Michael Anthony Hudson and Kelly Nicole Hudson

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEBRASKA

In the Matter of: ) Case No: BK 23-80946

)

MICHAEL HUDSON and KELLY ) Chapter 13

HUDSON, )

)

Debtors. )

)

Order Granting Objection to Exemption

This matter is before the court on the Chapter 13 Trustee’s objection to claim of

exemption and the response by the debtors (Doc. #14; Doc. #16). A hearing was held

on January 22, 2024. Jessie C. Polson appeared for the debtors and Thomas P.

Kenney appeared on behalf of the Chapter 13 trustee. Erin McCartney, the Chapter

13 trustee also appeared.

The Chapter 13 trustee objected to the homestead exemption claimed by the debtors

Michael and Kelly Hudson. Each debtor claimed a $60,000 homestead exemption in

their family home for a total of $120,000 in a single parcel of property. Because a

married couple can only collectively claim a single exemption in property and

because the exemption is limited to $60,000, the objection is sustained.1

The debtors assert as a result of LB 964, they can each separately claim a $60,000

homestead exemption in one parcel of property. LB 964 was signed into law in 2014

and amended § 40-102 of Nebraska’s homestead act. Section 40-102 delineates

“which property may be selected as the homestead” and “defines the persons who

are entitled to make the selection.” Landon v. Pettijohn, 438 N.W.2d 757, 760 (Neb.

1989). While LB 964 clearly expanded the persons entitled to claim the exemption

to include individuals, the issue is whether it allows a married couple to separately

claim two exemptions in one parcel of property. LB 964 revised § 40-102 as follows:

(1) If the claimant is married, the homestead may be selected from the

separate property of the husband claimant or, with the consent of the wife

from her separate property. claimant's spouse, from the separate property of

the claimant’s spouse.

1 This decision was reviewed by the other bankruptcy judge in this district, the Honorable

Thomas L. Saladino, who concurs in the result.

(2) When If the claimant is not married, but is the head of a family within

the meaning of section 40–115 or is age sixty-five or older, the homestead

may be selected from any of his or her property.

2014 Neb. Laws LB 964. The debtors assert the now amended statute protects an

individual claimant, instead of a family or a head of a family. They assert each

individual claimant can therefore separately claim the exemption in one parcel of

property. But to understand § 40-102, and the effect of LB 964, one must

understand homesteads in Nebraska and the evolution of Nebraska’s homestead

act.

“[T]he purpose of the Legislature in enacting the homestead statutes was to protect

the debtor and the debtor’s family residing in a home from the forced sale of the

home on execution or attachment.” Chambers v. Bringenberg, 963 N.W.2d 37, 54

(Neb. 2021). A “homestead” itself is a parcel of property.

In its inception, a homestead is a parcel of land on which the family resides,

and which is to them a home. It is constituted by the two acts of selection

and residence, in compliance with the terms of the law conferring it. When

these things exist bona fide, the essential elements of the homestead right

exist, and of which the persons entitled to it cannot be divested by acts or

inferences beyond their volition.

Gallagher v. Smiley, 44 N.W. 187, 189 (Neb. 1889). Once a homestead is acquired,

the land itself becomes “imbued” with the character of a homestead. Berggren v.

Bliss, 241 N.W. 544, 545 (Neb. 1932) (holding the fact the husband conveyed land to

his wife “does not constitute an abandonment of the homestead character with

which the land was imbued.”).

Selection of the homestead is through Nebraska’s homestead act. The framework

for the current homestead act dates to 1879. The act, even in its present form, does

not define a “homestead”. Even in the first homestead act in territorial Nebraska:

There was no attempt to define “homestead.” The word was used in its

general acceptation––the home of the family, the common–law castle of the

citizen. The question of value did not enter into its description. The poor and

the rich were treated alike. No one was to be deprived of his home.

Meisner v. Hill, 138 N.W. 583, 584 (Neb. 1912).

As indicated in Meisner, the first homestead act in territorial Nebraska did not

contain a dollar limitation. Id. at 585. The dollar limitation was added in 1875. Id.

The 1879 act retained a maximum value of the homestead, which was stated in the

first section of the act:

A homestead not exceeding in value $2,000, consisting of the dwelling house

in which the claimant resides, its appurtenances, and the land on which the

same is situated … shall be exempt from judgment liens and from execution

or forced sale, except as in this chapter provided.

Neb. Comp. Stat. c. 36 § 1 (2d ed. 1881).

