Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-05071/USCOURTS-ca10-89-05071-0/pdf.json

Parties Involved:
John B. Jarboe
Appellant
Barbara C. Treiber
Appellee
Craig Lewis Treiber
Appellee

Document Text:

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

JOHN B. JARBOE, Trustee, 

Plaintiff-Appellant, 

v. 

FI LED 

Ufiited States Court of Appeals 

Tenth Circuit 

MY15190 

.ROBERT L. HOECKER 

Clerk 

No. 89-5071 

BARBARA c. TREIBER and 

CRAIG LEWIS TREIBER, 

(D.C. No. 88-C-1540-B) 

(N.D. of Okla.) 

Defendant-Appellee. 

ORDER AND JUDGMENT* 

Submitted on the Briefs. 

Before McKAY, BARRETT and ANDERSON, Circuit Judges. 

John Jarboe, Trustee, plaintiff below, appeals from an 

order of the district court affirming an order of the bankruptcy 

court granting summary judgment in favor of Craig and Barbara 

Treiber. The relevant facts are not in dispute and may be briefly 

summarized. 

On September 11, 1986, within one year of his bankruptcy, 

Craig Treiber conveyed his one-half interest in his residence to 

his wife, Barbara. At the time of the conveyance, Craig and 

Barbara owned the property as joint tenants. The conveyance was 

in payment of a debt owed by Craig to Barbara in the approximate 

* This Order and Judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 89-5071 Document: 01019970132 Date Filed: 05/15/1990 Page: 1 
amount of $75,000.00. At all times relevant, the Treibers resided 

in the residence with their children. 

On March 10, 1987, Craig filed for relief under Chapter 7 of 

the Bankrucptcy Code. On October 1, 1987, Trustee Jarboe filed an 

adversary proceeding seeking to set aside Craig's conveyance of 

his interest in the residence as a voidable preference under 11 

U.S.C.A. § 547. On October 27, 1987, and on March 3, 1988, Craig 

amended his list of scheduled property, claiming the residence 

as exempt under 31 Okla. Stat. § 1, which 

part: 

provides in relevant 

A. [t]he following property shall be reserved to 

every person residing in the state, exempt from attachment or execution and every other species of forced 

sale for the payment of debts ••• 

1. The home of such person, provided that such 

home is the principal residence of such person; 

On March 31, 1988, Trustee Jarboe objected to the Craig's 

claim of exemption, alleging that inasmuch as Craig had conveyed 

his interest in the residence to his wife, he had no interest to 

claim as exempt. On April 12, 1988, the trustee's adversary 

proceeding against Barbara and his objection to the claimed 

exemption were consolidated. Thereafter, Craig moved for summary 

judgment and was joined by Barbara. 

In granting summary judgment in favor of the Treibers, the 

bankruptcy court found that (1) the transfer of Craig's interest 

to Barbara was not voidable because the residence was exempt under 

Oklahoma law and Rutledge v. Johansen, 270 F.2d 881 (10th Cir. 

1959) (even though all requisites of a voidable preference were 

present, the transfer was nonvoidable because the 

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property 

Appellate Case: 89-5071 Document: 01019970132 Date Filed: 05/15/1990 Page: 2 
transferred was exempt under Oklahoma law), and (2) even if the 

trustee were to avoid the conveyance, Craig and Barbara and their 

family would still have a homestead exemption in the residential 

property which would be superior to any rights of the trustee. 

In affirming the bankruptcy court, the district court held, 

inter alia, "[t]he homestead, exempt at the outset, does not lose 

its character, either by transfer between husband and wife or by 

reason of the bankruptcy filing." (R., Vol., Tab 11, p.4.) 

On appeal, Trustee Jarboe contends that the court erred in: 

(1) holding that a voluntary transfer of "exemptible" property may 

not be avoided under 11 U.S.C. §§ 547 or 548; (2) holding that the 

homestead rights of a spouse prevent the trustee's recovery of a 

joint tenancy interest; and (3) basing its rulings solely on state 

law to the exclusion of preemptive bankruptcy law provisions. 

