Title: Coones v. Federal Deposit Ins. Corp.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Coones v. Federal Deposit Ins. Corp.1990 WY 89796 P.2d 803Case Number: 89-209Decided: 08/30/1990Supreme Court of Wyoming
JAMES ALBERT COONES AND 
CINDY LEE COONES, 

F/K/A CINDY LEE JONES, 

APPELLANTS,

v.

FEDERAL DEPOSIT INSURANCE 
CORPORATION, 

APPELLEE.

Stephen R. 
Winship of Donald R. Winship & Associates, P.C., Casper, for 
appellants.

Thomas M. Hogan, 
Casper, Fredrick L. Fisch and Jeanne R. Lee, Denver, Colo., for 
appellee.

Before 
CARDINE, C.J.,* and THOMAS, URBIGKIT, 
MACY and GOLDEN, JJ.

* Chief Justice at time of 
oral argument.

URBIGKIT, Justice.

[¶1]      The United States 
District Court for the District of Wyoming certified to this court the following 
three questions which arose during a bankruptcy case. The stated questions, 
which involve the statutory interpretation of Wyoming's execution exemptions, 
are:

     1. May a husband and 
wife each claim as exempt $2,000.00 of tools of trade under W.S. § 1-20-106(b) 
(for a total of $4,000.00) when both are involved in the same 
occupation.

     2. May a rancher or 
farmer claim as exempt 75% of the proceeds derived from the sale of non-purchase 
money livestock under W.S. § 1-15-408.

     3. May a rancher or 
farmer claim as exempt 75% of the value of the crops and livestock offspring 
planted or born after the perfection of a security interest under W.S. § 
1-15-408.

[¶2]      We answer "yes" 
to the first question and "no" to the last two questions.

FACTS

[¶3]      Appellants were 
married to one another and engaged in a farming/ranching operation at the time 
they filed a petition in the United States Bankruptcy Court for the District of 
Wyoming under Chapter 11 of the Bankruptcy Code. Appellee Federal Deposit 
Insurance Corporation acts as a receiver and seeks to recover the collateral 
listed in a Security Agreement between appellants and Stockmen's Bank & 
Trust Company when appellants secured a loan from the bank. Pursuant to that 
petition, appellants each claimed $2,000 in value as a tools of trade exemption 
under W.S. 1-20-106(b) for a total of $4,000. They also claimed as exempt 
seventy-five percent of the value of personal service earnings from the sale of 
livestock born and crops planted after the Security Agreement. The United States 
Bankruptcy Court for the District of Wyoming denied those claimed exemptions and 
that decision was appealed to the United States District Court from which this 
certification is provided. Appellants argue Lingle State Bank of Lingle v. 
Podolak, 740 P.2d 392 (Wyo. 1987) is materially relevant to the last two 
certified questions.

DISPOSITION OF CERTIFIED 
QUESTIONS

1. Joint or Sole 
Exemption When Two Business Participants File a Joint Petition

[¶4]      The first 
certified question involves the statutory interpretation of W.S. 1-20-106(b) 
(June 1988 Replacement) as it relates to tools of trade exemptions:

     The tools, a motor 
vehicle, team, implements or stock in trade of any person, used and kept 
for the purpose of carrying on his trade or business, not exceeding in value two 
thousand dollars ($2,000.00), or the library, instruments and implements of any 
professional person, not exceeding in value two thousand dollars ($2,000.00), 
are exempt from levy or sale upon execution, writ of attachment or any process 
out of any court in this state.

(Emphasis 
added.)

[¶5]      The United States 
Bankruptcy Court for the District of Wyoming decided, as appellee argues, that 
this statute permits only one exemption per business. This misinterprets the 
statute. The statute establishes an exemption for anyone and not only one 
exemption per enterprise. We see no difference between a husband and wife being 
jointly engaged in a farm operation and a husband being a farmer and the wife 
being a school teacher. With passage of the married women's statute in 1876, now 
found in part in W.S. 20-1-202, 34-1-108 and 34-1-109, a husband and wife are 
each entitled to equal consideration and separate identity. These provisions of 
the Wyoming statutes, although pre-dating statehood, are required by provision 
in Wyo. Const. art. 6, § 1 mandating both the right to vote and the right of 
equality to enjoy civil, political and religious freedoms. See Coyne v. State ex 
rel. Thomas, 595 P.2d 970 (Wyo. 1979) and Ward Terry & Co. v. Hensen, 75 
Wyo. 444, 297 P.2d 213, 216 (1956).

[¶6]      We decline to 
interpret the statutory phrase "any person" to mean other than that each person 
is allowed such exemptions when such an exemption can be claimed. Statutes must 
be construed so no part is inoperative or superfluous. Thomson v. Wyoming 
In-Stream Flow Committee, 651 P.2d 778 (Wyo. 1982). Consequently, we hold that 
any or each person engaged in a business enterprise is entitled to the statutory 
$2,000 tools of the trade levy or execution sale exemption whether or not each 
may be jointly engaged in the same business or enterprise.

