Friedsam v. Rose

• Decision Date: 12 March 1925
• Docket Number: (No. 167.)<SMALL><SUP>*</SUP></SMALL&gt
• Parties: FRIEDSAM v. ROSE.
• Court: Texas Court of Appeals

271 S.W. 417

FRIEDSAM v. ROSE.

(No. 167.)^*

Court of Civil Appeals of Texas. Waco.

March 12, 1925.

Rehearing Denied April 16, 1925.

Appeal from District Court, McLennan County; James P. Alexander, Judge.

Action by J. K. Rose against I. W. Friedsam. Judgment for plaintiff, and defendant appeals. Affirmed.

Alva Bryan and W. L. Eason, both of Waco, for appellant.

Sleeper, Boynton & Kendall and S. E. Stratton, all of Waco, for appellee.

STANFORD, J.

This was an action of trespass to try title, brought by appellee, J. K. Rose, against appellant, to recover a lot fronting about 80 feet on Barnard avenue and running back with North Eighteenth street 165 feet to alley, and will be referred to herein as the North Eighteenth street property. The facts will be stated in connection with the assignments discussed.

Under several assignments, appellant contends, in effect, that the property was his homestead, that the bankruptcy court had no authority to order it sold as a part of his estate in bankruptcy, and so the sale of said property by the trustee of his estate, in accordance with the order of the bankruptcy court, to the appellee, conveyed no title. The record discloses that appellant had been engaged in the retail grocery and meat business and pickle manufacturing business since about 1908 on South Eleventh street, where he owned lots 8, 9, and 10, being houses Nos. 500, 504, and 508; lots 9 and 10 with buildings thereon valued at $7,500, and lot No. 10 with a brick building on same valued at $13,500. Appellant also owned a lot fronting 80 feet on Barnard street and running back 165 feet on North Eighteenth street. On the rear end of said lot had been cut off a business lot, 25 × 50 feet, and a brick business building constructed on same, fronting Eighteenth street. Appellant used the property on South Eleventh street for both his family residence and place of business for many years, and up to about a month prior to the time he filed his voluntary petition in bankruptcy, when he moved upon the property on North Eighteenth street, and began his residence on the front end of the North Eighteenth street lot and opened a grocery store and meat market on the rear end of said lot in said brick building, and also still maintaining his grocery, meat, and pickle business on the three lots on South Eleventh street. In his petition to be adjudged a bankrupt he claimed all of the Eleventh street property as his business homestead, and also all of the North Eighteenth street property, including the brick business house on same, as his residence homestead. The trustee of his estate recommended to the bankruptcy court that the North Eighteenth street property be set aside to him as both his residence and business homestead. Appellant, the bankrupt, filed a contest, protesting against the recommendation of the trustee. This controversy was settled by a written agreement, signed by the trustee in person and also by his attorneys, and by the attorney for the bankrupt, providing, in effect, that the South Eleventh street property should be set apart to the appellant, the bankrupt, in full settlement of all his claim of exemptions, and that he would surrender to the trustee all of the property claimed by him on North Eighteenth street. On the hearing of said contest, said compromise agreement was submitted to the bankruptcy court and by him approved, and by an order of said court the lots 8, 9, and 10, and all improvements on same, on South Eleventh street, were set apart to the bankrupt as his residence and business homestead, and in the same order the court directed the trustee to sell the North Eighteenth street property, which the trustee did, in accordance with law, and said property was bought in by appellee. Said sale was duly reported and approved by the court and deed made by the trustee, conveying said property to appellee.