Neither the district court nor a court of appeals can 

disturb a bankruptcy court's findings of fact unless they are 

clearly erroneous. Hall v. Vance, 887 F.2d 1041, 1043 (10th Cir. 

1989). A reviewing court may, however, exercise de novo review 

over the bankruptcy court's conclusions of law. Id. See also: In 

re Heape, 886 F.2d 280 (10th Cir. 1989); Bartmann v. Maverick Tube 

Corporation, 853 F.2d 1540 (10th Cir. 1988). Furthermore, whereas 

federal statutes govern the administration of bankrupt estates, 

"Congress has generally left the determination of property 

rights in the assets of a bankrupt's estate to state law. 

Property interests are created and defined by state law". Butner 

v. United States, 440 U.S. 48, 55 (1979); Steyr-Daimler-Puch of 

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America Corporation v. Pappas, 852 F.2d 132 (4th Cir. 1988); In re 

White, 851 F.2d 170 (6th Cir. 1988). 

In Oklahoma, that portion of the debtor's property occupied 

as the debtor's residence and used by the debtor and his spouse 

for family purposes qualifies as the exempt homestead. In re 

Shields, 85 B.R. 582 (Bkrtcy. N.D. Okla. 1988). Under Oklahoma 

law, "[t]he homestead interest vests jointly in the husband and 

wife for the benefit of themselves and the family regardless of 

which of them is vested with title." Matter of Estate of Wallace, 

648 P. 2d 828, 831 (Okla. 1982). 

Applying these principles, the bankruptcy court found that 

"even if the trustee were to avoid the conveyance, the debtor and 

debtor's wife and family would still have a homestead exemption in 

the residential property which would be superior to any rights of 

the trustee." In re Treiber, 92 B.R. 930, 933 (Bkrtcy. N.D. Okla. 

1988). The district court agreed and so do we. 

We hold that the Memorandum Opinion and Order of the 

bankruptcy court and the Opinion of the district court are sound 

and convincing. We affirm the bankruptcy court's grant of summary judgment in favor of the Treibers, for subtantially the 

well-stated reasons set forth in the bankruptcy court's 

Memorandum Opinion and Order of August 26, 1988, and the district 

court's Opinion of April 5, 1989, copies of which are attached 

hereto and by reference incorporated herein. 

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Entered for the Court: 

James E. Barrett, 

Senior United States 

Circuit Judge 

Appellate Case: 89-5071 Document: 01019970132 Date Filed: 05/15/1990 Page: 4 
( 

- _, FILED 

. ::RCTHY A. EVANS, CLE:;.~ 

. , BANKRUPTCY COUI<:" 

· ,.:,-. i Rf-. ~ • .)&::::-r ::F CKJ..Ah·-:t: 

In re: 

CRAIG L. 

John B. 

v . 

Barbara 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF OKLAHOMA 

] 

TREIBER, ] Case No. 87-00595-C 

] Chapter 7 

Debtor. ] 

] 

Jarboe, Trustee, ] 

] 

Plaintiff, ] 

] Adversary No. 87-0328-C 

] 

C. Treiber, ] 

] 

Defendant. ] 

MEMORANDUM OPINION and ORI)ER 

This matter comes on for decision by this court on the joint 

motion of debtor Craig L. Treiber and defendant Barbara c. 

Treiber for summary judgment. 

The court finds that the instant action is a core proceeding 

pursuant to 28 u.s.c. § 157.(b) (2) and that jurisdiction and venue 

are proper pursuant to 28 u.s.c. §§ 1334 and 1 4 09 respectively. 

The court makes the following findings of fact and 

conclusions of law as required by Bankruptcy Rule 7052: 

Findings 

On September 11, 1986 and within one year of his bankruptcy, 

the debtor conveyed his 1/2 interest in his residence to his 

. '} 

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Appellate Case: 89-5071 Document: 01019970132 Date Filed: 05/15/1990 Page: 5 
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wife, Barbara Treiber, defendant herein. At the time of the 

conveyance, the debtor and defendant owned the property as joint 

tenants and not as tenarits-in-common and did at that time and at 

all times thereafter reside in the property with their children. 

