#### In re Assignment of Kraus.

*Exemption in lieu of homestead*— Assignor *foregoes selection of property*— Right *to exemption not abandoned, when*— May *be enforced against proceeds of sale.*

Where an assignor for the benefit of creditors is induced to and does, forego the selection of specific articles of personal property under his claim for exemption in lieu of.a homestead, because of representations made to him by the assignee that he would have to wait until the property was sold and an order of court obtained, and that he would then be paid his exemption, actual selection, under such circumstances, is waived or excused, and the want of it cannot be held to be an abandonment or forfeiture of the assignor’s right to claim and have his exemption out of the proceeds of sale of the assigned property, upon formal demand made therefor before distribution.

(No. 10566

Decided January 26, 1909.)

Error to the Circuit Court of Cuyahoga county.

The facts are sufficiently stated in the opinion.

*Messrs.*Hart, *Canfield & Croke,*for D. V. Green, assignee.

Section 5441, Revised Statutes, provides that husband and wife living together, residents of Ohio, and not the owners of a homestead may in lieu thereof hold exempt from levy and sale real or personal property to be selected by such person, his agent or attorney at any time before sale, not exceeding five hundred dollars.

In *Kelley*v. Duffy, 31 Ohio St., 374, Judge Mcllvaine says, that it is quite certain that as against the general creditors, the debtor did not intend to abandon his rights to any exemption to *315which under the law he was entitled. This is shown by his reserving the right in the deed of assignment, and the court held that the exemption should be allowed.

In *Kuhn*v. *Nieberg,*40 Ohio St., 631, Nieberg assigned for the benefit of his creditors in the probate court, reserving all property which he might be entitled to under the exemption laws of the state. The appraisers did not set off any property tc be exempt to him in lieu of a homestead, the assignee did not set off any property, the assignor made a motion in the court that he be allowed the sum of five hundred dollars to be paid out of the proceeds of the sale. The court sustained the motion and ordered the allowance to be made. From that order the assignee appealed to the court of common pleas, which affirmed the judgment of the probate court, and the circuit court and supreme court affirmed the probate court.

Where the assignor has demanded his exemption in lieu of a homestead and has reserved his rights to the exemption in the deed, and has made his formal application within a reasonable time after the surplus has been ascertained and before distribution, he has done all he could towards claiming any exemptions. *In re Assignment of Bremer,*4 O. D., 80.

No assignment for the benefit of creditors shall be construed to include or cover any property exempt from levy or sale, unless in the assignment the exemption is expressly waived. *Schuler*v. *Miller,*45 Ohio St., 325.

Property which, the law reserves from the demands of creditors does not in law pass to the *316assignee in insolvency. Thompson on Homestead, Section 834.

If the exemption is reserved by deed of assignment the whole effect of the reservation is that he does not part with it, and the amount of the exemption must be paid by the assignee in money after the conversion of the property. *Mulford*v. *Shirk,*26 Pa. St., 473; *Mercer*v. *Cunningham,*53 Ohio St., 360; *Saylor*v. *Simpson,*45 Ohio St., 141; *Havens*v. *Horton, Jr.,*53 Ohio St., 342.

The fact that the laws exempting the family homestead and other property from sale to pay the debts of an improvident debtor is a salutary and humane policy and should receive such construction as will accord the benefit of the enactment. *Gibson*v. *Mundell, 29*Ohio St., 523.

When all homestead exemptions are reserved in the deed of assignment, and there is a mortgage on the premises against which no exemptions can be allowed and he asks for an exemption in lieu of a homestead, the claim is one against the money. *Insurance Co.*v. *Waters,*65 Ohio St., 163.

The policy of our courts is to construe the exemption laws, so as to give them the effect, if possible, of being in favor of the homestead right. *Conley*v. *Chilcote,*25 Ohio St., 320; *Chilcote v. Conley,*36 Ohio St., 545; *Sears*v. *Hanks,*14 Ohio St., 298; *In re Assignment of Bell,*12 O. C. D., 731.

