In re Anselmi
| Decision Date | 05 June 1985 |
| Docket Number | Bankruptcy No. 84-00741-A. |
| Citation | 52 BR 479 |
| Parties | In re Donald Rae ANSELMI, Debtor. |
| Court | U.S. Bankruptcy Court — District of Wyoming |
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Steven E. Snyder, of Holme Roberts & Owen, Denver, Colo., for debtor.
Gary A. Barney, Lander, Wyo., trustee, pro se.
Georg Jensen, Cheyenne, Wyo., for Howard T. Carroll and Richard E. Shanor.
Peter J. McNiff, of Carmichael, McNiff & Patton, Cheyenne, Wyo., for First Wyoming Bank, N.A.-Kemmerer.
Philip Nicholas, of Corthell and King, Laramie, Wyo., for First Interstate Bank of Laramie, N.A.
THIS MATTER came before the court on March 8, 1985 upon the Objection to Claimed Exemptions filed herein by Howard T. Carroll and Richard E. Shanor; Steven E. Snyder, of Holme Roberts & Owen, Denver, Colorado, appearing for the debtor; Gary A. Barney, Lander, Wyoming, for himself as trustee; Georg Jensen, Cheyenne, Wyoming, for Howard T. Carroll and Richard E. Shanor; Peter J. McNiff, of Carmichael, McNiff & Patton, Cheyenne, Wyoming, for First Wyoming Bank, N.A.-Kemmerer; Philip Nicholas, of Corthell and King, Laramie, Wyoming, for First Interstate Bank of Laramie, N.A.
The court has jurisdiction over the parties and subject matter of this contested matter pursuant to 28 U.S.C. § 1334, and the General Order of Reference of the United States District Court for the District of Wyoming, dated July 19, 1984, entered pursuant to 28 U.S.C. § 157(a). This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(B).
The debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code on October 4, 1985. The debtor is married, but his wife did not join in the petition. On his B-4 schedule, the debtor claimed as exempt two parcels of real property and various items of personal property. The real property claimed as exempt consists of the debtor's undivided one-half interest in a residence in Jackson, Wyoming, valued at $250,000, and a condominium in Rock Springs, Wyoming, valued at $32,000. The personal property claimed as exempt, and the estimated value of the debtor's undivided one-half interest therein, are as follows: (1) household goods and furnishings for three homes, which are located in Rock Springs, Wyoming, and Jackson, Wyoming, and Guaymas, Sonora, Mexico ($5,410); (2) certain paintings and statuary (hereinafter "artwork") ($8,111.50); (3) 46,000 shares of stock in the Outlaw Inn, Inc. ($350,000)1; (4) payments due under contracts for deed for the sale of 12 condominium units in the Kelly Condominium Complex in Jackson, Wyoming ($71,500); and (5) a beneficial interest in a Mexican Trust, which entitles the debtor and his wife to the use of a condominium in Guaymas, Sonora, Mexico ($32,000).2
The debtor claims that all of the foregoing properties are held with his wife as tenants by the entireties under Wyoming law and, thus, are exempt pursuant to Section 522(b)(2)(B) of the Bankruptcy Code. Howard Carroll and Richard Shanor, creditors and parties in interest within the meaning of 11 U.S.C. § 522(l), objected to the claimed exemptions.
The matter was heard by the court on March 8, 1985, and taken under advisement. Having fully considered the evidence presented, the memorandum of law filed by the debtor, the arguments of counsel, and having reviewed the applicable authorities, the court shall render its decision as follows.
Under Section 541(a) of the Bankruptcy Code, the commencement of a voluntary Chapter 7 case, which is initiated by filing a petition under Section 301, creates an estate, consisting of "all legal or equitable interests of the debtor in property as of the commencement of the case." Congress intended for "property of the estate" to be broadly defined to include all kinds of property, including tangible or intangible property and causes of action. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 367 (1977), reprinted in 1978 U.S.Code Cong. & Admin.News, p. 6323.
Bankruptcy courts and appellate courts have been nearly unanimous in holding that the debtor's interest in the entirety property is property of the estate under Section 541(a)(3)3. This court fully agrees. Once all property of the debtor comes into the estate under § 541, the debtor may then exempt certain property under 11 U.S.C. § 522(b).4 "Technically, the debtor, rather than initially withholding property that he claims as exempt, will actually be seeking a return from the estate of the property in question." 3 COLLIER ON BANKRUPTCY ¶ 522.26, at 522.76 (15th ed. 1985).
