Court Opinion

ID: 9536526
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:01:28.436563+00
Date Added: 2024-06-11T14:54:39.454049
License: Public Domain

HALLEY, V. C.J.
(dissenting). I shall have to dissent in this case, because I am firmly of the opinion that both the findings of the trial court and the majority opinion are based on a misconception of the facts.
John E. Woodruff, Sr., filed a petition in bankruptcy under the Frazier - Lempke Act on January 13, 1942. On April 14, 1942, he amended his petition and asked to be declared a bankrupt under the general bankruptcy act, and on the same date, April 14, 1942, he was adjudged a bankrupt; and from that date on, anything that he acquired was not subject to the bankruptcy proceedings. The trial court was under the impression that he was responsible to the bankruptcy court until April 14, 1945, when it was said that he was discharged in bankruptcy. Even if he had not been discharged until 1945, the adjudication of bankruptcy reverts back to the time the petition is filed, and any property acquired after filing of petition in bankruptcy belongs to the bankrupt, free and clear of the bankruptcy proceedings; but certainly, in this case, when he was declared a bankrupt on April 14, 1942, anything he acquired after that time clearly was not subject to the bankruptcy proceedings, as we have previously said. See 8 C.J.S., Bankruptcy, §§70, 197, and 200. It is also the rule that property acquired after the filing of the petition in bankruptcy does not pass to the trustee. Id., Sec. 198. The property involved was acquired on July 10, 1944, more than two years after John E. Woodruff was adjudicated a bankrupt.
John E. Woodruff testified that he paid $2,100 for this property, $1,600 being his own money and $500 his son’s money. There is no evidence in the record that E. E. Woodruff, the son, in whose name this five acres was held, had any claim to it other than as a partner. John E. Woodruff went ahead and made the improvements on the property, for which he claimed over $10,000. The son, in a deposition in this case, stated that he paid a very small amount toward purchasing the property, possibly $500: There is no testimony in the record to contravert the father’s claim that he paid $2,100 for the property, $1,600 his own and $500 his son’s, and that he got part of the money from a sister. Regardless of whether he did or did not, there is nothing in the record to contravert this testimony. He undoubtedly was making money after he was adjudged a bankrupt in 1942, and was entitled to use his earnings to purchase this property. His earnings were not subject to the bankruptcy proceedings, and he should not be charged with defrauding his creditors because he devoted his earnings after his adjudication in bankruptcy to his own personal ends. There is no justification in the record for the findings of fact of the trial judge as to the defrauding of creditors. There is nothing in the record to justify the statement in the majority opinion that the money spent for improvements on the property was furnished by the individual contributions of E. E. Woodruff; E. E. Wood-ruff never made any such statement, and there is nothing in the record to justify such a conclusion.
Any deed that E. E. Woodruff may have given to Mary E. Woodruff conveyed to her only such interest as E. E. Woodruff had in the property, subject to the lien of John E. Woodruff Sr. There was no occasion for John E. Woodruff, Sr., to put any claim in the bankruptcy proceedings against E. E. Woodruff, because this transaction had nothing to do with the bankruptcy proceedings.
The fact that John E. Woodruff, Sr., did not tell where the money came from with which he made the improvements is immaterial. This question was not asked on cross-examination. The fact that he was in the salvage business and other businesses is undisputed, *8and there is nothing in the record to show that he did not make his money from those businesses, and there was nothing to prevent his spending it in any way he chose. He paid for the improvements and was entitled to a lien in proportion to whatever share his partner, E. E. Woodruff, had in the property. There is nothing in the evidence to show that a penny of Mary E. Woodruff’s money went into the property. There is nothing to show what E. E. Woodruff’s interest in the salvage business was, and nothing to show that any of his money went into the improvements that were placed upon the property by his father.
In my opinion this case should be reversed, with instructions to the trial court to determine what the respective partnership interests of E. E. Wood-ruff and John E. Woodruff, Sr., were in the property involved in this suit — - which, according to the record now before us, would be 5/21 interest in E. E. Woodruff and 16/21 interest in John E. Woodruff, Sr., — and the interest of E. E. Woodruff should be burdened with a lien for 5/21 of the value of the improvements placed upon the property by John E. Woodruff, Sr.
I dissent.