In re PAGEL ELECTRIC & ICE CO.

In re PAGEL ELECTRIC & ICE CO. (District Court, S. D. Texas, at Houston. January 4, 1926.) No. 1078. 1. Bankruptcy @=>396(5) — Bankrupt held entitled to exemption of residence homestead without reference to claim of business homestead. A Texas bankrupt is entitled to exemption of a residence homestead, without reference €o any claim made by him to exemption of a separate business homestead. 2. Bankruptcy @=396(5) — Electric light plant, owned and used jointly by bankrupts, held exempt as business homestead (Rev. St. Tex. 1911, art. 3785). Three men, who were mechanics and machinists and each the head of a family, jointly purchased an electric light and ice plant, in which each thereafter exercised his calling. The lots on which the plant was located and which were used in its operation did not exceed in value $5,000, aside from the improvements thereon. Held that, under Rev. St. Tex. 1911, art. 3785, on their bankruptcy, they were entitled to exemption of the plant as their business homestead. 3. Bankruptcy @=396(5) — That the business homestead of bankrupts was used as a public utility under a municipal franchise held not to affect their right to exemption. That bankrupts used the plant as a public utility under a municipal franchise in connection with poles and wires in the streets for distribution of electricity to inhabitants of the town did not affect their right to exemption of the plant as their business homestead. In Bankruptcy. In tbe matter of tbe Pagel Electric & lee Company, Charles Herman Pagel, Frank August Pagel, Jr., and Louis Albert Pagel, bankrupts. On review of order of referee. Affirmed. Tbe following is tbe opinion of Referee Hume: “In tbis matter in due order there came on to be beard tbe application of tbe bank-' rupts to have set apart to them, as their exempt property, tbe specific articles respectively claimed by tbe bankrupts as tbe exemption to which they were entitled under tbe law as exempt personal property, exempt tools of their trade, and their exempt homestead. There also came on for consideration tbe exceptions to tbe allowance and setting apart of said exemptions, as filed by tbe creditor. The facts in tbis case are few and rather simple, and tbe referee finds that, as to tbe personal property exemptions, tbe bankrupts are entitled to have and receive them as claimed, and so directs that they be released and set apart to them, respectively, as claimed in tbe schedule. “As to tbe claim of Frank August Pagel, Jr., of lots 5, 6, 7, and 8, in block 42, of tbe town of Yoakum, Tex., as bis residence homestead, tbe referee finds that be is entitled to tbe same for tbe purposes of a borne, without reference to and in addition to any claim of right that be may have to any place or property used as a place- to exercise the cálling or business as bead of a family, and it is accordingly ordered that tbe same be set apart to him as such residence homestead. In re Eikel (D. C.) 283 F. 285; Pryor v. Stone, 19 Tex. 371, 70 Am. Dec. 341; Waggener v. Haskell, 89 Tex. 435, 35 S. W. 1; Harrington v. Mayo, 61 Tex. Civ. App. 610, 130 S. W. 650; Rock Island Plow Co. v. Alten, 102 Tex. 366, 116 S. W. 1144. “Tbe bankrupts claim as exempt to them lots 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30, in block 27, of tbe city of Sehulenburg, Fayette county, Tex., together with tbe electric light plant, ice plant, and tbe pumping plant, including all machinery, of every kind and character and nature, now situated on said tract of land, together with all wires, poles, tools, apparatus, and equipment necessary and used in tbe operation of said plants, or. in any manner belonging or •appertaining thereto, as being their homestead in tbe town of Sehulenburg, consisting of lots not exceeding in value $5,000 at tbe time of their designation as a homestead, without reference to tbe value of any improvements thereon, dedicated and used by them for tbe purposes of a home, or a place to exercise their calling or business as the heads of their, families. “The referee finds that on May 9, 1922, Charles Herman Pagel, Frank A. Pagel, Jr., and L, A. Pagel were respectively the heads of their families; that they were machinists and mechanics, and exercised as their calling or business as the heads of their families, the conduct, management, and operation of an electric light and ice company in the town of Sehulenburg, Tex.; that they were not then engaged as partners; that on May 9, 1922, for the purpose of carrying on their calling, trade, and business as the heads of their families, they purchased as joint owners, or owners in common, all of the above-described lots, on which there was then located and in operation the electric light and ice plant, battery service plant, pumping plant, and all machinery, houses, tools, apparatus, and equipment used in the operation of said plants; that each and all of said lots were used in the operation of said plants and to care for said plants and their equipment, and that said plant was further composed of poles, wires, cross-arms, and insulators and other devices necessary to transmit and deliver therefrom the electric current over the streets of the town of Sehulenburg; that at the time of said purchase Charles Herman Pagel, Frank A. Pagel, Jr., and L. A. Pagel, were solvent persons, and that they immediately engaged in the