In re Eckols, Bankruptcy No. 85-517
| Citation | 63 BR 523 |
| Decision Date | 30 July 1986 |
| Docket Number | Bankruptcy No. 85-517,86-62. |
| Parties | In re James A. ECKOLS, Debtor. In re James FOLLOMON, Debtor. |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of New Hampshire |
Barbara Millar, Nashua, N.H., for debtor Follomon.
Matthew Epstein, Concord, N.H., for debtor Eckols.
Dennis Bezanson, South Portland, Me., trustee.
Since the matters pending in both of these cases involve similar facts and a common issue of law, this memorandum opinion will address jointly the objections raised to the debtor's claim of a homestead exemption concerning certain real property in each case. The legal right to the homestead exemption is governed by N.H.R.S.A. 480:1 (Supp.1985). This is so because the Bankruptcy Code exemption provision in § 522 of the Code authorizes the various states to "opt out" of the federal exemption provisions. New Hampshire so elected by virtue of R.S.A. 511:2-a.
The New Hampshire statutory provision on homestead exemptions in RSA 480:1 (Supp.1985) is quite brief: "Every person is entitled to $5,000 worth of his homestead, or of his interest therein, as a homestead ..." The remainder of this statutory provision sets forth special rules regarding manufactured housing, i.e., mobile homes, which are not pertinent here.
The New Hampshire Supreme Court has read into the statute the further requirement that "occupancy" is essential to the existence of the homestead right, and that for the purpose of the creation of the homestead right the occupancy must be actual and physical in nature. Currier v. Woodward, 62 N.H. 63 (1882). The New Hampshire Court has recognized however that once a homestead is validly established by possession the homestead right may be continued in some circumstances by constructive possession or temporary absence with no intent to abandon the homestead permanently. Currier v. Woodward, supra, in dicta; Austin v. Stanley, 46 N.H. 51 (1865); Wood v. Lord, 51 N.H. 448 (1871).
The only reported decision in New Hampshire involving a homestead exemption claim in a divorce context apparently is the decision in Wiggin v. Buzzell, 58 N.H. 329 (1878). That brief, one-paragraph decision, denied the husband's claim to an exemption under a statute which at that time gave the homestead exemption only to the "wife, widow, or children." The court does state that the ex-wife's "homestead right, not being reserved in the judgment of divorce, was lost." However, it appears from the decision that the basis for this reference was that the wife's alimony "was determined upon consideration of her loss of her rights in his property." The Wiggin decision accordingly is not a general proscription against retention of homestead rights during the pendency of a divorce proceeding. It appears therefore that there is no decision of the New Hampshire Supreme Court squarely deciding the question of loss or retention of homestead rights in a pending divorce proceeding where there was no intentional relinquishment of the same.
The wife of the debtor Eckols filed for divorce in New Hampshire in August of 1984. At that time the debtor and his wife jointly owned and occupied a home in Bedford, New Hampshire as their homestead. On August 21, 1984 the divorce court entered a temporary order expelling the debtor from the premises and subsequently, on September 24, 1984, provided that "whichever party is deemed by the court to be the temporary physical custodian for the minor children shall have the temporary use of the parties' Bedford homestead." A guardian ad litem was appointed to investigate and report to the court with regard to the appropriate party to obtain custody of the children.
The effect of the foregoing two orders by the divorce court was to leave the wife in possession of the homestead and to forbid the debtor to possess the homestead until, and if, the court ultimately determined that the debtor was to obtain custody of the children.
The debtor filed his bankruptcy petition in this court on November 26, 1985. At that time the guardian had not yet reported on the custody issue and neither party had moved to force the report to be filed or for any further hearing to be held before the divorce court. Subsequently, in the Spring of 1986, the report of the guardian and a psychologist was filed and recommended to the divorce court that custody of the children be given to the debtor. This matter was still pending for final resolution in divorce court at the time of the March 17, 1986 hearing in this court on the trustee's objection to the debtor's claim of homestead exemption.
The evidence indicates that the debtor has had a number of various residences under oral tenancies or written leases in New Hampshire, Missouri, and Nevada during the pendency of the divorce proceeding and the present bankruptcy proceeding. While the trustee contends that these facts indicate that the debtor had no intent to return to the family home, I find to the contrary in that the debtor's occupation as an airline pilot satisfactorily explains these changing residences as being only temporary accommodations to his work as his airline activities changed.
It appears from the record that the debtor in fact did intend to return to the family home and reside with his children if he won the custody battle in the divorce court. The evidence further indicates that the delay in achieving a resolution of that issue in the divorce court was not attributable solely to the debtor. There was considerable delay in getting the appropriate report from the guardian and psychologist as required by the divorce court.
As a practical matter, the parties agreed after the filing of the bankruptcy to allow the trustee to sell the property in question. The dispute therefore revolves around the issue of whether debtor is entitled to $5,000 of the sales proceeds as his homestead exemption right under the New Hampshire statute.
In this case the homestead exemption issues is raised obliquely in conjunction with an attempt by the debtor to avoid an attachment lien by Fleet National Bank pursuant to the provisions of § 522(f) of the Bankruptcy Code. That provision would allow nullification of the attachment lien in question if it is shown that it would "impair" a valid exemption right of the debtor. The parties have submitted the legal issue on the exemption right to the court for decision, with a subsequent factual hearing to be held on the question of value of the property in question and any impairment, depending on the ruling on the legal...
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