On October 15, 1982, appellees, husband and wife Frederick and Josephine Pearl, filed a joint bankruptcy petition with
The federal Bankruptcy Code gives a debtor the option to use his federal exemptions, 11 U.S.C. § 522(d) (1979), or his state exemptions, but he may not mix them. However, the option is not available if the state passes a law prohibiting election of the federal exemption. See 3 Collier on Bankruptcy ¶ 522.09 (L. King 15th ed. 1981). Section 522(b)(2)(B) allows any exemption in the debtor's interest in property as a tenant by the entirety or as a joint tenant if the debtor elects to take the state exemptions. Id. § 522.10. On May 17, 1982, New York State pursuant to § 522(b) "opted out" of the federal scheme. N.Y.Debt. & Cred.L. §§ 282-284 (McKinney Supp. 1982-1983). The exemptions listed in the Bankruptcy Code § 522(d) were specifically denied to the debtor domiciled in the state, N.Y.Debt. & Cred.L. § 284, and in their place the opt-out statute stated that debtors might exempt personal and real property exempt from application to the satisfaction of money judgments under N.Y.Civ.Prac.L. §§ 5205 & 5206 (McKinney 1978 & Supp. 1982-1983).
Section 5206 of the Civil Practice Law and Rules is New York's "homestead exemption." It provides, in relevant part:
When the Pearls filed their bankruptcy petition, their accompanying schedules included an exemption of $20,000 equity in their homestead. The Pearls had, in other words, each claimed the $10,000 exemption of § 5206, and it was to this aggregation that appellant did, and continues to, object.
Since the federal Bankruptcy Code expressly defers to the state law of exemptions, the question thus presented is whether, as a matter of state law, the New York opt-out statute, adopting § 5206, allows aggregation. The court below, while finding for the debtor, first found a conflict between the state and federal enactments, and then engaged in an elegant, if not wholly persuasive, reconciliation of the state and federal statutes. Since we find that the New York legislature intended to allow each of two joint debtors to claim the benefit of the $10,000 exemption, consistent with the federal scheme, we have no need to attempt to resolve a possible federal-state conflict, nor do we think the attempt was called for below.
Section 5206 is the descendant of New York's Homestead Act of 1850. In re Feiss, 15 B.R. 825, 826 (Bkrtcy.E.D.N.Y.1981). In 1981, Bankruptcy Judge Hall of the Eastern District of New York conducted a thorough examination of the provision and concluded that it did not permit aggregation. Id. at 826-28.
When, in 1982, however, the New York State legislature passed the opt-out statute, it evidenced a new intention to allow aggregation under § 5206. It is interesting to note that in 1983 Judge Hall reconsidered his decision in In re Feiss in light of the
This purpose is made plain by the language of § 282 which states that "an individual debtor domiciled in this state may exempt" (emphasis added) property exempt pursuant to § 5206, as well as by the legislative history of the opt-out statute noted by Judge Hall. A memorandum in support of the proposed legislation prepared by one of its sponsors announced that the bill would make "modifications" in the New York law of exemptions, and as one exchange from the debate on the bill demonstrates, one such modification was to permit joint debtors to aggregate:
Report of Proceedings in New York Assembly, May 17, 1982, at 5364-65, cited in In re Webb, 29 B.R. at 283 n. 4.
The purpose of the New York legislation was clearly to provide joint debtors the opportunity to make a "fresh start" with a $20,000 homestead exemption. Accordingly, we affirm.