Opinion · Supreme Court of the United States
Smalley v. Laugenour
Smalley v. Laugenour, 196 U.S. 93 (1905)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1905-01-03
- Topic
- general
How later courts describe this case
- property exempt from levy and sale under state law is exempt from the estate
Citator
UpLaw has not yet analyzed Smalley v. Laugenour. The absence of a flag is not a finding that it is good law.
- Cited by
- 41 opinions
Headnotes
- Bankruptcy Law — Exempt Property The rights of a bankrupt to property as exempt are governed by the statutes of the State, and if such exempt property is not subject to levy and sale under those state statutes, it cannot be made to respond under the federal bankruptcy act. 196 U.S. 93 (citing § 6 of the bankruptcy act)
- Bankruptcy Law — Jurisdiction The bankruptcy court is expressly vested with jurisdiction to determine all claims of bankrupts to their exemptions; where a trustee has been appointed the trustee sets apart the exemptions and reports to the court, and where no trustee has been appointed the court acts in the first instance. 196 U.S. 93 (citing § 2, cl. 11, and § 47, cl. 11, of the bankruptcy act; Gen. Order XV)
- Bankruptcy Law — Review of Exemption Orders A creditor notified of the bankruptcy proceedings who wishes to contest the bankrupt's claim to an exemption must do so in the bankruptcy court or invoke the supervision and revision of the Circuit Court of Appeals; having failed to do so, the creditor cannot question the validity of the order setting the exemption apart in a later proceeding in the state court unless the order is absolutely void. 196 U.S. 93
- Federal Courts & Jurisdiction — Review of State Judgments (Section 709) The Supreme Court lacks jurisdiction under § 709 of the Revised Statutes to review a state court judgment that merely gives effect to a bankruptcy court's order setting apart exempt property, where the state court decided only the question of exemption under state law and no title, right, privilege, or immunity under the Constitution or laws of the United States was specially set up or claimed and decided against the plaintiff in error. 196 U.S. 93 (citing § 709, Rev. Stat.)
- Bankruptcy Law — Judgment Liens and Exempt Property A general judgment lien attaches only to real property that is not exempt; therefore, if the property was exempt at the time the bankruptcy petition was filed, the judgment under which it was sold was not a lien upon it, and assuming the judgment created a lien assumes the very question at issue, namely that the property was not exempt. 196 U.S. 93 (quoting the state Supreme Court)
SMALLEYv. LAUGENOUR,196 U.S. 93(1905)
25 S.Ct. 216
SMALLEYv. LAUGENOUR.
ERROR TO THE SUPREME COURT OF THE STATE OF WASHINGTON.
No. 97.
Submitted November 28, 1904.
Decided January 3, 1905.
THIS was an action of ejectment commenced in the Superior
Court of Lincoln County, Washington, by A.F. Smalley and F.
McLellan against George F. Laugenour and Jane Laugenour (with two
others, who subsequently ceased to be parties) to recover
possession of certain real estate situated in that county.
Page 94
The action was tried by the court without a jury, which filed
findings of fact and conclusions of law, and rendered judgment
for plaintiffs, whereupon defendants Laugenour carried the case
by appeal to the Supreme Court of Washington. The judgment was
there reversed and the cause remanded with directions to enter
judgment for appellants, defendants below.30 Wn. 307.
This writ of error was then brought.
The facts were stated by that court in brief as follows:
"The appellants are husband and wife, and acquired the land in
controversy as early as the year 1885. On March 16, 1895, the
respondents and one L.J. Hutchings, as partners, recovered a
judgment in the Superior Court of Lincoln County on a community
debt against the appellant, Geo. F. Laugenour, for the sum of
$363.45. On April 12, 1899, execution was issued on the judgment
and levied on the land mentioned, under which, after due
advertisement, it was sold at public auction to the respondents
for the sum of $532.15, being the amount then due on the
judgment. Thereafter the sale was confirmed by the court, and,
after the time for redemption had expired, a sheriff's deed was
executed and delivered to the purchasers, which they caused to be
recorded. On May 10, 1899, — three days before the execution sale
took place, — the appellant, Geo. F. Laugenour, filed in the
United States District Court for the District of Washington his
voluntary petition in bankruptcy, in the schedule to which he
listed the land in controversy, claiming the same as exempt under
the bankruptcy act. On May 11, 1899, the referee in bankruptcy,
to whom the proceedings had been referred, adjudged the
petitioner a bankrupt, and thereupon gave to the creditors of the
bankrupt, shown in the schedule attached to the petition, among
whom were the respondents, the formal notice required by the
bankruptcy act, notifying them of the adjudication of bankruptcy,
of the time and place fixed for the first meeting of the
creditors, that they might attend at such meeting, prove their
claims, examine the bankrupt, and transact such other business as
should properly come before the
Page 95
meeting. None of the creditors appeared at the time fixed for the
meeting, viz., June 5, 1899, and no trustee was elected or
appointed; the referee finding that no necessity existed
therefor. On August 9, 1899, the bankruptcy court entered an
order discharging the bankrupt from all debts and claims made
provable against the bankrupt's estate; and on August 12
`regularly made an order in said bankruptcy proceedings setting
aside to said bankrupt as exempt under the act of Congress
relating to bankruptcy, the real estate hereinbefore described,
and awarding said real estate to the said bankrupt.' The court
further found that since the execution sale the appellants had
been in possession of the real estate, claiming to be the owners
of the same; and for several years last past had resided in
Spokane County, Washington, and that the real property, during
the time, had been occupied by the defendant, Harry Gilliland, as
their tenant. On the facts so found it ruled that the respondents
were the owners and entitled to the possession of the premises,
and entered judgment accordingly."
