Chicago, Burlington & Quincy Railroad v. Hall

Syllabus

<p>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.</p> <p>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.</p> <p>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.</p> <p>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 waivei, no rights cali be acquired. Lockwood v. Exchange Bank,' 190 U. S. 294, distinguished.</p> <p>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 Fed. Rep. 76, approved.</p>