F I L E D

United States Court of Appeals

Tenth Circuit

AUG 26 2003

PATRICK FISHER

Clerk

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

In re:

MICHAEL ANTHONY VIGIL;

TINA ILENE VIGIL, also known as

Tina Ilene Christy,

Debtors.

MICHAEL ANTHONY VIGIL;

TINA ILENE VIGIL,

Appellants,

v.

TRACY LYNNE ZUBROD, Trustee,

Appellee.

In re:

CARRIE ANN MICHAELS,

also known as Carrie Ann

Michaels-Burkard,

Debtor.

CARRIE ANN MICHAELS,

Appellant,

v.

No. 02-8093

(BAP No. WY-02-003)

(BAP)

No. 02-8094

(BAP No. WY-02-002)

(BAP)
* This order and judgment is not binding precedent, except under the

doctrines of law of the case, res judicata, and collateral estoppel. The court

generally disfavors the citation of orders and judgments; nevertheless, an order

and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

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TRACY LYNNE ZUBROD, Trustee,

Appellee.

ORDER AND JUDGMENT *

Before TACHA , Chief Judge, BRORBY , Senior Circuit Judge, and HARTZ ,

Circuit Judge.

After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are

therefore ordered submitted without oral argument.

This appeal presents a purely legal question: whether under Wyoming’s

exemption statute, Wyo. Stat. Ann. § 26-15-129, a debtor in a Chapter 7

bankruptcy proceeding can exempt the cash value of a life insurance policy from

the bankruptcy estate. We answer that question in the affirmative, thus reversing

the Bankruptcy Appellate Panel.

In two separate cases, debtors Michael Anthony Vigil, Tina Ilene Vigil,

and Carrie Ann Michaels (collectively “debtors”) attempted to exempt from their
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bankruptcy estates the cash surrender value of certain life insurance policies

owned by them and insuring their lives. The objections of the trustee to the

claims of exemption were sustained by the bankruptcy court. Debtors appealed to

the Bankruptcy Appellate Panel (BAP), which consolidated the two cases and

affirmed the bankruptcy court. This appeal followed. Our jurisdiction arises

under 28 U.S.C. § 158(d). 

“On appeal from BAP decisions, we independently review the bankruptcy

court’s decision. We review the bankruptcy court’s legal determinations de novo,

and its factual findings under the clearly erroneous standard.” Lampe v.

Williamson (In re Lampe) , 331 F.3d 750, 753 (10th Cir. 2003) (quotation and

citations omitted).

Debtor Michael Vigil purchased two policies from The New York Life

Insurance Company, both listing Tina Vigil, his wife and co-debtor, as the

beneficiary. A third policy held by Tina Vigil lists Michael Vigil as the

beneficiary. Debtor Carrie Ann Michaels purchased a whole life policy from

The Prudential Insurance Company of America naming a non-debtor as the

beneficiary. There is no dispute as to ownership, beneficiaries, or values of the

whole life policies at issue.

Under § 522 of the Bankruptcy Reform Act of 1978, a debtor is entitled to

exempt certain property from the bankruptcy estate unless the state of his
1 The italicized portion of the statute quoted above was added by amendment

in 2001.

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domicile has elected to “opt out” of the federal scheme and provide its own

exemptions. Johnston v. Barney , 842 F.2d 1221, 1221 (10th Cir. 1988). 

Wyoming has opted out of the federal exemptions. See Wyo. Stat. Ann.

§ 1-20-109. The issue in this appeal is thus controlled by Wyoming’s exemption

statute, which provides in pertinent part:

(a) If a policy of insurance is executed by any person on his own life

or on another life, in favor of a person other than himself, . . . the

lawful beneficiary or assignee thereof, other than the insured or the

person executing insurance or executors or administrators of the

insured or the person executing the insurance , are [sic] entitled to its

proceeds, including death benefits, cash surrender and loan values,

premiums waived and dividends, whether used in reduction of

premiums or otherwise, excepting only where the debtor, subsequent

to issuance of the policy, has actually elected to receive the

dividends in cash, against the creditors and representatives of the

insured and of the person executing the policy, and are not liable to

be applied by any legal or equitable process to pay any debt or

liability of the insured individual or his beneficiary or of any other

person having a right under the policy , whether or not:

(i) The right to change the beneficiary is reserved or permitted . . . .

Wyo. Stat. Ann. § 26-15-129 (emphasis added). 1

In the bankruptcy court and before the BAP, debtors argued that this statute

authorized them to exempt the cash surrender value of their policies from their

bankruptcy estates. Both courts disagreed, finding that the language of the statute

unambiguously precluded such an exemption. In so doing, both courts concluded
2 The trustee cites unpublished opinions from the bankruptcy court in

Wyoming and from the Wyoming federal district court in support of her position. 

Because these opinions are not from this court, however, they do not bind us on

appeal.

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that the phrase “other than the insured or the person executing insurance or

executors or administrators of the insured or the person executing the insurance”

defined a class of persons ineligible for the exemption. We disagree.

