Sutman v. Hogsett

Opinion by Orlady, P. J., Claims for exemption under the federal statutes regulating bankruptcy are allowed in accordance with the law of the state in which the bankrupt resides. The federal statute declares “This act shall not affect the allowance to the bankrupt of the exemptions which are prescribed by the state laws.” And the trustee is required to set apart the bankrupt’s exemption and report the items and estimated value thereof to the court as soon as practicable after his appointment. The bankrupt’s property was all turned over to the trustee who sold it under an order of court. No claim for exemption was presented by the bankrupt until after his property had been converted into money through this sale. • It may well be doubted, therefore, whether the claim was in time. It was decided in Hammer v. Freese, 19 Pa. 255, that a debtor was not entitled to claim exemption of $300 of the money for which his personal property was sold at sheriff’s sale and this for the reason that the exemption act speaks of property, not of money. It requires him to elect the goods he wishes to retain and the property thus chosen and appraised is exempted from levy and sale. The act gives the right to the debtor to designate the property which he desires to retain and establishes a mode of ascertaining its value. It was accordingly held that a demand for an appraisement after the property had been converted into money by judicial sale was too late; that the right was waived by failure to make demand before the sale. This view was also held by Judge Ewing of the United States District Court for the Western District of Pennsylvania: In re Pfeiffer, 19 [183] A. B. R. 231. The federal law does not undertake to give to the debtor a different exemption from that which the law of his state accords him and the claimant must stand on the right which that law gives him. Waiving this view of the case, however, we think the conclusion of the learned trial judge was correct on the proposition that the right of exemption might be waived at any time before there had been a final determination of the claim of the bankrupt. That a debtor may waive Ms right to exemption under the Pennsylvania statute is well established. It is a personal privilege over which he has absolute control: Kyle and Dunlap’s App., 15 Pa. 353. Where the debtor fails to claim his exemption or withdraws his claim after having made it he is in the same situation as if there was no provision of law for exemption. And this release may be made as stated in the case last cited “at any time before the money is actually in his pocket.” By the Act of 1898 court of bankruptcy are vested with jurisdiction “to determine all claims of bankrupts to their exemptions.” General order No. 17, adopted by the Supreme Court of the United States under the authority of the bankrupt act, provides as follows : “The trustee shall make report to the court within twenty days after receiving the notice of his appointment of the articles set off to the bankrupt by him according to the provisions of the forty-seventh section of the act with the estimated value of each article and any creditor may take exceptions to the determination of the trustee within twenty days after filing of the report.” The obvious purpose of this regulation is to hold in abeyance the determination of the trustee as to the debtor’s right of exemption until the creditors have had an opportunity to be heard. The matter is in suspense until the lapse of time thus provided for. Until it has been determined that the right is valid the control of the court through the. trustee is not released. There has been no final ascertainment that the debtor is entitled to the particular property claimed. The withdrawal of the claim for ex [184] emption by the bankrupt in this case was made before the lapse of the period provided for in the general order above quoted. That withdrawal was in time under the Pennsylvania statute and we find nothing in the federal enactments or the decisions of the Federal court to1 prevent the exercise of that privilege by the debtor. Conceding as contended by the appellant that title to the exemption never passes to the trustee in bankruptcy or becomes a part of the bankrupt estate it is nevertheless true that the particular property claimed by the bankrupt must be identified and set apart and until the procedure prescribed by law for accomplishing that result has been applied the property is under the control of the court. We regard the determination of the case in the court below as in accordance with the law. The judgment is affirmed.