Kibbe v. Scholes , 219 Ala. 571 ( 1929 )

It seems to be the settled law that all property of the bankrupt, not exempt under the laws of the state, passes to the trustee in bankruptcy. Northern Alabama Ry. Co. v. Feldman,1 Ala. App. 334, 56 So. 16 (Opinion by Walker, P. J., now Judge of the United States Circuit Court of Appeals); 7 C. J. p. 113, § 186. And property not scheduled by the bankrupt passes under the bankrupt law as well as that scheduled. 7 C. J. 131, § 221.

"Although the state law governs with respect to the right to exemptions, the Bankruptcy Act governs with respect to the time and manner of claiming exemptions and the method of ascertaining the value of the property claimed as exempt, and of setting apart the exemption, and the bankrupt's right to exemption can be made available only in the manner prescribed by the act." 7 C. J. 354, § 620, and authorities cited in notes 37, 39, and 40; Northern Alabama Ry. Co. v. Feldman, supra.

Nothing is decided to the contrary in Matter of M. Ziff (D.C.) 225 F. 323, 35 A. B. R. 83, cited in the majority opinion. In that case the exemptions were scheduled and claimed in the bankruptcy proceedings, and the claim was contested by the creditors on grounds, among others, that the bankrupt had lost his right to claim exemptions in the bankruptcy proceedings, "(3) by failing to claim his exemptions in the Probate Court, as provided by section 4168 of the Alabama Civil Code, and (4) by failing to itemize the articles claimed as exempt in his claim filed in the bankrupt court;" and all that the cited case holds in this respect is that, where the property owned by the bankrupt does not exceed his exemption, the filing of a claim in the probate court is not essential, nor is it necessary in such case to itemize the property claimed in the bankrupt court.

The plea filed by the respondents, I agree, was not good as one in abatement, but, if there has not been an abandonment of the property or cause of action here involved by the trustee in bankruptcy, the facts set up are good in bar of the suit. Northern Alabama Ry. Co. v. Feldman, supra.

Moreover, it does not appear that the complainant was occupying the property as a homestead at the time he was adjudged a bankrupt, and his right to assert that the property was exempt, so as to prevent the title from passing, must exist at the time of his adjudication. Matter of M. Ziff, supra.

It is essential to the right asserted for the complainant to show that Margaret Chambers had notice of the complainant's equity in the property, and the only averment in the bill in respect to notice is that "the defendant, Margaret T. Chambers, was aware of complainant's right, title and interest in said premises, or was in possession of and had facts brought to herattention sufficient to put her upon inquiry concerningcomplainant's right, title and interest therein." (Italics supplied.) This averment being in the alternative, on demurrer questioning its sufficiency, is no stronger than the weakest alternative, and it is too clear to permit of argument that the italicized alternative is nothing more than a conclusion of the pleader, and is no stronger than the averment condemned in Bank of Luverne v. Birmingham Fertilizer Co., 143 Ala. 153,39 So. 126. See, also, Town of Cullman v. McMinn, 109 Ala. 614,19 So. 981.

In McKee v. West, 141 Ala. 531, 532, 37 So. 740, 741 (109 Am. St. Rep. 54) the plea approved alleged as facts: "That on the 28th day of May, 1902, the respondents, Mattie Langford and Emma Williams, were in the actual or constructive possession of the lands described in the bill and were seized, or claimed to be seized, in the transactions with this respondent, with the legal title to said lands; that on said date he made a loan of money to the said Mattie Langford and Emma Williams, and that contemporaneously therewith he took from them a mortgage to secure the repayment of said sum of money and the interest thereon; that before making said loan he required an examination of the records in the office of the Judge of Probate of Marengo county by an attorney, who reported that the title to said lands was in the said Mattie Langford and Emma Williams; that relying on these facts he made the loan and took the mortgage to secure the same; that at the time he made such loan and took said mortgage, the execution issued out of the Circuit Court of Perry county on the judgment against M. J. Williams in favor of the complainant had not been received by the sheriff of Marengo county; and that he had no notice of the complainant's equity and knew of no facts calculated to put him on the enquiry, either at or before the time he parted with the money loaned or at or before the time he took the mortgage on the said lands to secure the said loan."

The fifth ground of demurrer is: "For that the allegation that the respondent, Margaret T. Chambers, was in possession of and had facts brought to her attention sufficient to put her on inquiry concerning complainant's right in the premises, is but the conclusion of the pleader," was well taken, and justified the chancellor in sustaining the demurrer to the bill as last amended.

The averments in respect to lis pendens are clearly insufficient. Code of 1923, § 6878.

For the foregoing reasons, though I think there are others of equal merit, I am of opinion that the decree of the circuit court is free from error and should be affirmed, and therefore respectfully dissent.