The policy of the law is that the exemption law is designated for the benefit of debtors, it should be so construed as to effectuate it, and not thwart *317its object and policy. *In re Assignment of Bremer,*3 O. N. P., 12.

No bankrupt should be deprived of his exemptions by narrow and strict interpretation of laws, which were passed for his .benefit and prompted by wise and humane public policy. *In re Falconer,*110 Fed. Rep., 111.

*Messrs. Hamilton & Smith,*for Israel Bialosky, exceptor.

Selection by the debtor must precede any obligation upon either the appraisers or the assignee to set aside exemptions in lieu of homestead and this selection must be made before sale. Sections 5441 and 6348, Revised Statutes; *Carpenter*v. *Warner,*38 Ohio St., 416; *Butt*v. *Green,*29 Ohio St., 761; *Frost*v. *Shaw and Birchard,*3 Ohio St., 274.

A general demand for exemption without a selection or at least an offer to select is not sufficient to entitle the debtor to exemptions out of the proceeds of the sale of such property. *Butt*v. *Green,*29 Ohio St., 668.

The order made by the insolvency court authorizing the assignee to pay said $500.00 to the assignor in lieu of homestead exemptions was without jurisdiction and void.

The right to be heard upon a motion filed in probate court for exemptions is fundamental; such an order is one affecting the property rights of every creditor and when made without notice is void. *Mooney*v. *Fogg,*19 C. C., 327.

Crew, C. J.

