In re Ford, Bankruptcy No. 79-2-1846-L.
| Decision Date | 15 April 1980 |
| Docket Number | Bankruptcy No. 79-2-1846-L. |
| Citation | 3 BR 559 |
| Parties | In re Levy FORD, Jr., Debtor. |
| Court | U.S. Bankruptcy Court — District of Maryland |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
L. Stephen Hess, Shale D. Stiller, Irving E. Walker, Frank, Bernstein, Conaway & Goldman, Baltimore, Md., for debtor, Levy Ford, Jr.
Gary R. Greenblatt, pro se, Niles, Barton & Wilmer, Charles M. Tatelbaum, Sherbow, Shea & Tatelbaum, Baltimore, Md., for the trustee, Gary R. Greenblatt.
Nelson I. Fishman, Baltimore, Md., in support of the trustee.
Before GLENN J. GOLDBURN and HARVEY M. LEBOWITZ, Bankruptcy Judges.
This court, sitting en banc, is asked to determine the impact of the Bankruptcy Reform Act of 1978, P.L. No. 95-598 (November 6, 1978), 11 U.S.C. §§ 101 et seq. (the "Code"), on property owned as tenants by the entireties under Maryland law when only one spouse has filed a Voluntary Petition under Chapter 7 of the Code and has elected to take state exemptions under § 522(b)(2) of the Code. The significance of the issues to be decided in this case is demonstrated by the substantial interest evidenced by the bar of this State and the participation of various members of the bar in these proceedings. Extensive Memoranda and Reply Memoranda have been submitted by the parties and a hearing was held on February 12, 1980, at which time a Stipulation of Facts was presented and oral arguments heard. Upon request of counsel, both judges of the Bankruptcy Court of this district participated in these proceedings for the purpose of determining whether there would be any difference of opinion in this district regarding the issues presented. There is none, and we both concur in the opinion expressed below.
The question comes before the court on the following facts. On October 11, 1979, Levy Ford, Jr., the debtor filed a Voluntary Petition under Chapter 7, pursuant to § 301 of the Code. His spouse has not filed a bankruptcy petition. The debtor, on December 21, 1979, filed an Amended Schedule B-1 listing as real property the house and surrounding property at 1710 Windemere Avenue, Baltimore, Maryland 21218. On December 26, 1979, the debtor filed an Amended Schedule B-2, listing as personal property inter alia: under c., certain household goods, supplies, and furnishings, as set out on a list attached thereto; under d., a set of encyclopedias and, under f., a 1973 Chevrolet Malibu and a 1974 Chrysler. Both of these schedules with respect to the above real and personal property contained the caveat that "this property is owned by the debtor and his wife as tenants by the entireties; it is the debtor's position that this property is not within the estate in bankruptcy as designated by 11 U.S.C. § 541(a)." (Emphasis supplied.)
Mr. Ford elected to avail himself of the so-called "state exemptions" and filed on December 26, 1979, an Amended Schedule B-4 claiming the house and surrounding property, the household goods, supplies, furnishings, and books, and the two automobiles as exempt with the statement that "the property listed above is owned by the debtor and his wife as tenants by the entireties and therefore is exempt under 11 U.S.C. § 522(b)(2)(B)." (Emphasis supplied.)
Section 522(l), 11 U.S.C., in part provides that "unless a party in interest objects, the property claimed as exempt on such list Schedule B-4 is exempt." On January 2, 1980, the trustee, Gary R. Greenblatt, Esq., filed an Amended Report Of Exempt Property in which he denied the claim of the debtor that property held as tenants by the entireties is exempt under Maryland law. The trustee asserts his belief that such an exemption is not within the scope of the Bankruptcy Code thus making those assets a part of and retained within the bankruptcy estate. In addition, the trustee claims that the debtor can not take either the furniture, or the two automobiles, as exempt property since there is no equity in these items, and further that the Chrysler is titled exclusively in the debtor's name and not held as tenants by the entireties.
In response to the trustee's report, the debtor on January 2, 1980, filed an Amended Objection Of Debtor To Trustee's Determination Of Exempt Property in which it was asserted that a tenancy by the entireties interest in real and personal property is exempt from process under Maryland law and therefore is within the exemption provided by 11 U.S.C. § 522(b)(2)(B); that the fact that personal property is subject to a security interest does not impair the right to claim the property as exempt; and that the titling of a car in the name of the debtor alone does not invalidate the fact that the car is owned by the debtor and his wife as tenants by the entireties. The immediate parties to this controversy are the debtor and the trustee, and this court has been called upon to determine the issues raised by the Trustee's Amended Report Of Exempt Property and the Amended Objection Of Debtor To Trustee's Determination Of Exempt Property.
