In re Netz
Citation | 91 BR 503 |
Decision Date | 17 October 1988 |
Docket Number | Bankruptcy No. 3-88-1888. |
Parties | In re Frederick A. NETZ and Janet L. Netz, Debtors. |
Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota |
Mark C. Halverson, Mankato, Minn., Chapter 7 trustee.
Robert Winzenberg, Mankato, Minn., for Chapter 7 trustee.
ORDER SUSTAINING TRUSTEE'S OBJECTION TO DEBTORS' CLAIM OF EXEMPTION AND DECLARING STATE STATUTE UNCONSTITUTIONAL
On September 16, 1988, the Court convened a hearing on the objection of Debtors' Chapter 7 Trustee to their claim of exemption under MINN.STAT. § 550.37 subd. 24, to two annuities of a total value of $10,055.71. The Chapter 7 Trustee and his counsel duly appeared; no appearance was made by or on behalf of Debtors or the State of Minnesota. The Trustee's counsel argued that the Minnesota statute on which Debtors premised their claim of exemption violated MINN. CONST. Art. 1, § 12, that the exemption statute was therefore void and of no effect, and that the value of the annuities was property of Debtors' bankruptcy estate. By a notice entered and mailed on September 16, 1988, the Court certified the constitutional question to the Attorney General of the State of Minnesota pursuant to 28 U.S.C. § 2403(b). The notice authorized intervention by the Attorney General in the pending challenge to the constitutionality of the statute, so long as he filed a petition for intervention no later than October 3, 1988. The Attorney General has not filed a petition for intervention or otherwise appeared in this case. This order is entered accordingly.
Debtors filed a voluntary petition under Chapter 7 of the Bankruptcy Code in this Court on June 13, 1988. Via an amended Schedule B-4 filed on August 10, 1988, Debtors claimed as exempt pursuant to MINN.STAT. § 550.37 subd. 24 their interest in the following private annuities:
POLICY VALUE Principal Mutual Life Insurance Company $8,188.43 # XXXXX-XXXXXXXXX American Pathway $1,867.28 # 7434
The Trustee timely objected to Debtors' claim of exemption, arguing alternatively that the statute was unconstitutional or that the annuities did not fall within the ambit of protected assets under the statute.1
MINN.STAT. § 550.37 sets aside the classes of property enumerated in that section as exempt and "not liable to attachment, garnishment, or sale on any final process, issued from any court." MINN. STAT. § 550.37 subd. 1. Prior to April 12, 1988, MINN.STAT. § 550.37 subd. 24 read as follows:
Employee benefits. The debtor\'s right to receive present or future payments or payments received by the debtor, under a stock bonus, pension, profit sharing, annuity, individual retirement account, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
(emphasis added).
Via 1988 Sess.L., ch. 490, § 4, the Minnesota State Legislature amended the statute to read as follows:
Employee benefits. The debtor\'s right to receive present or future payments or payments received by the debtor, under a stock bonus, pension, profit sharing, annuity, individual retirement account, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service.
The amendment was effective on April 12, 1988.
The only change — but the crucial change — which the Legislature made was to remove the prior language which had limited the quantum of property subject to the exemption to that "reasonably necessary" for the support of the debtor or the debtor's dependents. Via judicial construction and application on a case-by-case basis, this language previously furnished a limitation on the aggregate value of pension benefits or similar assets which a debtor could claim as exempt pursuant to the statute. See, e.g., In re Schuette, 58 B.R. 417 (Bankr.D. Minn.1986); In re Sederstrom, 52 B.R. 448 (Bankr.D.Minn.1985); In re Montavon, 52 B.R. 99 (Bankr.D.Minn.1985); In re Rosen, 52 B.R. 96 (Bankr.D.Minn.1985); In re Bari, 43 B.R. 253 (Bankr.D.Minn.1984); In re Miller, 33 B.R. 549 (Bankr.D.Minn.1983); In re Werner, 31 B.R. 418 (Bankr.D.Minn. 1983); In re Taff, 10 B.R. 101 (Bankr.D. Conn.1981).2
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