And the court held that the order of the District Judge of the United States for the District of Washington, sitting in bankruptcy, awarding the property to Laugenour as property exempt from the claims of his creditors, and which related back to the time of the filing of the petition in bankruptcy, which was prior to the date of the attempted sale, was a judgment conclusive as between the parties that the property was so exempt at that date.
The state court was of opinion that Laugenour and his wife might have pleaded and proved facts showing that the property was exempt from execution at the time of the sale, making the issue directly in the state court, but, as they chose to rely on the principle ofres judicata, that is, on the adjudication by the bankruptcy court, having jurisdiction of person and estate, in a proceeding in bankruptcy in which the judgment of Smalley and McLellan was provable, the court gave due force and effect to that adjudication.
The jurisdiction of this court to review the final judgments and decrees of a state court rests on section 709 of the Revised Statutes, and in this instance must be derived from the third division of that section, if it exist at all. And on the face of this record we cannot find that plaintiffs in error specially set up or claimed any title, right, privilege or immunity under the Constitution, or any statute of or authority exercised under the United States, which was decided against by the state court. What seems to be complained of is that the state Supreme Court accepted the judgment of the Federal bankruptcy court as having been rendered in the exercise of the jurisdiction with which it was vested.Page 97
Plaintiffs in error were notified of the proceedings in bankruptcy, as provided by the bankruptcy act, and, if they had desired to contest the claim to exemption, they might have done so, or could have invoked the supervision and revision of the order by the Circuit Court of Appeals, but they did not do that, and could not question its validity in the state courts, unless, indeed, it were absolutely void, which is not and could not be pretended.
The bankruptcy court is expressly vested with jurisdiction "to determine all claims of bankrupts to their exemptions." § 2, cl. 11. Where there is a trustee he sets apart the exemptions, and reports thereon to the court, § 47, cl. 11; where no trustee has been appointed, under general order XV, the court acts in the first instance.
Section 6 of the bankruptcy act 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 of the petition in the State wherein they had their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition."
The rights of a bankrupt to property as exempt are those given him by the state statutes, and if such exempt property is not subject to levy and sale under those statutes, then it cannot be made to respond under the act of Congress.
In one of the paragraphs of the reply of plaintiffs in error (plaintiffs in the court of original jurisdiction) to the answer of defendants it was asserted that on the day their judgment was recovered Laugenour and his wife were the owners of the real estate in question, and the judgment became a lien thereon, and that "said lien, which culminated in the aforesaid sale of real estate to plaintiffs, was obtained and created pursuant to said suit, and more than four months prior to the filing of the alleged petition in bankruptcy;" and it is argued that this amounted to a special assertion of an immunity under the bankruptcy act. But immunity from what? Nothing more, at the best, than immunity from the discharge in bankruptcy;Page 98not from the exemptions authorized by the state statute. And so Fullerton, J., speaking for the state Supreme Court, said: "Lastly, it is said that the order of the court setting apart the property as exempt does not purport to, nor does it in law, affect existing liens upon the property set apart as exempt, and, unless the liens thereon be such as the law avoids of its own force, such liens may be enforced in the state court against and to the extent of the property affected by the lien, notwithstanding the order setting it apart as exempt, and the discharge of the debt in bankruptcy. In cases of liens which can exist independent of the question whether or not the property is exempt, undoubtedly the rule here invoked would be applicable; but the lien of a general judgment is not such a lien. It is a lien upon real property, only, which is not exempt. Hence if this property was exempt at the time of the filing of the petition in bankruptcy, the judgment under which it was sold was not a lien thereon, and to assume that the judgment was a lien is to assume that it was not exempt, — the very question at issue."
We are not able to perceive that the state Supreme Court denied in any way a right of plaintiffs in error specially set up or claimed under the Constitution or laws of the United States. All that was determined, and all that the state court was called on to determine, was the question of exemption under the state statutes. Its acceptance of the judgment of the Federal court in that regard does not bring the case within section 709.Writ of error dismissed.Page 99