August 25 2009
DA 08-0625
IN THE SUPREME COURT OF THE STATE OF MONTANA
2009 MT 290
McCONE COUNTY FEDERAL CREDIT UNION,
Plaintiff and Appellant,
v.
TEX J. GRIBBLE AND FRED WRATISLAW,
Defendants and Appellees.
APPEAL FROM: District Court of the Seventh Judicial District,
In and For the County of McCone, Cause No. DV 2005-005
Honorable Katherine M. Irigoin, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Ronald D. Allie, Allie Law Firm, Billings, Montana
For Appellee:
Laura Christoffersen, Christoffersen & Knierim, P.C.,
Culbertson, Montana
Submitted on Briefs: June 25, 2009
Decided: August 25, 2009
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 McCone County Federal Credit Union (Credit Union) appeals the decision by the
Seventh Judicial District Court of McCone County to grant Fred Wratislaw’s motion for
summary judgment. We affirm.
ISSUE
¶2 A restatement of the issue on appeal is whether the District Court erred by
granting Wratislaw’s third motion for summary judgment.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 During 2002 and 2003, Tex Gribble entered into at least four loan agreements with
the Credit Union. He subsequently defaulted on most, if not all, of them. Gribble
secured these loans with various pieces of large equipment including tractors, a combine,
a swather and a pickup truck. Notably, he did not secure them with real property he
owned in McCone County.
¶4 On April 14, 2005, the Credit Union filed a complaint against Gribble seeking
repayment of the loans, including interest and late fees, and the right to foreclose on the
collateral. The Credit Union also requested costs and reasonable attorney fees.
¶5 Eleven days later, on April 26, 2005, Gribble transferred the real property he
owned in McCone County (“the Gribble place” or “the property”) to Fred Wratislaw by
quit claim deed. Subsequently, the Credit Union moved to amend the pleadings to join
Wratislaw as a defendant. The District Court granted the motion. On October 7, 2005,
the Credit Union filed an amended complaint claiming Gribble’s transfer of the Gribble
place to Wratislaw was fraudulent. It alleged that Gribble made the transfer with the
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intent to hinder and delay the Credit Union’s claims, that Gribble became insolvent when
he sold the Gribble place to Wratislaw, and that Wratislaw did not pay adequate
consideration for the property. It asked the District Court to set aside the transfer under
the Uniform Fraudulent Transfer Act, §§ 31-2-327 through 342, MCA, (UFTA or the
Act) and allow the Credit Union to levy execution on the property, or its proceeds, to be
applied to any future judgment against Gribble.
¶6 In November 2006, Wratislaw filed a motion for summary judgment that was
denied. In June 2007, he filed a second summary judgment motion in which he argued
that the Gribble place was not “an ‘asset’ of the debtor subject to the [UFTA]” because
the UFTA excludes “property to the extent it is generally exempt under nonbankruptcy
law.” Section 31-2-328(2), MCA. Wratislaw submitted that the Gribble place, because it
was Gribble’s residence, was exempt under nonbankruptcy law, specifically
§§ 70-32-101 through 303, MCA, i.e., the homestead statutes. The Credit Union
responded that Gribble could not claim the exemption because he failed to declare the
Gribble place as his homestead.
¶7 Additionally, the Credit Union argued that Gribble had used various other
addresses on documents on file with the Credit Union and around the time he executed
the quit claim deed to Wratislaw; therefore, there was a genuine issue of material fact as
to whether the Gribble place was Gribble’s residence. The District Court determined the
Credit Union’s second argument was dispositive. It denied Wratislaw’s motion, ruling
that Gribble’s use of multiple addresses created a genuine issue of material fact regarding
the true place of his residence which precluded a disposition on summary judgment.
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¶8 Subsequently, the Credit Union deposed Gribble and Gribble testified that the
Gribble place was his permanent residence. He explained that he used other addresses at
times because he had a traveling job and was working out of state. He further testified
that he had his bills sent to his mother’s address so she could take care of them in his
absence but that he did not live at his mother’s house. He stated that he kept his personal
property and business records at the Gribble place and returned there on weekends and
when not working.
¶9 In June 2008, Wratislaw filed his third motion for summary judgment, opining that
Gribble’s deposition testimony resolved the only issue of material fact by establishing
that the property was Gribble’s place of residence and, therefore, was exempt under the
homestead statutes. The Credit Union once again argued that Gribble failed to file a
homestead declaration and, as a result, the homestead exemption did not protect him.
Wratislaw countered that the UFTA did not require the filing of a declaration of
homestead exemption; rather, it merely required that the property be “generally exempt
under nonbankruptcy law.” The District Court granted Wratislaw’s motion on November
17, 2008, ruling that the Gribble place was Gribble’s residence. It found that Gribble
“did not relinquish residency [by using] different addresses on documents.”
