In re Bell-Breslin

• Decision Date: 17 June 2002
• Docket Number: No. 00-5-1381-JS.,00-5-1381-JS.
• Citation: 283 B.R. 834
• Parties: In re Pamela BELL-BRESLIN, Debtor.
• Court: U.S. Bankruptcy Court — District of Maryland

Page 834

283 B.R. 834

In re Pamela BELL-BRESLIN, Debtor.

No. 00-5-1381-JS.

United States Bankruptcy Court, D. Maryland.

June 17, 2002.

C. Kevin Kobbe, Maria Chavez-Ruark, Piper, Marbury, Rudnick & Wolfe, LLP, Baltimore, MD, Counsel to Richard M. Kremen, Trustee.

Nathaniel E. Jones, Jr., James H. Fields, Jones & Associates, P.C., Baltimore, MD, Counsel to Ms. Ruth M. Walsh.

Dennis W. King, Danoff, King & Hofmeister, P.A., Towson, MD, Counsel to the debtor.

MEMORANDUM OPINION SUSTAINING OBJECTIONS TO DEBTOR'S EXEMPTION OF JEWELRY

JAMES F. SCHNEIDER, Chief Judge.

Richard M. Kremen, the Chapter 7 trustee objected to the exemptibility of rings given to the debtor by her non-filing spouse. Ruth M. Walsh, a creditor, also objected. For the reasons set forth, both objections will be sustained.

The question presented is whether rings given by a husband to his wife after marriage became her sole property, so that the wife's Chapter 7 trustee may administer them as property of her estate for the benefit of the wife's creditors. The debtor argued that the rings were the joint property of her husband and herself as tenants by the entireties because they were purchased with funds that the parties owned jointly as husband and wife. Unless they can be exempted under this rationale, the rings remain property of the estate and can be sold by the trustee. The debtor has exhausted the dollar value of her allowable exemptions, but entireties property is fully exemptible regardless of its value.

FINDINGS OF FACT

The rings described on the debtor's Schedules B and C as "wedding rings" were purchased by the debtor's husband on December 22, 1999, approximately three months after their marriage, with funds from a joint marital checking account. The debtor stated that the reason her husband purchased the rings was because it was important to him that she have a diamond ring. [Deposition of Pamela Bell-Breslin, July 18, 2000, page 47, line 8]. The debtor valued the rings at $8,000 in her bankruptcy schedules.

The debtor exempted the rings as property held as tenants by the entireties under the authority of In re Ford, 3 B.R. 559 (Bankr.D.Md.1980), aff'd. sub. nom. Greenblatt v. Ford, 638 F.2d 14 (4th Cir.1981). In Ford, this Court determined that under Maryland law, entireties property is exemptible from the bankruptcy estate when only one spouse files a voluntary Chapter 7 petition and claims the Maryland exemptions.¹

The debtor also cited Bender v. Bender, 282 Md. 525, 386 A.2d 772 (1978) for the proposition that the purchase of household furnishings for the use of both husband and wife by one spouse using his or her sole funds are presumed to be a gift to the marital unit and therefore held by both spouses as tenants by the entireties.

The objectors asserted that the rings belonged solely to the debtor. The trustee argued that joint tenancies are disfavored in Maryland, citing Boehm v. Harrington, 54 Md.App. 345, 355, 458 A.2d 885, 891 (1983)(presumption against joint tenancies applies to personal property). The trustee asserted that there was no evidence to overcome the presumption and that it was the parties' obvious intent that the debtor be the sole owner of the property because the rings, characterized as wedding rings, were given as an expression of love and affection and as a memorialization of the marriage. The trustee also contended that the rings are "wearing apparel,"² which in Maryland is customarily owned individually by spouses rather than as tenants by the entireties. The creditor alleged the claim of joint ownership was an afterthought which the debtor devised to keep the rings. Because both spouses have equal use of and access to household goods, they are distinguishable from apparel and jewelry. Therefore, the creditor asserted that rings worn by the debtor were the debtor's sole property, with which assertion the trustee concurred.

CONCLUSIONS OF LAW

It is well-settled in Maryland that "property held by the entirety is not subject to the claims of individual creditors of either spouse." In re Ford, 3 B.R. at 575, citing Phillips v. Krakower, 46 F.2d 764, 765 (4th Cir.1931), for that proposition and also for the proposition that the entireties doctrine is derived from the common law. The Ford opinion examined the nature and history of the doctrine:

The common law view of the nature of an estate by the entirety in Maryland was summarized in Marburg v. Cole, 49 Md. 402, 411 (1878):

By the common law of England, which is the law of this State, except where it has been changed or modified by statute, a conveyance to husband and wife does not constitute them joint tenants, nor are they tenants in common. They are in the contemplation of the common law, but one person, and hence they take, not by moieties, but the entirety. They are each seised of the entirety, and the survivor takes the whole. As stated by Blackstone, "husband and wife being considered as one person in law, they cannot take the estate by moieties, but both are seised of the entirety, per tout, et non per my; the consequence of which is, that neither the husband nor the wife can dispose of any part without the assent of the other, but the whole must remain to the survivor." 2 Bl.Com. 182. This has been the doctrine of the common law from an early period of its history ...

