### The Honorable James M. Moody, United States District Judge for 1 

### the Eastern District of Arkansas, sitting by designation. ________________ No. 96-1836 MNMI

________________ Arthur Sholdan, * * Debtor, * * Appeal from the United States Earl Jensen, The Personal * District Court for the Representative of the Probate * District of Minnesota Estate of Arthur Sholdan, * * [PUBLISHED]

Appellant(s), * * v. * * Michael Dietz, the Trustee * of the Bankruptcy Estate * of Arthur Sholdan, * *

Appellee. *

________________ Submitted: November 22, 1996 Filed: March 13, 1997

________________ Before BEAM and LOKEN, Circuit Judges, and MOODY , District Judge. 1

________________ MOODY, United States District Judge.

Earl Jensen, the personal representative of the probate estate o f deb tor, Arthur Sholdan, appeals from the decision of the district cour t affirm ing the bankruptcy court in sustaining the chapter 7 trustee’ s objection to Sholdan’s homestead exemption. Because the district court failed to make a finding on whether Sholdan’s ho mestead exemption was made with the “intent to defraud,” we remand. Sholdan was a retired farmer who sold his farm in 1980 and

### Bankruptcy debtors may elect to use either the exemptions set 2 

### forth in the federal bankruptcy code or in the nonbankruptcy law of the debtors' domicile. Compare 11 U.S.C. §§ 522(d) with 11 U.S.C. §§ 522(b)(2); Panuska v. Johnson (In re Johnson) , 880 F.2d 78 (8th Cir. 1989). If Sholdan had chosen the federal exemptions, conceivably he would have been able to exempt sufficient cash and personal property to allow him to stay at Mineral Springs Board and Lodge with no interruptions or changes. See 11 U.S.C. § § 522(d), (d)(5), and (d)(10)(E).
2 retained a mortgage a gainst the property. He moved from the farm into an apartment where he li ved for approximately 13 years. In December, 1993, Sholdan moved into Mineral Springs Board and Lodge, an assisted care livin g facility. In September, 1994, at which time Sholdan had reached the age of 90, he surrendered approximately ten certificates of deposits and sold his mortgage rights in the farmland to his nephew, Roger Jensen, for a total of approximatel y $140,000.00. Sholdan used this money to purchase a new home for approximately the same amount of money. At all times while living in his new home, Sholdan had the assistance of a nurse. When the
nurse was unavailable to stay with him overnight at his home, Sholdan spen t the night at Mineral Springs Board and Lodge. Following the liquidation of all o f his income producing assets to buy the home, Sholdan’s sol e
source of income was a social security payment of $486.00 per month. Shold an’s property taxes on his new home beginning in 1996 amounted t o $2,000.00 per year. In December, 1994, Sholdan filed a chapter 7 bankruptcy petition i n which he listed his new home as exempt pursuant to Minnesota law. 2 See Minn. Stat. Ann. § 510.01 (West Supp. 1997). Sholdan died on Februar y 5, 1995.

Earl Jens en, Sholdan’s nephew, is the representative of the probate estate. Earl Jensen’s and Roger Jensen’s children are contingent designee s of Sholdan’s will. T he Jensens consulted a bankruptcy attorney and real estate ag ents in an effort to assist Sholdan in structuring th e transactions concerning the disposition

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of his real property. The record reflects that Sholdan did not originate the idea of purchasin g the home for himself and the Jensens were the ones who actually undertook the search for Sholdan’s new home.
Sholdan’s primary creditor is Raymon d Olson who was severely injured in 1992, when Sholdan, driving down the wrong side of the highway, ran int o him. Olson filed a lawsuit for injuries receive d in the accident, and has filed a proof of claim against the bankruptcy estate for $1,000,000.00.