2. Sale Proceeds From 
Crops and Livestock as a Personal Earning Exemption

[¶7]      The second and 
third certified questions can be answered by joint discussion. The argument made 
by appellants presents thoughtfulness and ingenuity. All litigants recognize 
that the statute which was involved in Podolak, 740 P.2d 392 no longer exists 
and appellants now seek to apply the Wyoming garnishment statute broadly to 
create an execution exemption.1

[¶8]      Any definition of 
exemption is confined to statutory provisions. The general exemption statute, 
W.S. 1-20-101 through 1-20-110, does not provide any provision for earnings 
exemption. Appellants contend that a transferred application of the garnishment 
statute execution, W.S. 1-15-102, should provide a basis for holding contrary to 
the decision of the United States Bankruptcy Court for the District of Wyoming. 
Specifically, appellants contend that W.S. 1-15-408, Garnishment of Earnings for 
Personal Services, and the definition of earnings or earnings from personal 
services under W.S. 1-15-102(a)(vi) allow a rancher or farmer to claim a 
seventy-five percent exemption of proceeds from the sale of non-purchase money 
livestock and seventy-five percent of the value of crops planted and livestock 
born after the security interest was perfected.

[¶9]      Podolak, 740 P.2d 392 provides no precedent since the application in that case was one of 
garnishment and the defining statute was superceded by W.S. 1-15-102(a)(vi), 
which provides:

"Earnings" or "earnings 
from personal services" means compensation paid or payable for personal 
services, whether denominated as wages, salary, commission, bonus, proceeds of 
any pension or retirement benefits or deferred compensation plan or 
otherwise[.]

[¶10]   Appellants assert that the impact 
of 11 U.S.C. § 544, which provides a trustee for the estate with powers of a 
judgment creditor, inures to appellants as a debtor in possession under 11 
U.S.C. § 1107. They argue the garnishment statute provides an execution 
limitation for bankruptcy cases.2

[¶11]   Appellants also argue the statutory 
phrase "or otherwise" moves the coverage beyond conventionally described 
earnings or earnings from personal service. Podolak, 740 P.2d 392, considered a 
prior statute broadly involving "earnings of the judgment debtor;" and, of 
course, the present statute as enacted by Wyo. Sess. Laws ch. 198, § 3 (1987) 
occurred before Podolak had been written. See Podolak, 740 P.2d  at 394 n. 1. The 
original Wyoming statute discussed in Podolak was tied to earnings from personal 
service while the present statute redefines earnings or earnings from personal 
service as compensation paid or payable for personal services. We find from a 
comparison of the changed phraseology that the broadly based rules found in 
earlier Wyoming law were constricted by the 1987 definition which itemizes a 
character of identical rights, e.g., wages, salary, commission, bonus and 
proceeds of any pension or retirement benefit or deferred compensation plan. 
Statutes are entitled to a reasonable interpretation and we consider the 
character of benefits clearly defined within a wage and salary characterization. 
Profits and business earnings are outside the meaning of wage and salary. This 
interpretation gathers support from the garnishment statute provision which 
recognizes an obligation to pay as being different from profit or business 
earnings which involve a right to receive.

[¶12]   Appellants further contend that the 
word "otherwise" could suffice to provide entitlement for the broad character of 
rights found in Podolak to result from the prior statute. We cannot accept this 
thoughtful contention since its effect would be to disassociate the structure of 
the clause when relating to one character of exempt funds by adding an almost 
unlimited character of other funds which would have no particular validation 
within the constraints of a continuing wage garnishment statutory system. We 
limit any application of "otherwise" in W.S. 1-15-102(a)(vi) to a character of 
third-party obligations payable for services rendered by the claimant for 
exemption. Intrinsic to the meaning of W.S. 1-15-102 are the provisions of W.S. 
1-15-408 which are related to earnings for personal services periodically 
payable. Business profits and receipts from crop and livestock simply cannot be 
logically impressed with the garnishment concept.

[¶13]   Consequently, we answer the 
questions presented:

1. May a husband and wife 
each claim as exempt $2,000.00 of tools of trade under W.S. § 1-20-106(b) (for a 
total of $4,000.00) when both are involved in the same occupation[?]

YES

2. May a rancher or 
farmer claim as exempt 75% of the proceeds derived from the sale of non-purchase 
money livestock under W.S. § 1-15-408[?]

NO

3. May a rancher or 
farmer claim as exempt 75% of the value of the crops and livestock offspring 
planted or born after the perfection of a security interest under W.S. § 
1-15-408[?]

NO

FOOTNOTES

1 Wyoming has not elected 
to adopt the exemptions from property of the estates in bankruptcy provided in 
11 U.S.C. § 522(d). In re Anselmi, 52 B.R. 479, 484 (D.Wyo. 1985); W.S. 
1-20-109; Wyo. Sess. Laws ch. 8, § 1 (1980).

2 Interesting authority 
can be found in the bankruptcy courts relating to unpaid wages and the effect of 
the garnishment statute exemption limitation for bankruptcy exemption purposes. 
See In re Smith, 23 B.R. 708 (D.Md. 1982); In re Sanders, 69 B.R. 569 (E.D.Mo. 
1987); and In re Stewart, 32 B.R. 132 (D.Utah 1983).