Because there is no authoritative Wyoming law construing the reach of this

statute, we must endeavor to predict how the Wyoming Supreme Court would

interpret the question before us. See Johnson v. Riddle , 305 F.3d 1107, 1118

(10th Cir. 2002). 2 We agree with the BAP that this statute is unambiguous and

thus, under Wyoming law, must be construed according to its plain meaning. See

Abeyta v. State , 42 P.3d 1009, 1011 (Wyo. 2002). We must give “effect to each

word, clause, and sentence so that no part will be inoperative or superfluous.” 

Id. at 1012. Mindful that Wyoming courts construe exemption statutes liberally

“so as to effect their beneficent purposes,” see Pellish Bros. v. Cooper , 38 P.2d

607, 609 (Wyo. 1934), we have sought out cases interpreting statutes similar

to that of Wyoming’s in order to determine the reach of Wyo. Stat. Ann.

§ 26-15-129.

As early as 1928 in In re Messinger , 29 F.2d 158 (2d Cir. 1928), the

Second Circuit, construing a New York statute nearly identical to the Wyoming
3

In 1928, § 55a of the New York Insurance Law, as quoted in Messinger,

provided:

If a policy of insurance, whether heretofore or hereafter issued, is

effected by any person on his own life or on another life, in favor of

a person other than himself, . . . the lawful beneficiary or assignee

thereof, other than the insured or the person so effecting such

insurance, or his executors or administrators, shall be entitled to its

proceeds and avails against the creditors and representatives of the

insured and of the person effecting the same, whether or not the right

to change the beneficiary is reserved or permitted . . . . 

Messinger , 29 F.2d at 159 (emphasis added).

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statute, 3 held that a debtor could exempt the cash surrender value of a life

insurance policy from the bankruptcy estate as long as the debtor did not exercise

his power to name himself as the beneficiary. Id. at 160. The court observed that

“[t]he statute does not exempt the bankrupt if he exercises his reserved power to

change the beneficiary for his personal advantage, and, indeed, precludes an

exemption in such case by saying that ‘the beneficiary . . . other than the insured’

shall be entitled to the proceeds and avails.” Id. Thus, the Second Circuit

understood the language at issue here not to preclude the exemption outright as

the bankruptcy court and the BAP held, but to preclude it only if the debtor names

himself as the beneficiary.

We cited Messinger with approval in McConnico v. Privett (In re Privett) ,

435 F.2d 261, 263 (10th Cir. 1970). Privett involved the construction of the

Oklahoma exemption statute, which at the time provided:
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When a policy of life insurance is effected by any person on

his own life or on another life in favor of some person other than

himself having an insurable interest therein, or made payable by

assignment, change of beneficiary or other means to a third person,

the lawful beneficiary thereof or such third person, other than the

person effecting the insurance or his legal representatives , shall be

entitled to its proceeds against the creditors and representatives of

the person effecting the same.

Id. at 262 (quoting Okla. Stat. tit. 36, § 3631(A) (1989)) (emphasis added). While

not quite as similar to the Wyoming statute as the New York statute construed in

Messinger , the language of the Oklahoma statute is sufficiently close to the

Wyoming statute to make our holding in Privett relevant to this analysis.

Privett held that the Oklahoma statute allowed a debtor/insured to claim an

exemption for the cash surrender value of a life insurance policy, thus rejecting

the argument made here by the trustee. After acknowledging that the Oklahoma

statute was intended to “insulate the beneficiary from the creditors of the

insured,” id. at 263, this court endorsed the Messinger approach and allowed the

exemption, with the proviso that “if the bankrupt shall at any time exercise his

power to change the beneficiary for his personal advantage, the cash surrender

value shall constitute unadministered assets of the bankrupt estate.” Id. at 264. 

It is undisputed here that the debtors are not the beneficiaries of the policies

they own.

Privett was followed more recently in In re Ridgway , 108 B.R. 294, 298

(Bankr. N.D. Okla. 1989), where the court concluded that, under the Oklahoma
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statute, the cash surrender value of a life insurance policy was exempt, albeit with

the same caveat declared in Privett.

In view of the foregoing, we conclude that Wyo. Stat. Ann. § 26-15-129

allows a Chapter 7 debtor to exclude the cash surrender value of a life insurance

policy from the bankruptcy estate unless and until the debtor changes the

beneficiary for his personal advantage.

Our resolution of this matter makes it unnecessary to address whether the

BAP correctly concluded that a beneficiary of a life insurance policy cannot claim

an exemption under Wyo. Stat. Ann. § 26-15-129 in the cash surrender value of

a life insurance policy owned by a debtor.

The orders of the Bankruptcy Appellate Panel and the Bankruptcy Court are

REVERSED and these cases are REMANDED to the Bankruptcy Court for further

proceedings not inconsistent with this order and judgment.

Entered for the Court

Wade Brorby

Senior Circuit Judge