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95
FE'DERAL REPORTER.
. In re FRIEDERICK et al. (District Court, W. D. Wisconsin. June9,1800.) No. 82. B.N:KRUPTCY- EXEMPTIONS-P.ARTNERSHIP ASSETS.
. UJ;lder a statute (Rev. St. Wis. § 2982, subd. 8) exempting from execution , "the stock in trade of /lny merchant, trader, or other person, used and kept f6r the purpose of carrying ori his' trade or business, not exceeding $200 in value," in case ofthe.ban,kruptcy of amencantile partnership, where the : firm· has stock in trade., ,but there are ,no individual, assets, each partner, witlJ the consent of the other, is entitled to have the statutory exemption set apart to him out of the finn property.
" In . bankruptcy. On review of decision of referee in bankruptcy. MurpJ:J.Y& Kroncke,for bankrupts. . Hall &, OIl May 3,1899,George J.Friederick and engaged in the retail grocery trade on State street, ip filed petition involuntary ha,nkruptcy, and on duly bankrupt"; by this COlIct, both as part.1Ml!l' judivjdualS;' :In their ,petition' they each testify that they or personal, except such exemptions as they may 'se1ectrinder the exemption laws of and they claim the right to have their exemptions set· apart by the trustee from the partnership property turned over to him under the law. On C. K. Tenney, o{,¥adisoll, was appointed and qualified as ,trll*tee,and ther,e\1pou bankrupts applied.to him to set off their exemptions from whjcl;1 the trustee refueeli .to d9, aud iDj);mediatelymade to the referee to allow the whl) pecided that ,no exemptions could be. allowed from .1ihepartnership property. i An appeal was taken from the decision of referee, and the has been argued, and. is now for decision :by the court. :The exemptions are claimed undew subdivision 8 of sectiQn29S2. of thEjRevised Stc;Itutes of Wisconsin, which provides that following property shall be exempt, to wit: 'l'he tools, impIe.ments, 8,nd stock in trape of any mechanic, miner, merchant, trader, or other Pe1'80u, used a.nd kept for the purpose of carrying on his trade qrbusiness, not exceeding two hundred dollars in value. The ;bapkr,q,ptlawof 1898 provides as one of the duties of trustees under the law.that they ,shall respectively set apart the bankrupt's exemptions, and report the items and estimated value thereof to the court as soon as practicable after their appointment. The referee disallowed the claim of the petitioners on the ground that the property was partnership property, and there had been no severance. But I think this question was met and disposed of by the supreme court of .Wisconsin in O'Gorman v. Fink, 57 Wis. 649, 15 N. W. 771, in favor of allowing the exemptions. In this case the entire partnership stock had been levied upon and was in the hands of the marshal under an execution issued out of the United States circuit court. There was no severance in fact, and, indeed, there could be none. The . District
IN RE FRIEDERTCK.
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property was levied upon as partnership property for a partnership debt, and, taken from the possession of the partners. A partner' sued to recover his exemptions, Thequet'ltion, as stated by the court, for its consideration, was this: Wa,s the plaintiff entitled to a separate exemption to the amount of $200 out of the partnership property in the possession of the defendant under a levy on executions against the partnership where the other members of the firm consented that he should have the benefit ,of such exemptions? The court held that he was. The language of Chief Justice Cole in deciding the question is quite as applicable to the case at bar as to that. He says: "But it is said that the plaintiff, as an individual member of the firm, was not entitled to his exemption out of the firm property so long as it retained its character as firm property. In other words, it is claimed that the exemption statute relates to and is intended to deal with propprty which is owned in severalty, or with property which in its nature is severable, where the right of severance exists, and that the exemption does not and cannot attach to the property of a firm, which does not belong to either partner as his own before an actual division by the partners. On this subject Mr. Freeman, in his work on Executions, uses this just language: 'It often happens that property designated as exempt by statute belongs to two or more persons, either as co-tenants or co-partners. The question then arises whether this property must be treated as exempt to the same extent as if held in severalty. The answers to this question are irreconcilable, and the opposing opinions are both supported by very respectable authorities.' Section 221."
