In re Castleberry

• Citation: 143 F. 1018
• Parties: In re CASTLEBERRY.
• Decision Date: 02 December 1905
• Court: U.S. District Court — Northern District of Georgia

143 F. 1018

In re CASTLEBERRY.

United States District Court, N.D. Georgia, Northwestern Division.

December 2, 1905

Payne &amp Payne, for bankrupt.

R. J. &amp J. McCamy, for creditors.

King Spalding & Little, for surety company.

NEWMAN District Judge.

It is unfortunate, perhaps, that the machinery of the bankruptcy court is not such as would authorize the court to turn over the money in the hands of the trustee, less expenses, to the authorities of the county of Dade, at lease so much of it as has been derived from a sale of the real estate.

It seems entirely clear from the evidence that this real estate was bought with the money of the county; the checks given to pay for the same appearing to have been signed by the bankrupt as 'county treasurer.' What may be the truth as to the money realized from a sale of the stock of merchandise, seems rather more difficult to determine. The bankrupt, it is conceded, owes over $17,000 to mercantile creditors. The rights of Dale county and the mercantile creditors, respectively, can be determined hereafter, in a court of competent jurisdiction. The trustee in bankruptcy takes no title to exempt property, and the only jurisdiction that a court of bankruptcy has, as to exempt property, is for the purpose of setting it apart, and after hearing any question raised as to the right of exemption, to either refuse or approve the exemption, and have it turned over to the bankrupt. Bankr. Act July 1, 1898, c. 541, Sec. 70, 30 Stat. 565 (U.S.Comp.St. 1901, p. 3451).

It is thoroughly settled now that the bankrupt court will not undertake to enforce debts claimed to be good against the homestead or exemption. Such is the ruling of this court in Re Camp (D.C.) 91 F. 745; In re Wright (D.C.) 96 F. 187, following In re Bass, 3 Woods, 382, Fed.Cas.No. 1,091, the opinion being delivered by Mr. Justice Bradley. This is now thoroughly settled by the Supreme Court in Lockwood v. Exchange Bank, 190 U.S. 294, 23 Sup.Ct. 751, 47 L.Ed. 1061.

The decisions referred to were all with reference to notes containing a waiver of homestead exemption, but the same rule would be applicable in a case like this, where it is claimed that it is subject to an execution issued by the ordinary of the county, for the amount of the defalcation of the county treasurer, I do not differ at all with the referee in holding that the rights of the county of Dade are superior to the right of the bankrupt to his exemption in the sense that the county's claim against the amount of the exemption can be enforced, and the money paid ultimately to the county, rather than to the bankrupt. The same is true, however, of a note waiving homestead and exemption; but that is no reason why the exemption should not be set apart. But under the ruling of the Supreme Court in Lockwood v. Exchange Bank, the court will refuse a discharge until opportunity can be given to the creditors whose debts are good against the exemption, to enforce the same in a court of competent jurisdiction. Of course, where the exemption claimed, as in this case, is in money held by the trustee, the bankruptcy court would hold the fund and protect it until proper proceedings can be instituted and the money sequestered by a court of competent jurisdiction, for the benefit of parties at interest. The referee having inadvertently found that the equitable title to this fund in the hands of the trustee was in the county of Dade, by an amendment to his decree, found that the title was in the bankrupt, subject to an equity, under the facts, in favor of the county. This being true, and...