The Savannah morning news. (Savannah, Ga.) 1900-current, 1901-01-12
CHANGED THE RULE
WAIVER OF HOMESTEAD PRO-
NOUNCED INVALID.
JUDGE SPEER REVERSED
BANKRUPT DEBTOR MAY EAT HIS
CAKE AND HAVE 1T.

Decision of Far-Rencbing Impor-
lance Rendered by United states
Circuit Court of Appeals, at New
OrIeans-Cases in Which Decision
Was Rendered From This District.
Under Decision n Bankrupt Who
Has Previously Waived Homestead
May Keep IA Homestead Out of His
Assets Feared Decision VIII
Leave an Open Door to Much Dis
honesty.
A decision of far-reachlng Importance
and it is feared, one that wiH leave an
open door" to much dishonesty and
fraud, was rendered this week by the
United States Circuit Court of Appeals for
this circuit, sitting at New Orleans.
The court decides, in substance. that
when a man has waived the homestead to
which he is entitled under the state laws,
| and afterwards takes advantage of the
national act of bankruptcy, the waiver
becomes Immediately imperative and the
bankrupt may thereafter set apart his
| homestead and retain It, to the detriment
OF those of his creditors in whose favor
he has expressly waived it, as well as his
general creditors.
There were four or five consolidated
cases. some of them involving large
amounts of money, In which the de-
csion was rendered. These cases had
been tried before Judge speer and he had
held that the waiver was valid and prop
er and that it's force was not DESTROYED
| by the subsequent action of the debtor in
filing. his petition for discharge in bank
ruptcy.
These cases have been pending in the
Circuit Court of Appeals for nearly wear
and the decision of that tribunal has been
anxiously awaited. kilograms received
yesterday by Savannah lawyers announce
that Judge Speer has been reversed and
| the doctrine stated above enuncated by
the court as the proper rule of law.
The cases in which the Circuit Court of
Appeals has just rendered it's decision
originated before Referee Shelby Myrick,
at Americus. The principal case is that of
'. T. Woodruff bankrupt Referee NV
rick decided the cases as the Circupit
Court of Appeals decided them and was
overruled by Judge Speer
An Illustration of the way the new rule
VIII work will show something of its hard
ships. Suppose one man gives another
note for $1,000, in which he expressly
waves the homestead to which, If he
| nave family, he is entitled, and subse-
quently takes advantage of the act of
| bankruptcy Suppose at the time he files
his petition for discharge he has in cash
$1,000 Under the general state law he is
entitled to a homestead to this amount
but he is also entitled to waive It if he
sees mt. Under the application of the
decision of the Circuit Court of Appeals
he would be entitled to keep the $1,000
in money and at the same time receive
"a discharge from the court for the very
debt upon which he had waived his right
| to a homestead.
There are many cases that have arisen
in this district in which this question has
arisen and Judge Speer has decided all of
them In favor of the validity of the waiv-
er of homestead. The law of Georgia
gives this right to those who are entitled
to homesteads. The effect of the new de-
cision viii be the reversal of all of these
cases that have been tried on appeal
Ii is probable that the question will be
taken to the Supreme Court of the Unit
ed States, as it is one of far too mucn
Importance to be left to the ultimate de-
cision of any less august tribunal than
the highest in the land.
The decision, in case it is affirmed by
the Supreme Court on appeal, will doubt
less add very materially to the volume
! of business in the courts of bankruptcy
A man who had waived homestead in ia
vor of his creditors had no. particular
| temptation 90 take advantage of the act
! of bankruptcy as long as he had any
visible assets, when he understood that
the waiver of homestead he had made
would be upheld and he could not keen
this money from his creditors. When he
understands that the law gives him this
| right the man, whose anxiety to get rid
| of his debts overshadows in Importance
in his mind the propriety of adhering to
his contract and his promise will file his
| petition for a discharge in bankruptcy.
The most sanguine advocates of the
| act of bankruptcy do not seek to deny
| that il necessarily permits of much that
| is not honest, and that many bankrupts
| receive discharges. vino would be able to
meet all their obligations, not immediate
! ly perhaps. but in the course of a few
months or a few years. 1t is generally re-
garded as unfortunate that a new avenue
of dishonesty is opened.
The Circuit Court of Appeals of course
did not consider the effect of it's decision
| That was not its duty under the law In
| terpreting the act of bankruptcy with
reference to the particular question un-
der discussion the court came to the con-
cluson that 1t did not contemplate such
waivers of homestead as are usual under
the Georgia law and practice, and its de-
cision was rendered in accordance with
this Interpretation. If its Interpretation
| be correct the fault is with Congress
and not with the court, but the unfor-
tunate effect on the business world is
just the same.