The inclusion of a dollar limit did not change the nature of a homestead. Meisner,

138 N.W. at 585 (“This section does not attempt to define what a homestead shall

be. Its object is to continue the exemption from the claims of creditors, and limit

that exemption.”). In Meisner the Nebraska Supreme Court asked:

What is a “homestead”? Is it the present worth of the exemption which the

statute allows against the claims of creditors, or is it the family home?

Section 6 of the present Homestead Law (Comp. St. 1911, c. 36) requires a

creditor when he seeks to subject a homestead to the payment of his claim to

take an oath “that the value of the homestead exceeds the amount of the

homestead exemption.” This is a legislative declaration that the homestead is

something more than, and different from, the $2,000 exemption against the

claims of creditors. This distinction plainly runs through all of our

legislation. It is emphatically presented in substantially the same words in

sections 8 and 11 of the act.

Id. at 584 (emphasis added); see also 40 C.J.S. Homesteads § 1 (“As used in the

various statutes relating to homestead exemptions, the term ‘homestead’ generally

means not only the property occupied as a home but also the right to have it

exempted from levy and forced sale.”).

In the 1879 act, to obtain the protections a homestead offered, the homestead had to

be claimed. Only the “head of a family” could claim it.

When an execution for the enforcement of a judgment obtained in a case not

within the classes enumerated in section 3, is levied upon the lands or

tenements of a head of a family, such head of a family may notify the

officer at the time of making the levy of what he regards as his homestead,

with a description thereof, within the limits above prescribed, and the

remainder shall be subject to such levy, except as otherwise provided in this

chapter.

Neb. Comp. Stat. c. 36 § 5 (2d ed. 1881).

Under the 1879 act, the head of a family was “The husband, when the claimant is a

married person.” § 15 (emphasis added). A married woman was not statutorily a

head of the family and could not claim the exemption. A woman could claim the

exemption as head of the family only if she was not married. Id.

While our statute does designate the husband, when the parties are married,

as the head of the family, it does not necessarily follow that he is thereby

given exclusive dominion and control thereover, but it is evidently intended

merely that, in case an execution is levied on such homestead, such head of a

family may take the steps designated in section 5 to protect the same from

forced sale.

Klamp v. Klamp, 79 N.W. 735, 737 (Neb. 1899); see also 40 Am. Jur. 2d Homestead

§ 16 (“The person who is entitled to set up the homestead right within the

homestead exemption is often described as the ’head’ of a family or household.

Under such provisions, if the claimant is not shown to be the head of a family, a

claim of homestead is not sustainable.”).

The 1879 act was a step backwards for married women in the exemption-claiming

process. Earlier acts allowed either spouse to claim the homestead if the claimant

owned the property.

In 1866, provision was made for the selection of a homestead ‘by the owner’

of the land.

In 1871, the Legislature provided that a married woman had ‘separate

property’ rights in real and personal property. As amended, this act is now

section 42–201, R.S.1943, and following sections. By act of the Legislature

approved February 25, 1875, the Legislature repealed section 525 of the

Code of Civil Procedure and enacted a new act whereby the words ‘to be

selected by the owner thereof’ were omitted, and providing that on

application ‘of the debtor, or his wife,’ the homestead should be set off to the

debtor.

In 1877, the Legislature passed an act to exempt homesteads from judicial

sale. This act provided that the homestead ‘whether owned by the husband

or wife’ was exempt, and that the ‘owner, or the husband or wife’ could select

it. It contained additional references to the ‘husband or wife.’

By the act of 1879, the acts of 1875 and 1877 were repealed.

Edgerton v. Hamilton Cnty., 36 N.W.2d 258, 260–61 (Neb. 1949) (emphasis added)

(citations omitted).

Because the 1879 act only allowed the husband to claim the homestead, a

mechanism was required if only the wife owned the property. The mechanism is

now part of § 40-102. In 1879 the applicable section provided:

If the claimant be married the homestead may be selected from the separate

property of the husband, or with the consent of the wife from her separate

property. When the claimant is not married but is the head of a family,

within the meaning of section fifteen, the homestead may be selected from

any of his or her property.

Neb. Comp. Stat. c. 36 § 2 (2d ed. 1881). The purpose of the section was “clear”. The

family home was protected regardless of which spouse owned it or how it was titled.

It seems clear from a review of these previous acts that by the use of the

language here involved the Legislature intended to make certain that the

homestead could be selected, as it said, from the separate property of the

husband or, with her consent, from the separate property of the wife in the

sense of ownership in either the one or the other and not in the sense of the

character of the title by which the ownership was acquired.

