Hull v. Dicks

Background

L. K. Dicks, a Georgia resident, was declared bankrupt in January 1912 and a trustee was appointed who took possession of his property. Dicks died three weeks later, leaving a widow and four minor children. The widow asked a local court for the year’s support allowed by Georgia law; the court set that support aside from the property in the trustee’s hands. The trustee refused to pay, lower courts split on the issue, and the Circuit Court of Appeals sent a question to this Court about whether the trustee’s estate must bear that state-law allowance.

Reasoning

The Court considered whether the Bankruptcy Act lets a trustee’s title defeat a widow’s and children’s state-law right to a year’s support when the bankrupt dies after adjudication. The Court read §8 of the federal law to prevent death from stopping the bankruptcy proceedings while explicitly preserving any widow-and-children allowances required by the bankrupt’s state of residence. Section 70 vests title in the trustee, but the Court found that title is subject to the proviso in §8 and other statutory exceptions. So the Court answered yes: the trustee’s estate can be charged with the year’s support, and the right to that allowance arises at the bankrupt’s death and can be enforced against assets remaining with the trustee.

Real world impact

Widows and minor children in Georgia can claim a state-law year’s support from a bankrupt’s estate even if a trustee already holds title. Trustees and creditors must respect that state-law allowance, though recovery is limited to assets still in the trustee’s hands after lawful sales or distributions.