Case Name: ROQUEMORE et al. v. GOLDSTEIN et al.
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1959-10-29
Citations: 100 Ga. App. 591
Docket Number: 37678
Parties: ROQUEMORE et al. v. GOLDSTEIN et al.
Judges: Felton, C. J., Carlisle, Quillian and Nichols, JJ., concur. Gardner, P. J., dissents.
Reporter: Georgia Appeals Reports
Volume: 100
Pages: 591–599

Head Matter:
37678.
ROQUEMORE et al. v. GOLDSTEIN et al.

Opinion:
Townsend, Judge.
1. An adjudication in bankruptcy does not automatically void the lien of a garnishment based upon a judgment rendered within four months next prior thereto', but renders it voidable when the conditions of 11 U.S.C.A. §107 (a) are met. McLean v. G. T. Duke Co., 95 Ga. App. 135 (3) (97 S. E. 2d 537).
2. A bankrupt has the right to assert the invalidity of a lien of garnishment based on a judgment rendered within four months of his adjudication in bankruptcy if property involved is exempt as a homestead and has been set aside to him as such in the bankruptcy proceedings. _Morris Plan Bank of Georgia v. Simmons, 201 Ga. 157, 166 (39 S. E. 2d 166); Chicago, B. & Q. R. Co. v. Hall, 229 U. S. 511 (33 S. Ct. 885, 57 L. Ed. 1306).
3. However, "cash cannot be set aside as a homestead exemption" under Georgia law. Posey v. Rome Oil &c. Co., 157 Ga. 44, 52 (121 S. E. 205), Code § 51-601.
4. The lien of a garnishment attaches upon the service of a summons of garnishment on indebtedness existing at that time, and, as to future indebtedness embraced within the summons, it attaches immediately upon the accruing of the indebtedness. Owenby v. Wager, 64 Ga. App. 433, 435 (13 S. E. 2d 686); Code § 46-203.
5. The trustee in bankruptcy, or, if no trustee, the referee (Sample v. Jackson, 225 N. C. 380, 35 S. E. 2d 236) may exempt property to the bankrupt as a homestead only in accordance with the law of the state in which the bankruptcy proceedings are instituted, and, where property is attempted to be so set aside, but for lack of compliance with state law no valid homestead is created, the action is merely res judicata of the fact that the trustee did not administer it as a part of the bankrupt's estate for the benefit of his creditors, but as to creditors who have a lien against such property or fund the attempt to set the homestead aside is ineffectual for that purpose and does not become res judicata that the property is in fact exempt. Shipman v. Fitzpatrick (Mo.) 164 S. W. 2d 912; Thomas v. Speck, 47 Cal. App. 2d 512 (118 P. 2d 365); Lynch v. Stotler, 215 F. 2d 776; In re Ogilvie, 5 Am. Bankruptcy Reports, 374.
6. Applying the foregoing law to the facts of this case it appears that Goldstein and Gordon, d/b/a Prior Tire Company, obtained a judgment against Charles Edward Roquemore at the December term of the Civil Court of Fulton County and filed a garnishment against his employer on December 5, 1957. The garnishee made answer showing an indebtedness of $200.16 on March 17, 1958, and on the same date Roquemore filed his voluntary petition and was adjudicated a bankrupt in the U. S. District Court for the Northern District of Georgia. The bankrupt claimed this fund as a homestead and the referee, set it aside to him as such. On June 30, 1958, he was discharged in bankruptcy. Roquemore filed a petition for perpetual stay of execution in the Civil Court of Fulton County and, on the hearing, introduced the discharge in evidence. The court denied his motion to dismiss and after hearing evidence entered judgment in favor of the plaintiffs against Roquemore and P. E. Thomas, surety in the dissolution bond which the defendant had posted. This judgment was affirmed by the appellate division of that court, and the judgment of affirmance is here assigned as error.
The garnishee, having paid the money into court prior to any notice that the debtor claimed the fund as a homestead exemption is, of course, protected, and in this particular the case differs from Taylor v. Jarrell, 104 Ga. 169 (30 S. E. 675). However, as stated on page 171: "The debtor has the same right to apply for an exemption of a debt garnished after judgment against the garnishee that he would have to apply for a homestead in property after the same had been seized under execution." The situation is accordingly this: if the debtor has under the record in this case, a right to claim the homestead out of the fund paid in by the garnishee he should prevail, otherwise not. As stated in In re Rollins Boot Shop, 24 F. 2d 422: "The trustee takes no title to exempt property. His only power over it is to' value it and set it aside. The bankruptcy court has no jurisdiction to administer it otherwise without the bankrupt's consent. On the other hand, the bankrupt has no' right to demand an exemption in cash . . . If indivisible town realty must be sold in order to sever the homestead, the cash arising from the sale must be invested . . . And investment is required if the estate be in cash to begin with. . . 'In no case shall the allowance of cash without such investment be a valid exemption.' [Code § 51-601]. Such investment is not within the province of the bankruptcy court, and must be left to the state tribunal should the bankrupt or his family desire so to perfect the exemption." (Emphasis added). It follows that, while the debtor here is, under the. decree of the bankruptcy court, entitled to a homestead exemption equal to the fund caught in the garnishment proceedings prior to his adjudication in bankruptcy, that fund cannot become a homestead under Georgia law so as to be freed from the lien of the garnishment until it has been converted from money (a commodity in which homestead cannot be acquired) into property, and this must be done by an order of and under the direction of the ordinary of the county of the debtor's residence. When such application is made, and a properly certified copy thereof filed in the court where the garnishment proceeding is pending, the action in the latter court should be stayed pending an order allowing the debtor to invest the money in personal property which may properly be the subject of the homestead exemption (Code § 51-601 supra), the property in which the investment is sought to be made being such as is approved and directed by the ordinary. A properly certified copy of such order, filed in the court where the garnishment proceeding is pending, would necessarily so perfect the homestead sought to be set aside to the debtor by the referee in bankruptcy as to exempt it from the lien of the judgment creditor. So long, however, as it remains merely cash, and no application for investment has been made with the ordinary, it remains a commodity which cannot be the subject of homestead exemption, and therefore, not being exempt and not having been administered as a part of the bankrupt's estate, it is a fund against which a garnishment can legally proceed.
Decided October 29, 1959.
It follows that since this record shows no application by the bankrupt to the ordinary of the county of his residence for direction to invest the fund in personal property, his homestead exemption was not valid, and the trial court properly found the fund subject to the garnishment.
Judgment affirmed.
Felton, C. J., Carlisle, Quillian and Nichols, JJ., concur. Gardner, P. J., dissents.
Miles B. Sams, for plaintiffs in error.
Marvin P. Nodvin, contra.