTIES.
'Where certain of the members of a dissolved partnership file their voluntary petition in bankruptcy. asking for an adjudication of themselves and also of the firm, but no notice of the proceeding\! is .given to the otber partners. who do not join in the petition, an adjudication that the petitioners, "as co-partners and as individuals," be declared bankrupt, is erroneous, :md wiJI be YlH:a ted on motion. 'Vlwre certain of the memhers of a partnership file their voluntary petition in bankruptcy, asking for an adjudication of the firm, but the other partners do not join and are not notified of the proceedings, the defect is not cured hy filing in court, after the adjudication, a paper purporting to em]Jody the consent of the nonjoining partners, but which is unverified, qualifit'd i11 its terms, and signed by their attorneys.
Julius Altman and Henry Altman filed a petition in bankruptcy, praying that an adjUdication in bankruptcy might be made against themselves as individuals, and also against a certain partnership of whl<:h they had been members,