The essential facts of this . case are not in dispute, and so far as they are perti*318nent to the present inquiry, are: that on November 14, 1902, Fred. Kraus, by deed of voluntary assignment for the benefit of creditors, conveyed all of his property, except such as was by law exempt from execution, to one D. V. Green, as his assignee. On the following day, November 15, 1902, said deed of assignment was filed with the court of insolvency of Cuyahoga county, and thereupon said assignee duly qualified and took possession of all of the assignor’s property, which was of the appraised value of eight hundred and twenty-nine dollars and thirty-two cents, and consisted of personal property only. In said deed of assignment the assignor, in express terms, excepted and reserved therefrom “such property as is by law exempt from execution.” At the time of said assignment, the assignor, Fred. Kraus, was a resident of the state of Ohio, a married man living with his family, and neither he nor his wife was the owner of a homestead. On the day of the assignment the assignor demanded of the assignee his exemption in lieu of a homestead, and again within a few days thereafter he made a second demand therefor. Both these demands, which were orally made, were at the time disregarded and ignored by the assignee, and Kraus was told he would have to wait until the property was sold, and neither said assignee, nor the appraisers appointed by the court to appraise the property assigned, allowed or set off to said assignor before sale any property as and for his exemption in lieu of a homestead. Thereafter, the assignee, by .order of the insolvency court, sold all of said property at private sale for the *319sum of eight hundred and fifty dollars. Shortly after said sale and before the distribution of any part of the proceeds thereof, the assignor, Fred. Kraus, filed in said insolvency court, his formal written demand and application asking that said assignee be required to set apart and pay to him five hundred dollars as his exemption in lieu of a homestead. This application was, on March 31, 1903, granted by the court and said assignee, out of the money in his hands, was ordered to pay to said assignor the sum of five hundred dollars, which he did. Thereafter, on September 16, 1903, D. V. Green, as assignee, filed in said court of insolvency his first partial account, and in said account credited himself with the five hundred dollars so paid by order of the court to said Fred. Kraus, assignor. To this account exceptions were filed by Israel Bialosky, an attachment creditor, who excepted, among other things, to this item of five hundred dollars paid by the assignee to said Fred. Kraus as and for his exemption in lieu of a homestead. On the hearing of said exceptions the court of insolvency found and adjudged that the order of said court theretofore made, directing' the assignee to pay over to the assignor said sum of five hundred dollars in lieu of his homestead exemption, was made without notice to said creditor, Israel Bialosky, and was void. The court also further found and adjudged that the assignor not having made selection and had set off to him before sale, specific personal property to the value of five hundred dollars in lieu of his homestead exemption, forfeited his right to such exemption and was not entitled to receive *320said sum of five hundred dollars out of the proceeds of the sale of said property;- and thereupon the court sustained said exception and charged, said assignee in his account with the five, hundred dollars so paid to Kraus, assignor, and ordered the assignee to account for the same as money in his hands subject to distribution among the creditors of the estate of said assignor. On appeal to the court of common pleas a like judgment was rendered by that court, and this latter judgement was subsequently affirmed by the circuit court. To obtain a reversal of these judgments the present proceeding in error is prosecuted by D. Y Green, assignee. The judgment of affirmance by the circuit court was erroneous, and should be reversed, unless upon the facts above stated the court of common pleas was right in its conclusion of law that the failure of Kraus, the assignor, to make selection, and to actually have set off to him before sale property to the amount and value of five hundred dollars, was a waiver or abandonment of his right to thereafter demand or have such exemption out of the proceeds arising from the sale of the assigned property. While it is undoubtedly the law in Ohio that the statutory right to hold exempt from levy and sale in lieu of a homestead real or personal property not exceeding' five hundred dollars in value, is a personal privilege that may be waived by the person entitled to exercise such right, by his voluntary and intentional failure or neglect to make his demand and selection at- the proper time, or in a reasonable manner, yet this court has uniformly held, -that the right to exemption being a valuable *321right, and one grounded upon the principles of a' wise and humane public policy, that the statutes granting exemptions should be liberally, construed, and that no mere technicality should be permitted to defeat the right. In the present case the right of Kraus, assignor, to his statutory exemption in lieu of a homestead, unless waived or abandoned, is not controverted; and that he never *knowingly*or *intentionally ■*waived or abandoned such right is, we think, clearly shown and established by the undisputed facts as they appear of record in this case. In his deed of assignment, while unnecessary for him so to do, Kraus, assignor, expressly reserved his exemption. Thereafter, and before sale, he twice made demand for his exemption of Green, assignee, and was told by the latter: “I have no money, you will have to wait till I sell the stock and the court makes an order, then I will pay you your exemption.” Green, the assignee, testifies, that when Kraus demanded his exemption, “I said to him I could not do it, I could not do anything until I got an order from the court, and when everything was disposed of then I could pay him the money, provided the court made me do so, that is what I told him.” Thus, in effect, Kraus was, at the time he demanded his . exemption, informed and advised by the assignee that the same could not then be allowed to him, but that he must wait until after the sale of die property, and until such time as the court should make an order directing its payment, and then it would be paid to him. His right to the exemption being clear, and the same not having been waived or abandoned *322and demand therefore having been seasonably made by the assignor, it became and was the duty of the assignee to have the same appraised, set off and allowed to him before sale. Having failed in this it would indeed be a harsh rule, and one wholly inconsistent with the spirit and humane purpose of our exemption laws, that would under such circumstances deny to the assignor the right to claim and have such exemption out of the proceeds of sale, upon his formal demand made therefor while said proceeds are yet in the hands of the assignee undistributed. The rule requiring selection by the claimant of the exempt property, must have a reasonable interpretation, and where one entitled to his exemption seasonably demands the same of the officer or person whose duty it is to have such exemption set off and allowed to him, and the officer or person charged with this duty, either purposely, or through mistake and unintentionally, by his conduct, or by statements anck representations made to the claimant, so deceives or misleads the claimant that the latter is thereby reasonably induced to forego his right to make selection of the specific property to which he is by law entitled, actual selection, under such circumstances, is waived or excused, and the want of it can not be held to be an abandonment or forfeiture of the claimant’s right. We are of opinion, therefore, that in the present case, upon' the undisputed facts, Fred. Kraus, the assignor, was entitled to receive and hold exempt out of the proceeds of the sale of the assigned property five hundred dollars in lieu of a homestead. This sum having been paid to him, as and for such ex*323emption, by D. V. Green, assignee, the latter was entitled to have credit in his account for the amount so paid, and the exception to this item of the account should have been overruled and such credit allowed.

*Judgment reversed.*

Summers, Spear, Davis, Shaucic and Price, J'J., concur. ,