Due to the legal unity of husband and wife, each was deemed to own the entire indivisible estate while the marriage endured, and neither could convey his or her interests without the consent of the other. Columbian Carbon Co. v. Kight, 207 Md. 203, 206, 114 A.2d 28, 30 (1955); McCubbin v. Stanford, 85 Md. 378, 390, 37 A. 214, 214 (1897). The right of survivorship possessed by each spouse, one of the estate's chief incidents, was indestructible except by the joint act of the husband and wife. Jordan v. Reynolds, 105 Md. 288, 293, 66 A. 37, 38 (1907). Due to the husband's position of dominance at common law, the husband had complete control and custody of the entirety property and his right to the income therefrom was subject to the claims of his creditors, provided that his wife's vested right of survivorship remained unaffected. Columbian Carbon Co., 207 Md. at 206, 114 A.2d at 30; Clark v. Wootton, 63 Md. 113, 118-119 (1885).

See Arnold, Tenancy by the Entireties and Creditors Rights in Maryland, 9 Md.L.Rev. 291, 294 (1948) (hereinafter cited as Arnold).

The Maryland Constitution and the Married Women's Property Acts altered the common law rule that gave the husband control of his wife's property during coverture. Arnold at 294. See Md. Const. art. III, § 43; Md. Ann.Code art. 45, ss 1-2 (1971 Repl.Vol.). These Constitutional and statutory provisions gave the wife dominion over her own property and also deprived her husband's creditors of the right to attach the income derived from entirety property. Arnold at 294. Despite these changes, the concept of the legal unity of husband and wife and the indivisible nature of their interest in entirety property has been preserved. See Dioguardi v. Curran, 35 F.2d 431, 432 (4th Cir.1929); Annapolis Banking & Trust Co. v. Smith, 164 Md. 8, 9-10, 164 A. 157, 158-59 (1933). As stated in Ades v. Caplan, 132 Md. 66, 69, 103 A. 94, 95 (1918):

The nature of this estate forbids and prevents the sale or disposal of it, or any part of it, by the husband or wife without the assent of both; the whole must remain to the survivor. The husband cannot convey, incumber, or at all prejudice, such estate, to any greater extent than if it rested in the wife exclusively in her own right. He has no such estate, as he can dispose of to the prejudice of the wife's estate. The unity of the husband and wife as one person, and the ownership of the estate by that person, prevents the disposition of it otherwise than jointly.

While the estate exists, there can be no partition between the interests of the husband and wife. See Jordan v. Reynolds, 105 Md. at 294, 66 A. 37 at 38-39. In addition, while the estate exists, the spouses share equally in the income from property held as tenants by the entireties. Whitelock v. Whitelock, 156 Md. 115, 143 A. 712 (1928); Masterman v. Masterman, 129 Md. 167, 98 A. 537 (1916).

In re Ford, 3 B.R. at 565-66. Thus, a debtor's individual creditors could neither levy upon nor sell a debtor's undivided interest in entireties property to satisfy debts owed solely by the debtor. Because a debtor's interest in tenancy by the entireties property is exempt from process under Maryland law, "the debtor's interest in property which he holds as a tenant by the entirety may be exempted from the estate ... under [11 U.S.C. §] 522(b)(2)(B)³." Ford at 576. Cf. U.S. v Sandra Craft, 535 U.S. 274, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002)(federal tax lien held to attach to one spouse's interest in T/E property and IRS may levy the property.).

Maryland law recognizes that a tenancy by the entireties may be created in personalty as well as in real estate. In re Pernia, 165 B.R. 581-82 (Bankr.D.Md.1994)(Series EE savings bonds held not to be property held by the entireties only because U.S. Treasury regulations determined ownership); State of Maryland v. One 1984 Toyota Truck, 69 Md.App. 235, 237-38, 517 A.2d 103, 104 (1986)(truck); M. Lit, Inc. v. Berger, 225 Md. 241, 170 A.2d 303 (1961)(tavern business jointly owned and operated by spouses); Schildt v. Schildt, 201 Md. 10, 92 A.2d 367 (1952)(livestock); Beard v. Beard, 185 Md. 178, 44 A.2d 469 (1945)(restaurant business owed jointly by spouses); Hammond v. Dugan, 166 Md. 402, 170 A. 757 (1934)(bonds); Tyler v. U.S., 281 U.S. 497, 501, 50 S.Ct. 356, 358, 74 L.Ed. 991 (1930)(shares of corporate stock in which the husband created a tenancy by the entireties by a conveyance executed to himself and his wife); Brewer v. Bowersox, 92 Md. 567, 572, 48 A. 1060, 1062 (1901)(funds deposited in a bank account "wherein the depositors are disjunctively named, but the money is expressly made payable...