In re Cohn
| Decision Date | 28 July 1909 |
| Citation | 171 F. 568 |
| Parties | In re COHN. |
| Court | U.S. District Court — District of North Dakota |
J. K Murray and Stambaugh & Fowler, for bankrupt.
J. P Williams and Engerud, Holt & Frame, for creditors and trustee.
The above bankrupt filed his voluntary petition in bankruptcy on the 5th day of December, 1908. About the 1st of July, 1908 he made final proof upon a government homestead, and received his final receipt entitling him to a patent therefor. All debts scheduled by the bankrupt were incurred prior to the date of his making such final proof. In his schedules he claimed the homestead as exempt both under the laws of North Dakota and under section 2296 of the Revised Statutes of the United States (U.S. Comp. St. 1901, p. 1398). The trustee set the land off to him as his homestead, under the state laws. One of his creditors filed exceptions before the referee to this action of the trustee, and asked that an order be entered denying the bankrupt's right to the land as a homestead, and directing the trustee to take possession of the same and apply it to the satisfaction of the bankrupt's debts. This question was fully presented before the referee, by counsel for the respective parties, upon voluminous testimony. As the result of such hearing, the referee found that the bankrupt prior to the time of the filing of his petition in bankruptcy had removed from the state of North Dakota, in which the homestead is situated, and taken up his residence in the city of Minneapolis, in the state of Minnesota, and that he had thereby abandoned his homestead as an exemption under the laws of the state of North Dakota, and lost all right to claim the same as exempt under those laws; but the referee further held that the homestead was exempt from the claims of all creditors whose indebtedness was incurred prior to the date of the making of final proof, and entered an order so declaring, and directing that the homestead be applied only to the payment of those debts, properly proven, which had arisen since the bankrupt made final proof for his homestead. A creditor whose claim accrued prior to the making of such final proof excepted to this order of the referee, and at his request the order has been certified to the court for review.
The bankrupt has filed no exceptions to the order of the referee, and cannot therefore be heard to object to any of its provisions. If this were not the case, it is quite likely that he would have just cause to complain of the order because it limits his exemption from debts to those which accrued prior to the making of his final proof; whereas, section 2296 of the Revised Statutes declares that the homestead shall not 'in any event become liable to the satisfaction of any debt contracted prior to the issuing of the patent therefor. ' There is no evidence presented here showing that any patent has ever been issued. It is the issuance of the patent which fixes the time when the property shall become liable to subsequent debts of the homesteader. Barnard v. Boller, 105 Cal. 214, 38 P. 728; Wallowa National Bank v. Riley, 29 Or. 289, 45 P. 766, 54 Am.St.Rep. 794.
Counsel for the objecting creditor contends that section 2296 of the Revised Statutes is repealed by sections 6 and 70, subd. 5 of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 548, 565 (U.S. Comp. St. 1901, pp. 3424, 3451)). Section 6 simply provides that the bankruptcy act shall not affect the allowance to bankrupts of the exemptions which are prescribed by state laws. Plainly this section deals solely with state laws. It is declaratory in its character. Its purpose is to save exemptions allowed by state laws, not to abolish those allowed by federal law. Its language is affirmative, and ought not to be given a negative effect, in the absence of a clear manifestation of such a legislative purpose. Potter's Dwarris, 69. Section 70 declares that the trustee shall be vested with the title of the bankrupt (except property which is exempt), to all '(5) property which prior to the filing of the petition he could by any means have transferred, or which might have been levied upon and sold under judicial process against him. ' The land in...
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