Court Opinion

ID: 8773142
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:51:40.618446+00
Date Added: 2024-06-11T17:02:21.886007
License: Public Domain

PARDEE, Circuit Judge
(after stating the facts as above). By the second section of the bankruptcy act' of 1898, the bankruptcy court is given jurisdiction, among other things, (11) “to determine all claims of bankrupts to their exemptions,” and by the sixth section it is provided :
“This act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing o'f the petition in the state wherein they have had their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition.”
By the seventh section of the same act it is made the duty of the bankrupt, among other things, (8) to “prepare, make oath to, and file in court within ten days, unless further time is granted, after the adjudication, if an involuntary bankrupt, and with the petition, if a voluntary bankrupt, a schedule of his property, showing * * * and a claim for such exemptions as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee, and one for the trustee.”
By the forty-seventh section of the act it is made the duty of the trustee, among other things, to (11) “set apart the bankrupt’s exemptions and report the items and estimated value thereof to the court as soon as practicable after their appointment.”
By the seventieth section of the act the trustee takes title as of date of the adjudication in bankruptcy, “except in so far as it is to property which is exempt.”
General order in bankruptcy No. 11 (89 Fed. vii, 32 C. C. A. xiv) is as follows:
“The court may allow amendments to the petition and schedules on application of the petitioner. Amendments shall be printed or written, signed and verified, like original petitions and schedules. If amendments are made to separate schedules, the same must be made separately, with proper references. In the application for leave to amend, the petitioner shall state the cause of the error in the paper originally filed,”
Applying these provisions of the law, which so fully and carefully protect the bankrupt’s exemptions, to the facts as given by the referee, we think it is clear that the bankrupt did not waive his right by failure to set forth in his schedules a claim for such exemptions as he was entitled to.
This is the plain equity and we think also the clear law of the case. Certainly the bankrupt did not intend to waive his exemptions, nor did lie at any time in terms waive them. The mere failure to claim them in the schedules, which are amendable by the equity practice in General Order No. 11, ought not to be treated either as a legal or equitable estoppel. See Burke v. Title & Trust Co., 135 Fed. 562, 67 C. C. A. 486, and Remington on Bankruptcy, §§ 1063-1070, inclusive. In this particular case it seems that the failure to specifically claim the exemptions in the schedules arose from the fact that the attorney who *647prepared the schedules for the bankrupt was ill informed as to the textual provisions of section 70 of the bankruptcy law, and advised his client that the claim for exemptions should be made later when the trustee should be appointed. And, on this aspect of the case, see In re Fisher (D. C.) 142 Fed. 205, and In re Kaufmann (D. C.) 142 Fed. 898. In re Carley, 117 Fed. 130, 55 C. C. A. 146, decided by the Circuit Court of Appeals in the Third Circuit, is authority for the proposition that, where the right to amend in bankruptcy proceedings is a valuable legal right, the action of the district judge in refusing the amendment may be revised in the Circuit Court of Appeals under section 24b of the bankruptcy act of 1898. This must be correct, because by said section 24b our jurisdiction to revise is in equity.
In this case the bankrupt did not waive his exemptions, and he had notwithstanding his omission to set forth his claim in the schedules a clear legal right to the exemptions allowed by the laws of the state of Alabama; and we think lie had a legal right to prefer his claim in the bankruptcy proceedings at any seasonable time while the property remained in the hands of the trustee unaffected by adverse rights. Having this clear legal right, whether he asserted it by petition or by proposed amendment to defective schedules is immaterial. As appears by the law above quoted, the trustee took no title to the exempt property ; and it was his duty to set the same apart as soon as practicable. There is no contention, aside from the omission in the schedules, that the claim was not asserted seasonably; in fafct, reservation in the original petition suggested the right. As to the effect the alleged waiver notes may have to defeat or affect the bankrupt’s rights, see Lockwood v. Exchange Bank, 190 U. S. 294, 23 Sup. Ct. 751, 47 L. Ed. 1061.
For these reasons, the judgment of the District Court and of the referee denying the bankrupt the right to so amend his schedules as to claim his exemptions under the laws of the state of Alabama are reversed, and the petitioner is allowed to file his amendment to the schedules within a reasonable delay fixed by the court, the proceeding's thereon to lie according to law and in accordance with the views herein expressed.