Additionally, the court found that In re Snyder, 2006 MT 308, 335 Mont. 11, 149 P.3d
26, supported the conclusion “that actual residency in a place is not a requirement to
property being an exempt homestead.” Without analysis of the Credit Union’s “failure to
file the homestead declaration” argument, the District Court stated that exemptions in
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Montana are to be liberally construed in favor of debtors. It is from this order granting
Wratislaw’s motion for summary judgment that the Credit Union appeals.
STANDARD OF REVIEW
¶10 We review a district court’s grant of summary judgment de novo, and apply the
same criteria applied by the district court pursuant to M. R. Civ. P. 56(c). A district court
properly grants summary judgment only when no genuine issues of material fact exist,
and the moving party is entitled to judgment as a matter of law. Pennaco Energy v. Bd.
of Environmental Rev., 2008 MT 425, ¶ 17, 347 Mont. 415, 199 P.3d 191 (citation
omitted).
DISCUSSION
¶11 Did the District Court erroneously grant summary judgment to Wratislaw?
¶12 On appeal, the Credit Union argues that the District Court erred by finding that the
property was Gribble’s residence and, therefore, exempt. It further asserts that because
Gribble failed to file the declaration of homestead, the property was not protected by the
homestead exemption; therefore, it is available to a third party creditor. The Credit
Union submits that the District Court erred in holding that the property was exempt from
the UFTA or, alternatively, that it erred by granting summary judgment because genuine
issues of material fact continued to exist.
¶13 As he did before the District Court, Wratislaw maintains that the Gribble place
was Gribble’s residence and that his use of other addresses while holding a traveling job
did not constitute a change in his legal residence. Additionally, Wratislaw once again
asserts that the property was not an “asset” under § 31-2-328, MCA, because the property
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was “generally exempt” as a homestead. He maintains that a homestead declaration need
not have been filed to protect the property from a claim under UFTA or from claims of a
creditor which had not yet attached at the time of the transfer. Wratislaw notes that
Montana has not analyzed the issue of whether a formal filing of homestead exemption is
required under the UFTA; therefore, he relies upon cases from sister jurisdictions for the
proposition that a creditor cannot set aside as fraudulent a transfer of property that the
debtor could have claimed as exempt. Jahner v. Jacob, 515 N.W.2d 183, 186 (N.D.
1944). Wratislaw opines that because Gribble could have claimed the property as his
homestead and the Credit Union had not yet obtained judgment against Gribble at the
time Gribble sold the property, the Credit Union cannot have the transfer set aside as
fraudulent.
¶14 We first address whether the District Court correctly concluded that the Gribble
place was Gribble’s residence. Section 1-1-215, MCA (2003), establishes the rules for
determining a person’s residence. It provides, in relevant part:
Every person has, in law, a residence. In determining the place of
residence, the following rules are to be observed:
(1) It is the place where a person remains when not called elsewhere
for labor or other special or temporary purpose and to which the person
returns in seasons of repose.
(2) There may be only one residence. If a person claims a residence
within Montana for any purpose, then that location is the person’s residence
for all purposes unless there is a specific statutory exception.
(3) A residence cannot be lost until another is gained.
. . .
(6) The residence can be changed only by the union of act and intent.
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We have held that this statute “merely provides a district court with guidelines in
determining a person’s place of residence. Hence, each case regarding a person’s place
of residence ‘must stand on its own facts.’ ” Umland v. National Cas. Co., 2003 MT 356,
¶ 25, 319 Mont. 16, 81 P.3d 500 (citation omitted).
¶15 As noted above, Gribble acknowledged that he used at least two addresses during
the time he borrowed money from the Credit Union—his mother’s and a post office box.
The record confirms this and reveals that he used his mother’s Huntley, Montana address
for all loans he secured from the Credit Union in 2002 and 2003, and a post office box in
Wolf Point, Montana, on the quit claim deed to Wratislaw. In his deposition, Gribble
explained that he began working for a power line construction company in February
1997, and continued working for the company until November 2004. During his time
with this company, he traveled extensively and was away from Montana for weeks at a
time. He therefore had much of his mail delivered to his mother’s house so that she could
take care of his bills in his absence and forward to him significant mail that required his
attention. He also had some less important mail sent to a post office box. He testified
that the Gribble property was a rural route with a post office box designation. Gribble
stated unequivocally in both an affidavit and his deposition that he considered the Gribble
place to be his residence. He kept all his personal belongings and business records at the
Gribble place and always returned to the property when not traveling for work. The
Credit Union did not come forward with facts to rebut Gribble’s claim that the property
was his residence.
