Court Opinion

ID: 8749271
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:19:40.153766+00
Date Added: 2024-06-11T17:00:51.483085
License: Public Domain

PARDEE, Circuit Judge
(dissenting). On the 3d of May, 1900, Ellis M. Talbott made the following transfer:
“For value received X hereby transfer and assign to L. S. Worsham, trustee, all my interest in the judgment obtained in my favor in the case of Ellis M. Talbott v. R. A. Lancaster, Receiver, in the United States circuit court for the Western division of the Southern district of Georgia. [Signed] Ellis M. Talbott.”
On the 25th day of August following I. Bashinski and other creditors of Ellis M. Talbott filed their petition in the bankruptcy court, praying that Ellis M. Talbott might be adjudicated a bankrupt on the ground that he, while insolvent, had transferred certain of his property, to wit, an execution in favor of said Ellis M. Talbott against R. A. Lancaster, and which was evidenced by a decree of the United States circuit court for the Western division of the Southern district of Georgia, amounting to about the sum of $3,000, which transfer was alleged1 to be an act of bankruptcy and, as a preference, void under the bankrupt law. Upon this petition the said Ellis M. Talbott was finally adjudicated a bankrupt.
On the 22d day of January, 1901, various delays occurring on account of the nonresidence of said Talbott, he finally filed on the 1st of February, 1902, his schedules, wherein he showed, among other property turned over to. L. S. Worsham for the benefit of creditors of Talbott & Palmer, the said judgment in favor of Ellis M. Talbott against R. A. Lancaster, receiver. In the meantime, and while the above proceedings were pending, a trustee was appointed, who, in March, 1901, instituted proceedings against , one R. C. Jordan, an attorney at law, to recover from him the proceeds of the judgment in the case of Talbott v. Lancaster, which resulted in the recovery from said attorney, as proceeds of said judgment, the sum of $2,000. Talbott filed his schedules February, 1902, and petitioned to have a homestead set apart to him out of the funds in the hands of the trus*341tee, which application was resisted because in fact the only funds in the hands of the trustee were the proceeds of the Lancaster judgment, which it was alleged had been recovered by the proceeding for the benefit of the creditors.
The following is the finding of fact made by the referee:
“I further find that on the 28th day of May, 1900, the said Ellis M. Talhott did make a transfer to L. S. Worsham, as trustee, to all of his interest in a judgment obtained in his favor against R. A. Lancaster, as receiver in the United States court for the Western division of the Southern district of Georgia, but that the proceeds of said judgment were never recovered by said Worsham, trustee, but that the same were in the hands of R. O. Jordan, one of the attorneys for said bankrupt, at the time the proceedings in bankruptcy were begun; that the said Worsham, trustee, never reduced any portion of the same to his possession; and that by order of the United States court the amount of said judgment was ordered to be paid to the trustee in bankruptcy of said Ellis M. Talbott, and the same was afterwards so paid by the said Jordan.”
The judge of the bankruptcy court stated the facts as follows:
“Ellis M. Talbott had recovered by a proceeding in the circuit court a judgment against Lancaster, receiver, amounting to some thousands of dollars. Talbott became involved in his business. That was the business of a broker. He had a partnership with a Mr. Palmer. His firm failed, and to secure his creditors he assigned to a trustee the judgment which he had obtained in the case against Lancaster. The assignment was made in writing, and is as follows: ‘Por value received, I hereby transfer and assign to L. S. Worsham, trustee, all my interest in the judgment obtained in my favor in the case of Ellis M. Talbott v. R. L. Lancaster, receiver, in the United States circuit court for the Western division of the Southern district of Georgia.' This, it otherwise appears from the evidence, was an assignment for creditors. It is true, I believe, that it was assigned for the creditors of Talbott & Palmer, but Ellis M. Talbott was himself personally bound to pay those debts, and therefore it was, in contemplation of law, an assignment for his creditors. This assignment was made within four months anterior to the proceeding - in bankruptcy. It was clearly a preference, and upon the proper issue made by the bankrupt court it was held to be a preference. The money recovered by virtue of the judgment was paid over to the trustee in bankruptcy, and then, after some delay before the referee and in this court, Mr. Talbott files his application for exemption out of this fund.”
In Pendleton v. Hooper, 87 Ga. 108, 13 S. E. 313, 27 Am. St. Rep. 227, the supreme court of Georgia held that, although title had been parted with, a homestead might still be claimed on the theory of possession; holding that no present interest or estate in land beyond that implied in the fact of possession is requisite to sustain a claim of exemption as against a debt or lien inferior to the exemption right.
In Whitehead v. Mundy, 91 Ga. 198, 17 S. E. 287, the above case was cited approvingly, and a homestead allowed in a crop of corn raised on another man’s land, on the theory of possession.
In McDowell v. McMurria, 107 Ga. 812, 33 S. E. 709, 73 Am. St. Rep. 155, a homestead was denied in a case where creditors had recovered property alleged to have been fraudulently conveyed. The court said:
“Under our statute, a homestead could, on the application of McMurria, only be set apart for the benefit of his family out of his own property. Civ. Code, § 2828. Inasmuch, however, as, prior to his application, the title by his own voluntary act had passed out of him, it follows that such homestead could not legally be granted. This is true whether the deed of conveyance was made with a good or a fraudulent intent. Cassell v. Williams, 12 Ill. *342387; Sumner v. Sawtelle, 8 Minn. 309 (Gil. 272); Huey’s Appeal, 29 Pa. 219. In Re Graham, 2 Biss. 449, Fed. Cas. No. 5,660, the court, ruling on this question, said: ‘In attempting to place his property beyond the reach of his creditors, he has placed his exemptions beyond his own reach.’ It follows, from what has been said, that the receiver should not have been restrained from the execution of the decree of the superior court of Calhoun county to. sell the property, because of the application of McMurria for homestead.”
In the present case the bankrupt has neither title nor possession, nor any meritorious claim, and, in my opinion, he is not entitled to a homestead out of the funds recovered by the creditors.
Talbott was put into bankruptcy because of the assignment of the Lancaster judgment. Up to the adjudication in bankruptcy there seems to be no pretense that under the law of Georgia he could have been assigned a homestead out of the proceeds of that judgment. In effect, the bankrupt’s creditors sued for and recovered the proceeds of the judgment (for it was done by their trustee), and thereupon Talbott applies for and is allowed a homestead out of those proceeds. It would be interesting to know under what law Talbott gets his homestead. It is not supposed that the bankruptcy law allows any homestead to bankrupts except as otherwise entitled. The law of Georgia does not allow a debtor a homestead out of property that he has voluntarily sold and conveyed. An examination of the transcript shows that the pretense that Talbott’s assignment to Worsham was incomplete is an afterthought, and without substantial basis in law or fact.
I think the learned judge of the court below'and my brethren here have been too liberal with the property that should under the bankrupt law go to Talbott’s creditors.