Cannon v. Dexter Broom & Mattress Co.

PURNELL, District Judge. On February 18, 1901, appellant filed a petition in bankruptcy, and was adjudged bankrupt the same day. [658] Oñ the 4th day of January, 1902, the trustee set aside, as a personal property exemption under the laws of South Carolina, specific personal property valued at $50 and $450 in cash, proceeds of sale of merchandise. To this allowance creditors excepted, on the ground it did not appear that the stock of goods had been paid for; hence the bankrupt was not entitled to his personal property exemption from the proceeds of sale thereof. The District Court, sitting in bankruptcy, sustained the exception to the allowance of the exemption mentioned, and this action of that court is the only question presented in the record now before us. Section 6 of the bankrupt act of 1898 [U. S. Comp. St. 1901, p. 3424], provides: “This act shall not affect the allowance to the bankrupts of the exemptions which are prescribed by the state laws which are in force at the time of the filing of the petition in the state wherein they have had their domicile,” etc. Exemptions must, therefore, be regulated by the state law. The laws of South Carolina provide that a debtor shall not be entitled to a personal property exemption out of property or the proceeds of property for which he has not paid the purchase money. The referee found as a fact, which finding was affirmed by the District Judge, that the stock of merchandise out of the proceeds of which the bankrupt was allotted his personal property exemption had not been paid for, and the bankrupt himself testified that the purchase money for the stock of goods had not been paid. So it does not affirmatively appear that the purchase money had been paid, but it does appear that the bankrupt was not in a position to avail himself of the provisions of the laws of the state. In the case of McGahan v. Anderson, 51 C. C. A. 92, 113 Fed. 115, the question as to the personal property exemption was identical with the one at bar, and the court, speaking through Judge Jackson, in that case concurs with the court below— “For the reason that under the provisions of the Constitution of South Carolina money derived from the sale of merchandise on which the. purchase money is still due cannot be set aside as an exemption, and it would be unjust to the creditors to do so. * * * The court is further of the opinion that the exception to the judgment of the court below as to the personal property exemption of $500 should be overruled; this court holding that the allowance of $75 as a personal property exemption and the disallowance of $425 (proceeds of sale of merchandise upon which the purchase money had not been paid) is correct.” We see nothing in the case which distinguishes it from McGahan v. Anderson, and no reason why the rule therein laid down should not apply. The judgment of the court below is. therefore affirmed.