In re Isele

• Decision Date: 13 July 1940
• Docket Number: No. 609.,609.
• Citation: 33 F. Supp. 853
• Parties: In re ISELE.
• Court: U.S. District Court — Western District of Tennessee

33 F. Supp. 853

In re ISELE.

No. 609.

District Court, W. D. Tennessee, W. D.

July 13, 1940.

H. J. Steuterman, of Memphis, Tenn., for bankrupt.

Charles A. Rond, of Memphis, Tenn., for trustee.

MARTIN, District Judge.

The personalty exemption laws of Tennessee have been prolific of constant controversy in bankruptcy courts. The instant case presents another troublesome question.

The Referee in Bankruptcy has sustained the Trustee in his refusal to set aside as exempt to the bankrupt any part of a stock of liquor store merchandise, or any of the money realized from the sale of such merchandise. The ruling of the Referee is grounded upon his opinion that because the liquor was kept for sale by the bankrupt he cannot claim it as exempt under the personalty exemption contained in the last paragraph of Section 7701 of the 1939 Supplement to Tennessee Code of 1938, being Chapter 138, Section 1, of the Acts of the General Assembly of Tennessee for the year 1939.

Hearing has been had on the petition of the bankrupt for review of the Referee's ruling, disallowing the exemption claimed. The Referee has found that the bankrupt owned no household goods, but concludes that he "is unable to see in what way this will benefit the bankrupt as there are not any other assets out of which the bankrupt might claim his exemption"; and says, further, that he "is of the opinion that the bankrupt should not be allowed any part of the funds realized from the trustee's sale of the liquor stock of this estate, as exempt property."

Decision will turn upon an interpretation of the last paragraph of Section 7701 of the 1939 Tennessee Code Supplement, cited supra, in conjunction with the other provisions of the section, in the light of the accomplished amendment of the pre-existing code section on the same subject.

Prior to the present law, resultant from the aforementioned amendatory act of 1939, the statutory personalty exemption was provided in Section 7701 of the Tennessee Code of 1932, as follows: "The personal property of a resident head of a family to the amount of seven hundred and fifty dollars in value, to be selected by him, shall be exempt from levy and sale under execution or attachment, and from distraint or seizure except as is otherwise provided in this article; provided, such selection may not be made of personal property which is subject to a valid lien or title retained for security, so as to defeat the creditor so secured; nor, of goods, wares or merchandise acquired or held by the debtor as a merchant or dealer, so as to defeat his mercantile or trade creditors, or any of them; nor as against any sort of process issued for the purchase money of property sought to be selected for exemption."

In the last paragraph of the existing Code Section 7701, which, by Chapter 138, Section 1, of the Acts of 1939, supplanted the foregoing quoted section, the amount of the exemption was reduced from $750 to $450, and the italicized portion of the former law, quoted above, was not re-enacted into the new Section 7701 either in form or in substance. This seems indicative of the legislative intent.

The principle, expressio unius est exclusio alterius would seem to apply. In the list of specific articles exempted from execution in the existing Section 7701, in seven of the thirty items listed of specifically described household goods (largely food stuffs), exemption was limited to such articles as were kept for family use and in five of the seven was added the expression, "not for sale as merchandise". In the remaining twenty-three specifically described items of exempt personalty, no such express limitation to family use, or to articles not for sale as merchandise, is found. Nor is any such limitation of exemption contained in the last paragraph of the new Section 7701. On the contrary, the exemption coverage is described in broad language, as appears from the following quotation of the concluding paragraph: "In the event the head of the family does not own sufficient articles as above enumerated to aggregate a total fair value of four hundred and fifty ($450.00) dollars, such head of the family may select and claim additional articles of personal property then owned and in his or her possession, sufficient with the enumerated articles to amount to said aggregate value."

Dixon v. Koplar, 8 Cir., 102 F.2d 295, 297, re-states the settled rule in apt language: "The rights of a bankrupt to property as exempt are those given him by the state statutes; and the federal courts, sitting as courts in bankruptcy, will determine exemptions according to those statutes, and the decisions of the courts of last resort of the states construing and...