Where a resident citizen of Georgia has been duly adjudicated a
bankrupt and dies after such adjudication and after the
appointment, qualification, and partial administration of the
trustee, the estate vested in the trustee under § 70 of the
Bankruptcy Act of 1898 is chargeable under § 8 of that law with the
allowance for a year's support of the widow and minor children as
provided by § 4041 of the Georgia Code.
The Bankruptcy Act of 1898 makes no exception to the rule that,
after proceedings have been commenced, they are not to be abated by
death of the bankrupt, and, under the proviso in § 8, the right of
the widow and children in case of such death to an allowance out of
what remains in the hands of the trustee is as broad as the
prohibition against abatement.
What the court may do pending the life of the bankrupt is
binding on the bankrupt, and, as to such property as has been
distributed prior to his death, the right of the widow and children
to charge it with support under a state statute is defeated. Such
allowance can only be made out of property remaining in the hands
of the trustee on an order duly made in proceedings in which he, as
representative of the creditors, has a right to be heard.
The facts, which involve the construction of §§ 8 and 70 of the
Bankruptcy Law of 1898 and § 4041 of the Georgia Code in regard to
the allowance to be made for a year's support of the widow and
children of a bankrupt dying during administration of the estate,
are stated in the opinion.
Page 235 U. S. 585
MR. JUSTICE LAMAR delivered the opinion of the Court.
In January, 1912, L. K. Dicks, a citizen and resident of
Richmond County, Georgia, was adjudicated a bankrupt. James M.
Hull, Jr., was elected trustee, and on February 5, 1912, took
possession of all the property of the bankrupt. Three weeks later,
L. K. Dicks died, leaving a widow and four minor children.
Thereafter the widow applied to the court of ordinary for the
year's support to which the family was entitled by virtue of the
provision in the Georgia Code (§ 4041) that
"upon the death of any person . . . leaving an estate,
solvent or insolvent . . . it shall be the duty of the ordinary . .
. to appoint . . . appraisers, . . . to set apart and assign to
such widow and children . . . either in property or money, a
sufficiency from the estate for their support and maintenance for
the space of twelve months. . . ."
Citation issued, and thereafter the ordinary duly set apart to
the family a year's support to be made out of the estate of L. K.
Dicks in the hands of the trustee in bankruptcy. The widow
subsequently applied to the referee for an order directing the
trustee to pay over the amount so set apart. Her application was
denied, and that ruling was reversed by the district court. 198 F.
293. The trustee took the case to the circuit court of appeals,
which certified to this Court the following question:
"Where a resident citizen of Georgia has been duly adjudicated a
bankrupt and dies after such adjudication, and after the
appointment, qualification, and partial administration of the
trustee, is the estate vested in the trustee under § 70 of the
bankruptcy law of 1898 chargeable under § 8 of the same law, or
otherwise, with the allowance for a year's support of the widow and
minor children, as provided in the laws of Georgia? "
Page 235 U. S. 586
Counsel for the appellant contends that this question should be
answered in the negative. He insists that § 8 [Footnote 1
] of the Bankruptcy Act does not create
a right, but, as in this case, merely preserves the right, given by
the state law, to have a year's support "out of the estate" left by
the husband and father. It was then argued that, as the title to
the property had vested in the trustee before the death of the
bankrupt, Dicks did not die "leaving an estate," and there was
therefore no estate out of which, under the Code of Georgia, the
year's support could be set apart.
This reasoning would be applicable if the widow and children
were asserting rights of inheritance under the statute of
distribution. Moreover, there would be no answer to the argument
advanced if the title, which vested in the trustee, was in its
nature like that which would have been acquired if Dicks in his
lifetime had made a deed of assignment to the trustee. But such is
not the case. For, construing the statute as a whole, it will be
seen that, while § 70 [Footnote
] of the Bankruptcy Act vested title in the trustee primarily
for the benefit of the creditors, there was no exception in favor
of the bankrupt himself, and the transfer was also subject to a
condition in favor of his family if he died before the
Page 235 U. S. 587
proceedings ended. If the bankrupt elected to claim a homestead,
the exempt property, even though it had passed to the trustee,
would, after identification and appraisal, be turned back into his
possession. Chicago, &c. R. Co. v. Hall, 229
U. S. 515
. The trustee's title was also subject to the
condition that, if the bankrupt died during the pendency of the
proceedings, the widow and children would be entitled to receive
the allowance given them by the laws of the state of his residence.
