Long v. Hayslip

• Decision Date: 23 November 1955
• Docket Number: No. 15610.,15610.
• Citation: 227 F.2d 555
• Parties: George J. LONG, Creditor, Appellant, v. Homer Clyde HAYSLIP, Individually and d/b/a Textag Control System, Bankrupt, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

227 F.2d 555 (1955)

George J. LONG, Creditor, Appellant, v. Homer Clyde HAYSLIP, Individually and d/b/a Textag Control System, Bankrupt, Appellee.

No. 15610.

United States Court of Appeals Fifth Circuit.

November 23, 1955.

Henry M. Hatcher, Jr., and Johnson, Hatcher & Meyerson, Atlanta, Ga., for appellant.

Grace W. Thomas, Atlanta, Ga., for appellee.

Before HUTCHESON, Chief Judge, and TUTTLE and BROWN, Circuit Judges.

TUTTLE, Circuit Judge.

This case is related to Hayslip v. Long, 5 Cir., 227 F.2d 550. That case was an appeal from an order denying the bankrupt a discharge. This is an appeal from a judgment of the district court affirming an order of the referee granting the bankrupt a homestead exemption.

The facts essential to the decision and an understanding of this appeal are substantially all contained in the opinion in the other case, and they will not be repeated here. An added fact here is that, aside from the value of the patent and license rights which Hayslip sought to transfer to his wife and son, there was cash amounting to $1409.42 which was available for setting aside as a homestead exemption to the bankrupt if he was entitled to have it so allowed. The Georgia statute provides for a homestead exemption of $1600.00.

The only issue here is whether the attempted conveyance by Hayslip to his wife and son, which a jury in a subsequent civil action in the district court found to be "fraudulent," followed by a statement by Hayslip in his schedule of assets that he had transferred the property to his wife and son for $200 cash and $11,500 past consideration, so offended the Georgia statute dealing with homestead exemptions as to deprive him of his right to an exemption.

The exemption to be allowed in the bankruptcy court is, of course, that established by state law.¹ The only provision of the state law that is available to the appellant here under the objection before the referee is found in Section 51-203 of the Georgia Code. The applicable language is:

"* * * The debtor guilty of wilful fraud in the concealment of part of his property, of which he shall be possessed when he shall seek the benefit of the exemption, shall, on account of his fraud, lose the benefit of such exemption, * *."

Both parties discuss in their briefs the question of whether the patent and license rights were property "possessed" by the bankrupt at the time he sought the benefit of exemption.

In our opinion the only part of the Georgia statute that would deprive Hayslip of his exemption, since he seeks his exemption out of property other than that which he conveyed, is the prohibition against wilful fraud in concealment. Assuming that Hayslip was still "possessed" of his patent and license rights, which assumption was rejected by the trial court,² nevertheless we must face the question as to whether there was any wilful fraud in the concealment of such property.

It is admitted that there was no attempt to conceal the fact of the conveyance by the bankrupt. He entered it in his schedule as having been conveyed to his wife several months prior to bankruptcy. Appellant bases his contention that there was a concealment on two propositions. First, that the transfer to his wife was a colorable and fictitious transfer, not for full consideration, and second, that the bankrupt alleged in his schedule that the property had been conveyed for a present and past consideration, whereas the referee must take it as proven that this statement by the bankrupt was false. The only means by which appellant sought to prove these two elements of concealment was by introducing in evidence the judgment and verdict of the jury in the civil action finding the conveyance from Hayslip to his wife and son to be "fraudulent." His theory back of the proof of this judgment and verdict was that it was res judicata, first on the proposition that the conveyance was fictitious and without consideration, and second, on the proposition that the amount of consideration stated in his schedule was in fact not paid. For the reasons...