Matter of Thompson, Bankruptcy No. 82-1648-W.

• Decision Date: 27 January 1984
• Docket Number: Bankruptcy No. 82-1648-W.
• Citation: 46 BR 1
• Parties: In the Matter of Russell THOMPSON, Dixie A. Thompson, Debtors.
• Court: U.S. Bankruptcy Court — Southern District of Iowa

46 B.R. 1 (1984)

In the Matter of Russell THOMPSON, Dixie A. Thompson, Debtors.

Bankruptcy No. 82-1648-W.

United States Bankruptcy Court, S.D. Iowa.

January 27, 1984.

C.R. Hannan, Perkins, Sacks & Hannan, Council Bluffs, Iowa, for debtors.

Steven H. Krohn, Smith, Peterson, Beckman & Willson, Council Bluffs, Iowa, for Agricultural Production Cr. Assoc.

ORDER OVERRULING OBJECTION TO CLAIMED EXEMPTION AND ORDER DECLARING CERTAIN PROPERTY NOT PROTECTED BY 11 U.S.C. § 522(f)

RICHARD STAGEMAN, Bankruptcy Judge.

The debtors filed a joint petition under Chapter 11 of the Bankruptcy Code on November 15, 1982.

In Schedule B-4 annexed to the debtors' petition, the debtor, Russell Thompson, claimed 210 pigs under six months of age, valued at $4,500, as exempt property under Section 627.6(5), Iowa Code (1981).

Under Iowa law a debtor is entitled to hold exempt from execution, among other property, "all pigs under six months." Id.

The objecting creditor states that the debtor cannot have the 210 pigs set off as exempt property. The creditor is wrong, the pigs are exempt under Iowa law. Sparks v. Flesher, 217 Iowa 1086, 252 N.W. 529 (1934).

In a resistance filed to the creditor's objection, the debtor asserts that not only are the pigs exempt, but the creditor's security interest under 11 U.S.C. § 522(f) is voidable as well. The parties argued this point in briefs so the court will decide it.

11 U.S.C. § 522(f) applies to this case even though the uniform federal exemptions do not by reason of the State of Iowa having declared them nonapplicable. 11 U.S.C. § 522(d); Section 627.10, Code of Iowa (1981). See In re Hill, 4 B.R. 310 (Bkrtcy.N.D.Ohio 1980).

11 U.S.C. § 522(f) states in material part:

Notwithstanding any waiver of exemptions, the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—

. . . .

(2) a nonpossessory, nonpurchase-money security interest in any—

(a) household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry that are held primarily for the personal, family or household use of the debtor or a dependent of the debtors; . . .

The issue presented by the parties is this: are this farmer's 210 pigs under six months old "held primarily for the personal, family or household use of the debtor . . ."

The court thinks not. The debtor is engaged in the business of farming. He is raising livestock on a commercial scale, and it cannot be argued that the livestock or animals are used as pets or for personal slaughter to be consumed by his family. The debtor is asking the court to effectively eliminate the requirement that these items be held for personal, family or household use for the debtor.

The hogs of this debtor are a capital business venture, financed as such. Congress did not mean to protect the entrepreneur's stock in trade or producer's inventory which is apparent by the restriction to uses of the exempt property for personal or family use. This is easily grasped from a reading of the legislative history. As stated in In re Hill, supra:

Congress enacted 11 U.S.C. Section 522(f) to protect the debtor\'s exemptions, his discharge, and thus his fresh start by permitting him to avoid certain liens on exempt property. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 362 (1977); S.Rep. No. 95-989, 95th Cong., 2nd Sess. 76 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787. Congress looked to the practice of creditors with judicial liens and nonpurchase money security interests under the Bankruptcy Act and concluded that these creditors had an unfair advantage over the debtor. Congress intended that the debtor use the avoiding power under Section 522(f) of the Bankruptcy Code, to eliminate this unfair advantage. The purpose of Section 522(f) of the Bankruptcy Code is stated in the following excerpt from the House of Representatives Report:

`In

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