In its 1973 Report, the Commission on the Bankruptcy Laws of the United States recommended uniform federal exemptions to supersede conflicting state and federal laws granting or restricting exemption. Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. No. 93-137, 93d Cong., 1st Sess., Pt. I at 170, Pt. II at Section 4-503 (1973). The bankruptcy bill drafted by the National Conference of Bankruptcy Judges in response to the Commission Bill would have allowed the debtor to choose between the exemptions provided under state law, and those provided in the federal bankruptcy statute. See Hearings on H.R. 31 and H.R. 32 Before the Subcomm. on Civil and Constitutional Rights of the House Judiciary Comm., 94th Cong., 1st and 2d Sess., Ser. No. 27, App., at 146-51 (1976).
As enacted, Section 522(b) represents a compromise between H.R. 8200, the House Bill, which allowed debtors to choose between state or federal exemptions, and S. 2266, the Senate version, which contained no provision for any federal bankruptcy exemptions. See 124 Cong.Rec. H11,095 (daily ed. Sept. 28, 1978) (Remarks of Representative Edwards). That compromise, found at Section 522(b)(1), allows each state to "opt out" of the federal exemptions provided in Section 522(d), but does not allow states to "opt out" of Section 522 in its entirety. Eanes v. Shepherd, 33 B.R. 984, 987 (W.D.Va.1983); In re Thacker, 5 B.R. 592, 594 (Bkrtcy.W.D.Va.1980).
The State of Wyoming has exercised its prerogative to "opt out" of the exemptions package enacted by Congress. § 1-20-109, W.S.1977, 1982 Cum.Supp. Thus, an individual debtor in a bankruptcy case in the State of Wyoming may only exempt from the estate the property listed in paragraph (2) of 11 U.S.C. § 522(b). Subparagraph (A) of that section provides that such a debtor may exempt "any property that is exempt under Federal law, other than subsection (d) of this section the federal system of exemptions or State or Local law." This subparagraph embraces all of the statutory exemptions provided for by the Wyoming legislature, including the homestead exemption (§§ 1-20-101 to 1-20-104, W.S. 1977, 1983 Cum.Supp.); the "tools of the trade" exemption (§ 1-20-106(b), W.S.1977, 1982 Cum.Supp.); and a household goods exemption (§ 1-20-106(a)(iii), W.S.1977, 1984 Cum.Supp.) See generally 7 COLLIER ON BANKRUPTCY, supra, at 761 through 776.1 ().
In addition to the exemptions specifically provided for by the applicable Wyoming statutes, subparagraph (B) of § 522(b)(2) permits the exemption of "any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law." Rather than creating an additional exemption, § 522(b)(2)(B) simply recognizes the right which exists under the laws of certain states, to protect entirety property from execution by the creditors of one spouse. See 1 NORTON BANKRUPTCY LAW AND PRACTICE, supra, § 26.09, at pt. 26-p. 11. Generally, courts interpreting the phrase "exempt from process" in Section 522(b)(2)(B) have equated it with immunity from the reach of creditors. See In re Thacker, supra, 5 B.R. at 595; In re Redmond, 15 B.R. 437, 439 (Bkrtcy, E.D.Tenn, 1981); S. Block, "Creditors' Rights Against Entireties Property In and Out of Bankruptcy." 1983 Ann.Surv.Bankr.L. 239, 249 notes 102, 104.
Since there is no federal law of property, it is necessary to look to state law to determine the nature, extent, and effect of the debtor's interest in a tenancy by the entirety, and whether that interest is immune from the reach of creditors under "the applicable law." Matter of Cipa, 11 B.R. 968 (Bkrtcy.D.Pa.1981); Matter of Crum, 6 B.R. 138, 141 (Bkrtcy.M.D.Fla. 1980); 4 COLLIER ON BANKRUPTCY, supra, ¶ 541.078a, at 541-34. See Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. No. 93-137, 93d Cong., 1st Sess. Pt. 1 at 194 (1973).
In Wyoming, as in several other states, the exemption from process of entirety property from the debts of a single spouse is not codified by statute, rather it is a matter of common law as interpreted by judicial decisions. See Peters v. Dona, 49 Wyo. 306, 54 P.2d 817, 826 (1936) (); Ward Terry and Co. v. Hensen, 75 Wyo. 444, 297 P.2d 213, 220 (1956) (); Rupe v. First National Bank at Douglas, 485 P.2d 384, 385 (Wyo.1971) (). "The applicable law" referred to by Section 522(b)(2)(B) includes both the state's statutory law and the common law as interpreted by the courts. In re Redmond, 15 B.R. 437 (Bkrtcy.E.D.Tenn.1981). Section 522(b)(2)(B) then, requires the court to determine the nature of the debtor's interest in property held as tenant by the entirety and the status of that interest under Wyoming law. See Matter of Jones, 31 B.R. 372, 376 (Bkrtcy.D.Mich....
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