Peet v. Checkett (In re Peet)Peet v. Checkett (In re Peet)
Matthew Richard Peet and Marilynn Louise Peet appeal the August 25, 2014 order of the bankruptcy court
BACKGROUND
The Peets filed a petition for relief under chapter 13 of the bankruptcy code on December 5, 2011. When they filed their petition for relief, the Peets and Marilynn Peet’s parents held title to real property in Missouri as joint tenants, and Marilynn Peet and her father held title to a 2005 Ford half-ton pickup registered in Missouri as joint tenants.
On the Peets’ motion, the bankruptcy court converted the case to chapter 7 on January 23, 2014. Cheekett was appointed the chapter 7 trustee.
Marilynn Peet’s father passed away on April 14, 2014. Her mother passed away the following day.
That summer, the trustee proposed to sell the real property and the pickup. The Peets objected. The bankruptcy court overruled the Peets’ objections and authorized the trustee to sell the real property and the pickup. The Peets timely appealed.
STANDARD OF REVIEW
The relevant facts are not in dispute. We review the bankruptcy court’s conclusions of law de novo. Pierce v. Collection Assoc., Inc. (In re Pierce),
DISCUSSION
The filing of a petition for relief under the bankruptcy code creates a bankruptcy estate comprising, inter alia, all the debtor’s legal and equitable interests in property on the petition date. 11 U.S.C. § 541(a)(1). State law determines the nature and extent of a debtor’s interest in property. N.S. Garrott & Sons v. Union Planters Nat'l Bank (In re N.S. Garrott & Sons),
Under Missouri law, a joint tenant “hold[s] by the moiety (or half) and by
Joint tenancy is based on the theory that the tenants share one undivided estate, with the distinctive characteristic of the right of survivorship. Upon the death of any one of the joint tenants, the entire estate goes to the survivors, and so on to the last survivor, who attains sole ownership and exclusive possession. A joint tenancy can be destroyed by conveyance ... by one or more of the joint tenants during the lifetime of the cotenants.. A conveyance by a cotenant destroys the unity of title and converts the joint tenancy into a tenancy in common insofar as the interest of the particular joint tenant is concerned.
Remax of Blue Springs v. Vajda & Co.,
The Peets do not deny their interest in the real property and Marilynn Peet’s interest in the pickup were property of the bankruptcy estate. They instead argue the filing of their petition for relief severed the joint tenancies in the real property and the pickup and converted those joint tenancies to tenancies in common.
If the Peets are correct, on the petition date and at all relevant times thereafter, they each held an undivided one-quarter interest in the real property, and Marilynn Peet held an undivided one-half interest in the pickup. The trustee would therefore be entitled to only half the proceeds from the sales of the real property and the pickup, less any portion thereof the Peets have exempted.
The Peets are mistaken: Nothing in the bankruptcy code
[The] concept [that the filing of a petition for relief severs a joint tenancy] is evidently from the fantasy world of make believe or born as a result of wishful thinking. It is just not true. The debtor does not transfer his title to 541 property of the estate but holds his title subject to the exercise by the trustee of [the trustee’s] rights to sell, use or lease such property by appropriation under the “avoidance” or “strong arm” sections as typified by Sections 542, 543, 544, 545, 546 and 547 of the 1978 Act, as amended.... The trustee has no title to property of the estate until he elects to take affirmative action and proceedings are had or orders made.
Whittington v. Gilbralter Sav. & Loan Assoc. (In re Spain),
The absence of any language of conveyance in the bankruptcy code is in marked contrast to the Bankruptcy Act of 1898, which originally provided, in pertinent part:
The trustee of the estate of a bankrupt, upon his appointment and qualification, ... shall ... be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is held to be exempt[.]
Bankruptcy Act of 1898, 30 Stat. 544, 565 at § 70(a). This language remained virtually unchanged for 80 years. See 11 U.S.C. § 110(a) (1976) (repealed 1978). By eliminating this provision in 1978, Congress sounded the death knell for the Peets’ argument.
Congress eliminated the provisions of the old Bankruptcy Act which vested “title” in the Chapter 7 trustee by operation of law. Thus, the concept of “title” in the Chapter 7 trustee as a basis for determining what property the trustee will administer in a Chapter 7 proceeding ended with the enactment of the Bankruptcy Reform Act of 1978.