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¶16 We conclude the District Court did not err in determining as a matter of law that
Gribble’s residence was the Gribble place. Gribble presented evidence of the requisite
act and intent as required by § 1-1-215, MCA (2003). The fact that Gribble traveled for
business and provided his mother’s address or a post office box address does not defeat
his claimed residency. See Burchett v. MasTec North America, Inc., 2004 MT 177,
¶¶ 22-24, 322 Mont. 93, 93 P.3d 1247; Independence Bank v. Halseth, 2002 MT 100, 309
Mont. 398, 46 P.3d 657. Because the Gribble place was Gribble’s residence, it qualified
as his homestead.
¶17 We next address the Credit Union’s claim that the Gribble property was not
exempt because Gribble did not file the declaration of exemption, and therefore the
transfer may be set aside as fraudulent under the UFTA. The result of setting aside a
transfer under the UFTA is that the property at issue revests in the debtor who transferred
it. Once the property is revested in the debtor, the creditor may make a claim against it
for purposes of satisfying a judgment the creditor has against the debtor. In this case, if
the transfer was set aside as fraudulent, the Gribble place would revest to Gribble and the
Credit Union could seek to use the property, or the proceeds from the sale of the property,
as repayment of the debt Gribble owes.
¶18 The UFTA provides, in relevant part, that transfer of an “asset” by a debtor is
fraudulent as to existing and future creditors if the debtor transferred the asset with an
“actual intent to hinder, delay, or defraud” a creditor, or without receiving a reasonably
equivalent value in exchange for the transfer or obligation. Section 31-2-333(1), MCA.
An “asset” is defined as “property of a debtor,” but does not include “property to the
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extent it is generally exempt under nonbankruptcy law.” Section 31-2-328(2)(b), MCA.
The issue before us is whether the Gribble place was an “asset” given that it was
Gribble’s homestead, and homesteads are “generally exempt under nonbankruptcy law.”
See § 25-13-615, MCA (homestead exempt from execution of judgment); § 70-32-201,
MCA (homestead exempt from execution generally); Dzikowski v. Delson (In re Delson),
247 B.R. 873, 875 (S.D. Fla. 2000) (“[A]n interest in homestead is ‘generally exempt
under nonbankruptcy law.’ ”). If the property does not satisfy the definition of an “asset”
under the UFTA, its transfer is not subject to the Act’s provisions.
¶19 The crux of the Credit Union’s argument is that while the UFTA defines “asset” to
exclude property that is “generally exempt” under homestead laws, to qualify as an
excluded asset in Montana, property must be “expressly” or “absolutely” exempt via the
debtor’s compliance with the provisions of Montana’s homestead statutes. In other
words, it is the Credit Union’s position that to be protected by the homestead exemption
in Montana, whether against a claim arising in bankruptcy, under the UFTA, or in pursuit
of a judgment, a debtor must have first filed the declaration required by § 70-32-105,
MCA (“The person selecting a homestead must execute and acknowledge, in the same
manner as a grant of real property is acknowledged, a declaration of homestead and file
the same for record.”). It argues that without such a filing, a homeowner in Montana is
not protected by the homestead exemption. The Credit Union urges us to agree based
exclusively on the language of the homestead statute rather than on the language of the
UFTA. However, we conclude that since the Credit Union is seeking relief under the
UFTA, we must be primarily guided by its provisions.
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¶20 The UFTA excludes from its definition of “asset” property that is “generally
exempt under nonbankruptcy law.” The term “generally” means “as a rule” or “in
disregard of specific instances with regard to an overall picture.” Merriam-Webster
Online Dictionary, retrieved July 21, 2009, from http://www.merriam-
webster.com/dictionary. The majority of states plus the District of Columbia have
homestead exemption laws. See e.g. Ala. Code § 6-10-2, Cal. Code Civ. Proc. § 704.720,
Iowa Code § 561.16. The existence of homestead exemption provisions in over 45 states
quite simply means that homesteads are “generally exempt” from execution or forced
sales. Additionally, while some states offer automatic homestead protection (see e.g.
Ariz. Rev. Stat. § 33-1102; Wash. Rev. Code § 6.13.040), many states, like Montana,
require that a homeowner file a declaration or claim of homestead exemption. The
requirement of formal declaration, however, while presumably necessary to defeat certain
claims against the homeowner/debtor, is not contained in the UFTA. While the UFTA
could have been drafted to include the requirement that the debtor hold a formal
exemption in those states providing for such exemptions, it was not. It is not the function
of this Court to insert into a statute a provision that has been omitted. Section 1-2-101,
MCA. Therefore, under the statute as written, we conclude that because Gribble’s
homestead would be “generally exempt under nonbankruptcy law,” it is not an “asset” for
purposes of the UFTA.
