In re Vonhee

• Decision Date: 18 December 1916
• Docket Number: 5699.
• Citation: 238 F. 422
• Parties: In re VONHEE et al.
• Court: U.S. District Court — Western District of Washington

238 F. 422

In re VONHEE et al.

No. 5699.

United States District Court, W.D. Washington, Northern Division.

December 18, 1916

Coleman & Fogarty, of Everett, Wash., for bankrupts.

Frank D. Lewis, of Everett, Wash., for trustee.

Sherwood & Mansfield, of Everett, Wash., for excepting creditor.

NETERER District Judge.

The trustee set over to Alfonse Vonhee as exempt from the community property of himself and wife, wearing apparel household goods, and utensils, one cow, fifteen chickens, two guns, two watches, and the homestead, and disallowed $88 current wages due the bankrupt. Exceptions were filed by the bankrupt and a creditor who had performed labor for the copartnership of Vonhee & Hayes, bankrupt, which had been reduced to judgment, and upon hearing the referee confirmed the report of the trustee as to the homestead, but reversed his order as to the wages due and personal property. Petitions for review are now presented by the bankrupt alleging that no exception was taken by the creditor to the setting aside of the watches; that the creditor's claim is primarily against the copartnership; that the marital community is entitled to have said personal property set aside as exempt under section 563, Rem. & Bal. Code of Washington; that section 564, under which the creditor claims to subject the property to his claim, is repugnant to the Constitution of Washington, and that prior to the entry of the order the cow and the chickens had been used as food for the family of the bankrupt. Petitions for review are also presented by the trustee and the excepting creditor. The trustee contends that the wages are not exempt, as section 703, under which they are claimed, is not an exemption statute, but a part of the garnishment law. The excepting creditor contends that section 564 is constitutional, and that under its provisions all of the property can be subjected to his labor claim.

The bankrupt has cited no authority in support of his contention that section 564, supra, is unconstitutional. Article 19 section 1, of the Constitution of Washington provides:

'The Legislature shall protect by law from forced sale a certain portion of the homestead and other property of all heads of families.'

The bankrupt's contention that under this section it is mandatory upon the Legislature to set aside property as exempt and that it has no authority to subject property exempt as to general creditors to the payment of claims for wages, cannot be sustained. The amount and kind of property to be exempt from execution is purely a question of legislative policy. While the Supreme Court of Washington has not had this statute before it, the Supreme Court of the United States, in passing upon a Washington statute exempting the proceeds or avails of life insurance policies, which was attacked in Holden v. Stratton, 198 U.S. 202, at page 208, 25 Sup.Ct. 656, at page 657 (49 L.Ed. 1018), said:

'The fallacy which the proposition embodies consists in presupposing that because the Constitution of the state of Washington provides that the Legislature 'shall protect by law from forced sale a certain portion of the homestead and other property of all heads of families,' thereby a limitation was imposed upon the general power of the Legislature to determine the amount and character of property which should be exempt. * * * To the contrary, in California, where a constitutional provision obtains identical with the one we are considering, * * * it has been decided that the character and amount of property which shall be exempt from execution is 'purely a question of legislative policy.' Spence v. Smith, 121 Cal. 536 (53 P. 653, 933, 66 Am.St.Rep. 62).'

Nor can the contention of the excepting creditor that the words 'no property,' in section 564, include real as well as personal property, be sustained. That question has been settled by the state Supreme Court in Ervay v. Hill, 46 Wash. 457, at page 461, 90 P. 590, at page 592, in which the court said:

'But, in addition to this and waiving any question of the constitutionality of the amendatory act, it is apparent that the amendment does not in any way affect the law providing for the exemption of homesteads. An examination of the section amended shows that it has no reference to the subject of homestead exemptions, but is applicable only to exemptions of personal property. The legislative announcement is that section 5248a be amended, and while the comprehensive words 'no property' are used in the act, such words must be construed as referring only to the character of property described in the section amended. In this country exemptions are favored by the law, especially homestead exemptions; and it would be doing violence to the spirit of the law and to all well-recognized canons of construction to hold that the repeal of the provisions of a specified section repealed by implication other sections of the same chapter, the subject-matter of which was not embraced in the section amended.'

Ballinger's Ann. Codes & St. Sec. 5248a, is section 564, Rem. & Bal. Code.

Homestead exemptions are in no wise affected by the limitation imposed by section 564.

The contention of the bankrupts that the bankruptcy court takes no title to the exempt property and receives it merely for the purpose of setting aside the exemptions, and that it is not within the power of the bankruptcy court to determine the validity, extent, or priority of liens upon exempt property has been disposed of by the adjudication of the federal and Supreme Court.

In Re Grimes, 96 F. 529, the court at page 534, said:

'The title to exempt property does not pass to the trustee; it is vested in the bankrupt. Bankr. Act July 1, 1898, c. 541, Sec. 70a, 30 Stat. 565 (Comp. St. 1913, Sec. 9654). He may sell it or mortgage it. But, while this is true, property of the second class cannot be considered exempt property until it is selected and set apart. * * * It must necessarily pass to the trustee, who has temporary dominion over it until the exemptions are made. His title may be termed a defeasible title. When the exemptions are formally set apart by the trustee, and affirmed by the court, the title of the bankrupts then becomes superior to that of the trustee and absolute. After the exempt property has been designated and set apart to the bankrupts by the trustee, it has been administered, and has passed out of the possession and control of the bankruptcy court. The trustee has no further concern with it, nor has the court any jurisdiction to defend such property from adverse claims or liens that may or may not be distinguished by the bankruptcy proceedings. It will not entertain a proceeding to enforce a lien upon such property. * * * Such a lien may be enforceable in a state court without regard to any pending proceeding in bankruptcy.'

In Re Hatch, 102 F. 280, the court, after bankrupt's exemptions had been set apart and delivered to him, refused, on the petition of a creditor holding a chattel mortgage on the property, to order the bankrupt to restore the property to the trustee to be sold for the benefit of the mortgagee.

In Re Durham, 104 F. 231, at page 233, the court said:

' * * * Where the property is claimed as exempt, no title passes to the trustee, and he is only entitled to the possession thereof for the purpose of ascertaining, by proper appraisement, whether the value of the property does not exceed that allowed as exempt under the laws of the state. As soon as that is ascertained, it is the duty of the trustee to deliver it to the bankrupt.'

In Woodruff v. Cheeves, 105 F. 601, at page 606, 44 C.C.A. 631, at page 636, in disposing of a petition asking that the court withhold the bankrupt's discharge after his exemptions had been set apart, and take possession of the exempt property and subject it to sale in satisfaction of bankrupt's notes which the petitioners held, and in which the right of exemption had been waived, the court said:

'It seems clear to us that this language of the statute leaves no room for argument to show that the exempt property constitutes no part of the estate in bankruptcy subject to administration by the trustee or by the court of bankruptcy.'

In Re Little, 110 F. 621, the court in denying the petition filed by a mortgagee after the property had been set apart as exempt, to have the validity of its mortgage determined by the bankruptcy court, at page 226, said:

'By the action of the trustee, confirmed by the referee, the exemptions claimed by the bankrupt were allowed, and the particular property was set apart to him, and passed into his possession and control. When thus separated from the general estate, the exempt property ceased to be in the possession of the trustee or of the court, and under the provisions of section 70 the trustee took no title thereto. Under these circumstances the referee rightly ruled that the court of bankruptcy would not entertain jurisdiction over the exempt property at the request of the claimant bank.' In Re Jackson, 116 F. 46, the court said:

'The bankrupt act has expressly excluded from the control of the

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