Edgerton, 36 N.W.2d at 261. Secondarily, consent protected the wife from the

husband exerting “dominion and control” over the homestead to the detriment of

the wife. See, e.g., Klamp, 79 N.W. at 737 (holding husband could not in a divorce

proceeding claim a homestead for himself from the separate property of the wife to

“drive and exclude her from it.”).

Nebraska’s homestead act was amended twice in the last 15 years. In 2010 it was

amended to allow not just families, but also individuals over age 65 to claim a

homestead. See 2010 Neb. Laws LB 907. Later the legislature deemed it unfair all

individuals could not claim the exemption. To correct this unfairness, § 40-102 was

amended again in 2014, through LB 964, to allow any individual to claim the

homestead regardless of age or head of a family status.

LB 964 was introduced by Senator Lydia Brasch, who did so at the request of

bankruptcy attorneys. Despite the long history of protecting only a family, the

senator testified she found it “difficult to understand why a never-married person

does not qualify for this exemption.” See Transcript of Hearing on LB 964 before the

Judiciary Comm., 103d Leg., 2d Sess. (Feb. 7, 2014), at 30 (Fil. No. 26). She further

testified:

[LB 964] allows for equal protection under the law. Present homestead

exemption law in Nebraska rightly favors individuals 65 and older and those

either married or once married. Single people are singled out. Truly, they

work just as hard as those who qualify for the exemption. They have dreams

of owning and keeping a home, just as those who currently qualify. They

may make poor financial decisions similar to those who are married, once

married, or over 65. But they should not be treated differently because of

their age or marital status. They should be equally afforded the protection

that bankruptcy allows.

Id.

When introduced, LB 964 removed the reference to head of a family only from § 40-

102. The definition of head of a family and references to it in other parts of the act

were retained. This oversight was cleaned up. Subsequent amendments to LB 964

removed all references to “head of a family” from the act. See Neb. Legis. J., 2014

Reg. Sess. No. 52, at 1281.

Regarding § 40-102’s change from “husband” and “wife” to “claimant” and

“claimant’s spouse”, Senator Brasch testified the original language was patriarchal.

She testified this change in LB964 simply “cleans up the language in section 40-

102(1) that has been the same since the law was initially created in 1879 and it

makes the language gender neutral.” Transcript of Floor Debate, 103d Legis., 2d

Session 66 (March 24, 2014).

Conclusions of Law

The debtors concede the homestead act allowed a married couple only one

exemption before LB 964 was signed into law. But they assert LB 964’s amendment

of § 40-102, which removed the “head of a family” language, shifted the focus and

protections to an individual “claimant”. They reason it now allows each spouse to

claim a separate homestead in a single parcel of property. To iterate, LB 964

modified both sentences in § 40-102:

(1) If the claimant is married, the homestead may be selected from the

separate property of the husband claimant or, with the consent of the wife

from her separate property. claimant's spouse, from the separate property of

the claimant’s spouse.

(2) When If the claimant is not married, but is the head of a family within

the meaning of section 40–115 or is age sixty-five or older, the homestead

may be selected from any of his or her property.

2014 Neb. Laws LB 964.

LB 964 did not go as far as the debtor contends. The head of a family requirement

was only in subsection (2) of § 40-102, which subsection never applied to a married

couple. Removal of the head of a family from subsection (2) did not change the law

applicable to married couples who are, and were, governed only by subsection (1).

LB 964’s changes to subsection (1) made the statute gender neutral. In making the

statute gender neutral, the husband no longer is the only one who can claim the

homestead. The amendment makes either spouse “entitled to make the selection.”

Landon, 438 N.W.2d 757 at 760.

But LB 964 did not change the fact the claiming spouse makes the selection for the

married couple. This is apparent for several reasons. Section 40-102 continues to

differentiate between married couples and unmarried individuals. It retains the

consent language. The balance of the act remains unchanged and continues to

differentiate between a homestead and the value of the exemption. The homestead

continues to be in property, not in an “interest” in property. Finally, and perhaps

most importantly, the LB 964 did not change long-standing Nebraska law holding

one parcel of property cannot sustain two homesteads.

Section 40-102 continues to differentiate between an individual claimant and a

married claimant. The debtors’ construction impermissibly ignores the

differentiation. “In construing a statute, a court must determine and give effect to

the purpose and intent of the Legislature as ascertained from the entire language of

the statute considered in its plain, ordinary, and popular sense.” Sanitary & Imp.

