In the Matter of John Peter Quilici, Bankrupt. Edward M. Walsh v. John Peter Quilici

The bankrupt in this action claimed as exempt property, a deposit of $1,000 in a savings and loan association organized under California law. The trustee refused to allow the exemption. The referee allowed the exemption. The district court, on review, affirmed the order of the referee. We reverse.

Under the Bankruptcy Act, exemptions are governed by state law, 11 U.S.C. § 624 . § 690.21 of the California Code of Civil Procedure provides that shares of stock in any building and loan association are exempt to the extent of $1,000. § 7611 Calif. Financial Code, provides that the shares of associations, issuing neither stock nor investment certificates, are exempt up to the sum of $1,000. The referee specifically found that the association issued stock.

A sharp distinction exists between the shares of an association and its stock, In re Pacific Coast Bldg, and Loan Ass’n, 15 Cal.2d 134, 142 , 99 P.2d 251 (1940). “Stock”, is defined as “guarantee stock”, Calif. Fin. Code § 5068. “Shares”, are defined as “withdrawable shares constituting * * * membership shares”, Calif. Fin. Code § 5067.

Judge Byrne’s decision, In the Matter of Mulkins and Crawford Electric Co., (D.C.S.D.Cal.1956)…