October 13 2011
SYNOPSIS OF THE CASE
2011 MT 257, DA 11-0203: In re MICHAEL ROBERT HOLZAPFEL, LYNN A.
HOLZAPFEL, debtors. 1
The Honorable Ralph B. Kirscher, United States Bankruptcy Judge for the District
of Montana, has referred a question of law to the Montana Supreme Court.
The Court held that debtors in bankruptcy may not claim that an ATV is an
exempt sporting good pursuant to § 25-13-609(1), MCA. For the purposes of personal
property exempt from execution under Montana law, a four-wheeled all-terrain vehicle
(ATV) is a “motor vehicle” and not a “sporting good.”
Title 25, Chapter 13, part 6, MCA, provides for certain classes of property held in
the bankruptcy estate that are exempt from execution of judgment. A debtor may exempt
$4,500 worth of sporting goods, not to exceed $600 per item. Similarly, a debtor may
exempt one motor vehicle worth up to $2,500. The Holzapfels contended that their ATV
fell under the exemption for “firearms and other sporting goods.”
The Montana Supreme Court held that an ATV is a “motor vehicle” under
Montana’s motor vehicle code. An ATV is subject to registration and title requirements
that do not apply to “firearms and sporting goods.” Since the Legislature provided a
specific and separate exemption for a “motor vehicle,” it follows that the exemption for
“firearms and other sporting goods” was not intended to include motor vehicles.
The dissent would hold that an ATV is a sporting good for exemption purposes,
citing Article XIII, Section 5 of the Montana Constitution, requiring the Legislature to
enact liberal homestead and exemption laws.
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This synopsis has been prepared for the convenience of the reader. It constitutes no part
of the Opinion of the Court and may not be cited as precedent.
No. OP 11-0203
IN THE SUPREME COURT OF THE STATE OF MONTANA
2011 MT 257
IN RE: MICHAEL ROBERT HOLZAPFEL and
LYNN A. HOLZAPFEL,
Debtors.
ORIGINAL PROCEEDING: Certified Question from The United States Bankruptcy
Court for the District of Montana
Cause No. 10-62842-7
Hon. Ralph B. Kirscher, presiding
COUNSEL OF RECORD:
For Debtors:
William L. Managhan; Managhan Law Firm, Kalispell, Montana
For Chapter 7 Trustee:
Christy L. Brandon; Brandon Law Firm, Bigfork, Montana
Submitted on Briefs: September 7, 2011
Decided: October 13, 2011
Filed:
__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 This is an original proceeding brought to this Court pursuant to M. R. App. P.
15(3) on a certified question from the Honorable Ralph B. Kirscher, United States
Bankruptcy Judge for the District of Montana. The question of law is: Whether, under
Montana’s liberal construction of exemptions, Debtors may claim an exemption in a
Yamaha 4 wheel all-terrain vehicle (“ATV”), as a sporting good pursuant to § 25-13-
609(1), MCA. This Court accepted the certified question on April 19, 2011.
¶2 The undisputed facts, supplied by the Bankruptcy Court, are as follows:
1. Debtors are joint debtors and this is a joint case.
2. Debtors filed their bankruptcy case on December 13, 2010.
3. The Debtors’ Amended Schedule B itemizing their personal
property lists at paragraph 25 a 2006 Yamaha 4 wheel ATV. Schedule C
lists Debtors’ exemptions, including an exemption in the 2006 Yamaha
ATV claimed exempt as “Sporting Goods” pursuant to MCA § 25-13-
609(1).
4. The Trustee objected to Debtors’ claim of exemption under § 25-
13-609(1) on the grounds that the sporting goods exemption does not apply
to an ATV.
5. Debtors responded to the Trustee’s objection asserting that, under
the liberal construction of Montana exemption statutes provided at Article
XIII, Section 5 of the Montana Constitution, and the plain language of §
25-13-609(1), their ATV should be exempt as a sporting good.
The Bankruptcy Court requests an answer to the question.
¶3 Article XIII, Section 5 of the Montana Constitution requires the Legislature to
enact liberal homestead and exemption laws, which the courts will liberally construe in
favor of debtors where the legislative intent is not clear. In re Maynard, 2006 MT 162, ¶
4, 332 Mont. 485, 139 P.3d 803. Liberal construction may not, however, disregard the
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plain mandate of the legislature. MacDonald v. Mercill, 220 Mont. 146, 151, 714 P.2d
132, 135 (1986); § 1-2-101, MCA.
¶4 Section 25-13-609, MCA, provides:
A judgment debtor is entitled to exemption from execution of the
following:
(1) the judgment debtor’s interest, not to exceed $4500 in aggregate
value, to the extent of a value not exceeding $600 in any item of property,
in . . . firearms and other sporting goods . . . ;
(2) the judgment debtor’s interest, not to exceed $2500 in value, in
one motor vehicle[.]
The Holzapfels contend that their ATV falls under the exemption for “firearms and other
sporting goods.”
