In re Shumaker
| Decision Date | 06 March 1991 |
| Docket Number | Bankruptcy No. 90-41106-007. |
| Citation | 124 BR 820 |
| Parties | In re Thomas Lee SHUMAKER, f/d/b/a Rocky Mountain Packing Company, Debtor. |
| Court | U.S. Bankruptcy Court — District of Montana |
Robert Drummond, Marra, Wenz, Johnson & Hopkins, P.C., Great Falls, Mont., for debtor.
William A. Squires, Matteucci, Falcon, & Squires, P.C., Great Falls, Mont., for United Food and Commercial Workers Union.
Ross P. Richardson, Butte, Mont., Trustee.
In this Chapter 7 case, United Food and Commercial Workers Union (Union), an unsecured creditor, has filed timely objections to claims of exemption sought by the Debtor.1 The matter has been submitted on stipulated facts and Briefs by the parties have been filed in support of their respective positions.
The stipulated facts are:
1. That the Debtor, Thomas Lee Shumaker, is 47 years old, and filed his Chapter 7 bankruptcy on July 28, 1990.
2. That the Debtor, Thomas Lee Shumaker, is holding an individual retirement account having a net value of $33,247.85, not including penalties or cost of early withdrawal, consisting of securities valued at $29,011.25, and cash in the amount of $4,236.60 at the time of filing as demonstrated by Exhibit "A".
3. That the Debtor opened his individual retirement account on November 3, 1987. The Debtor completed the Account Information Form and Application (Exhibit "B") to open the account. (Exhibit "C").
4. A copy of the D.A. Davidson & Co. IRA Disclosure Statement (Exhibit "D") controls the account of the Debtor.
5. That the Debtor rolled over $10,358.39 into his individual retirement account on November 3, 1987. The proceeds from this figure represented funds held in the Debtor's Oscar Mayer Pension and two other IRAs. (Exhibit "E").
6. That upon discontinuation of the business of Rocky Mountain Packing Company, the Debtor rolled over his 401K plan into the IRA. That rollover was of $3,350.89 on June 16, 1990. (Exhibit "F"). That no other contributions have been made to the IRA other than the contributions referred to above.
7. That subsequent to the filing of the Petition, believing the IRA to be exempt property, the Debtor cashed a portion of his IRA totaling $16,135.37 and used it to finance the purchase of a new vehicle. (Exhibit "G").
8. That at the time of filing the Petition in bankruptcy, the Debtor was a ranch hand employed by Phalen Ranch. On the 24th of July, the Debtor had surgery on his shoulder and has been unemployed ever since, earning $124.50 per week on workers' compensation. The Debtor intends to return to employment as a ranch hand.
9. That the Debtor has testified at the First Meeting of Creditors that he used a personal computer in the business to keep production records of livestock on the ranch he was employed on, even though such record keeping is not a requirement of the Debtor's employment. Additionally, all of the former Rocky Mountain Packing Company records are kept on his computer.
10. The parties stipulate that in the event that the Montana exemption statute is found unconstitutional, leave shall be granted the Debtor to amend his schedules to claim the IRA as exempt under federal exemptions laws, and the creditor reserves all right applicable thereto.
In the bankruptcy Schedules filed by the Debtor, under Schedule B-4, Debtor claimed the following exemptions:
Type of Property Value Claimed Exempt
Household goods $1,710.00
Automobile-1988
Chevrolet Pickup 8,867.86
Boat-Duracraft
Canoe 2,500.00
Office equipment-computer 2,000.00
Tangible personal property-D.A
Davidson Account (120
shares General Electric) 5,400.00
Tangible personal property-Oscar
Mayer Pension 5,000.00
Stock and company interest-401K
Rocky Mountain
Packing Company Plan 2,039.76
Stock and company interest-D.A
Davidson Account 6,600.00
By Order dated October 25, 1990, the Debtor was allowed to amend his Schedules to reflect, among other things, that the various IRA and pension accounts listed above had been combined into one IRA account by the Debtor pre-Petition, and that said single IRA was now being claimed as exempt by the Debtor under Schedule B-4.
