Steele v. Buel

• Decision Date: 12 November 1900
• Docket Number: 1,394.
• Citation: 104 F. 968
• Parties: STEELE et al. v. BUEL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

104 F. 968

STEELE et al. v. BUEL et al.

No. 1,394.

United States Court of Appeals, Eighth Circuit.

November 12, 1900

W. B Collins (H. R. Collins, on the brief), for appellants.

James C. Davis, W. J. Roberts, and Hillhouse Buel, for appellees.

The firm of Steele & Co. and Daniel Steel, Anna M. Steele William M. Steele, and Daniel H. Steele, the individual members composing the firm, were duly adjudged bankrupts in the district court of the United States for the Southern district of Iowa, Eastern division. All the parties were when the proceedings in bankruptcy were instituted, heads of families, and citizens and residents of the state of Iowa. At the date of the adjudication the bankrupts severally held policies of insurance on their lives as follows: Daniel Steele, three on his life; William M. Steele, two on his life; Daniel H. Steele, one on his life. The bankrupts claim that these policies of insurance and their cash value were exempt under the laws of Iowa from the payment of their debts, and that, being so exempt, neither the policies nor their cash value passed to the trustee in bankruptcy as assets of their estates under the bankrupt act. The referee in bankruptcy reported to the district court that the policies were not exempt under the bankrupt act, but passed to the trustee as assets of the bankrupts' estates; and the district court, somewhat doubtingly, confirmed the ruling of the referee, on the authority of a previous decision of that court in Re Lange (D.C.) 91 F. 361, and thereupon the bankrupts appealed the case to this court.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

CALDWELL Circuit Judge, after stating the case as above, .

It is objected by the appellees that the appeal was not taken within 10 days, as required by section 25 of the bankrupt act, but the limitation of 10 days prescribed by that section is by its terms limited to appeals 'in the following cases, to wit: (1) From a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; and (3) from a judgment allowing or rejecting a debt or claim of five hundred dollars or over. Such appeal shall be taken within ten days after the judgment appealed from has been rendered, and may be heard and determined by the appellate court in term or vacation, as the case may be. ' This case does not fall under either of the three heads mentioned in the section. The rule therefore, applicable to this case is found in section 24, which gives the right of appeal in absolute terms, without any limitation as to time other than that fixed by law for the regulation of appeals generally.

The remaining question is, were the policies exempt under the bankrupt act? The learned district judge, in his opinion in this case, concedes that policies of life insurance are exempt from the payment of the assured's debts under the Code of Iowa. The broad and comprehensive provisions of section 1805 of the Code of that state leave no room for doubt on this question. The claim of the trustee is that the proviso to section 70 of the bankrupt act abrogates the state law and section 6 of the bankrupt act, so far as relates to the exemption of policies of life insurance held by the bankrupt. Section 6 of the act declares:

'This act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing of the petition in the state wherein they have had their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition.'

This section establishes the rule of exemption in the most absolute and unqualified terms, and that rule is the state law. The phrase, 'this act shall not,' is the exact legal equivalent of the expression, 'nothing contained in this act shall. ' This rule of exemption, therefore, pervades the whole act, and is to be read into every other section and provision of the act. If congress had intended to diminish or lessen the state exemptions in any case, and particularly if it had intended to subject to the payment of the bankrupt's debts his policies of life insurance which were exempt under the state law, that intention would undoubtedly have found expression in clear and unmistakable language in section 6. That was the appropriate place for limiting or qualifying the state exemptions, if it was to be done at all. 'If a general provision is merely to be negatived in some particular, the negative should be expressed in immediate contact with the general words. ' Bouv. Law Dict. tit. 'Proviso.' Additional exemptions or benefits not granted to the debtors by the state laws might be provided for, in the proper connection, anywhere in the act, as was done by this proviso in relation to policies of life insurance in states which do not exempt them, as we shall presently see. In construing the proviso to section 70, not only the whole of that section, but the whole act, must be considered. That section reads as follows:

'The trustee of the estate of a bankrupt, upon his appointment and qualification, and his successor or successors, if he shall have one or more, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is exempt, to all (1) documents relating to his property; (2) interests in patents, patent rights, copyrights and trade-marks; (3) powers which he might have exercised for his own benefit, but not those which he might have exercised for some other person; (4) property transferred by him in fraud of his creditors; (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: provided, that when any bankrupt shall have any insurance policy which has a cash surrender value payable to himself, his estate, or personal representatives, he may within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own, and carry such policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets; and (6) rights of action arising upon contracts or from the unlawful taking or detention of, or injury to, his

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