Guernsey v. Douglas

SHAW, J.

This is an action by Guernsey, as trustee in bankruptcy of E. W. Douglas, under the Bankrupt Act of the United States, against Douglas and his wife, to set aside a deed from Douglas to his wife for five lots near Stockton, and to vacate a declaration of homestead thereon afterward filed by the wife. The court decided that the homestead was valid as to one of the lots, being the lot numbered 8, on which Douglas had built a house in which he and his wife at the time resided, but that it was invalid as to the other lots, being the lots numbered 5, 6, 7, and 9, and further, that the deed was made to the wife with intent to hinder, delay, and defraud the creditors of Douglas, that it was made within four months before the filing of the petition in bankruptcy by Douglas, and that it was not made for a present, fair, or valuable consideration. Judgment was given in favor of the plaintiff as prayed for as to the four lots last mentioned and in favor of the defendant as to the lot numbered 8. The defendants appeal from the judgment.

Subdivision (e) of section 67 of the Bankrupt Act of the United States [U. S. Comp. Stats. 1913, sec. 9651; Fed. Stats. Ann. 1912, p. 792], provides that all conveyances of his property by a person adjudged a bankrupt, made, within four months prior to the filing of his petition in bankruptcy, with intent to hinder, delay, or defraud his creditors shall be null and void as against creditors, except as to purchasers in good faith and for a present fair consideration, and that the property so conveyed, if not exempt from execution, remains a part of his assets and may be recovered by the trustee.

The contention of the appellants to the effect that homestead property is exempt from execution and, therefore, under the Bankrupt Act, does not pass to the trustee or become assets of the bankrupt’s estate, is completely answered, so far as the findings are concerned, by the statement therein that the homestead declaration is invalid as to the four lots recovered by the trustee.

The conclusion that the homestead was invalid as to these lots is based upon findings that at the time the declaration

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of homestead was filed the defendants resided in the house situated on lot 8, that said lot was sufficient in size for the convenient use and enjoyment of such house as a home, that they never resided on the other four lots, and that neither said four lots nor any part thereof were then or ever necessary for the use and enjoyment of the house or home on lot 8. These findings fully support the conclusion that the homestead character did not attach to these four lots.