In re Burden, B 22-48.

CourtUnited States District Courts. 8th Circuit. United States District Court of Nebraska
Citation83 F. Supp. 416
Docket NumberNo. B 22-48.,B 22-48.
PartiesIn re BURDEN.
Decision Date17 February 1949

J. Jay Marx, of Lincoln, Neb., for bankrupt.

Herman Ginsburg and Ginsburg & Ginsburg, of Lincoln, Neb., for Charles Sherman, objecting creditor.

DELEHANT, District Judge.

This proceeding is before me on the designated creditor's Petition for Review of an order of the Referee avoiding, releasing and discharging an execution lien of the creditor upon one 1939 — 1½ ton Chevrolet Truck (theretofore set off to the bankrupt as exempt, infra) obtained, within four months next prior to the filing of the Petition in Bankruptcy, through judgment and the issue and levy of an execution in the Municipal Court of Lincoln, Nebraska, and on the Referee's Certificate thereon in pursuance of Section 39, sub. a of the Bankruptcy Act of June 22, 1938, Title 11 U.S.C.A. § 67, sub. a.

These facts, as found by the Referee, are unchallenged and are clearly correct. I, therefore, adopt them. The bankrupt and the objecting creditor are severally designated by their respective surnames.

At all times mentioned in the ensuing factual recital, up to and including the filing of his Petition in Bankruptcy, Burden was insolvent.

On July 29, 1948 Sherman, as plaintiff, filed in the Municipal Court of Lincoln, Nebraska, a petition against Burden, as defendant, to recover $388.37 with interest and costs. On the same day a summons returnable on August 4, 1948 at 8:30 o'clock a. m. was issued upon the petition and served upon Burden by the delivery of a copy of it at his usual place of residence.1

On August 4, 1948 at 11:15 o'clock a. m., in the action thus instituted, judgment by default was made and given in favor of Sherman and against Burden for $398.37 and costs of suit, and an execution on the judgment was issued out of the court of its rendition directed to its constable and commanding him to levy the execution upon the property of the defendant which he might find.

On August 17, 1948, the constable levied the execution on the truck already described.

On August 18, 1948, Burden filed in the action then pending upon the execution in the Municipal Court, his claim of exemption, in which he claimed the truck as exempt from levy and sale under the laws of Nebraska, (a) generally, in lieu of homestead, under Section 25-1552, R.S.Neb. 1943, to him as one having "neither town lots or houses subject to exemption as a homestead"; and (b) under section 25-1556(8), R.S.Neb.1943, as a "tool or instrument * * * used and kept for the purpose of carrying on his trade or business." Burden made similar claims in open court. Sherman objected to the several claims for exemption. After showing and hearing, the issue thus arising was submitted to the Municipal Court.

On September 3, 1948, the Municipal Court entered in the case the following order: "On defendant's motion for release of 1939 Chevrolet Truck, taken on execution, as a tool in trade, Overruled", and an order that the truck remain in the possession of the constable and that he proceed to sell it for the satisfaction of Sherman's judgment. No further action was ever taken by the constable or the Municipal Court in that action.2

On August 17, 1948, no other encumbrance against the truck was of record; but on August 18, 1948, a chattel mortgage upon it, to secure the payment of the sum of $567 to Federated Finance Company, of Lincoln, Nebraska was filed for record. That chattel mortgage had been in existence, unfiled and unrecorded, for some time.

On September 4, 1948, Burden, as plaintiff, instituted, in the District Court of Lancaster County, Nebraska against Sherman, the constable and others, as defendants, an action in replevin for the recovery of the possession of the truck. On the same day, a Writ of Replevin was issued in that action, out of, and under the seal of, that court, directed to the sheriff of Lancaster County, Nebraska, commanding him to take possession of the truck. Pursuant thereto, the sheriff possessed the truck and caused it to be appraised. Its value was fixed in the appraisal at $750. Still on September 4, 1948, Burden, the plaintiff in the action, as principal, and one J. L. Caplan as surety, executed and delivered to the sheriff a replevin bond in due form in the penal sum of $1,500, conditioned that they would pay all damages and costs awarded against them and return the truck in case a judgment for its return was rendered against Burden. Thereupon, the sheriff delivered the truck to Burden, who, at all times subsequent thereto has retained its possession. On October 13, 1948, the defendants in the replevin proceeding filed their answer therein, and, in that answer, among other things, denied that the court in which the proceeding was pending had jurisdiction of it. No further proceedings have been had in that case.

On October 19, 1948 Burden instituted this proceeding, filed his petition for adjudication, and was adjudicated a bankrupt.

On November 2, 1948, the first meeting of creditors was held, and Hyman Polsky was appointed trustee and qualified in that capacity.

On November 10, 1948, the trustee filed his report of exempt property and set the truck and other property off to Burden as his exempt property under the laws of Nebraska, and the Bankruptcy Act. No exception was taken to the report.

On November 24, 1948, the Referee made and entered an order approving the trustee's report of exemptions, and set the truck off as exempt along with other property. No exception was taken to that order.

