I respectfully dissent. Upon careful study of Dona Ana’s briefs and exhibits supporting the allegation of Dofflemeyer’s intent to defraud, I fail to find sufficient
evidence to raise a genuine issue of material fact. Clearly, in anticipation of Dona Ana’s attempt to attach the nonexempt funds, Dofflemeyer simply transferred assets into exempt annuities for no purpose other than retirement. In re Mueller, 71 B.R. 165 (D.Kan.1987), aff'd, 867 F.2d 568 (10th Cir.1989), is instructive as to whether such a transfer of assets was fraudulent as to Dona Ana. There, the court alluded to the common-law judicial exemption (developed before the bankruptcy act) that was applied whenever a creditor challenged a transfer as a fraudulent conveyance. The exception arose only for a creditor who had a “peculiar equity” in the assets converted to exempt property. “Peculiar equities” exist either when converted funds are fraudulently procured from the creditor or when the creditor has a lien on the assets used to procure the exempt property. Id. at 167. Dona Ana has provided no evidence that the funds were fraudulently procured or that the annuities were procured directly or indirectly by the sale of property on which it held a lien.
It is now true that any creditor may challenge a transfer of assets under the Fraudulent Transfer Act, but in determining intent to defraud, consideration must be given to the status of the creditor seeking to challenge the transfer. If the creditor does not have a peculiar equity or the transferor does not have an ulterior fraudulent purpose, more is required than just the fact that the debtor acquired exempt retirement annuities in anticipation of a lien. See, e.g., In re Reed, 700 F.2d 986, 991 (5th Cir.1983) (noting that converting nonexempt assets into exempt assets is frequently motivated by the intent to put those assets beyond the reach of the creditors (which is the function of an exemption) and giving as an example of actual intent to defraud, a debtor who on the eve of bankruptcy borrows money that he then immediately converts into exempt assets); In re Barash, 69 B.R. 231 (Bankr.D.Kan. 1986) (holding that because none of the nonexempt assets used to reduce exempt homestead mortgage were obtained with funds procured from or secured to a creditor and no other extrinsic evidence was shown of actual intent to defraud, transfer was not fraudulent even though made just prior to filing of bankruptcy). But see In re Schwingle, 15 B.R. 291 (W.D.Wis.1981) (holding that actual intent to place property beyond reach of creditors is fraudulent).
The trial court already has made several uncontroverted findings that support Dofflemeyer’s claim that his transfer of nonexempt assets into exempt retirement annuities was legitimate and with the intent to provide for his retirement rather than for some ulterior purpose:
5. Defendant Dofflemeyer is 77 years old and retired.
6. Dofflemeyer was self-employed and put aside for his retirement the funds that Dona Ana seeks to garnish.
7. Dofflemeyer derives his income from Social Security and the annuities that Dona Ana seeks to garnish.
8. Dofflemeyer’s Social Security income is $700 per month and is not sufficient to pay his medical expenses, taxes, auto expenses, food, clothing and utility expenses.
9. Dofflemeyer receives $710 per month from the annuities that Dona Ana seeks to garnish.
10. Without the income from the retirement fund/annuities, Dofflemeyer would lack the resources to continue his independent living existence.
11. Without the income from the retirement fund/annuities, Dofflemeyer would either be forced on the public dole or would increase the likelihood of his becoming a public charge.
The Legislature has expressed clearly its intent to protect the retirement income of individuals. This Court has long held that exemption statutes are to be liberally construed in favor of the debtor. See In re Spitz Bros., 8 N.M. 622, 635, 45 P. 1122, 1125 (1896). Like the homestead exemption statute, the retirement exemption statute “was adopted as a humane policy to prevent families from becoming destitute as the result of misfortune through common debts which generally are unforeseen.” See Hewatt v. Clark, 44 N.M. 453, 457, 103 P.2d 646, 649 (1940). “By permitting the debtor to keep those assets necessary for his economic survival, state exemption laws fulfill important social policies which must be balanced against the need for creditor protection.” Alan N. Resnick, Prudent Planning or Fraudulent Transfer? The Use of Nonexempt Assets to Purchase or Improve Exempt Property on the Eve of Bankruptcy, 31 Rutgers L.Rev. 615, 615 (1978). “[I]t is consistent to permit the debtor to ... purchase new exempt property on the eve of bankruptcy, so long as the items ... purchased will at least partially relieve the debtor of the need for governmental assistance.” Id. at 627.
The trial court had before it evidence that Dofflemeyer’s intent in transferring his assets from certificates of deposit to retirement annuities was to provide retirement income in order to pay for necessities. There was no extrinsic evidence that Dofflemeyer’s intent was to defraud his creditors. “Fraud can never be predicated on an act which the law permits.” In re Tveten, 402 N.W.2d 551, 553 (Minn.1987). Therefore, I would affirm the trial court.