Dist. No. 1 of Fillmore Cnty., Neb. v. Nebraska Pub. Power Dist., 573 N.W.2d 460,

465 (Neb. 1998). The court must “attempt to give effect to all of its parts, and if it

can be avoided, no word, clause, or sentence will be rejected as superfluous or

meaningless; it is not within the province of a court to read anything plain, direct,

and unambiguous out of a statute.” Id. If the exemption is a personal exemption for

all individuals, why does the statute still differentiate between a claimant who is

married and a claimant who is an individual? If both can claim the exemption in

one parcel of property, marital status is irrelevant. If both can claim the exemption

in one parcel, only subsection (2) is necessary.

The statute also retains the “consent” and “separate property” language. Under the

debtors’ construction, consent becomes irrelevant. If both spouses can each

separately claim two exemptions in one parcel of property, there is no need to make

a claim from the spouse’s separate property. The spouse can claim the exemption on

his or her own. The consent language only makes sense if the homestead remains in

a singular family home, which might still be owned by one of the two spouses.

The homestead act still maintains separate references to a homestead and the

homestead exemption. The claimant does not claim the exemption. The claimant

selects the homestead. See Neb. Rev. Stat. § 40-102. The homestead then obtains the

benefit of the exempt status. After the homestead is selected, a court must

“determine whether or not such land is subject to the homestead exemption”. See

§ 40-108 (emphasis added). If the land qualifies as a homestead, the court must

determine the extent and value of the homestead and compare it to the value of the

homestead exemption. The value of the homestead exemption is limited to $60,000

under the first section of the act, which section, aside from the exemption amount,

remains strikingly similar to the section one of original 1879 act:

A homestead not exceeding sixty thousand dollars in value shall consist of

the dwelling house in which the claimant resides, its appurtenances, and the

land on which the same is situated, not exceeding one hundred and sixty

acres of land, to be selected by the owner, and not in any incorporated city or

village, or, at the option of the claimant, a quantity of contiguous land not

exceeding two lots within any incorporated city or village, and shall be

exempt from judgment liens and from execution or forced sale, except as

provided in sections 40-101 to 40-116.

§ 40-101 (emphasis added).

In addition to §§ 40-101 and -108 discussed above, the bulk of the homestead act

remains unchanged after LB 964. As the Nebraska Supreme Court recognized in

Meisner in 1912, the bulk of the act is a “legislative declaration that the homestead

is something more than, and different from, the $2,000 exemption against the

claims of creditors.” Meisner, 138 N.W. at 585. The court recognizes the distinction

to this day. See Chambers, 963 N.W.2d at 55 (citing Meisner holding the homestead

“is something more than the present worth of the exemption the homestead statutes

allow.”). The bulk of the act continues to read as an exemption of a single parcel of

property, not as a personal exemption in an interest in property. See, e.g., Neb. Rev.

Stat. § 40-105 (allowing the claimant to “apply to the district court in the county in

which the homestead is situated for an order to determine whether or not such lands

or tenements, or any part thereof, are exempt as a homestead”); § 40-106 (requiring

the court to determine the “value of the homestead”); § 40-116 (“If the homestead be

conveyed by the claimant, or sold for the satisfaction of any lien...”).

The debtors’ argument requires the court to read § 40-102 as an exemption not in

the homestead, but in the claimant’s interest in the homestead. The Legislature

knew how to use the term “interest”, which it used in § 40-104 to refer to a singular

homestead of a married person:

[T]he homestead of a married person cannot be conveyed or encumbered

unless the instrument by which it is conveyed or encumbered is executed

and acknowledged by both spouses. The interest of either or both spouses may

be conveyed or encumbered by a conservator[.]

§ 40-104. If the Legislature intended each of a married couple to claim a homestead

exemption in their own one-half interest in marital property, it knew how to do so.

Most importantly, LB 964 did not change well-established and longstanding

caselaw holding a parcel of property cannot sustain two homesteads, which change

must have occurred to sustain the debtors’ two exemptions.

It is true that a homestead cannot be occupied jointly by two families so that

both will have homesteads therein. Also, it is true that if a tenant in common

claims a homestead, he must occupy the property to the exclusion of his

cotenants.