The court then proceeds to say: "The question whether'one partner, with the consent of the other partners, can claim an exemption out of the firm property in a case like the one before us, has never been passed upon by this court. In view of the conflict of judicial opinion on the subject, we feel quite free to adopt that rule which seems most in harmony with our decisions under the exemption laws, and the humane spirit of these statutes. It Is quite unnecessary to observe that this court has deemed it a duty to construe liberally these laws, in order to carry out the manifest purpose of their enactment. * * · In the Russell Case (Russell v. Lennon, 39, Wis. 570) the plaintiffs were partners doing husiness' as tinners and jobbers. The levy was upon their tools and stock In trade for a partnership debt. The learned chief justice, In the opinion, says: "Ve have no doubt that in proper cases each member of a partnership is efltitled to his separate exemption out of the partnership property, and that the partnership property, after levy, may be severed by the partners, so that each partner may have his several exemption. But it seems to us to be as indefimsible to extend the personal privilege of exemption to a partnership, as such, as to extend it to a corporation aggregate.' It will be seen that there is here a clear and distinct intimation that each member ,of a partnership is entitled to his separate exemption out of the partnership property, and the chief justice says that after the the partnership property may be severed by the partners so as to give e!lch partner his several exemption. In that case the court was not called upon to state what acts were neccssary to be done by the partners after a levy to make a severance of the partnership property, nor do we well see what more the partners could do to aceomplish this end than consent that eaeh should have his exemption, and exercise his power of selection. This, in contemplation of law, ought to amount to a severance, so that the several right of each partner would attach to the portion by him selected. Unless the severance can be made in this way, it is very evident that the right of each partner to his separate exemption out of the partnership property after levy eannot be protected or enforced; for ceriainly the partners cannot, after a levy, take possession of the corpus of the partnership property, and make a division of it among themselves. This, obviously, is impracticable. Therefore, nnless the JIlutual consent of the partners that each shall have his exemption and, make !:Jis selection from the partnership property has the effect to partition Dr sever the joint property so that the several exemption will attach to the por-
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tlon selected, no exemption in many' cases could be had. But where all the partners demand the exemption, each must be deemed to consent that the others have. it, and make his individual. selection. This. we think, was. all the' court in the 'Russell palle deemed necessary for the partners to do in order to make a severance of the. partnership property, and so change its character that the statutory right would attach as in goods held in severalty. We are well aware there are most respectable adjudications against this view."
'rhis case was decided by the unanimous opinion of the five judges then constituting the cou.rt. It is just and sound in its conclusions, and has never been overruled or qualified by any subsequent adjudication. In my judgment, it meets every condition and requirement of the case at bar for the of these claims. In most of the cases since decided in which the claims of. partners have been disallowed it has been either where there was an element of laches, or where the question arose between third parties, neither of whom were claiming the exemptions. Of course, where partnership property is levied upon under an execution against the partaership, the claims to exemption should be made without delay, or they will be waived. That rule is just, and necessary, in order that the creditor, in case the claim is allowed, may proceed to secure his debt by a further levy or in some other manner. If the debtor is guilty of any laches in making the claim, it will be held to constitute a waiver of his right, although it is held that he cannot, by express agreement in advance, waive his exemption. There is no conclusive presumption, where partnership property is levied upon, that the individual partners may not have individual property more than enough to satisfy all their claims under the exemption laws of the state. But, while this is so, it must be remembered that where persons are engaged in trade as partners it is not at all probable that they will also have stock in trade on their individual account, because this would be' inconsistent with the partnership obligations. So that in general, if exemptions cannot be allowed to the individual partners out of partnership property, they cannot be allowed at all, because there will be no property to which the exemptions could apply. But where it affirmatively appears, as in this case, that they have no other property, and they are guilty of no laches, and there is no question of intervening rights, there would seem to be no good reason, all the partners consenting, as in this case, and joining in the petition, why they should be denied the benefit of the law, which was intended to apply equally to all. No reason but a purely technical one' has ever been suggested why men engaged in business as partners, and having all their means employed in that way, should not be entitled to the benefit of our exemption laws, as well as persons employed in trade on their individual account. There is no reason why a man's family should be turned into the streets without a dollar to help themselves with, or to keep off starvation, by greed and rapacity of creditors, in the one case more than in the other. Our exemption laws are liberal. They were so framed and i.ntended by the wise framers of our constitution and by our legislature, and they have received a liberal and sensible constrnction by the courts to accomplish the beneficent purpose of the fram-
