In re Bailey

• Decision Date: 17 February 1959
• Docket Number: No. B-343-L.,B-343-L.
• Citation: 172 F. Supp. 925
• Parties: In the Matter of Merle Ernest BAILEY, Bankrupt.
• Court: U.S. District Court — District of Nebraska

172 F. Supp. 925

In the Matter of Merle Ernest BAILEY, Bankrupt.

No. B-343-L.

United States District Court D. Nebraska.

February 17, 1959.

Paul Galter, Wagener, Marx & Galter, Lincoln, Neb., for bankrupt.

Emory P. Burnett, trustee, Lincoln, Neb., pro se.

VAN PELT, District Judge.

This matter is before the Court on a petition to review the Referee's order denying a claim that certain property is exempt.

Petitioner in Schedule B-5 claimed as exempt under Section 25-1556, R.R.S. 1943, "truck and tools and equipment used in painting business". The trustee's report of exempt property denied the claimed exemption of the truck.

The question is whether the Bankrupt's panel truck falls within the following exemption contained in Section 25-1556 (R.R.S.1943):

"No property hereinafter mentioned shall be liable to attachment, execution or sale on any final process issued from any court in this state, against any person being a resident of this state and the head of a family: * * * (8) the tools and instruments of any mechanic, miner or other person, used and kept for the purpose of carrying on his trade or business: * * *"

The bankrupt is clearly a resident and the head of a family. He uses the panel truck to carry paint, tarps, ladders, brushes, etc. to the jobs which he has obtained as a small painting contractor. Certain portions of the truck have been especially adapted for this use. The Court is in agreement with the findings of fact made by the Referee as follows:

"Findings of Fact.

"The bankrupt is the head of a family and is a resident of Lincoln, Lancaster County, Nebraska. At the time of the institution of this bankruptcy proceeding on April 12, 1958, and for several years prior thereto the bankrupt was engaged in the work of painting various structures; mostly homes. He describes himself as a painting contractor. Approximately 90% of his work was done as a small individual painting contractor. Almost entirely this was in painting new homes recently constructed. He would contact the contractor or builder and after checking the work to be done he would tender an oral lump sum bid for the job, whether it be painting one or two or several houses. He would then do most of the work himself. On rather rare occasions when he found he had a little more than he could do he would employ a journeyman painter for a time on an hourly wage rate. Now and then on rare occasions he would work as a journeyman painter at an hourly wage for some other contractor, but this was mostly incidental.

"Since much of his work was the painting of newly constructed homes in new additions and not yet occupied he found it necessary to transport his equipment, that is, his paint, brushes, rollers, drop cloths and ladders from the job to his home each evening and from his home to the job each morning. In 1955 he purchased and remodeled the 1951 International panel truck here involved to serve this transportation purpose.

"The value of the truck is not of serious importance here and is not definitely established. He paid $295.00 for it some three years ago. A fair valuation at this time would appear to be approximately $200.00. He thereupon removed the righthand seat, installed overload springs on the rear axle and constructed two shelves on the inside of each side of the truck, all running lengthwise and being approximately eight or nine inches wide. As thus equipped the bankrupt was enabled to load cans of paint and other small items on these shelves and drop cloths and ten foot ladders in the body of the truck and still close the rear door. Ladders fourteen and possibly sixteen feet in length and used together to make an extension ladder some twenty eight or thirty feet high could likewise be hauled in this truck by separating the two parts of the extension ladder and leaving the ends of the ladders extending out the rear of the truck with the rear doors left open.

"For all practical purposes I think it may be said that the truck was used exclusively by the bankrupt for the purpose of transporting these items of painting supplies and equipment between his home and the job and from job to job. On rare occasions he might take his son with him and drop the son off at school on the bankrupt's way to work and use the truck for other family purposes on rare occasions. Either the bankrupt or some other member of the family from time to time owned a pleasure type automobile which took care of the general family purpose needs.

"The painter employed as a journeyman painter does not furnish any tools or equipment. The brushes, rollers, drop cloths and ladders are furnished by the painting contractor. The paint itself is furnished by the painting contractor if so provided in his contract.

"The bankrupt is the owner of his home and his equity in that home has been set off by the Trustee as exempt under the provisions of Section 40-101 of the Revised Statutes of Nebraska for the year 1943 as amended."

In his conclusions of law, the referee concludes that the truck was not within the exemption set out above. The bankrupt contends that the truck is within the words: "tools and instruments of any * * * person, used and kept for the purpose of carrying on his trade or business."

The point here at issue has never been decided by the Nebraska Supreme Court.

In the annotations to the Nebraska statute, the Reviser of Statutes, an able and experienced Nebraska lawyer, has set forth the following: "Exemption of truck as tool for carrying on business allowed in bankruptcy court. In re Burden, D.C. 83 F.Supp. 416." The referee, in analyzing that case concludes that the case is not a square holding to that effect because the exemption was claimed not only under the statute above cited, but also under § 25-1552 which exempts $500 in personal property when the debtor has no homestead.

The original bankruptcy petition of Burden claimed in Schedule B-5 as exempt under the state laws, certain listed property including a "1939 1½ Ton Chevrolet Truck." There were cited both Sections 25-1552 and 25-1556 as well as Sections 25-1553 and 25-1554, and also because of the claim that an insurance policy was exempt, Section 44-371. In the application to release the truck from the execution which had been levied, all four sections, to wit, 25-1552, 25-1553, 25-1554 and 25-1556 were set forth as the basis for the application. The report of the referee found in paragraph 10 that the trustee filed his report of exempt property and set the truck off to the bankrupt as his exempt property under the laws of the State of Nebraska, and the provisions of the bankruptcy act and that no exceptions were taken to the report. The bankruptcy court entered an order approving the trustee's report of exemptions and the truck was set off as exempt and no exceptions were taken. In the hearing before the referee it was contended that the bankrupt claimed the truck as exempt under the laws of the State of Nebraska. It appears that it was argued that it was exempt both under the specific exemption statute, namely, as a tool of trade and under the $500 monetary exemption statute in lieu of a homestead. The referee in bankruptcy found the property to be exempt without specifying the section of the statute relied on. The court in review found that when levied upon, the truck had a value greater than $500 but due to an accident it was at the...