This latter limitation on the trustee's title was in connection
with legislation on the subject of abatement.
For the statute seems to assume that, in the absence of a
statutory provision to the contrary, the death of the bankrupt
would have abated the proceedings. In that event, the property,
although the title thereto had been previously vested in the
trustee, would have been surrendered to the bankrupt's personal
representatives, who would then have been in possession of an
out of which, under the Georgia Code, a year's
support could have been set apart to the widow and children.
Congress need not have made any change in the general law, but, as
in the Act of 1841, 5 Stat. 440, c. 9, could have allowed the suit
to abate on the death of the bankrupt; or, as in the Act of 1867,
14 Stat. 522, § 12, c. 176, it could have permitted, without
requiring, an abatement; or, as in the Act of 1800, 2 Stat. 27, §
19, c. 19, it could have made a mandatory provision that the
proceedings should continue if the bankrupt died "after commission
sued out," or it could have legislated, as in § 8 of the present
statute, 30 Stat. 549, § 8, c. 541, where Congress went further
than in any of the previous bankruptcy laws and made a universal
and mandatory provision that "the death . . . of a bankrupt shall
not abate the proceeding." That sweeping declaration, however, was
coupled with the proviso that,
"in case of death, the widow and children shall be entitled to
Page 235 U. S. 588
rights of dower and allowance fixed by the laws of the State of
the bankrupt's residence."
Section 8, with these two clauses, prevents, on the one hand,
the loss and inconvenience to creditors resulting from an
abatement, while at the same time avoiding the hardship of
depriving the widow and minor children of a right to which they
would have been entitled if the suit had abated on the death of the
husband and father. The statute makes no exception or
qualification; after the proceedings have been commenced, they are
not to be abated by death. And the proviso clearly indicates an
intention to make the preservation of the widow and children's
right to the allowance as broad as the prohibition against the
abatement of the suit. Inasmuch as the proceedings did not abate if
the death of the bankrupt occurred after filing the petition and
before the election of the trustee, neither was the right to the
allowance lost if the bankrupt died after such election, and at a
stage of the proceedings where the title had, by the operation of
law, vested in the trustee. For such title, whenever it accrued,
was subject to the condition that the assets, in the hands of the
trustee, should be charged with the payment of the allowance to
which, on the death of the bankrupt, the widow and children were
entitled under the laws of the state of his residence.
It is claimed that, under this interpretation, if the bankrupt
died after the trustee had wholly or partially administered the
estate, the widow and children could still enforce their rights to
a year's support out of the bankrupt estate, even if the property
had passed into the hands of purchasers. But this loses sight of
the fact that the family had nothing in the nature of a lien which,
during his lifetime, prevented the bankrupt or the trustee from
disposing of his property. What was done by the court while the
bankrupt was in life and a party to the proceeding was binding upon
him, and therefore as effectual
Page 235 U. S. 589
to defeat the right to a year's support out of such property as
if the sale and distribution had been made by the bankrupt himself,
or by his duly authorized agent.
The right to the year's support accrued at the date of the
bankrupt's death, and could be enforced out of property remaining
in the hands of the trustee, and then only after the allowance had
been duly made in proceedings where he, as representative of the
creditor, had the right to be heard.
There has been some conflict in the decisions dealing with the
subject (In re McKenzie,
142 F. 384(6); In re
111 F. 523; In re Newton,
122 F. 103; In
113 F. 767; In re Parschen,
119 F. 976;
Thomas v. Woods,
173 F. 586, vacated,
1005), but the foregoing considerations require that the question
of the circuit court of appeals should be answered, Yes.
"§ 8. Death or insanity of bankrupts. -- a
The death or
insanity of a bankrupt shall not abate the proceedings, but the
same shall be conducted and concluded in the same manner, so far as
possible, as though he had not died or become insane:
That, in case of death, the widow and children
shall be entitled to all rights of dower and allowance fixed by the
laws of the state of the bankrupt's residence."
"§ 70. Title to property. -- a
The trustee of the
estate of a bankrupt, upon his appointment and qualification . . .
shall . . . be vested by operation of law with the title of the
bankrupt, as of the date he was adjudged a bankrupt, except insofar
as it is to property which is exempt. . . ."