In re Tune

115 F. 906, 1902 U.S. Dist. LEXIS 251
CourtDistrict Court, N.D. Alabama
DecidedMay 19, 1902
StatusPublished
Cited by11 cases

This text of 115 F. 906 (In re Tune) is published on Counsel Stack Legal Research, covering District Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Tune, 115 F. 906, 1902 U.S. Dist. LEXIS 251 (N.D. Ala. 1902).

Opinion

JONES, District Judge

(after stating the facts). In Re Moore (D. C.) 112 Fed. 290, it was held that the waiver of exemption authorized by the laws of this state could not of itself confer any title, interest, or equity in the property of the debtor, and did not constitute a lien or pledge in any sense. That case differs from this, in that there the exempt property was claimed before a judgment or attachment. In view of the argument of counsel and the effect claimed for the levy on the exempt property in this case, some further discussion of the case seems proper.

The whole office and effect of a waiver of exemptions is to build up an estoppel which is quickened into being only by a judgment on the debt and the issue of execution in the statutory mode. An estoppel to claim property does not give the person in whose favor the estoppel runs a lien on that property. The judgment and execution alone give the waiver any operation; and the combined effect of the debt, waiver, judgment, and execution, so far as they give any virtue to the waiver, is merely to bring the estoppel into play. If any lien arises in this case it is because of a levy, if that levy can be lawfully followed by a judgment of condemnation. Any legal obstacle interposed between the levy and the right of judgment, so as to defeat condemnation, keeps the waiver in the background, and renders it wholly without influence. No Hen in a suit on a simple contract debt can ripen from a levy of an attachment, unless that levy can be followed by a judgment of condemnation. Riens thus obtained are “obtained through legal proceedings,” and are the mere creatures of proceedings in court. The preservation of the levy under the at[910]*910tachment is essential to the right of the creditors to subject the property in this case. The question then arises, was the attachment lien dissolved by the adjudication? It is urged that a court of bankruptcy cannot concern itself with liens upon exempt property, or their enforcement. It cannot be denied that it ought to view with concern an attempt to create a lien upon exempt property pending discharge. It is its duty to see that legal remedies for collection of debts, from which discharge may absolve, shall not be allowed to create liens upon property set apart to the bankrupt, so as to nullify the policy of the law, by subjecting the exempt property to debts from which the discharge intended to free it. It is insisted that, as the raft of logs was exempt property, the provisions of the bankrupt act annulling attachments and liens cannot affect the levy in this case, as those provisions were made for the benefit of creditors who cannot share in the exempt property, and no disposition the debtor may make or suffer to be made can amount to a preference. All enlightened governments endeavor to guard against the distressing consequences resulting from the inexorable collection of debt, the enforcement of which shapes in so many ways the condition and destiny of the debtor, by granting liberal exemptions, and providing for periodic discharge from debt. To accomplish these results, the bankrupt law not only relieves the debtor from all debts, with a few exceptions, but to all intents and purposes makes the bankrupt a creditor with a lien, so to speak, and prefers him to creditors to the extent of his exemptions in distributing his assets. This cardinal purpose dominates the whole law. When the statute deals with the dissolution and annulment of attachments, judgments, etc., it is careful to specify the exception, and the only exception, in which the bankrupt’s exempt property shall not be affected by the changed legal status imparted to the rest of his estate by the dissolution of attachments and liens; and that is the case of conveyances made to hinder, delay, and defraud creditors. The subdivision in which this is provided is preceded by one relating to the same general subject, in which no such exception is made; and it is followed by another section, which is peremptory and sweeping in its language, that “all liens shall be deemed null and void, and the property affected shall be wholly discharged and released and shall pass to the trustees as a part of the estate of the bankrupt.” If the statute did not intend to except exempt property from the effect of its policy in declaring all liens void, save in the particular instance mentioned, why use such sweeping and peremptory language as necessarily to include all the bankrupt’s property in all other sections specifying what shall pass to the trustee? This studied difference in the language of the different subdivisions of the same section, which deals with liens and the effect of their dissolution or annulment, cannot be ignored in ascertaining the legislative intent. It is significant of a purpose not to exclude exempt property, save in the one specified instance, from the benefit of the annulment of liens, and to pass it to the trustee for the benefit of the bankrupt. The main reason for the four-months provision was to prevent the race by creditors to seize the estate of the insolvent when it is found that he is in failing circumstances, and [911]*911to prevent the preferences which would follow if liens and attachments were allowed during that period. This purpose would be wholly defeated if liens could be created upon the exempt property. Some creditors would unquestionably be preferred. Some would receive satisfaction in whole, some in part, and some nothing. All this, in the face of the policy of the statute to preserve the exempt property, and to require all creditors who had not acquired liens older than four months, or which are protected, to share equally in the bankrupt’s estate.

If subdivision “c” is not destroyed by subdivision “f,” it can have no effect in this case, since the debtor resisted the lien, and the creditors did not know he was in contemplation of bankruptcy. Without entering into any extended discussion on the subject, it seems to me that subdivision “f” destroys subdivision “c.” If subdivision “f” had been enacted in a subsequent independent statute, there would be little doubt that it was intended as a revision of the entire field of “liens obtained through legal proceedings,” and would necessarily amount to a repeal of the prior law on the subject, though there were no express words of repeal. In view of the known history of the enactment of the bankrupt law, and the fact that subdivision “f” is the latest utterance in point of time on the subject of liens obtained by operation of law, I feel compelled to hold that subdivision “f” of section 67 controls this case. Under that section the lien of the attachment “is null and void,” and the “property affected” is wholly “discharged and released therefrom,” and passes to the trustee “as a part of the estate of the bankrupt.” This construction is in harmony with the purpose of other provisions of the bankrupt law to have the whole estate, including the exempt property, pass to the trustee to be administered in the bankrupt court. For certain purposes the court takes possession of the exempt property, and the right of possession passes to the trustee for that purpose. The court is given express power to determine the exemption and to set apart the property to the bankrupt. Although the title to the exempt property does not pass to the trustee, yet, as the purpose of the bankrupt law is to protect it, and to save it to the bankrupt, to the detriment of creditors, the language of the act in section 67, subd. “f,” where it speaks of the property affected by the levy passing to the trustee, must be construed to mean that it passes to the trustee for whom it may concern, to be administered in the order that the language and policy of the bankrupt law command.

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Cite This Page — Counsel Stack

Bluebook (online)
115 F. 906, 1902 U.S. Dist. LEXIS 251, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-tune-alnd-1902.