¶21 The foregoing interpretation is consistent with Montana’s tradition of liberally
construing exemptions in favor of debtors. In Snyder, a bankruptcy proceeding, Snyder
sold her home in February 2005, filed her homestead exemption for that home in
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September 2005, and filed for Chapter 7 bankruptcy in October 2005. In her bankruptcy
petition, she claimed a right to exempt $22,000 in proceeds from the sale of her home
from the bankruptcy estate, under the statutory homestead exemption. The bankruptcy
court was unsure of how to proceed under such circumstances; therefore, it certified the
following question of law to this Court: Under Montana’s liberal construction of
exemptions, is a debtor allowed to trace proceeds from the sale of the debtor’s home
when the debtor had not filed a homestead declaration prior to selling the home? Snyder,
¶¶ 1-3.
¶22 We summarized the relevant statutes for establishing a homestead in Montana.
We then explained that in 1987, the Montana Legislature revised the laws relating to
property exempt from execution in two significant ways, one of which is relevant to our
analysis here. We said that § 70-32-216(1), MCA, as amended, “provides protection for
traceable proceeds from such properties if the properties ‘could have been claimed as an
exempt homestead’ at the time of disposal. This statutory change created the right to
claim a homestead exemption, in the delineated circumstances, after the property has
been disposed of, and after the person claiming a homestead exemption has vacated the
property.” Snyder, ¶ 10 (emphasis in original). We noted that while § 70-32-216(1),
MCA, was inconsistent with § 70-32-106, MCA, which mandates that a homestead
declaration must contain a statement that the person making the declaration is residing on
the premises at the time the declaration is made, we must nonetheless liberally construe
homestead and exemption laws in favor of the debtor. Snyder, ¶¶ 11-13. For this reason,
we answered the bankruptcy court’s certified question affirmatively, stating “yes, if the
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homestead is otherwise eligible for exemption pursuant to § 70-32-216, MCA.” The
holding in Snyder clearly undercuts the Credit Union’s contention that a prior formal
filing of a homestead declaration is a sine qua non for a debtor to obtain any protections
against execution.
¶23 Finally, we note that when construing a statute derived from a uniform act, it is
appropriate to refer to decisions of other jurisdictions interpreting that act in order “to
effectuate the general purpose of making uniform the [UFTA] among states enacting it.”
Section 31-2-327, MCA. We find support for our conclusion in Farstveet v. Rudolph,
630 N.W.2d 24, ¶ 29 (N.D. 2001) (A creditor may challenge a transfer for fraud only if
the property would be subject to levy and execution if revested in the transferor. Because
Rudolph could have claimed the homestead property exemption while she possessed title
to it, the Farstveets cannot enforce their claim against the homestead.), and In re Roca,
404 B.R. 531, 542-544 (Ariz. 2009) (The Arizona UFTA could not be utilized to avoid a
transfer of homestead property because a homestead is not an “asset” under the UFTA.).
¶24 In keeping with Montana’s tradition of liberally construing exemptions in favor of
debtors, we conclude that a homestead is not an “asset” under the UFTA and therefore is
not subject to the provisions of the Act.
CONCLUSION
¶25 For the foregoing reasons, we affirm the District Court’s grant of summary
judgment in favor of Wratislaw.
__________________________________
Justice
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We Concur:
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS
/S/ JIM RICE
Justice John Warner dissents.
¶26 I dissent. As Gribble did not file a homestead exemption, as required by statute,
the property in question is an asset as described in the UFTA.
¶27 I agree with the Court that because the Credit Union did not rebut Gribble’s claim
that the property was his residence, there is no material issue of fact, and summary
judgment is appropriate.
¶28 I disagree with the Court’s legal conclusion that the property is not an asset under
the UFTA as it is generally exempt from execution. Section 31-2-328, MCA, provides:
(2) “Asset” means property of a debtor, but the term does not include:
(b) property to the extent it is generally exempt under nonbankruptcy law;
¶29 Section 70-32-105, MCA, relating to the protection of a homestead from
execution, provides:
The person selecting a homestead must execute and acknowledge, in the
same manner as a grant of real property is acknowledged, a declaration of
homestead and file the same for record.
¶30 This Court is to harmonize statutes as much as possible, giving effect to each of
them. Yellowstone Federal Credit Union v. Daniels, 2008 MT 111, ¶ 18, 342 Mont. 451,
181 Mont. 595; § 1-2-101, MCA. It is not appropriate to look primarily at one statute and
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relegate another to a secondary status, as the Court does at ¶ 19. Sections 31-2-328 and
70-32-105, MCA, are not in conflict. The property in question is an asset of Gribble and
it is not generally exempt—it is not exempt at all, unless and until he selects it as a
homestead. He did not do so. The Court’s decision today renders § 70-32-105, MCA,
meaningless.
¶31 I would reverse and remand for a trial on whether the transfer from Gribble to
Wratislaw was fraudulent under the UFTA. I dissent.
/S/ JOHN WARNER
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