Pincus v. Meinhard & Brother , 139 Ga. 365 ( 1913 )

Hill, J.

(After stating the foregoing facts.)

1. The ¿main question in this case is, did the statement to Meinhard & Brother by Max Pincus, containing what purported to be U waiver of homestead and exemption rights, contain a valid, binding waiver as contemplated by law? It is insisted that the waiver of homestead and exemption rights was not a part of the contract upon which the defendant obtained the goods and merchandise from the plaintiffs. If the defendant signed the statement containing the waiver contemporaneously with the offer to buy, and it was done for the purpose of obtaining the goods of the plaintiffs, and they bjr reason of this waiver sold and delivered ■the goods to the defendant, then it is a good waiver, and the defendant is bound by the contract. What does the record show with reference to this? On July 1, 1911, the defendant ordered of the plaintiffs, by letter, a specified bill of goods. Before the plaintiffs would sell and deliver the goods they required a signed statement of the defendant as to his financial condition. In compliance with, this request, the defendant made the statement containing the clause 'as to homestead and exemption waiver as set out in the above statement of facts. Just two days after the date of the last letter of the defendant (it does not appear how long the letter was in transmission) with reference to the statement containing the waiver, the plaintiffs approved the order for the goods and entered the same upon their books for shipment at the time designated by the defendant, and charged the goods to the account of the latter, and they were, actually delivered to him on August 18 thereafter, according to the terms of the contract. Our law declares: “The debtor shall have power to waive or renounce in writing his right, to the benefit of the exemption provided for in this article, except as to wearing apparel,” etc. Civil Code, § 6584. And section 3413 provides: “Any debtor may, except as to wearing apparel and three hundred dollars’ worth of household and kitchen furniture and provisions, waive or renounce his right to the benefit of the exemption provided for by the Constitution and laws of this State, by a waiver, either general or specific, in writing, simply stating that he does so waive or renounce such right, which waiver may be stated in the contract of indebtedness, or contemporaneously therewith or subsequently thereto in a separate paper.” But it is insisted that the present case falls within the ruling made in the case of Ragan v. Taff, 134 Ga. 835 (68 S. E. 579). We think the facts of this case are radically different from those in the case cited. In that case, on page 838, Mr. Justice' Evans said: “Here a retail merchant gave to 'a wholesale merchant a statement of his financial condition, which contained a general waiver and renunciation of his homestead rights. The retail merchant did not order the goods 'at the time he gave this statement, nor did the wholesale merchant contract at that time to sell him any goods. There was absolutely no privity of contract between them. The goods were sold six months thereafter on open account, and we do not think the homestead waiver in the statement prepared for credit barred the retail merchant from applying for a homestead as against debts subsequently contracted.” In the present case, the credit for the identical bill of goods sold to the defendant by the plaintiffs was extended partly on the faith of the statement containing the waiver, and the goods were sold immediately after the reception of the statement containing the waiver, and on the faith of it. They were manufactured and bought by the plaintiffs for the sole purpose, as the record discloses, of. being shipped to the defendant on his order, and were charged on the books of the plaintiffs to the defendant’s account. It appears, therefore, that the waiver of homestead and exemption rights was made contemporaneously with the application for the goods, and was a part of the contract upon which the defendant. Max Pincus, obtained the goods from the plaintiffs. This being true, the waiver of homestead was a valid, binding waiver by the defendant, and the exemption set apart to him by the bankruptcy court will not prevail as against the plaintiffs’ debt.

But it is insisted further that the defendant did not sign the contract containing the waiver. How this is can be determined by the jury from the evidence on the final trial of the case.