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ers of our constitution and laws. Until the above decision by our supreme court, it was an open question whether any exemptions could be allowed to partners who had all their means employed in partnership trade. But after that adjudication, which goes the whole length and breadth of allowing the exemptions, though no actual severance of the property has taken place, and though none could take place, after the property is seized and taken out of the possession of the partners, there would seem to be not much war· rant for any court, desiring to do obedience to the liberal and just rule there laid down, of resorting to any technicalities to defeat the exemption. Looking at the history of the law, in connection with its plain provision for all merchants and traders, it is difficult to see how any other conclusion could have been arrived at by the court. The exemption comes, not only within the evident purpose and spirit of the law, but within the clear and undoubted letter. The exemption of not exceeding $200 of the liltock in trade of every merchant and trader residing and doing business within the state is provided for in express terms. No hint or suggestion is found in the law itself that it was intended to apply only to individual traders, and not to the members of a partnership. A person en· gaged in trade jointly with another is no less a merchant and trader than one so engaged in trade on his individual account. No doubt a large majority of the merchants of the state are engaged in joint trade as co-partners with others. They need the same measure of protection in case of business disaster as persons engaged in trade on individual account, and the law, in terms, gives it. There should be some very snbstantial reason for depriving them of their right to the protection which the law gives. When this clause of the law was first enacted in the early history of the state, it did not contain any express provision for merchants and traders. The provision ran: "The tools, implements and stock in trade of any mechanic, miner, or other person, *. * * not exceeding $200 in value," etc. It was contended that this provision did not cover tile case of merchants, but only mechanics and miners and other persons similarly situated,-like well diggers, who used tools and implements, and incidentally had a little stock in trade in connection with their business,-because it was said that merchants are quite as prominent a class as mechanics and miners, and therefore, if the legislature had meant to include them, it would have named them, and not left them to be included under the general term of "other persons." But the courts gave the clause a liberal construction, and held that it applied to mer-chants. Afterwards the legislature amended the law by inserting the words "merchant and trader," so as to leave no doubt about its meaning. Since this change in the express terms of the law, there would seem to be no good reason for finding technical reasons to defeat the liberal and beneficent policy of the statute. Perhaps, in view of these plain provisions, both before and since the decision ,of O'Gorman v. Fink, the objection, which is quite technical in character, of a want of severance, has been employed quite as much as its intrinsic merits would warrant, both in this court and in courts of the state, to
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-defeat the purpose and intent of the 'legislaturetQ.,anow exero.pc ti,Qns, to ,persO,lls engaged as partners in joint trade., The caseot rn re Biugbesl' 8 1,07, Fed. Cas.. No. 6,842, in this court in the !lecision oft,he. supreUle court in O'Gorm;:in v, probabLy cpITectly decideq. on the facts of that case> uQdtJ: 'the adjudications:as . they then stood. In cases of levy there could .be no actual severance. But the C\lUftin, ,QiHorlllan v. Fink said the mutual COlll'lent and agreement of the partners to take, each, exemp#olls" amOl,mts to a severance.in law, If, the mutual . anq .agneelllent. of the partners works, aseV'erance in the case of a levy, why not in the case of a voluntary petition in bankruptcy, which only provides for set apart after the property pas:come into the exemptions possession of the trustee? Assume that this is :a fiction. Very the habit of well. The cour.ts of common law have always resorting to fiction for the purpose of doing .. But they do not resort -for the purpose of working injustice. From the days of Lord Mallsfield and Chief Justice,Marshall to the present time the law has perhaps been ameliorated and improved quite as much by ·the adjudications of great judges as by express legislative enactment. But there would seem to be no ,great need of or to fiction in orderto do justice under a statute and obvious in its meaning, law in question.. . If these eXemptions are to be allowed to the individual partners out of partnership property incases where they havellQ :individual property, what possible difference does it .Ulake to the creditors whether tbe exemptions are selected and taken out before the prope.rtyis turned over to the trustee or immediately It is quite that it is not contemplated by the bankrupt law that they trustees setshould betaken out before, because it provides for ting apart and fixing a value, upon the exemptions. The fixing a value of course could not be left to the debtor. He might fix a value that .would take the entire stock. That must be done undel' the auspices and direction of the trustee, and,t\) .that end he should' have possession of the entire estate. I am: unable to see why the couese pursued in this case 'by the debtors was not the proper one under the law. They filed their petition, and turned over all the property, 'claiming their exemptions at the same time. r think it was thedtIty of the trustee to have set apart the exemptions, and cause a proper valuation of them to be made. .In some of the cases decided since that of v. Fink the question has arisen between creditors upon the validity of an assignment under the state insolvent law. XhiswaJ'l, the caSe in Bank v. Hackett, 61 Wis;335, 21N. W. 280. There was an effort made to set. aside the assignment because the partners had reserved partnership property to themselves as exempt. In sustaining the assignment the Murt said: "A partnership is not entitled th an exemption out of the co-partnership property. The reservation in the case at bar, being of the property owned by the partners jointly to them jointly, is nugatory and void."
