Court Opinion

ID: 8746969
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:11:01.530789+00
Date Added: 2024-06-11T17:00:43.793203
License: Public Domain

NEWMAN, District Judge.
The above is the report of the referee on the right of the bankrupt to have the exemption allowed by the constitution and laws of Georgia out of his stock of merchandise, which has passed into the hands of his trustee in bankruptcy. The referee, as will be seen, refuses to approve the exemption. In view of the fact that counsel were somewhat restricted in their oral argument before the court on these exceptions, I have examined the evidence in the case, and the entire record, very carefully, and have considered the casé, as counsel for the bankrupt urges it should be considered, only with reference to the admitted condition of the bankrupt in June, 1901, and the situation subsequent thereto. That -which operates most strongly against the bankrupt, to my mind, is not so much the amount of goods on hand in June, the amount afterwards purchased, and the small amount on hand at the time the petition in bankruptcy was filed, and the failure to account for the proceeds, although this is not at all satisfactory, but it is the failure of the bankrupt to make any satisfactory showing as to the general conduct of his business. His testimony is a succession of failures to answer questions which any business man of ordinary intelligence could answer with reference to the conduct of his own business. He utterly fails to make a full, frank, and complete disclosure as to his affairs, which is required of one seeking an exemption under the laws of Georgia. Section 2830 of the Code of Georgia provides that:
“It shall be the duty of each and every person who claims the benefit of the exemption allowed in this article, as the allowance is a liberal one, to act in perfect good faith; and as it is in the power of the debtor, claiming the exemption of personal property, to conceal part of his property or money, and to claim the balance as exempt, it shall be the duty of such debtor, when he takes steps in the court of ordinary to have said exemption of personal prop*699erty set off to him, to make a full and fair disclosure of all the personal property, Including money, stocks and bonds, of which he may be possessed a t the time, and all such money or property which he may hold in excess of the said exemption shall be subject,” etc.
Another part of the same section is as follows:
"The debtor guilty of wilful fraud in the concealment of part of his property from his creditors, of which he is possessed when he seeks the benetit of the exemption, shall, on account of his fraud, lose the benefit of such exemption, and his property shall he subject to the payment of all just debts which he owed at the time such fraud was committed.”
It is impossible to read the examination of this bankrupt, and believe that he has acted “in perfect good faith,” as the statute requires, with his creditors.
Questions similar to that presented here have been before this court. In re Waxelbaum, 101 Fed. 228; In re Williamson (in the Northwestern division of this district) 114 Fed. 190, and In re Stephens (in this division) 114 Fed. 192. In the Williamson Case referred to, this language is used:
"In Georgia the exemption from levy and sale provided by statute will not be allowed unless the person claiming the same comes into court with clean hands; and certainly, In order to justify the allowance of an exemption out of a stock of goods, as against the creditors who sold the goods with which the business has been conducted, a case should be shown of fair dealing on the part of the debtor.”
I think the conclusions reached by the referee are fully justified by the record in this case. As I was impressed with the argument of counsel for the bankrupt that he had not had opportunity to present the bankrupt’s condition prior to June, 1901, I have, as stated, confined my examination of the case to the condition of the bankrupt at that time, and to facts which are developed subsequent thereto, and really mainly as to occurrences at the time and just before tlie failure of the bankrupt, which seem to me amply sufficient to justify the refusal of the exemption claimed.
It is well understood that the court will not interfere with a finding of the referee on the facts of a case unless it is manifestly erroneous, and certainly this cannot be said of the referee’s report in this matter. The action of the referee denying the exemption is approved.