Luenenborg v. Luenenborg, 259 N.W. 649, 652 (Neb. 1935); see also Berggren, 241

N.W. at 545 (“It is elementary that: ’A person cannot at the same time have two

homesteads, nor can he have two places, either of which at his election he may

claim as his homestead.’) (citation omitted). Stacking two $60,000 exemptions is

also not in accord with the caselaw history of homesteads. “[W]hen legislation is

enacted which makes related preexisting law applicable thereto, it is presumed that

the Legislature acted with full knowledge of the preexisting law and judicial

decisions of the Supreme Court construing and applying it.” State v. Urbano, 589

N.W.2d 144, 157 (Neb. 1999).

The Nebraska Supreme Court affirmed the nature of a homestead in 1989:

Analogizing to the rule that “[a] person cannot have two homesteads, nor can

he have two places either of which at his election he may claim as a

homestead,” Travelers Indemnity Co. v. Heim, 218 Neb. 326, 330, 352

N.W.2d 921, 924 (1984), we note that two separate homesteads cannot exist

in the same parcel of land.

Landon, 438 N.W.2d at 760.

Although one parcel of property cannot support two homesteads, some confusion

appears to have been caused in the cases where the Nebraska Supreme Court held

a co-tenant is not prohibited from claiming a homestead exemption.

We have held under this act that a homestead may be claimed in land held

in joint tenancy, specifically stating that the act did not specify or define the

character of the ownership or interest in lands which is necessary to support

the homestead right, and that any estate or interest was sufficient which

gave a right of occupancy or possession accompanied by requisite occupancy.

Edgerton, 36 N.W.2d at 260. The confusion occurred in 1997 when the bankruptcy

court in Matter of Roush followed Edgerton, allowing a co-tenant to claim a

homestead exemption in property, but ignored Landon, blessing two homesteads in

one parcel of property.

The fact that single unmarried individuals with dependent children can, in

effect, invoke two homesteads with respect to the same real estate under

circumstances in which they could not assert dual homestead exemptions if

they were married to each other, is irrelevant. The legal issues in the cases

now before me would be the same if each of the debtors, Robert M. Roush

and Mary K. Fisher, were married to third parties, so that the real estate

was occupied by two families each comprised of a husband and a wife and

children. I have no doubt that under the existing law, as declared by the

Nebraska Supreme Court, each of the families would be entitled to claim the

homestead exemption.

Matter of Roush, 215 B.R. 592, 595 (Bankr. D. Neb. 1997).

The debtors argue they could file separate bankruptcy cases. And the court’s

opinion in Roush allows co-tenants to each claim a homestead in one parcel of

property. Therefore, the married couple could do the same. But Judge Saladino,

writing for the bankruptcy court in In re Uhrich subsequently recognized the

inconsistency between Roush and Landon.

The Court recognizes that the Honorable John C. Minahan in In re Roush,

215 B.R. 592, 594–95 (Bankr.D.Neb.1997), found that single, unmarried

individuals with dependent children can each claim a homestead exemption

in their respective interests in jointly owned property. While the underlying

facts in Roush are not entirely clear, it appears that each of the homestead

claimants had his or her own children and that there were two separate

families living in the jointly owned home. Since the present cases do not

involve two separate families, Roush is distinguishable and the Court will

leave for another day whether Roush can be reconciled with Nebraska

Supreme Court decisions such as Landon v. Pettijohn.

In re Uhrich, 355 B.R. 783, 790 n.2 (Bankr. D. Neb. 2006).

Despite the Roush court’s lack of doubt in 1997, the Nebraska Supreme Court to

this day continues to refer to “exclusive” occupancy regarding a homestead

exemption in property owned by tenants in common. See Chambers, 963 N.W.2d at

54–55 (“We have explained that any interest in real estate, either legal or equitable,

that gives a present right of occupancy or possession, followed by exclusive

occupancy, is sufficient to support a homestead right therein.”). It also has not

backed down from the long-standing proposition a parcel of property cannot sustain

two homesteads.

Based upon the foregoing, it does not matter whether the debtors filed their case as

a joint case or contemporaneous separate cases. In the case of a married couple,

only one homestead is available. To the extent Roush could be read to allow a

married couple two homesteads, it is overruled.2

IT IS ORDERED: The Chapter 13 trustee’s objection to exemptions is SUSTAINED.

Dated: February 7, 2024

BY THE COURT

/s/ Brian S. Kruse

Brian S. Kruse

Bankruptcy Judge

2 We will continue to leave to another day “whether Roush can be reconciled with Nebraska

Supreme Court decisions such as Landon v. Pettijohn” as it pertains to two co-tenants who

contemporaneously file bankruptcy.