In re Stout

• Decision Date: 17 September 1900
• Citation: 109 F. 794
• Parties: In re STOUT.
• Court: U.S. District Court — Western District of Missouri

109 F. 794

In re STOUT.

United States District Court, W.D. Missouri, Central Division.

September 17, 1900

Hunter & Kraemer, for claimant.

PHILIPS District Judge.

The sole question in this case is whether or not certain real estate of the bankrupt is exempt as a homestead from the claim of the creditor, Jabez H. Potter. The referee, John Montgomery, Jr., has found this issue in favor of the claimant. To this action of the referee the bankrupt has filed exceptions, which have been referred to the court for determination.

It is the recognized rule of the federal courts-- and especially in matters of bankruptcy-- that on review of the decision of a referee, based upon his conclusions on questions of fact, the court will not reverse his findings unless the same are so manifestly erroneous as to invoke the sense of justice of the court. In re Waxelbaum (D.C.) 101 F. 228. This rule must, of necessity, be observed by the courts where the findings and conclusions of the referee are based upon conflicting testimony. He sees and hears the witnesses, and his vantage ground is much better than that of the court for determining the credibility of the witnesses and the weight of their testimony. The principal point of controversy in this case is whether or not the debt of the claimant against the bankrupt arose prior to his acquisition of the real estate claimed as a homestead. This question of fact depends largely upon the testimony of the claimant and a number of corroborating circumstances, which the court, on examination of the testimony taken by the referee, is of opinion well justified the referee's conclusion. The claimant, Potter was security upon two notes executed by the bankrupt, given to one Steele in 1873. Steele died, and one Todd became his administrator. Suits were instituted on these notes by said administrator in a justice's court in 1873, upon which judgments were obtained. Potter claims that he appealed from these judgments to the state circuit court, but what became of the appeals the evidence fails to disclose. This, however is quite a matter of immateriality; the essential question being whether or not Potter, as security, paid these debts of the bankrupt. The contention of Potter is that he afterwards settled these claims with the succeeding administrator of Steele's estate by way of a claim he held against the estate, he having, as he testified, bought up certain interests of the distributee heirs in the estate, and that he settled his indebtedness to the estate in that way. It is true that Todd testifies that Potter never paid him any money on these claims against the bankrupt, and it is also true that the succeeding administrator, Sims, testifies in the same way. But there are many facts and circumstances in the case which tend to corroborate the contention of Potter. In the first place, during all this period, Potter was solvent and it was the imperative duty, under the statute, of these administrators to proceed to collect all outstanding claims and to account therefor to the estate. Being charged, presumably, in the inventory of the estate, with these claims, if they had not been able to collect them they would have taken credit therefor on the ground that they were uncollectible. In addition to this, the record in evidence shows that a suit was pending between administrator Sims and Potter in the circuit court of Morgan county in 1878, and that Potter recovered judgment for $50.50, which, by stipulation of the parties, was to be credited on a judgment in favor of the Steele estate against Potter, rendered in said justice court; thus clearly showing that Sims was mistaken when he said he knew nothing about the claim of Potter against the estate, and that he first heard of it in 1884. There is another circumstance that indicates that Potter's contention that he bought up the claims of certain of the heirs is probable, and that is the fact that the testimony of Sims shows that there are some of the heirs with whom he has never settled as to their distributive shares. It is wholly incredible, if these heirs were not conscious of the facts that their claims had passed to some one else, that they would not in all these years have called for their distributive shares. The dealings also between Potter and the bankrupt from 1873 to 1889 show beyond question that the bankrupt recognized the fact that he was during the time indebted to Potter. He was paying Potter money, selling him mules, which were paid for in the way of credits on Potter's claim against him; and in 1889 he executed a note to Potter, which he claims represented the balance then due on the claim, and which has since passed into judgment, becoming the basis of the allowance made by the referee in favor of Potter...