Chicago, Burlington & Quincy R. Co. v. Hall
229 U.S. 511 (1913)

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U.S. Supreme Court

Chicago, Burlington & Quincy R. Co. v. Hall, 229 U.S. 511 (1913)

Chicago, Burlington & Quincy Railroad Company v. Hall

No. 249

Submitted April 21, 1913

Decided June 9, 1913

229 U.S. 511

Syllabus

Property exempted under the laws of the state of the bankrupt cannot be garnisheed in another state where similar property is not exempted under a judgment obtained within four months of the filing of the petition, and, after notice of the bankruptcy proceedings, the garnishee is not protected in paying over under the judgment by the full faith and credit provision of the federal Constitution.

A state law relating to debts which is contrary to the provisions of the federal Bankruptcy Act is nullified thereby, and, when so nullified, is not entitled to full faith and credit in the courts of other states under the federal Constitution.

While title to property exempted under § 70f does not vest in the trustee, it does pass to him as part of the bankrupt's estate for the purposes named elsewhere in the statute, including the duty of segregation, identification, and appraisal.

Section 67f does not defeat rights in exempt property acquired by contract or waiver of exemption; but where, as in this case, there has been no waiver, no rights can be acquired. Lockwood v. Exchange Bank,190 U. S. 29, distinguished.

The decisions of the state and lower federal courts in regard to annulment of liens on exempt property have been conflicting, and this Court now holds that § 67f annuls all such liens obtained within four months of the filing of the petition, both as against the property which the trustee takes for benefit of creditors and that which may be set aside to the bankrupt as exempt. In re Forbes, 186 F. 76, approved.

88 Neb. 20 affirmed.

Hall, a resident of Douglas County, Nebraska, was employed by the railroad as switchman in its yards in Omaha. His wages were exempt from garnishment by the laws of Nebraska. In July, 1907, he was insolvent, and

Page 229 U. S. 512

in that month, while temporarily in the State of Iowa, two proceedings were instituted against him in which he was personally served, and the railroad, which owed him $122 as wages, was garnisheed. In one of these cases, Rawles sued on an open account for $54.20, the railroad being required to answer on August 10th. In the other, Torrey, holding a judgment for $22.40, rendered in 1894, served a summons of garnishment on the railroad, requiring it to answer on August 27, 1907.

While these proceedings were pending in the Iowa courts, Hall returned to Nebraska, and, on August 7, 1907, he was, on his own application, adjudged a bankrupt, his wages being claimed as exempt, and the two Iowa plaintiffs included in his list of creditors. Notice of the bankruptcy proceeding was given to them and to the railroad.

Thereafter, on August 10th, the railroad answered in the Rawles suit, admitting that it owed Hall $122, and a judgment was accordingly entered against the railroad as garnishee for $61.60. On August 27, it answered in the Torrey suit, and the court entered judgment against it as garnishee for $56.91. Hall, in the bankruptcy proceedings, had asked that, as allowed by the laws of Nebraska, his wages be set apart as exempt, and filed a petition praying that the railroad should be summarily ordered to pay him the amount due for work done in June and July, 1907. The application was resisted by the railroad and was denied by the court, which held, on the authority of Ingram v. Wilson, 125 F. 913, that the bankruptcy court could determine that the property was exempt, but had no jurisdiction to compel its payment.

In view of that ruling, Hall made a further application to have the $122 set off to him as exempt. An order to that effect was passed by the referee. Hall was discharged as a bankrupt in April, 1908, and then sued the railroad and recovered a judgment, which was affirmed

Page 229 U. S. 513

by the Supreme Court (88 Neb. 20), and the case was brought here.

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