Benner,
In reaching the conclusion that the filing of a petition for relief does not sever a joint tenancy, we are mindful of the several cases cited by the Peets that say otherwise. However, we are not persuaded by those cases.
In the oldest of those cases, for example, the court expressly acknowledged the bankruptcy code “does not provide that the Trustee holds title to the estate property.” In re Lambert,
With respect to the legislative history, to the extent it can be read to conflict with Congress’s elimination of § 110(a) and its passage of § 541(a) — and we are not suggesting it can be — § 541(a) controls.
Legislative history can be a legitimate guide to a statutory purpose obscured by ambiguity, but in the absence of a clearly expressed legislative intention to the contrary, the language of the statute itself must ordinarily be regarded as conclusive. Unless exceptional circumstances dictate otherwise, when we find the terms of a statute unambiguous, judicial inquiry is complete. The mere fact that statutory provisions conflict with language in the legislative history is not an exceptional circumstance permitting a court to apply the legislative history rather than the statute.
U.S. v. Erickson P’ship (In re Erickson P’ship),
With respect to §§ 363(h) and 522(b)(2)(B), the court stated: “Both of these sections are written in the past tense ‘had,’ not the present tense ‘has,’ thus indicating that the debtor no longer holds the title that he did just prior to commencement of the case.” Lambert,
In another of the cases cited by the Peets, the court acknowledged the legislative history on which the court in Lambert relied “is not directly on point.” Feldman v. Panholzer (In re Panholzer),
The remaining cases cited by the Peets offer nothing new or different. In one, the court relied exclusively on Lambert. In re Tyson,
In the last case cited by the Peets, one of our own, we stated: “With joint tenancy property, only the debtor’s share of the property comes into the estate[.]” Abernathy v. LaBarge (In re Abernathy),
CONCLUSION
Having reviewed the matter de novo, we agree with the bankruptcy court’s conclusion that the filing of a petition for relief does not sever a joint tenancy. The Peets’ undivided estate in the real property and Marilyn Peet’s undivided estate in the pickup are property of the bankruptcy estate, and the trustee is entitled to the proceeds from the sales of the real property and the pickup, less any portion thereof the Peets have exempted. We therefore affirm the bankruptcy court’s August 25, 2014 order authorizing the trustee to sell the real property and the pickup.
Notes
. The Honorable Arthur B. Federman, Chief Judge, United States Bankruptcy Court for the Western District of Missouri.
. The bankruptcy court’s August 25, 2014 order was not stayed. Presumably, the real property and the pickup have since been sold. This would ordinarily render the Peets' appeal moot. 11 U.S.C. § 363(m); Sears v. U.S. Trustee (In re AFY),
. A joint tenancy can also be destroyed by partition or by execution on a joint tenant's interest. Remax of Blue Springs,
. It appears the Peets have exempted $476.00 of the value of the pickup.
. The Peets do not identify any provision of Missouri law that would sever a joint tenancy upon the filing of a petition for relief. Cf. Minn. Stat. § 500.19, subd. 5 ("A severance of a joint tenancy interest in real estate by a joint tenant shall be legally effective ... if ... a severance is effected pursuant to bankruptcy of a joint tenant.”).
.This disposes of the Peets’ corollary argument that the filing of their petition for relief destroyed the unity of title and the unity of time, two of the elements of a joint tenancy under Missouri law. See In re Estate of Gerling,
. " 'The debtor’s interest in property also includes “title” to property, which is an inter
. When the Lambert decision was issued, § 363(h) provided, in pertinent part, "the trustee may sell both the estate's interest ... and the interest of any co-owner in property in which the debtor had, immediately before the commencement of the case, an undivided interest as a ... joint tenant[.]” It now reads, in pertinent part, “the trustee may sell both the estate’s interest ... and the interest of any co-owner in property in which the debtor had, at the time of the commencement of the case, an undivided interest as a ... joint tenant[.]”
. When the Lambert decision was issued, § 522(b)(2)(B) allowed a debtor to exempt from property of the estate "any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a ... joint tenant!.]” That provision is now found at § 522(b)(3)(B).