The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1873-11-07
creditors of the bankrupt have any interest

Natu, anu tnaI tucy exceed In vaiue the real
estate incumbered by them, there can be no
reason for the exercise of the powers of the
Bankrupt Court.
| To take possession of the property In such
| case and sell 1t through the assignee, so fai
| from bentting the creditors or the bankrupt
| himself, would only add to tho costs, and
would diminish the dividends Of the one
| without adding to the possible surplus oil
| the other. s.t.
II any fraud were alleged on the part OF
| the persons appointed to sell tho estate BY
| the State Court, or any want OF good faith
| on the part of the creditors seeking its juris.
diction. or II in any way 1t could be made to
appear to the Bankrupt Court that the gene
raj creditors would be benefited by sale
| through the assignee In bankruptcy rather
| than by the persons named in the decree OF
the State Court, the Bankrupt Court, which
! Is the guardian both of the Interest of the
creditors and of the bankrupt, ought to ex-
| ercise its power and maintain lite jurisdic-
| ton.
But il these reasons are wanting, and the
facts appear to the contrary, IL seems to the
court that the general creditors have no IN.
tereSt in the proceedings In the State Court.
Whatever become OF the property, whether
| 1t be sold for less or more. can make no diff
[ ference in their dividends OF the bankrupt's
estate.
1t seems to the court that in the case at
bar, and in the other cases submitted, where
similar proceedings In State courts have been
had by lien creditors prior to the adjudica-
| ton in bankruptcy, to sell the estate of an
insolvent debtor which was incumbered be-
You'd its value, the Bankrupt Court ought
| not to have interfered.
1t should have allowed the lien creditors
| to have pursued their remedy.
| The assignee in bankruptcy took only
such estate in bis realty as the bankrupt
| himself bad
| In this case confessedly this Was Of no
| value. The. bankrupt's estate was incum-
| bered by liens admitted to be valid greatly
beyond its value, and without paying them
| of the assignee had nothing of value In the
estate. Neither he nor the general creditors
propose to do this.
But in the case Ut bar, and the others sub
| mitted with it, the bankrupt, by bis assignee,
| claims that his real estate ought to be admin.
stered in the Bankrupt Court, because it is
| there only he can have the benefit OF the
homestead exemption which is supposed to
be allowed by the net Of March 8, 1873,
| amen dstory Of the bankrupt act.
1t appears In this case, from the agreed
statement Of facts, that not only was the real
estate Of the bankrupt incumbered by valid
liens far beyond its value, prior to bis appl-
cation for the benefit, Of the bankrupt law,
but that on the 10th day of November, 1859,
nearly two years and q half before his appli-
cation in bankruptcy, the bankrupt had exc
cuted two deeds Of trust conveying all his
estate in this property to the parties men
toned therein.
These deeds, indeed, were subsequently
BY the State Court declared fraudulent and
void az to creditors, but they are valid as to
hn and be is not to be heard IN bank
rupt court to ask that an estate, tho value Of
which be has received once in the debts
represented by judgment liens upon it, and
again By the consideration expressed in the
deed which conveyed all his estate to an
other, shall be assigned to him, nevertheless,
"a q homestead.
The homestead exemption was Q bounty
to unfortunate but honest debtors. 1t WAS
not intended for the benefit Of fraudulent
bankrups.
In some of the cases submitted with the
one at bar, where the liens Of judgment
creditors mstured before adjudlcations In
bankruptcy, are greater in value than the
real estate, there has been no subsequent
conveyance by deed Of trust 81 In this tnse.
The claim is that under the provisions Of
the act Of March s, 1878, the bankrupt Is
entitled to the exemption allowed by the act
of Assembly Of Virginia commonly known
az the homestead exemption, passed June
9Th, 1870, and that this homestead exemp-
ton has precedence of and is paramount TO
the liens Of the judgnent-credit0rs.
The bankrupt in this case, and In the
other cases submitted, were adjudicated
bxnkrupts prior to the passage Of the act Of
March 8, 1878.
In our opinion the relation Of the bank
rupt to his property is fixed the moment he
files his petition in voluntary bankruptcy !;
and in involuntary bankruptcy so soon rs he
is adjudicated q bankrupt. The rights OF his
creditors to his estate are determined at the
same time. What the homestead exemptions
are at these times, both the bankrupt and
his creditors are presumed to know. He
petitions and they resist; or, they petition
and he resists. in the Bankrupt Court, with
full knowledge of the then existing law OF
| bankruptcy.
To repeal all exemptions after the bank
| rupt had petitioned, and was entitled to an
exemption by Law, would be an injustice
| TO him. TO give him an exemption not al
| lowed by law at the time Of his application,
when too late for bis creditors to resist bis
adjudication as O bankrupt, would be
| equally unjust to them.
~ Every bankrupt then, and his creditors, it
seems to US, ought to be and are concluded,
as TO bis and their interest in the bankrupts
estate by the law Of bankruptcy existing at
| the time of his application or adjudication as
| bankrupt 49, ..,. =" "
The bankrupt, if he has acted in good
| faith. is entitled to discharge from all bis
| debts.
| ! His creditors are entitled to the proceeds
OF all his property except that which The
| then existing Law exempts from their claims
| Bv filing his petition he asks that this may
1 be 80. - :
By proving their debts the creditors assent
! also. lLs 49,. ... :.
all the estate of the bankrupt Is conveyed to
the assignee. 1t is provided also thst such
| assignment shall relate back TO the com
| mencement of proceedings in bankruptcy.
| Section II provides that such property
fmesuing that property which, by the tnen
| existine law of the State, was not exempted
from lew upon execution, and which, by
force of the bankrupt law, had come into the
hands of the nssignee,) shall be divided
amongst the creditors whose Claims snal
| have been proved and allowed.
| II seems evident from these two sections
that what is surrendered by the bankrupt a.
the time of bankruptcy shall be distributed
| 10 his creditors, and that what is then ex
empt by law he shall retain. f..
The exemption allowed is not matter in
tho discretion of the court 1t is matter OIL