The following Stipulation of Facts was introduced into evidence as a joint exhibit of the parties (Stipulation, Joint Ex. # 1).
1. The debtor, Levy Ford, Jr., was born on December 3, 1941.
2. The debtor's wife, Della Mae Ford, was born on February 7, 1944.
3. The debtor and his wife have been married since December 10, 1969.
4. All of the debtor's household goods, supplies and furnishings, including the set of encyclopedias, were acquired by the debtor and his wife during their marriage and before November 6, 1978, and are held by them as tenants by the entirety.
5. The debtor's 1973 Chevrolet Malibu was acquired by the debtor and his wife during their marriage and before November 6, 1978, and is titled in both of their names as tenants by the entirety.
6. The personal property described above in Paragraphs 4 and 5 was purchased with funds some of which were provided by the debtor and some of which were provided by the debtor's spouse. Both spouses were employed when the personal property was acquired.
7. The real property known as 1710 Windemere Avenue, Baltimore, Maryland was purchased by the debtor and his wife on or about April 28, 1971, is titled in both of their names, and is owned by the debtor and his wife as tenants by the entirety. The consideration for the purchase of this property, other than that provided by the mortgagee, Provident Savings Bank, was furnished entirely by the debtor. At the time of purchase, however, the debtor's wife was employed at the Social Security Administration, 110 Paca Street, Baltimore, Maryland. After the original purchase of the real property, the mortgage payments have been made from joint bank accounts owned by the debtor and his wife. These joint bank accounts consisted of funds deposited by both the debtor and his wife from their respective earnings; each also has withdrawn money from these accounts for both joint and personal purposes.
8. None of the real or personal property described above was obtained by the debtor and his wife as a gift.
9. All of the debtor's obligations outstanding as of the date his Voluntary Petition was filed were incurred before October 1, 1979, and some of them were incurred before November 6, 1978.
10. Neither the debtor nor his wife had any specific intent with respect to creditors when they acquired their various assets.
11. The court may take judicial notice of the fact that a number of husbands and/or wives in the State of Maryland purchased assets as tenants by the entirety before November 6, 1978 with the understanding that, if either of them should become involved in bankruptcy proceedings, the assets held as tenants by the entirety would not be subject to the claims of a trustee in bankruptcy of the bankrupt spouse.
The issues raised by this controversy and now before the court are:
1. Where a debtor holds property as a tenant by the entirety under Maryland law, does he have an interest which would become property of the bankruptcy estate under 11 U.S.C. § 541(a) when only one spouse is in bankruptcy.
2. If the debtor's interest in property as a tenant by the entirety under Maryland law is property of the estate under § 541(a) of the Code, may it be exempted by the debtor from property of the estate under 11 U.S.C. § 522(b)(2)(B).
3. If the debtor's interest in property as a tenant by the entirety under Maryland law is property of the estate, under § 541(a) of the Code, and is not exempt under § 522(b)(2)(B) of the Code, does § 541(a), as implemented by 11 U.S.C. §§ 363(h) and 363(j) of the Code, deny due process in violation of the Fifth Amendment of the Constitution if those sections are construed to apply retrospectively to tenancies by the entireties created prior to the enactment of the Code.
For the purposes of determining the first two issues raised, the court will assume, without deciding, that the provisions of § 541(a), as implemented by §§ 363(h) and 363(j), are constitutional and are applicable not only prospectively from the date of the enactment of the Code, November 6, 1978, but also retrospectively from said date to the tenancies by the entireties created by the debtor and his spouse.
Section 541(a) of the Code provides:
The question of what is property under § 70(a) of the Bankruptcy Act of 1898, as amended (the "Act"), is a federal question. Chicago Board of Trade v. Johnson, 264 U.S. 1, 10, 44 S.Ct. 232, 234, 68...
To continue reading
Request your trial
-
In re Garrett
... ... GARRETT, Debtor ... OWENS-ILLINOIS, INC., Plaintiff, ... J.M. GARRETT, Defendant ... Bankruptcy No. B79-2591A ... United States Bankruptcy Court, N.D. Georgia, Atlanta Division ... April 15, ... ...