The Bankruptcy Act expressly confers upon courts of bankruptcy jurisdiction to determine all claims of bankrupts to their exemptions. Section 2 of the Bankruptcy Act (U. S. Comp. St. § 9586), creating courts of bankruptcy and defining their jurisdiction provides that such courts "are hereby invested, within their respective territorial limits, * * * with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings * * * to * * * (11) determine all claims of bankrupts to their exemptions." 1 Fed. Stat. Ann. (2d Ed.) 516, 533; In re Elkin (D. C.) 218 F. 971; Nez Perce Bank v. Pindel, 193 F. 917, 113 C. C. A. 545; In re Highfield (D. C.) 163 F. 924; In re W. C. Allen & Co. (D. C.) 134 F. 620; In re Lucius (D. C.) 124 F. 455; C. J. vol. 7, § 629. Not only so, but the jurisdiction of such courts in bankruptcy matters is exclusive. McGahan v. Anderson, 113 F. 115, 51 C. C. A. 92; 7 Am. Bankr. Rep. 641; C. J. vol. 7, § 629. The bankrupt is obligated to schedule all his property in his petition in bankruptcy — that which he claims as exempt as well as that to which he makes no claim — and it is the duty of the bankruptcy court to determine and set apart to him the exemptions allowed by law. Clearly, the property is subject to the jurisdiction of the court. If the bankruptcy court did not have jurisdiction of all the property of the bankrupt and the power to determine the bankrupt's exemptions, the administration of the bankruptcy law would be impossible. We think the facts in this case demonstrate the wisdom of the bankrupt law in requiring the bankrupt to schedule all of his property, both what he claims exempt and nonexempt, and in providing that said court shall determine the bankrupt's exemptions and set same apart to him. As stated above, appellant owned three lots on South Eleventh street, a house on each lot, one being a brick building, all valued by him in his voluntary petition to be adjudicated a bankrupt at $21,000; also, a residence and business lot, with a brick building on it then used by him as a place of business, on North Eighteenth street, of the value of $6,000 or $7,000. He had used the Eleventh street property for his residence, as well as his business homestead, up to about a month before he filed his petition, when he moved onto the North Eighteenth street property. In his petition in bankruptcy he claimed all of it, valued at some $26,000, as exempt. When the trustee, representing the creditors, recommended to the bankruptcy court that the residence and business lot, with the brick building on it, on North Eighteenth street, be set apart to the bankrupt as his exemptions and that the South Eleventh street property be held not exempt and that it be administered for the benefit of creditors, the bankrupt filed a contest, contending all of it, except the business lot and brick building on North Eighteenth street, should be held to be exempt. If the bankruptcy court did not have jurisdiction to determine this contest because it involved a question of exemptions, then what court could determine it? No state court could determine it, and unless such question could be determined there could be no administration of the bankrupt law.

The bankruptcy court had jurisdiction and the exclusive right to determine such issue, and its judgment or decree adjudging and setting apart to the bankrupt his exemptions was a judgment of a court of competent jurisdiction, and appearing to be regular upon the face of the record, no court has a right to question its validity collaterally, as attempted here. If the bankrupt, appellant herein, was aggrieved by the judgment or order of the bankruptcy court, his remedy was by appeal, not to a state court, but to a higher federal court, or, in some circumstances, he might bring a suit in the proper federal court — a direct proceeding — to set aside said judgment, but certainly such suit could not be maintained in a state court. No state court has a right to review or question, either collaterally or directly, the judgment of the bankruptcy court involved herein. 1 Fed. Stat. Ann. (2d Ed.) 516, 533; Smalley v. Laugenour, 30 Wash. 307, 70 P. 786; Smalley v. Laugenour, 196 U. S. 93, 25 S. Ct. 216, 49 L. Ed. 400; Seedig v. First Nat. Bank (Tex. Civ. App.) 168 S. W. 445; Martin v. Robinson, 67 Tex. 368, 3 S. W. 550.

The judgment of the bankruptcy court, setting aside the Eleventh street property to appellant as his sole exemption, was rendered upon the written request and agreement of appellant, signed by his counsel, and he does not claim that he was misled or deceived, or that there was any error or mistake in said agreement or the judgment rendered thereon, and never made any complaint of said judgment until long after the Eighteenth street property was sold and purchased by appellee. He had the right, under the bankrupt law, to thus designate his exemptions, and having done so, and a valid judgment rendered, giving him what he requested, he is bound by same. We overrule all of appellant's assignments raising the contention that the bankruptcy court had no authority to order the Eighteenth street property sold and that such sale conveyed no title, etc.

Under several assignments, appellant contends, in effect, that the trial court should have instructed a verdict for him, because the evidence showed that if any one acquired any title by reason of the trustee's sale, such one was W. E. Johnson, and not appellee. The record shows, as testified by both appellee and W. E. Johnson, that W. E. Johnson, as a representative of appellee, attended the sale and bid the property in for appellee, and notified the trustee at the time he bid it in that he had done so for appellee and for him to make the deed to appellee. The trustee reported the sale as having been made to W. E. Johnson, and it was approved and deed directed to be made to the purchaser. Appellee paid the amount of the bid and deed was made to him. There was no objection to the evidence showing that W. E. Johnson was acting only for appellee in...