The conveyance was in payment of a debt owed by the debtor to the 

defendant in the approximate amount of $75,000, 

Thereafter, on March 10, 1987 and within one year of the 

conveyance, the debtor filed for relief under chapter 7 of the 

Bankruptcy Code. on the 9th day of April, 1987, John B. Jarboe 

was appointed trustee of the estate. On October 1, 1987, the 

trustee filed this adversary proceeding seeking to avoid said 

conveyance by virtue of § 54 7 of the Bankruptcy Code. 

section states, in pertinent part, as follows: 

(b) Except as provided in subsection (c) of 

this section, the trustee may avoid any 

transfer of an interest of the debtor in 

property 

(1) to or for the benefit of a creditor; 

(2) for or on account of an antecedent debt 

owed by the debtor before such transfer was 

made; 

(3) made while the debtor was insolvent; 

(4) made 

* * * (B) between ninety days and 

before the date of the filing 

petition, if such creditor at the 

such transfer was an insider; and 

one year 

of the 

time of 

(5) that enables such creditor to receive 

more th~n such creditor would receive if --

(A) the case were a case under chapter 7 

of this title; 

2 

Said 

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(B) the transfer had not been made; and 

(C) such creditor received payment of 

such debt to the extent provided by the 

provisions of this title. 

11 u.s.c. § 547(b). 

The debtor filed amendments to schedule B-4, Property 

Claimed Exempt, on October 27, 1987 and again on March 3, 1988 

claiming the residence as exempt property under 31 o. s. § 1, 

which, in pertinent part, as follows: 

A. [T]he following property shall be reserved 

to every person residing in the state, exempt 

from attachment or execution and every other 

species of forced sale for the payment of 

qebts . . . ; 

1. The home of such person, provided 

that such home is the principal residence of 

such person ..•• 

Okla. stat. Ann. tit. 31, § 1 (A) (1) (1988). 

On March 31, 1988, the trustee objected to the debtor's 

claim of exemption alleging that debtor had conveyed his interest 

in the residence to his wife, defendant herein, and therefore had 

no interest to claim as exempt. 

On April 12, 1988, the adversary proceeding against Barbara 

Treiber and the objection to the claimed exception were 

consolidated (because the same issues of law and fact were 

involved in each dispute) and set for trial. 

On the 7th day of June, 1988, the debtor filed a motion for 

summary judgment on the objection to his claim of exemption which 

was joined in by the defendant in regard to the complaint for 

recovery of the preference. 

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Conclusions of Law 

At a pretrial conference it was decided that two questions 

of law should be ruled upon by the court prior to an evidentiary 

hearing. ·~, The first question __ of __ law--is -whether it is possible to 

have a voidable preference under § 54 7 of the Bankruptcy Code, 

assuming all statutory requirements of a preference are met, 

where the subject matter of the preference is totally exempt 

property. This issue was decided by the United States Court of 

Appeals for the Tenth Circuit in the case of Rutledge v. 

Johannsen, 270 F.2d 881 (10th Cir. 1981). In that case, the 

bankrupt, within four months . of bankruptcy, while insolvent, 

transferred to the defendant his Oklahoma homestead property in 

payment of an antecedent debt. The appellate court held that 

even though all requisites of a voidable preference had been met, 

the transfer was nonvoidable because the property transferred was 

exempt under Oklahoma law. That court stated: 

The trial court's judgment is directly 

supported by textbook law to the effect that 

a transfer of exempt property of a debtor, 

though it is to a creditor and to apply o~ an 

antecedent indebtedness, does not give rise 

to a voidable preference. 

* * * 

For to hold otherwise would afford 

creditors a right in exempt property prior to 

bankruptcy which the law does not give them 

at the time of the filing or after 

adjudication. And, it would deny to the 

bankrupt the right to accomplish before 

bankruptcy that which he co-..1ld clearly do 

after bankruptcy. surely, if a bankrupt is 

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,,. 

( 

entitled to have exempt property of which he 

is seized at the time of the filing of the 

bankruptcy set apart from the bankruptcy 

estate, he is entitled to make a val id 

transfer of it prior to the date of the 

filing. This view accords the bankrupt his 

full right under the exemption laws, while at 

the same time preserving to the trustee the 

right to challenge the exempt character of 

the transferred property in proceedings like 

these. 

The trustee argues that the Rutledge case is no longer 

controlling because it was decided under the old Bankruptcy Act 

and not under the present Bankruptcy Code. 

One of the reasons for the court's ruling in Rutledge was 

that under the Bankruptcy Act exempt property did not become part 

of the bankrupt's estate and, therefore, conveyance of such 

property could not be preferential. 

The trustee points out that under the Bankruptcy Code 

exempt property does become part of the. estate and then, if -

properly claimed, is exempted out, and therefore, a conveyance of 

such property could be considered preferential if all other 

requirements are met. The trustee contends that this procedural 

difference in allowing exemptions effectively eliminates the 

Rutledge case as a precedent. 

This court rejects that argument. The requisites of a 

preference under the old Bankruptcy Act and the new Bankruptcy 

Code are substantially the same. Whether exempt property can be 

the subject matter of a preferential transfer should not depend 

upon the method in which the exemptions are claimed and allowed. 

No creditor is injured when the entire subject matter of a 

5 

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preference consists of exempt property. If the property had not 

been conveyed, the creditors would not have shared in it. In 

short, -- no harm, no foul. 

The second question of law to be decided is if the court 

holds that exempt property can be the subject matter of a 

preference, does the trustee gain anything by setting aside the 

conveyance. Even thqugh this question is moot if the above 

holding is correct, a ruling on this issue should be made. 

The homestead exemption under the statutes and Constitution 

of the State of Oklahoma is discussed in great detail in In re 

Wilmsmeyer, 2 B.C.D . . 482, opinion by United States Bankruptcy 

Judge David Kline of the Western District of Oklahoma. Judge 

Kline held that a bankrupt who, prior to bankruptcy, had conveyed 

away his homestead residence but on the date of bankruptcy still 

resided on the property with his wife and family was still 

entitled to a homestead exemption in the property. Judge Kline 

set out the following rules in regard to Oklahoma homesteads: 

LAW 

HOMESTEAD EXEMPTION 

Time Determinable 

Exemption rights are determinable as of the 

date of bankruptcy and the trustee is obliged 

to set apart any exemptions allowed by law. 

Rutledge v. Johannsen, 270 F.2d 881, 882 (CA 

10 1959). 

Policy 

"The policy of this court has always been, 

and now is, to construe 1 iberal ly this 

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provision of the Constitution [concerning 

homestead exemption], in order to encourage 

the ownership of homes, where families may be 

safe and secure from misfortune or 

improvidence, believing that such security 

conduces to the stability and good order of 

the state." Hein v. Wahl, 40 P.2d 683, 684 

(Okla. s. ct. 1935). Moreover. the homestead 

is reserved to family if title is in either 

husband or wife; and an individual interest 

of a tenant in common may be held as 

homestead of his family. Lehman v. Tucker. 55 

P.2d 62 (Okla. s. Ct. 1936). And such 

undivided interest in realty is not subject 

to be levied on by execution. Hein v. Wahl, 

supra. (emphasis mine] 

Nature of Ownership Interest Required 

"While it has been said that ordinarily there 

can be no homestead right without ownership, 

legal or equitable, of the homestead 

property, and ownership is expressly required 

by some [5] decisions, the purpose of the law 

••• is not to make the homestead privilege 

depend on absolute ownership, but rather on 

occupancy, coupled with some right or estate 

of the debtor in the property. " 4 o c. J. S. 

Sec. 78, p. 517, citing Hein v. Wahl, 40 P.2d 

683 (Okla. s. ct. 1935). 

As a general rule ownership in fee is not 

essential in order to establish a homestead 

right in land. The homestead right is not an 

estate in land, but a mere privilege of 

exemption from execution of such estate as 

the holder has. Any interest in land coupled 

with the requisite occupancy is sufficient to 

support a homestead exemption. It may be 

supported by a life estate, by a leasehold 

interest, by a tenancy at will or at 

sufferance, or by a mere possessory interest 

or equitable title • In fact one 

wrongfully in possession, but claiming a 

right to hold, may impress upon the premises 

occupied the character of a homestead against 

creditor:; and all other persons except the 

owner of superior title (citing 

authorities)." Mercer v. McKeel, 108 P.2d 

138, 141 (Okla. s. ct. 1940). 