2. The next inquiry is, whether the exemption consisting of the stock of goods set apart to the defendant, Max Pincus, by the trustee, and approved by the referee, vested the title to the same in him individually, so that he could alienate it. There is no question that prior to the bankruptcy proceedings the title to the goods was in Max Pincus. Did his voluntary petition in bankruptcy, and the submitting of himself and his assets, consisting wholly of the stock of goods set apart as exempt by the trustee, to the bankruptcy court, divest the title and vest it in the trustee ? By subsection (a) of section 70 of the bankruptcy act of 1898 (30 Stat. 565, H. S. Comp. St. 1901, p. 3451), it is provided that “the trustee of the estate of a bankrupt, upon his appointment and qualification, and his successor or successors, if he shall have one or more, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is exempt ” etc. (Italics are the writer’s.) 3 Remington on Bankruptcy, Supp. 867, § 70. In the case of Lockwood v. Exchange Bank, 190 U. S. 294 (23 Sup. Ct. 751, 47 L. ed. 1061), it was held that “The trustee does not take title to property exempt by the law of the State, but, until the exempt property is set off, has possession.” See also Collier on Bankruptcy (9th ed.), 1029, (b); McKenney v. Cheney, 118 Ga. 387, 392 (45 S. E. 433). But though the title to the property set .aside by the bankruptcy court is still in the bankrupt, it is as much exempt from levy aud sale as to existing debts, where there is no valid waiver of homestead and exemption rights, as if it had been set apart by the ordinary of the State having jurisdiction. Evans v. Rounsaville, 115 Ga. 864 (42 S. E. 100). But this is not true as to debts contracted subsequently to the setting aside of the exemption. Dozier v. McWhorter, 113 Ga. 559. When the exemption is set apart to the bankrupt by the bankruptcy court, the title is in 'the bankrupt precisely as it was before. Broach v. Powell, 79 Ga. 79, 81, 82 (3 S. E. 763); Bush v. Lester, 55 Ga. 579, 581; Broach v. Barfield, 57 Ga. 601, 604; Burtz v. Robinson, 59 Ga. 763; Laramore v. McKinzie, 60 Ga. 532, 534; Brady v. Brady, 67 Ga. 368; Felker v. Crane, 70 Ga. 484; Anderson v. Brown, 72 Ga. 713. The title being in the bankrupt, he can alienate the property set apart by the bankruptcy court before such time as he applies for and obtains a homestead and exemption under and by virtue of the constitution and laws of the State, as head of a family, or as having the care and support of dependent females. Felker v. Crane, 70 Ga. 484. When that is done, the property so set apart is also exempt from levy and sale until such time as the law provides it can be sold. When the property is set apart under the State law, the head of the -family can sell it as provided in section 6584 of the Civil Code.

It appears from the authorities above cited, that at the time the defendant sold the property set apart as exempt by the bankruptcy court, and before he had applied fox a homestead from the ordinary, as head of a family, under the State law, he had a right to sell the stock of goods to the vendees, and the latter would get a good title to the same, unless the goods were sold with the purpose to delay or defraud the creditors of the vendor, who have the right to subject the exemption, and this intention was known to the purchasers. Civil Code, §§ 3224 (2), 4109. The note given for the goods contains a condition that it shall not be paid by the makers if the title to the homestead and exempt property shall fail. This seems to indicate at least a suspicion on their part as to the genuineness of the title. Fraud in the sale of these goods being charged in the petition, and there being conflicting evidence on this subject, and insolvency being alleged as to the defendant, the court did not err in impounding .the goods to await the final determination of the case.

3. The order of the court requiring the impounding of the note given for the purchase-price of the goods is also assigned as error, because the payee thereof, Morris Pincus, was not a party to the case. It does not appear from the record that Morris Pincus, the payee of the note, was a party to this suit, or was present 'at the trial and waived not being a party, nor does it appear that the defendant was in possession of the note. It was error, therefore, to require the impounding of the note. It was proper for the court to impound the goods pending the final trial, but not the note given therefor, where it appears that the payee was not a party to the suit. He would be a necessary party before that could be done. For this reason alone, we reverse the judgment of the court below. No other errors appear in any of the assignments.

Judgment reversed.

All the Justices concur.