Roberts v. Henry V. Dick & Co.

• Decision Date: 08 March 1960
• Docket Number: No. 8012.,8012.
• Citation: 275 F.2d 943
• Parties: Clarence Paul ROBERTS, and wife Becky M. Roberts, Appellants, v. HENRY V. DICK & CO., Inc., objecting creditor, Appellee. In the Matter of Clarence Paul ROBERTS, and wife Becky M. Roberts, Bankrupts.
• Court: U.S. Court of Appeals — Fourth Circuit

275 F.2d 943 (1960)

Clarence Paul ROBERTS, and wife Becky M. Roberts, Appellants, v. HENRY V. DICK & CO., Inc., objecting creditor, Appellee.

In the Matter of Clarence Paul ROBERTS, and wife Becky M. Roberts, Bankrupts.

No. 8012.

United States Court of Appeals Fourth Circuit.

Argued January 15, 1960.

Decided March 8, 1960.

Dan E. Perry and John T. Manning, Chapel Hill, N. C., for appellants.

W. Harold Edwards, Chapel Hill, N. C., for appellee.

Before SOBELOFF, Chief Judge, and HAYNSWORTH and BOREMAN, Circuit Judges.

SOBELOFF, Chief Judge.

Separate petitions in bankruptcy were filed on November 6, 1957, by Clarence Paul Roberts and his wife, Becky Mangum Roberts, each listing the same general creditors in identical amounts aggregating $114,663.62, except that the husband listed an additional obligation of $11,500 to the United States for federal withholding and Social Security taxes. The petitioners were adjudicated bankrupts and the cases were combined for administration, the same trustee being appointed for both estates.

Henry V. Dick & Co., Inc., one of the creditors, filed objection to the bankrupts' petitions for discharge, on the ground that the petitioners had transferred property within the previous twelve months with intent to hinder, delay and defraud creditors. The property in question was several parcels of land in North Carolina, subject to mortgages, and title was held by petitioners as tenants by the entirety. After a hearing the referee denied the discharge, and his decision was affirmed by the District Court.

The single legal issue presented by this appeal is whether, since the husband and wife filed separate petitions in bankruptcy, the property owned by them by the entireties passes to the trustee. Petitioners contend that under North Carolina law an estate by the entirety is not an asset of either husband or wife individually, and that, therefore, the creditors of neither individual could subject such property to their claims. They rely primarily on Dickey v. Thompson, 1929, 323 Mo. 107, 18 S.W.2d 388 in which it was held that where husband and wife bring separate proceedings which are later consolidated, the trustee is not entitled to property held by the bankrupts as tenants by the entirety.

This decision, though followed by the Missouri court in Shipman v. Fitzpatrick, 1942, 350 Mo. 118, 164 S.W.2d 912, is criticized in a case note at 43 Harv.L.Rev. 312 (1929). Moreover, the Remington treatise suggests the decision is extreme, 3 Remington on Bankruptcy, section 1223.01 (1957) and it is observed in 4 Collier on Bankruptcy, section 70.17, Note 40 (14th Ed.) that:

"The Dickey case is remarkable in that the spouses were adjudicated on the same day and the court acknowledged that under Missouri law a creditor with a separate judgment against a husband and wife on an obligation owing by both may enforce it against property held by the spouses as tenants by the entirety."

Appellee, on the other hand, cites three Federal District Court decisions holding that property held by the entireties will pass to the bankruptcy trustee to satisfy the joint debts of the husband and wife, even though they have petitioned separately for adjudication as...