Th e bankruptcy court found that Sholdan had transferred non-exemp t proper ty (the certificates of deposits and mortgage) to exempt propert y (th e new house) with the “intent to hinder or delay” his creditors i n violation of Minnesota law. See Minn. Stat. Ann. §§ 513.41-.51 (Wes t 199 0). Specifically, Minnesota Statute Annotated § 513.44 states “[a ] transfer made . . . is fraudulent as to a creditor . . . if the debtor mad e the tran sfer . . . with actual intent to hinder, delay, or defraud an y creditor of the debtor. . .. Minn. Stat. Ann § 513.44(a)(1)(West 1990). The bankruptcy court reasoned that Sholdan int ended to “hinder or delay” his creditors by purchasing a house which was too large for his needs whil e he still needed a live-in nurse, and by making improvements to the house in the form of a larg e deck which was of little use to Sholdan because he had no family in the residence with whom to enjoy it. The bankruptcy cour t did not rule on whether the debtor acted with “intent to defraud.” Becaus e the ba nkruptcy court found that the debtor transferred the non-exemp t property to an exempt property, a homestead, with the intent to “hinder
or del ay” his creditors, the bankruptcy court sustained the trustee’ s objection applying Minnesota law.

The district court upheld the bankruptcy court’s decision holdin g that it was not necessary to find “intent to defraud” to set

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aside a transfer of n on-exempt property to exempt property. The district court held that a finding of an intent to “hinder or delay” was sufficient

. The district court also found that the bankruptc y court correctly inferred Sholdan’s intent to “ hinder or delay” based on the cost of the house with the improvements being nearly equal to the debtor’s liquid assets whic h left Sholdan with insufficient income to maintain the house and to pa y property taxes. Finally, the district court uph eld the bankruptcy court’s factual findings by holding that the bankruptcy court’s use of observation s about the human interest aspects of the case were of no legal significance , and t hat the actual findings regarding the intent to “delay or hinder ” creditors were not clearly erroneous, and supported by the record.

Because t he district court was acting as an appellate court, w e review the district court’s factual and legal conclusions de novo

. Se e Wegner v. Grunewaldt , 821 F.2d 1317, 1320 (8th C ir. 1987). If we conclude that the b ankruptcy court’s findings are silent or ambiguous as to a n outcome determinative fact question, we may not make our own findings but must remand the case to the bankruptcy court for the necessary factua l determination. See Rine & Rine Auctioners v. Douglas County Bank & Trust Co. (In re Rine & Rine) , 74 F.3d 854, 863 n. 7 (8th Cir. 1996).

The t rustee objects to the homestead exemption on the ground tha t Sho ldan had taken title to the real estate in question in specifi c cont emplation of his bankruptcy filing and with a specific intent t o “hinde r, delay or defraud” his scheduled creditors. The trustee , therefore, maintains that Sholdan’s successors in interest should be denie d the benefit of the statutory exemption. Jensen argues that intent t o “hinde r or delay” is insufficient to disqualify Sholdan’s homestea d exemption. It is Jensen’s position that the ba nkruptcy court has to make
a finding that there was also an “intent to defraud.” In addition, Jense n argues that

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the bankruptcy court and district court used a value-limit analysis which is not authorized in a Minnesota exemption case. Alternatively he argues that even if the value-limit test of Johnson were allowed, there was n o extreme degree of disparity between the exempt property and the debtor’s needs.

Under section 11 U.S.C. § 522(b), a debtor can choose to exempt from property of the bankr uptcy estate that property which is exempt under the applicable state or federal law. See Hanson v. First Nat’l Bank , 848 F.2 d 866, 868 (8th Cir. 1988). Here, Sholdan elected a state-created exemption

. The scope of the exemption is fixed by state law . See Panuska v. Johnson (In re Johnson) , 880 F.2d. 78 (8th Cir. 1989); Norwest Bank Nebraska, N.A

. v. Tveten , 848 F.2d 871, 876 (8th Cir. 1988).

Minne sota law does not allow a homestead exemption where a debto r transfers property “with intent to hinder, delay or defraud” a creditor. See M inn. Stat. Ann. §§ 513.41-.51; In re Tveten , 402 N.W.2d 551, 55 6 (Minn. 1987). Here the bankruptcy court made no finding as to whether Sholdan claimed his homestead exemption with the “intent to defraud. While t he facts of this case might well support a finding of “intent t o defraud,” we cannot make such a finding. See Rine v. Rine Auctioners v. Douglas County Bank & Trust Co. (In re Rine & Rine) , 74 F.3d at 863 n.7.

Finall y, we do not mean to say that the test of “hinder or delay ” might not prevail und er another set of facts. In this case, however, the facts do not support such a finding.
Accordingly, without reaching the me rits of the remaining arguments,
we remand this case to the district court with instructions to remand to the bankruptcy court for a factual finding on the issue of Sholdan’ s “intent to defraud.”

### 6 A true copy.
Attest: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT