Fetter v. United States, 13684

• Decision Date: 10 August 1959
• Docket Number: No. 13684,13685.,13684
• Citation: 269 F.2d 467
• Parties: Albert FETTER and Mary Louise Fetter, His Wife, Jointly, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

269 F.2d 467 (1959)

Albert FETTER and Mary Louise Fetter, His Wife, Jointly, Appellants, v. UNITED STATES of America, Appellee.

Nos. 13684, 13685.

United States Court of Appeals Sixth Circuit.

August 10, 1959.

Theodore F. Hughes, Berkley, Mich., for appellant.

John M. Chase, Jr., Asst. U. S. Atty., Detroit, Mich. (Fred W. Kaess, U. S. Atty., Detroit, Mich., on the brief), for appellee.

Before SIMONS and MILLER, Circuit Judges, and SHELBOURNE, District Judge.

SHELBOURNE, District Judge.

The appeals are from a judgment of the District Court where two separate actions were filed against Albert Fetter and Mary Louise Fetter by the United States after it became the owner of notes by assignment. Each of the notes was a Title I, Federal Housing Administration note executed for work done on property owned by the makers of the notes as tenants by the entireties. None of the four notes was secured by mortgage, mechanic's statutory lien or other security.

Prior to the filing of the suits, Albert Fetter was discharged in bankruptcy and pled his discharge as a complete defense. The wife alleged that none of the considerations for the loans passed to her sole and separate estate and that none of the considerations was spent on property which she "presently" owned jointly with her husband.

The District Court thus summarized the defense: "Defendants contend the bankruptcy and discharge of the defendant husband precludes the plaintiff obtaining any judgment in the actions, several and/or joint against the parties or either of the parties." 163 F.Supp. 11.

The Trial Court entered judgment against the defendants jointly, reciting subsequently in the judgment that the husband had been adjudicated a bankrupt and that the liability of the wife thereunder should be in accordance with Sections 557.51-54, Compiled Laws of Michigan, 1948. The sections referred to are recited in Michigan Statutes Annotated as follows:

"26.181 Married woman; abolition of disability to make certain contracts. Section 1. The common law disability of married women to make and enter into the class or kind of contracts hereinafter specified in section two (2), is hereby abrogated and abolished.

"26.182 Married woman; capacity to be bound jointly with husband on written instrument. Sec. 2. Hereafter married women shall be possessed of the power and capacity, and it shall be competent for them to bind and makes (make) themselves jointly liable with their husbands upon any written instrument as hereinafter provided. Said liability to extend, however, only to the property described in the following section.

"26.183 Liability of certain realty to seizure; liability of personalty to garnishment. Sec. 3. Hereafter the real estate of the husband and wife owned by them as tenants by the entirety, or the real estate acquired by either as survivor of the other, or in the event of divorce the interest of either in real estate which was previously owned by them as tenants by the entirety, shall be liable to seizure and sale on execution, and all personal property and choses in action owned by husband and wife jointly with right of survivorship therein, shall be subject to writ of garnishment and all other process provided by law, in satisfaction of any judgment which has been recovered against the persons who were at the time of the execution of such written instrument husband and wife jointly or the survivor upon any instrument signed by both. In case the wife is the survivor, or in case the husband and wife have been divorced prior to the recovery of the judgment, a judgment against the wife may be satisfied only out of such property.

"26.184 Judgment or decree; enforcement, recitals; endorsement of process. Sec. 4. Such judgment or decree shall be enforced in all respects as now provided by law, except this, that in all cases where such liability is sought to be enforced as against the real estate of the husband and wife owned by them jointly as tenants by entirety or the crops, rents, profits or proceeds thereof or taken therefrom, or any personal property or choses in action owned by the husband and wife jointly with right of survivorship therein, the judgment or decree shall recite and it shall be the duty of the court to determine in such suit or proceeding whether such judgment or decree is rendered upon any written instrument and whether the parties defendant in such suit or proceeding and against whom such judgment or decree is rendered, were at the date of delivery of such instrument husband and wife, naming them, which recital of fact for the guidance of the office shall be endorsed upon any writ of execution or other process issued thereon or for the collection thereof, which recital shall be conclusive as against the husband and wife and authorize the enforcement of such judgment or decree as against all property subject to the satisfaction thereof by virtue of this act."

The parties are not in disagreement that what the United States obtained was a joint or a Quasi-in-Rem judgment susceptible of being satisfied only out of property owned by defendants-appellants as tenants by the entirety in accordance with the statutes, supra.

A tenancy by the entirety in real property is an estate in land accruing to husband and wife wherein both are seized of the entirety so that neither can dispose of any part without the consent of the other, nor may either subject it to payment of his or her individual debts. Collier on Bankruptcy, 14th Edition, Vol. 4, Sec. 70.17, p. 1035. In 41 C.J.S. Husband and Wife § 34, p. 458, it is described as "a peculiar and anomalous estate." Each (husband and wife) is seized per tout et non per my; there is but one estate. Whether or not an estate by the entirety has been created in property depends upon state law. Collier on Bankruptcy, Vol. 4, p. 1039.

The contention of defendants-appellants is that the liability of the husband was discharged under Section 35 of Title 11, United States Code Annotated. That section provides that a discharge in bankruptcy releases the bankrupt from all of his provable debts whether allowable in full or in part, except six specifically defined classifications within none of which is it provided that debts contracted jointly with the wife are exempted. Counsel for defendants-appellants contend...