¶1Bankruptcy — Exemptions—Fraudulknt Conversion or Property.,
¶2Where a debtor, shortly before filing his voluntary petition in bankruptcy, and in contemplation thereof, sold property which was not exempt from execution, and applied the proceeds in part payment of a debt secured by a mortgage on property claimed to bn exempt as a homestead, held, that the transaction was in fraud of the bankruptcy law, and that the (rust.ee in bankruptcy, for tlie benefit of the creditors, should be subrogated to the rights of the mortgagee to the extent of tlie money so paid.
¶3In Bankruptcy. On review of decision of referee in bankruptcy.
¶4The referee certified, the case for review, as follows:
¶5“Now on this 31st day of .Tune, A. JD. 1899, at Beatrice, in said district, before Fulton Jack, one of the referees of the above court, this cause coming on to be heard under the order of the above-entitled court for the purpose of taking evidence as to the amount of mortgage indebtedness upon tlie real estate claimed by the above-named bankrupt as exempt to him for a homestead, and upon the issues joined by die trastee by his answer filed in regard to such matters, the iriist.ee appeared at the time and place, of which notice had been duly given to all pari ios in interest, and the bankrupt also appeared. A a d the referee having heard the evidence of the parties, and being duly advised in the promises, finds that tlie mortgage indebtedness upon said premises claimed as a homestead is the sum of §51,091.33, bearing in-tercut at the rate of 8 per cent, per annum. And the referee, being advised in tlie premises, finds that during the month of December, A. D. 1898, and in contemplation of proceeding's in bankruptcy, the said Joel Y. Boston, bankrupt, made and executed a chattel mortgage to the owner and holder of the said real estate mortgage covering certain property, to wit, a,both 100 bushels of corn, which he did not list in any schedule tiled by him; and that Use said bankrupt afterwards personally sold said com, obtained the proceeds thereof, and applied the same upon the said real-estate mortgage, and that tlie proceeds of said corn was the sum of ¡,:‘L~0; that ⅜3(> of said amount was paid within a few days of the tiling of said petition in bankruptcy, and that the remaining 890 thereof was paid themon more tiian two months after the filing of said petition in bankruptcy; and the referee finds that tlie bankrupt lias obtained the benefit: of the proceeds of said property in the reduction of the mortgage indebtedness upon Ills homestead, and that the bankruptcy estate is entitled to be subrogated to the rights of Annabel M. Evans, the owner of said mortgage, to the said amount of .8120. It is therefore considered, ordered, and adjudged by tlie referee that the amount of tlie mortgage indebtedness upon the real estate claimed by Joel V. Boston, bankrupt, as exempt, to wit, the south half of the southeast quarter of section four (4), township six (6), range eight (8) east, in Gage county, Nebraska, in the sum of if 1,091.33; and it is further decreed that tlie estate in bankruptcy of the said Joel V. Boston *588have a Hen upon said real estate for the benefit of the creditors of said Joel V. Boston to the amount of $120, and that the trastee at once set off to the Dankrupt, as his homestead, all of said real estate, subject to the mortgage indebtedness due said Annabel M. Evans, and subject to said lien of $120; and it is further ordered and directed that if the said Joel V. Boston fail for 20 days to pay said sum of $120 to O. M. Enlow, the trustee in bankruptcy of said estate, that, in that event, the trustee proceed to sell at public auction, for cash, said lien of $120 upon said real estate. To the order decreeing said, lien of $120 upon said real estate, and directing the sale of the same by the trustee, the bankrupt excepts. Pulton Jack, Referee in Bankruptcy.”
¶6“District of Nebraska — ss.: The bankrupt having taken exceptions to the above order of the referee as indicated therein, the question above cited is hereby certified to the Hon. W. H. Munger, judge of the above court, for his opinion thereon. Fulton Jack, Referee in Bankruptcy.”
¶7F. M. Davis, for petitioner.
¶8S, D. Killen, for defendants Wolford Bros., J. H. Spellman, and Evert Yan Engen.
¶10This matter is heard on an appeal from the decision of Referee Jack, finding that the bankrupt, a few days before filing his voluntary petition, disposed of property not exempt, and applied the same in partial payment of an incumbrance upon property which was exempt; that such transaction upon the part of the bankrupt was in fraud of the bankruptcy law; and that by reason thereof the creditors are entitled to be subrogated as mortgage creditors upon the homestead to the extent of such payment, to wit, $120. This decision of the referee is affirmed.