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Additionally, it has even been held that mere 

possession without title is sufficient to 

support homestead right under Oklahoma law. 

In re Wineland, 3 F.Supp. 796, 797 (D.c. 

Okla. 1933) . 

Conveyance 

Under Oklahoma law a husband and wife can 

convey their homestead to a third party, but 

"no deed, mortgage, or contract relating to 

the homestead exempt by law • • shall be 

valid unless in writing and subscribed by 

both husband and wife where both are living 

(1971) Sec. 4. Also, see Grenard v. McMahon, 

441 P.2d 950 (Okla. s. ct. 1968). And any 

deed given in compliance with this statute 

takes effect from the date of its delivery. 

May v. Archer, 302 P.2d 768, 771 (Okla. s. 

Ct. 1956). 

In re Wilmsmeyer, 2 B.C.D. 482. 

Applying these rules to the instant case, it is clear that 

even if the trustee were to avoid the conveyance, the debtor and 

debtor's wife and family would still have a homestead exemption 

in the r~sidential property which would be superior to any rights 

of the trustee. Also, even if this court were to hold that the 

conveyance was a voidable preference and that the debtor had 

waived his homestead· exemption because of the conveyance, the 

wife and family would still have the exemption which would be 

superior to the rights of the trustee. 

The trustee argues that if the conveyance is set aside, he 

would become a co-tenant in the property and his interest as a 

co-owner would be superior to the homestead interests of the 

other co-tenants. The trustee contends that the homestead 

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rt 

.. , 

exemption of the wife and family would only be valid against 

creditors and could not be used to defeat his right to partition 

as a co-tenant. This court rejects such argument. 

The trustee, even if deemed to be a co-tenant, is only 

liquidating the assets of the debtor for the benefit of the 

creditors and, therefore, while a homestead interest may not be 

superior to the interest of a co-tenant, it is superior to the 

interest of a trustee in bankruptcy. To hold otherwise would 

simply allow the husband's creditors to indirectly, through the 

trustee, defeat the homestead interests of the wife and family 

when they could not do this acting their own. Accordingly, 

The joint motion of debtor and defendant for summary jugment 

is GRANTED and this adversary proceeding is concluded. 

ORDERED this 26th day of August, 1988. 

~ t,_ : _J o f'\ r-. .__\:A. r b O (!_ 

Ro~.\ "J.,n ~\·, *" 

U...~T'~ 

9 

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----- --- - - - - ~,--~ ~-------..---------------------- ( . 

IN THE UNITED STATES DISTRicr COURT FOR THE ~. 

NORTHERN DISTRicr OF OKIAHOMA J APR 

JOHN B. JARBOE, 

LE 

31989 

D 

Plaintiff, 

) 

) 

) 

) 

) 

) 

) 

) 

) 

J?.C'' C {•:: .. ri • I u ,, • voi ~ --r, ~1Cik 

v. 

BARBARA C. TREIBER, et al, 

Defendants. 

u. s. D!STmcr CCURT 

OPINION 

Appellant brings the instant appeal from a decision of the 

United States Bankruptcy Court, granting Appellee' s Motion for 

Summary Judgment; thereby concluding that Debtor's homestead 

interest was exempt property and not subject to the Trustee's 

reach. 

A. The Facts 

Within a year before Debtor sought protection of the United 

States Bankruptcy Court, he executed a deed whereby he purported • 

to transfer his interest in he and his wife's home, to his wife. 

The home, prior to Debtor's action, was held jointly by he 

and his wife, as joint tenants, as required under Oklahoma law 

(~, Tit. 16 O.S. §4). 