¶5 The parties have focused their arguments on whether an ATV is a “sporting good”
under § 25-13-609(1), MCA. However, an ATV is a “motor vehicle” under Montana
law, and consequently it falls under the specific “motor vehicle” exemption provided in §
25-13-609(2), MCA. Section 61-1-101(46), MCA (2011), defines “motor vehicle” as a
“vehicle propelled by its own power,” and includes a “quadricycle if it is equipped for
use on the highways.” A quadricycle can be for both highway and off-highway use, and
is characterized as a motor vehicle even if designed for off road use. Section 61-1-
101(50), MCA (2011). 1 As a quadricycle, the ATV is subject to registration and title
requirements. Sections 61-3-201; -313(2); and -321(8), MCA. Under Montana law, the
meaning of a word or phrase defined in the code is applicable wherever that word or
1
The cited definitions in subsections (46) and (50) of § 61-1-101, MCA, were renumbered in the
2011 publication of the Montana Code Annotated. In the 2009 edition of the code, those same
subsections were numbered (40) and (44) respectively. The definition of “off-highway vehicle”
remained unchanged from 2009 to 2011, but the definition of “motor vehicle” was amended in
ways that do not affect the outcome of this case.
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phrase occurs “except where a contrary intention plainly appears.” Section 1-2-107,
MCA. Therefore, the cited definitions in Title 61 apply to the phrase “motor vehicle” in
Title 25.
¶6 These registration and title requirements applicable to “motor vehicles” are not
applicable to “firearms or other sporting goods.” Since the Legislature has provided a
specific and separate exemption for a “motor vehicle,” it follows that the exemption for
“firearms and other sporting goods” was not intended to include motor vehicles. This
Court must apply the plain mandate of the legislature. MacDonald, 220 Mont. at 151,
714 P.2d at 135; Friends of the Wild Swan v. Dep’t. of Natural Resources & Cons., 2005
MT 351, ¶ 13, 330 Mont. 186, 127 P.3d 394; § 1-2-101, MCA (the role of the court is to
ascertain and declare the terms and substance of a statute, striving to adopt a construction
giving effect to all provisions).
¶7 Therefore, the answer to the certified question is that under Montana law the
Debtors may not claim an exemption in a Yamaha 4 wheel all-terrain vehicle as a
sporting good pursuant to § 25-13-609(1), MCA.
/S/ MIKE McGRATH
We concur:
/S/ PATRICIA COTTER
/S/ BETH BAKER
/S/ JIM RICE
/S/ BRIAN MORRIS
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Justice Michael E Wheat dissents.
¶8 Article XIII, § 5 of the Montana Constitution provides that “[t]he legislature shall
enact liberal homestead and exemption laws.” Furthermore, we are committed to
“liberally construe exemption laws in favor of debtors where legislative intent is not
clear.” In re Maynard, 2006 MT 162, ¶ 4, 332 Mont. 485, 139 P.3d 803 (citing In re
Zimmerman, 2002 MT 90, ¶ 15, 309 Mont. 337, 46 P.3d 599; MacDonald v. Mercill, 220
Mont. 146, 151, 714 P.2d 132, 135 (1986); Neel v. First Federal Savings and Loan
Association of Great Falls, 207 Mont. 376, 383, 675 P.2d 96, 100 (1984)).
¶9 The question here is whether an ATV qualifies for exemption under § 25-13-
609(1), MCA, as a “sporting good.” The majority relies on the definition of a “motor
vehicle” to include a quadricycle (§ 61-1-101(46), MCA (2011)), and the registration and
title requirements attendant thereto, to disqualify an ATV as a “sporting good.” I think
the majority’s analysis is too restrictive. There are thousands of farmers, ranchers,
hunters, and other outdoor sports enthusiasts who use ATVs as an integral part of their
outdoor activities. A hunter riding his ATV into the back country with his hunting rifle is
certainly using his firearm “and other sporting goods.” ATV club members trailering
their ATVs to a back country trailhead for a group ride in the mountains could be
considered as recreating with sporting goods.
¶10 Such liberal construction was recognized by Bankruptcy Judge Peterson in In re
Mutchler, 95 B.R. 748 (D. Mont. 1989). In Mutchler, the debtor claimed an exemption
under § 25-13-609(1), MCA, in a boat, a boat trailer, a snowmobile, and a motorcycle. In
allowing these exemptions, the court reasoned:
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Thus, I conclude that under [§] 25-13-609(1) [, MCA,] any item of property
may be exempt up to $600.00, provided the entire exemption for all items
of property including those specifically enumerated does not exceed
$4,500.00 in the aggregate. I believe this interpretation comports with
legislative intent and clearly eliminates much controversy over what
particular items may be claimed as exempt. Since each item of property
claimed exempt by Bonnie Mutchler, except the 1970 Silverline boat and
Yamaha motorcycle is less than $600.00, those items are properly exempt
under § 25-13-609(1) [,MCA]. As to the boat and motorcycle, those items
will be turned over to the Trustee for sale, whereupon Bonnie Mutchler will
be given a credit for $600.00 in each item as her exemption.
Mutchler, 95 B.R. at 755. Although Judge Peterson was extending the exemption to a
boat, trailer, snowmobile, and motorcycle rather than an ATV, the same logic applies in
this case.
¶11 People who are forced to file for bankruptcy are entitled to a fresh start. Part of
that fresh start, as recognized by our Constitution, is a liberal construction of the
exemption laws. For these reasons, I would allow the exemption in the ATV.
/S/ MICHAEL E WHEAT
Justice James C. Nelson joins in the foregoing dissent.
/S/ JAMES C. NELSON
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