Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-15-02040/USCOURTS-ca8-15-02040-0/pdf.json

Parties Involved:
James Kevin Checkett
Appellee
National Association of Bankruptcy Trustees
Amicus on Behalf of Appellee(s)
National Association of Consumer Bankruptcy Attorneys
Amicus on Behalf of Appellant(s)
Marilynn Louise Peet
Appellant
Matthew Richard Peet
Appellant

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 15-2040

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In re: Matthew Richard Peet; Marilynn Louise Peet

lllllllllllllllllllllDebtors

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Matthew Richard Peet; Marilynn Louise Peet

lllllllllllllllllllllAppellants

v.

James Kevin Checkett

lllllllllllllllllllllAppellee

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National Association of Consumer Bankruptcy Attorneys

lllllllllllllllllllllAmicus on Behalf of Appellant(s)

National Association of Bankruptcy Trustees

lllllllllllllllllllllAmicus on Behalf of Appellee(s)

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Appeal from the United States Bankruptcy

 Appellate Panel for the Eighth Circuit

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Appellate Case: 15-2040 Page: 1 Date Filed: 04/27/2016 Entry ID: 4392536 
 Submitted: February 10, 2016

 Filed: April 27, 2016

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Before RILEY, Chief Judge, LOKEN and BENTON, Circuit Judges.

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BENTON, Circuit Judge.

Matthew Richard Peet and Marilynn Louise Peet held title to real property as

joint tenants with Marilynn’s parents. Marilynn and her father also owned a Ford

pickup as joint tenants. The Peets filed for bankruptcy under Chapter 13, later

converting to Chapter 7. See 11 U.S.C. § 1307(a). After the conversion, Marilynn’s

parents died. The Trustee then notified the Peets he intended to sell the real estate

and pickup, maintaining that the right ofsurvivorship made the bankruptcy estate the

sole owner. Agreeing, the bankruptcy court ruled that the joint tenancies remained

intact through creation ofthe bankruptcy estate and allowed the sale. TheBankruptcy

Appellate Panel affirmed. In re Peet, 529 B.R. 718 (B.A.P. 8th Cir. 2015). 

The Peets challenge the sale of the real property and pickup, arguing their joint

tenancies became tenancies in common, with no right of survivorship. Thus, they

claim, the death of Marilynn’s parents did not change the estate’s share of the

property. This court sits as a “second court of review in bankruptcy matters,”

reviewing interpretations of law de novo and factual findings for clear error. 

Advanced Control Solutions, Inc. v. Justice, 639 F.3d 838, 840 (8th Cir. 2011). 

Having jurisdiction under 28 U.S.C. § 158(d)(1), this court affirms. 

When the Peets filed for bankruptcy under Chapter 13, they owned a joint

tenancy with right of survivorship in the real property, and Marilynn owned a joint

tenancy with right of survivorship in the pickup. In Missouri, a joint tenancy is

“based on the theory that the tenants share one undivided estate, with the distinctive

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characteristic of the right of survivorship.” Remax of Blue Springs v. Vajda & Co.,

708 S.W.2d 804, 806 (Mo. App. 1986). The essential elements of a joint tenancy are

the four unities of interest, title, time, and possession. In re Estate of Gerling, 303

S.W.2d 915, 917 (Mo. 1957). Each joint tenant must have one and the same interest;

the interests must be conveyed by the same title; the interests must commence at the

same time; and each joint tenant has the right to possess the property. In re

Robinson, 791 S.W.2d 844, 848 (Mo. App. 1990). Severing any of the four unities

destroys a joint tenancy. The remaining tenants become tenants in common, with no

right of survivorship. Johnson v. Woodard, 356 S.W.2d 526, 528 (Mo. App. 1962). 

According to the Peets, filing bankruptcy severs the unities of time and title,

turning joint tenancies into tenancies in common. The Peets rely heavily on an

introductory sentence in a recent Supreme Court decision: “When a debtor files a

Chapter 7 petition, his assets, with specified exemptions, are immediately transferred

to a bankruptcy estate.” Harris v. Viegelahn, 135 S. Ct. 1829, 1835 (2015)

(emphasis added). The Court was not presented with the issue here, and the

descriptive sentence does not suggest that “immediately transferred” means a

severance sufficient to destroy the unities of time and title. 

Section 541 of the Bankruptcy Code states that filing a bankruptcy petition

“creates an estate. . . . comprised of . . . all legal or equitable interests of the debtor

in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). This

starkly contrasts with Section 541’s predecessor—Section 70a of the Bankruptcy

Act—which said that upon the filing of a bankruptcy petition, “the trustee . . . shall

. . . be vested by operation of law with the title of the bankrupt. . . .” Bankruptcy Act

of 1898, 30 Stat. 544, 565 at § 70(a). By eliminating the vesting language, Section

541 “eliminates any unnecessary, avoidable dependence on nonbankruptcy law.” 

5 Collier on Bankruptcy § 541.LH at 541-135 (16th ed. 2016). Accordingly, state

law determines only a debtor’s legal interest in property up to the moment the

bankruptcy petition is filed; state law does not limit the transferability of that interest

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Appellate Case: 15-2040 Page: 3 Date Filed: 04/27/2016 Entry ID: 4392536 
to the bankruptcy estate. See id. at 541-135-36 (“[U]nlike the requirement of the

Section 70a(5) of the Bankruptcy Act, it is not necessary under the Code to further

determine whether nonbankruptcy law permits the debtor to transfer the

property. . . .”). Cf. Butner v. United States, 440 U.S. 48, 54-55 (1979) (finding that

the bankruptcy court was required to abide by a state law that—because of a prebankruptcy act—gave property rights to a mortgagee instead of the bankruptcy

trustee).

Under Chapter 7, assets remain in the debtors’ name until the trustee disposes

of the property. See Maniez v. Citibank, F.S.B., 937 N.E.2d 237, 251 (Ill. App. 2010)

(holding that in a Chapter 7 bankruptcy, a conveyance “does not occur until the

trustee sells or otherwise disposes of the property and title passes”); In re DeMarco,

114 B.R. 121, 127 (Bankr. N.D. W. Va. 1990) (“There must be some affirmative

action taken by the trustee to break the unities of time, title, interest, and possession

to destroy the joint tenancy.”);In re Spain, 55 B.R. 849, 854 (Bankr. N.D. Ala. 1985)

(“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 his rights to sell, use or lease such property

by appropriation. . . .”). But see In re Chadwick, 113 B.R. 540, 543 (Bankr. W.D.

Mo. 1990) (holding that filing bankruptcy severs a joint tenancy). Nothing in

Missouri law suggests otherwise. Cf. Renard v. Butler, 30 S.W.2d 608, 609 (Mo.

1930) (holding that trusteesin bankruptcy are not “persons interested asjoint tenants,

tenants in common, or coparceners” under the state partition statute). 

Because the bankruptcy estate included the joint tenancies, the Bankruptcy

Appellate Panel did not err in affirming the sale of the real property and pickup. 

* * * * * * *

The judgment is affirmed.

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Appellate Case: 15-2040 Page: 4 Date Filed: 04/27/2016 Entry ID: 4392536