Case Name: In re CABOT
Court: United States District Court for the Southern District of Ohio
Jurisdiction: United States
Decision Date: 1921-01
Citations: 295 F. 765
Docket Number: 
Parties: In re CABOT.
Judges: 
Reporter: Federal Reporter
Volume: 295
Pages: 765–767

Head Matter:
In re CABOT.
(District Court, S. D. Ohio, W. D.
January, 1921.)
1. Bankrupty <@=396(I) — Courts <@=366(19) — Ohio exemption statute applies as interpreted by courts of that state.
Gen. Code Ohio, § 11738, providing for exemptions, applies to a bankruptcy proceeding (Bankruptcy Act, § 6 [Comp. St. § 9590]), and is to be given the meaning fixed by the interpretation of the highest courts of that state.
2. Bankruptcy <@=399(3) — -Effect of fraudulent concealment of assets depends on statute and policy of state.
The effect of fraudulent concealment of assets by a bankrupt on his right to exemptions depends on the statutes and policy of the state.
3. Bankruptcy <@=399(3)-™ExeKiptioffi not withheld because of fraud before bankruptcy.
Gen. Code Ohio, §§ 11729, 11738, do not warrant the withholding of exemption of $500 to á husband and wife on the ground that there was fraud in the origin of the debt or in the disposition of the property prior to bankruptcy, because the exemption is not a privilege personal to the debtor, but is for the benefit of his family and the public.
<g==>For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
In Bankruptcy. In the matter of the estate of James Bred Cabot, bankrupt. On petition to review finding of referee allowing bankrupt exemption as a married man.
Exceptions overruled, and order affirmed.
M. C. Lykins, of Cincinnati, Ohio, for bankrupt.
W. A. Rinckhoff, of Cincinnati, Ohio, pro se.
Charles E. Dornette, of Cincinnati, Ohio, for trustee.

Opinion:
PECK, District Judge.
The case is here upon petition to review a finding of the referee allowing the bankrupt his exemption as a married man, under the statute of Ohio, without deducting the value of a certain diamond ring alleged to be fraudulently concealed. We accept the referee's conclusion of fact, as he heard the witnesses.
It appears that the bankrupt, within a few months prior to the filing of his petition, bought upon credit, and without payment of any part of the purchase price, a diamond ring of the value of $300. It is not listed or accounted for among his assets. His attempted explanation, that he, being then employed at a salary of $20 a week, bought it as a present for a niece whom he had not seen for 10 years, and to whom he mailed it, without registration, and who failed to receive it, is not accepted by the referee as true, nor is it so accepted by this court. The referee found, nevertheless, that the bankrupt had not had possession of, nor power to produce, the ring at any time since the institution of bankruptcy proceedings. Petitioner claimed that its value should be set off against the bankrupt's statutory exemption. This contention the referee denied, and so the case is here.
The Ohio statute applies (Bankruptcy Act, § 6 [Comp. St. § 9590]), and is to be given the meaning fixed by the interpretation,of the highest courts of the state. Collier on Bankruptcy (11th Ed.) p. 203. General Code of Ohio, § 11738, allows husband and wife living -together, not the owner of a homestead, to hold exempt real or personal property selected by them not exceeding $500 in value, in addition to the amount of other chattel property exempt by law. The exceptions to this exemption are specifically set forth in the statute itself, and in section 11729 and elsewhere. They include claims for the price paid for personal property sought to be held exem.pt, claims on mortgages, claims for work and labor, vendors' and mechanics' liens, claims for money lost by gambling, and taxes for the sale of intoxicating liquors. There appears to be no statute denying the exemption as against claims incurred by the fraud of the claimant.
The effect of fraudulent concealment of assets by a bankrupt on his right to exemptions also depends upon the statutes and pdlicy of the state. Collier on Bankruptcy (11th Ed.) p. 223. The question is thus put by Judge Dickinson in Re Liby (D. C. Pa.) 218 Fed. 90, 33 Am. Bankr. Rep. 312:
"Is the exemption allowed for the benefit of the bankrupt, or is the exemption law in the nature of a police regulation, and primarily for the benefit of the community, to prevent insolvents from becoming public charges?"
In Ohio the policy was thus declared by Judge Scott in Sears v. Hanks, 14 Ohio St. 298. 84 Am. Dec. 378:
"The humane policy of the Homestead Act seeks not the protection of the debtor, but its object is to protect his family from the inhumanity which would deprive its dependent members of a home. Its benefits can only be claimed by heads of families, married persons living together as husband and wife, and widowers or -widows having an unmarried minor child or children residing with them as part of their family."
The policy so declared has been consistently adhered to. Wildermuth v. Koenig, 41 Ohio St. 180; Roig v. Schults, 42 Ohio St. 165, 168. Judge Westenhaver, in Re Hewit (D. C. Ohio) 244 Fed. 245, 247, 40 Am. Bankr. Rep. 6, said of the law of Ohio:
"The homestead exemption, it is said, is not given for the benefit of the debtor, but for the protection of his family, and in part for the protection of the public who might otherwise be burdened with the partial support of an insolvent debtor's family."
See, also, In re Schafer (D. C. Pa.) 151 Fed. 505, 18 Am. Bankr. Rep. 361.
It is concluded that the law of Ohio does not warrant the withholding of the exemption on the ground that there was fraud in the origin of the debt or in the disposition of property prior to bankruptcy, because the exemption is not a privilege personal to the debtor, but is for the benefit of his family and the public. Therefore the referee, having found that the bankrupt did not have, and could not produce, the ring at or after the filing of the petition, did not err in allowing the exemption provided by the statute. If a fraud was committed, redress must be otherwise sought.
Exceptions overruled. Order affirmed.