Subsequent to Debtor's filing, the Trustee filed an 

adversary action against Debtor's wife, claiming that Debtor's 

transfer of his interest in the couple's home was voidable under 

11 u.s.c. §547(b). Thereafter, on October 27, 1987, the Debtor 

amended Schedule B-4, adding to it his homestead interest, 

claiming same as exempt. Notwithstanding Bankruptcy Rule 

4003(b), which provides that the -Trustee shall file any objection 

Appellate Case: 89-5071 Document: 01019970132 Date Filed: 05/15/1990 Page: 14 
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to claimed exemptions within thirty (30) days, the Trustee filed 

no objection. on March 3, 1988 the Debtor again amended Schedule 

B-4, reiterating his claim for exemption of his homestead 

interest pursuant to Tit. 31 o.s. §1. The Trustee responded on 

March 31, 1988, objecting to the claimed exemption by reason of 

Debtor's purported earlier transfer. 

The Bankruptcy Court consolidated the adversary proceeding 

with that of the Trustee's objection on April 12, 1988. 

Thereafter, on June 7, 1988, the Debtor and his wife (Defendant), 

filed a joint Motion for Summary Judgment on the Trustee.' s 

objection. Following hearing, the Bankruptcy · Court granted 

Debtor's Motion on August 26, 1988 and subsequently overruled the 

Trustee's Motion for Rehearing on November 1, 1988. 

B. The Issues on Appeal 

Two fund ~mental issues are presented on appeal. First,) does 

the Trustee have an interest in Debtor's home, in light of the 

homestead? Second, may Debtor claim an exemption to the 

homestead after transferring same to his wife? 

The Bankruptcy Court found ( 1) that Debtor's homestead is 

exempt property, hence not part of his estate; and (2) that 

avoidance of the conveyance would be a fruitless exercise in 

light of the wife's superior homestead rights. As a result, the 

Trustee would not be able to partition the homestead, thus 

rendering avoidance of the transfer meaningless. 

Upon review, the Court agrees. The Bankruptcy Court 

correctly addressed the fundamental issues, finding the homestead 

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to be exempt and indivisible. 

Furthermore, this Court finds persuasive the holding of 

Rutledge v. Johansen, 270 F.2d 881 (10th Cir. 1959), adopted by 

the Bankruptcy Court as governing the instant case. There, the 

debtor conveyed his homestead some four (4) months before 

declaring bankruptcy. The Trustee sought to set aside the 

conveyance, but the Court of Appeals upheld a finding to the 

contrary, stating: 

[A] transfer of exempt property of a debtor, though it 

is to a creditor and to apply on an antecedent 

indebtedness, does not give rise to a voidable 

preference ••• The statement is grounded in the legal 

concept that property exempt by law remains in the 

bankrupt, does not pass to the trustee, and the 

bankrupt's disposition of it prior to bankruptcy is 

therefore no concern to the trustee or the creditors he 

represents. (Id.) (Emphasis added.) 

The Debtor's transfer of his homestead interest to his wife, 

was a transfer of otherwise exempt property and "therefore (of) 

no concern to the trustee or.the creditors he represents." 

Notwithstanding the foregoing, under Oklahoma law, the 

homestead belongs to the entire family. (See, In re: Carothers' 

Estate, 167 P. 2d 899, 902 (Okla. 194 6)) . Here, not only is 

there a real question as to the validity of debtor's initial 

transfer to his wife (Oklahoma law requires both husband and wife 

execute a deed conveying the interest of one, when the real 

property is held in joint tenancy, as here), but as to the effect 

of same, even if valid. See,~= Pettis v. Johnston, 190 P. 681, 

78 Okl. 277 (Okla. 1920), wherein the court held, (and such is 

Oklahoma law today) , that the homestead interest "is jointly 

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vested in the husband and wife for the benefit of themselves and 

family, without regard to which spouse owns the title to the 

land." (Emphasis added.) 

Thus, the effect of the husband's attempted conveyance, 

notwithstanding the exempt character of the property, is the same 

as if he had never conveyed it. The trustee cannot, therefore, 

acquire an interest superior to the homestead. 

In sum, this case is determined by the character of the 

property about which it is centered. The homestead, exempt at 

the outset, does not lose its character, either by transfer 

between husband and wife or by reason of the bankruptcy filing. 

ACCORDINGLY, the judgment of the Bankruptcy Court is hereby 

AFFIRMED. 

/ 

I 

~d'?t:e~~ire~ /,/ ~~ ' 

THO}'.AS R. BRETT 

UNITED STATES DISTRICT COURT 

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