conduct of said business upon said lots as a place to exercise their calling or business as the heads of their families; that at said time said lots did not exceed in value $5,000, without reference to the value of the improvements thereon. “The referee finds that about two weeks after the purchase of said property, and after said property was used by the purchasers as joint owners for the purpose of and as a place to exercise their calling or business as the heads of their families, they began to use the name of ‘Pagel Electric & lee Company’ to designate the same, and that at all times since they have so continued to use said property for such purposes, and at no time since have they had any other place to exercise or carry on their calling or business, and that they have never since followed any other trade or occupation. The referee finds that the fact that the personal property claimed by the bankrupts as exempt to them may have consisted in part of property which they owned as partners, or as joint owners, would not affect their right to claim such as exemptions, but that such property was exempt to them under the provisions of article 3785 title 55 of the Revised Civil Statutes of 1911. This rule is supported by the case of St. Louis Type Foundry Co. v. International Live Stock Printing & Publishing Co., 74 Tex. 651, 12 S. W. 842, 15 Am. St. Rep. 870, as also by the ease of Willis v. Morris, 66 Tex. 628, 1 S. W. 799, 59 Am. Rep. 634, wherein the Supreme Court held that the tools of their trade were exempt to partners, and the fact that they employed mechanics using large and expensive machinery did not deprive them of the homestead exemption to the place of their business and the necessary machinery annexed to the freehold. “The referee concludes that the lots mentioned constituted the homestead of the respective claimants, consisting of lots not exceeding in value $5,000 at the time of their designation, and used as a place to exercise their calling or business as the heads of their families, and that the fact that they owned the property jointly, or as partners, did no deprive them of the right to claim and hold said property exempt as their business homestead. The right of partners, or joint owners, to claim their homestead being jointly owned, or partnership property, is well established in Texas. The rule in Texas is laid down and distinguished in 4 American Law Reports, at pages 335 to 339, and the doctrine is announced and sustained in the case of Swearingen and Garrett v. Bassett, 65 Tex. 267. It is also upheld in the case of Gordon v. McCall, 20 Tex. Civ. App. 283, 48 S. W. 1111. The exemptions of homesteads taken out of jointly owned or partnership property, have been held in the eases of Williams v. Meyer (Tex. Civ. App.) 64 S. W. 66, and Allen v. Meyer (Tex. Civ. App.) 65 S. W. 645; also the eases of Willis v. Morris, 66 Tex. 628, 1 S. W. 799, 59 Am. Rep. 634; Clements v. Lacy, 51 Tex. 151; also see 29 Corpus Juris, 851, 852, § 178, 29 Corpus Juris, 810, § 61, and Ruling Case Law, § 36. “The referee concludes that the occupation of the property in question by the respective joint owners, or partners, was a joint and concurrent occupation of the property; that it was an open and visible dedication and appropriation of it to their uses as a place to exercise their calling or business as the heads of their families; that it was such an actual occupation and dedication, continuous and uninterrupted, and that it served to put all persons upon notice that, from the moment of its acquisition, the property became and was, impressed with such, homestead characteristics as thenceforth withdrew it from liability for debt, and made it exempt to its owners who had so dedicated, appropriated and used it; and that under the law of this state the claimants should have said lots set apart as being exempt to them as their homestead. “The referee has given attention to the contention that the property claimed as a business homestead was used in connection with the municipal franchise serving as a public utility through the use of poles, wires, and other property distributing' electricity to citizens over the streets and ways of the town and public roads, and the referee concludes that the use of the property in connection with the franchise cannot affect its homestead qualities and characteristics or its exemption features. The franchise rights cannot be controlled by the exemption statute, or by the bankruptcy court, and are dependent entirely upon the will of the municipality and such contracts as the. owners of the exemption property may carry out with the municipality, and, in the absence of any authority holding that the existence of the franchise or the public utility can have the effect of depriving the claimants of their lawful exemptions, the referee is unwilling to hold that they will have that effect in this case. “It is therefore accordingly ordered that the trustee shall set apart the personal property and the real estate claimed as exempt by the bankrupts.” Boyles, Brown & Scott, of Houston, Tex., and Marcus Schwartz, of Hallettsville, Tex., for bankrupt. [MAJORITY — HUTCHESON, District Judge.] HUTCHESON, District Judge. The opinion and order of the referee in the above-styled matter having been carefully considered by me, and they appearing eor'rect, the same are in all things affirmed.