In re Baumann

• Decision Date: 10 October 1899
• Citation: 96 F. 946
• Parties: In re BAUMANN.
• Court: U.S. District Court — Western District of Tennessee

96 F. 946

In re BAUMANN.

United States District Court, W.D. Tennessee, Western Division.

October 10, 1899

W. K Poston and Frank Zimmermann, for petitioning creditors.

J. M Gregory, for respondent.

HAMMOND J.

The question is made on an exception to the evidence, and by asking an instruction to the jury, whether property exempt under the state statute from execution at law is to be reckoned in balancing the property and debts upon the issue of solvency or insolvency, as made by a contested petition in bankruptcy. It is entirely true, as stated by Mr. Justice Bradley in Re Bass, 3 Woods, 382, Fed. Cas. No 1,091, 'that exempted property constitutes no part of the assets in bankruptcy, and that the assignee acquires no title to exempted property. ' Nevertheless it does not follow that it is not to be counted when determining the question whether he be solvent or insolvent. It is not a question of what constitutes assets in a court of bankruptcy, for that has not been reached as yet, but what constitutes a solvency that shall escape a condition of bankruptcy and the bankruptcy court. The bankruptcy statute provides, in section 1, subd. 15, as follows:

'A person shall be deemed insolvent within the provisions of this act whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred concealed, or removed, or permitted to be concealed or removed, with intent to defraud, hinder or delay his creditors, shall not, at a fair valuation, be sufficient in amount to pay his debts.'

This is probably as arbitrary a provision as is to be found in the statute. It was intended to wipe out, as with a sponge, all that confusion which is to be found in previous bankruptcy statutes and decisions as to the meaning of the word 'insolvency.' It had also the more comprehensive purpose of designating with absolute fixity the only class of persons upon whom the involuntary features of the bankruptcy statute should operate, namely, those whose property was not sufficient in amount to pay their debts. It does not proceed upon any theory that the debts will in fact be paid by the appropriation of the property to that end, nor upon the theory that as a matter of fact it is available for compulsory payment, but upon the theory that the defendant has sufficient property with which he may pay his debts if he chooses to do so. It would destroy the fixity of the statutory definition if an inquiry were permitted as to the more or less difficulty there might be in making the property available under legal compulsion, and it would reintroduce into the law of bankruptcy as much or more confusion about the meaning of the word 'insolvency' than existed before congress determined to put the meaning of that term beyond all question. Moreover, the language of the above-quoted section is explicit. There is not the least ambiguity about its meaning. It leaves no room for any construction by implication or otherwise. Obviously, it was intended to give us a rule in mathematics, the terms of which are absolute. Congress had the most plenary power to so limit the operation of the bankruptcy statute and, looking to the perplexities of the subject, public policy requires that effect shall be given to the...