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In v. Baker,68 Wis. '442, 32 N. W. 523, by partners purported to convey to the assignee all the partnership property "not exempt to them by the laws of the state," and a schedule contained a claim by each partner of certain property as being exempt. All of the property, however, was delivered to the assignee, and remained in his possession, and the assignors never in fact claimed any property as exempt. It was held that the exemption clause did not invalidate the assignment. In Bong v. Parmentier, 87 Wis. 129, 58 No W. 243, partners had assigned for the benefit of creditors all their property "except such as is exempt from levy and sale under execution." The whole of their stock of goods was included in the inventory, and delivered to the assignee, and no selection or claim of any specific property as exempt was made until more than 10 weeks after the assignment was completed. Nor did it appear that the partners did not possess individual property sufficient to satisfy the right to exemptions. Mr. Justice Cassod,ay, in delivering the opinion of the court, says: "The·:partners did not, at any time before the assignment, and while they were owners of the property, sever their interest therein. For more than, ten,: weeks after the making of the assignment neither partner made any spedfic selection or claim for any such exemption. This was certainly an unreasonable delay, and: a' waiver of any rIght to such exemption. Besides, for aught that appears in the record, the respective partners may have individual property sufficient to satisfy any and all claims for exemptions."
Bank
In LaplOnt v.Wootton, 88 Wis. 107, 59 No W. 456, partners ,assigned for the benefit of creditors all their property ,except suell as might by law be exempt from seizure on execution or attachlllent. All of the property was delivered to the assignee; and was inclUded in the inventory without mentio'n of exemptions, and no elaimsfor exemptions were made until nearly a month, later, after the,assignee had expended labor and money upon the property in c!1ring for and insuring it and getting it ready 1'.01' sale. It was very properly held that there was a waiver of the right to exemptions from the 'Partnership property. Mr. Justice Newman, in deliv'ering the opinion, says "that the co-partnership had no right to tilms," which is undoubtedly true. He also says, "The co-paMners had rio such right in the co-partnership property until after aseverance," which is also true. But he dOes not stop to define what will amount to a severance. It was not necessary, as that had been already settled in O'Gorman v. Fink. The court nowhere intimate any dissatisfaction with the decision in that case, or any intention to qualify it in an'y waY,and I take it that the refusa1 to allow the exemption is' placed upon the other :very satisfactory ground that no claim for exemptions was made for nearly a month after the entire property had been in the possession of the assignee, and he had expended labor and money upon it in caring for it, insuring it, and getting it ready for sale. The court say that the case is governed by the decision in Bong v. Parmentier, and clearly in that case the denial to exemptions was placed upon the ground of laches. It does' not appear that the court in either case intended to resort to the old technicality that there had been no severance,
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which" the oourt had so effectually disppsed of, in ,furtherance, of in O'Gorman v. Fink; orto quaUfY,their formerru,lipgthat an 'llgreement among the to claim their exemptions amounted to a severance in law, so far as to enable the court to allow the exemptions. That wpuld bemuGh too narrow ground for that orany court to stand upon. Let a:q order be entered instruGting the to set apart the exemptions as prayed. '
In J;,e WOOD. (District Court, No. 4,460. 1. CRlM:£NAL LAW-PROCEEDINGS To,REMOVE OFFENDERS-CONCLUSIVENESS OF ,DECISlON OF COMMISSlONER."
June 29, 1899.)
The action of a commissioner in discharging a person in proceedings for his removal to another district for trial on a criminal charge, after a full hearing, sHould be conclusive on the government, especially where the: testimony offered is that upon which the indictment was found.
2. SAME'+COPY, OF INDICTMENT AS EVIDENCE.
In the-matter of the removal of John Wood to the district of Washington for trial on a criminal charge. John H. ';Hall, U. So Atty. 'Charles J. Schnabel, for defendant. BELLINGER, District Judge. This is a procee!ling for the removal of 'John Wood to the district. of Washington, upon an indictmell t, ,found 'in that, district, charging him with, subornation of perjury in prqcnring one James M. Perry to make, before, ,the register of the public land office, a certain false oath, which false oath consisted of a sworn .statement in. writing, requireQ' under the provisions of the act of congress for the sale of timber lands, in the states of Oregon, Nevada, Oalifornia, an!l'Washington Territory, to the effect that the said Per,ry had made it personal examination of certain public lands of the States, when in truth and in fact he ):l.Rd not been upon or examined said lands, and did not know at the time whether the affidavit so made was true or ,The appHcation for removal was heard by Commissioner Deady, who,.\Vithout other evidence than the certified copy tpe indictment found in the district of Washington, ordered the f;1efendant committed to await an order of removal. Prior to thispllOceedin,g,.a like petition was:filed by the attorney, for the United States before E. D. McKee, also commissioner for this district, before WhClIl?-l:J. hearing was had, and the testimony of witpesses taken. Thewitnesses..exilmined were James M. Perry (the party whose false itis alleged, was procured by Wood) and the wife of said Perry. 4:t .this }learing no copy of the indictment was presented.
0'