Additionally, the Debtor amended Schedule B-4 to claim various items of household furnishings as exempt. In his Brief in Support of Declarations of Exemptions filed herein on November 2, 1990, the Debtor acknowledged that the creditor's objections to the exemptions in the household furnishings were well taken to the extent that the value of the exemption exceeded $600.00 worth of household furnishings as exempt, and accordingly, those items of personal property listed in Schedule B-3 which are not claimed as exempt in Schedule B-4 must be turned over to the Trustee for liquidation and distribution to the creditors herein. Those items of property are as follows:
Item Value
Bar Stools (4) $ 50.00
Coffee Table 10.00
Dining Room Chairs (2) 20.00
Dresser 10.00
Dresser (water damaged) 25.00
Dresser and Cabinet 50.00
End Table 10.00
Gun Vault (homemade) 80.00
Ladder Back Chairs (2) 100.00
Recliner (plastic) 20.00
Recliner 25.00
Rocker (wood) 25.00
Sofa 25.00
Stuffed Chair 10.00
Stuffed Chair 25.00
Waterbed 50.00
The Debtor's original Schedules also sought to exempt a Duracraft canoe. In his amendments and subsequent Brief, the Debtor also conceded the validity of the Union's objection to this exemption. The Duracraft canoe is no longer claimed exempt on the Debtor's amended Schedule B-4 and therefore must also be turned over to the Trustee for liquidation.
The Debtor has also amended his Schedule B-4 to reflect a $1,200.00 vehicle exemption. However, said vehicle was purchased post-petition with proceeds from the Debtor's IRA account. (Stipulation of Fact, paragraph 7). Accordingly, this exemption is tied directly to challenge against the IRA account and need not be addressed by the Court. The remaining issues raised by the Union's objection deal with the claim of exemption of a computer under Section 25-13-609(3), Mont.Code Ann., as a tool of the trade and the exemption of the Debtor's IRA account.
As to the computer, under the agreed facts, the Debtor uses the computer in his occupation as a farm laborer to keep production records on his employer's ranch, even though such record keeping is not a requirement of the Debtor's employment. The specific exemption under amended Schedule B-4 lists the computer as "office equipment" valued at $2,000.00.
An exemption statute is to be liberally construed for the benefit of the Debtor. McMuller v. Shields, 96 Mont. 191, 29 P.2d 652 (1944); In re Frazier, 5 F.Supp. 903 (D.Mont.1934). The Montana legislature in 1987 changed many of Montana's exemption statutes, particularly those dealing with personal property items, by setting aggregate dollar amounts on all classifications of personal property and eliminating any requirement of necessity. See, In re Neutgens, 7 Mont.B.R. 43 (Bankr.Mont. 1989) for a discussion of Montana new exemption statutes. And, after this Court's decision of In re Mutchler, 95 B.R. 748, 6 Mont.B.R. 388 (Bankr.Mont.1989), the 1989 Montana legislature again changed § 25-13-609(3) to reduce the value of each item of personal property listed in such sub-section to an "aggregate" value of $3,000.00. Id. at 757, Ftn. 1.
I find the language of In re Siegman, 757 P.2d 820 (Okla.1988), certified to the Supreme Court of Oklahoma by the Oklahoma bankruptcy court on the issue of interpretation of the Oklahoma tool of the trade exemption statute, to be instructive because of the close similarity in language (except as to value) of the Montana and Oklahoma exemption statutes.
Id. at 822.
After approving of the holding of the Montana Supreme Court in McDonald v. Mercill, 220 Mont. 146, 714 P.2d 132, 135 (1986), the Oklahoma court concluded:
"We now hold that the tools of the trade exemption under 31 O.S.Supp.1987 § 1(A)(6) applies to any property which comes within the scope of the terms tools, apparatus or books, is used in the trade or professional of the debtor or a dependent of the debtor, and is reasonably necessary, convenient or suitable for production of work in that trade or profession regardless of size, source of power, mobility or mode of operation." Id. at 824.
Further, Matter of Knight, 75 B.R. 838 (Bankr.S.D.Iowa 1987), interpreting a similar Iowa statute on tool of the trade exemption, holds:
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