Not formally found, but implicit in all findings of the Referee is the ownership of the truck by Burden at all material times. Then, too, the Referee's entire ruling in the proceeding before him implies, and before me Sherman has acknowledged that, at the time of the filing of his Petition in Bankruptcy, Burden was engaged in commercial trucking operations, as his business or occupation, and that the truck was then used and kept by him for the purpose of carrying on that business.3

After Burden's recovery of possession of the truck, it was involved in a collision, in consequence of which it was damaged and its market value was diminished. It was repaired; but it appears to be conceded that its present value is somewhat less than its value on the date of levy. Without prescribing exact values at either time, it satisfactorily appears that its value on August 17, 1948 was somewhat more, and on October 19, 1948 was somewhat less, than $500.

The Referee's ruling, to which exception was taken, was upon the issues made by the following pleadings. On October 29, 1948 the bankrupt, who had theretofore made claim to the truck as his exempt property in bankruptcy, filed with the Referee his application for an order releasing it from the execution. On December 2, 1948, the creditor filed objections and answer to the application. Theretofore, on November 24, 1948, the Referee had made and entered an order discharging the truck from the execution and levy, which order he had vacated under date of November 30, 1948, upon the creditor's application, and for insufficient notice and hearing. In the vacating order of November 30, 1948, the creditor was directed to file his answer on or before December 3, 1948. On December 3, 1948, the Referee formally and in writing set the hearing on the issues for December 6, 1948, and by mail gave formal notice thereof to Caplan, the surety on the replevin bond, to Federated Finance Company, the chattel mortgagee and to Polsky, the trustee. The hearing was had as scheduled; and the Referee entered the challenged order on December 8, 1948. Petition for Review was filed by the creditor on December 10, 1948, and the Referee's Certificate of the proceedings was made and filed on December 13, 1948.

Broadly understood, the creditor contends, first, that the referee was without jurisdiction to entertain the controversy or make the order; and secondly, that, even if his jurisdiction be granted, his order was mistaken and erroneous.

The statute directly involved is Section 67, sub. a, of the Bankruptcy Act of 1938, Title 11 U.S.C.A., § 107, sub. a, the first four numbered subparagraphs of which are set out in a footnote.4 In any appraisal of the published literature upon the significance of the cited language, it must be understood that it represents a comprehensive legislative modernization and revision, effective September 22, 1938, of Section 67 subs. c and f of the Bankruptcy Act in its form prior to the amendment of 1938, Title 11 U.S.C.A. § 107, subs. c and f, in its language before the cited date. And the amplified language and coverage of the amendatory legislation must be kept in view in the evaluation, for present purposes, of otherwise pertinent judicial decisions upon facts maturing before September 22, 1938.

Arguing in denial of the jurisdiction of the Referee over the instant issue, the creditor assembles substantial authority to the effect that in the application of the former statute (a) not every lien obtained by judicial proceedings upon the property of a debtor within four months prior to the filing by or against him of a petition in bankruptcy, resulting in an adjudication of bankruptcy, was made void or voidable by the statute, but only such lien as was obtained in the circumstances defined in the statute, and principally at a time when the debtor was insolvent; and (b) the statute, despite its mandatory language, did not operate automatically to dissolve the lien thus obtained in the instant, and by force alone, of the adjudication in bankruptcy; but (c) the lien denounced was made, not void, but voidable through the judgment of a court of competent jurisdiction, and upon the completion of proper procedure to obtain its cancellation. Connell v. Walker, 291 U.S. 1, 54 S.Ct. 257, 78 L.Ed. 613; Taubel-Scott-Kitzmiller Co. v. Fox, 264 U.S. 426, 44 S.Ct. 396, 68 L.Ed. 770. Thus far, there is no question of...

To continue reading

Request your trial
4 cases
  • Harris v. Hoffman, 18715.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • July 5, 1967
    ...4 Collier on Bankruptcy §§ 67.15, 67.16 (4th ed.1964). See also Sampsell v. Straub, 9 Cir., 194 F.2d 228. Cf. In re Burden, D.C.Neb., 83 F.Supp. 416; Wallace T. Bruce v. Najarian, 249 Minn. 99, 81 N.W.2d 282 holding that 67a did not affect a mechanics lien since it is a statutory lien; the ......
  • In re Engram, 2313
    • United States
    • United States District Courts. 11th Circuit. Middle District of Georgia
    • January 19, 1957
    ...a bankrupt is binding upon the bankruptcy court. Many of the cases herein cited are discussed in the case of In re Burden, D.C.D.Neb., 83 F.Supp. 416, which holds that under the modernization and revision of the Bankruptcy Act effected September 22, 1938, the Referee has summary jurisdictio......
  • Ulmann v. Rapides Bank & Trust Co. in Alexandria, 2324
    • United States
    • Court of Appeal of Louisiana (US)
    • May 3, 1968
    ...294) 136 So. 122; Huff v. Justice, (La.App.) 174 So.2d 164; Schexnailder v. Fontenot, et al., 147 La. 467, 85 So. 207; In Re Burden, 83 F.Supp. 416 at page 427 (headnote 10). * * Citing Mercer National Bank of Harrodsburg v. White's Ex'r., 236 Ky. 128, 32 S.W.2d 734, the district court said......
  • In re Bailey, B-343-L.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • February 17, 1959, 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......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT