KATHLEEN P. DWYER, trustee, [Note 1] vs. JOSEPH J. CEMPELLIN & another. [Note 2]

ABRAMS, J. The United States District Court for the District of Massachusetts has certified two question to this court. See S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981). The questions concern the proper construction of the homestead statute, G.L.c. 188, s. 1 (1994 ed.).

We summarize the agreed facts. In October, 1981, husband and wife, Joseph J. Cempellin and Adele Cempellin (debtors), and John Cempellin acquired a residence as joint tenants, each holding an undivided one-third interest in the property. On November 13, 1981, the debtors recorded a declaration of homestead which they both had signed. In October 1985, John Cempellin conveyed his one-third interest to the debtors, and they took title to his interest as tenants in common. In 1994, the debtors filed a voluntary petition under Chapter 7 of the Bankruptcy Code. At the time of filing, the debtors

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held a one-third interest in the homestead as tenants in common and a two-thirds interest as joint tenants. The debtors claimed an exemption in their residence pursuant to the homestead statute, G.L.c. 188, s. 1 (1994 ed.). The exemption excluded virtually all of the debtors' equity in their home from the bankruptcy estate.

Kathleen P. Dwyer, the Chapter 7 trustee for the debtors, objected to the debtors' claim in 1994 of a $92,000 homestead exemption. The trustee argued that the exemption was invalid because the debtors had filed in 1981 a joint declaration of homestead when the version of G.L.c. 188, s. 1, which was in effect in 1981 unambiguously provided that "only one owner may acquire an estate of homestead in any such home for the benefit of his family". [Note 3] After a hearing, the Bankruptcy Court looked to the version of G.L.c. 188, s. 1, which was in effect in 1994, at the time the debtors filed their Chapter 7 petition. [Note 4]

The Bankruptcy Court judge determined that the statute was "internally inconsistent" because it used the words "owner or owners" in the first portion and a specific restriction to "only one owner" in a latter paragraph. Relying on

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Federal precedent, the Bankruptcy Court judge liberally construed the homestead exemption in favor of the debtors and concluded that, although Adele Cempellin's declaration of homestead was a "legal nullity," her husband's declaration was valid. The trustee appealed to the District Court for the District of Massachusetts, claiming the Bankruptcy Court judge erred by relying on a federal rule of statutory construction.

The District Court concluded that the Bankruptcy court judge should not have applied the Federal rule to liberally construe G.L.c. 188, s. 1, reasoning that Federal law requires that Massachusetts law is to determine the scope of a State-created exemption. See In re Miller, 113 B.R. 98, 101 (Bankr. D. Mass. 1990) (Bankruptcy Court must rule on an issue of State law as it believes the highest State court would rule, or, if the issue has not been addressed, as it predicts the highest court would rule). The District Court judge noted the lack of guidance in Massachusetts cases [Note 5] and determined that it was unable to make an informed prediction of how we would rule. Thus, pursuant to S.J.C. Rule 1:03, the District Court certified to this court the following two questions of State law:

1. Should the validity of a purported declaration of homestead under G.L.c. 188, s.1, recorded on November 13, 1981, be determined under the version of G.L.c. 188, s. 1, in effect at the date of recording, or under the version of G.L.c. 188, s. 1 in effect on August 22, 1994, the date on which the declarants' Chapter 7 bankruptcy petition was filed?

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2. Should a purported joint declaration of homestead by husband and wife, recorded on November 13, 1981, be deemed invalid because of the requirement under G.L.c. 188, s. 1, "that only one owner may acquire an estate in any such home for the benefit of is family," and if it is, is it invalid as to both filers?

The parties now agree correctly that the validity of the debtors' homestead declaration must be resolved under the version of G.L.c. 188, s. 1, as amended through St. 1979, c. 756, s. 1, in effect when the debtors recorded their declaration on November 13, 1981. See G.L.c. 188, s. 10 (194 ed.) ("All existing estates of homestead which have been acquired under any law heretofore in force shall continue to be held and enjoyed notwithstanding the repeal of such law"). See also Dulanty v. Pynchon, 6 Allen 510 (1863). The debtors further acknowledge that if their declaration was invalid under the law in effect when recorded, no subsequent amendments can validate it. Accordingly we shall only decide the issue posed by the second certified question: whether a joint declaration of husband and wife was invalid under the 1979 version of the homestead statute. [Note 6]

Although we have never addressed the appropriate standard for construing the homestead exemption, the overwhelming weight of authority in other jurisdiction is that homestead exemptions should be liberally construed in favor od debtors. See, e.g., First Ala. Bank v. Renfro, 452 So. 2d 464, 468 (Ala. 1984); Matter of Bly, 456 N.W.2d 195, 199 (Iowa 1990); In re Martin, 875 P.2d 417, 422 (Okla. 1994).

Homestead laws are based on a public policy which recognizes the value of securing to householders a home for the family regardless of the householder's financial condition. "The preservation of the home is of paramount importance because there the family may be sheltered and preserved." First Ala. Bank, supra at 468. "Public policy dictates that exemption laws, such as homestead provisions, should be liberally construed to comport with their beneficent spirit of protecting the family home." In re Martin, supra at 422.

The obvious legislative purpose of G.L.c. 188, s. 1, is to protect the home from the claims of creditors for the benefit

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of the homestead declarant and his or her family. We conclude that, in light of public policy and the purpose of the statute, the State homestead exemption should be construed liberally in favor of the debtors. [Note 7]

The 1979 version of G.L.c. 188 s. 1, is internally consistent and unambiguously stipulates that only one owner may acquire an estate of homestead. From the language we infer that, if more than one owner claims exemption in the same residence, only the first to record a valid declaration of homestead would receive homestead protection. Any subsequent recording would be entirely ineffective without a release of the first homestead claim. However, nowhere does the statute state that a declaration of homestead signed by two persons is invalid.

Indeed, the debtors' declaration of homestead fully complied with the express statutory requirements for acquiring a valid estate of homestead when it was recorded in 1981. See G.L.c. 188, s.2 [Note 8]. The document adequately identified the property at issue and contained a written declaration of intent to hold the property as a homestead. The document was signed and sealed, acknowledged, and recorded in the

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proper registry of deeds. The declaration of homestead confirms that Joseph Cempellin complied with each of these requirements, and by signing after her husband, Adele Cempellin complied with each of these requirements. Their declaration would be undisputedly valid if only one of them had signed it. The only aberration is that husband and wife signed the same document.

the homestead statute does not state that a second signature on the declaration renders the homestead claim invalid. In construing the homestead exemption, we think that we should apply the rule of liberal construction. We concluded that the debtors' declaration of homestead is valid under the 1979 version of G.L.c. 188, s. 1, in effect in 1981, but only as to the person whose signature comes first, in this case, Joseph Cempellin. As the second declarant, Adele Cempellin could not acquire the exemption without a release of the first recorded declaration, and her signature is simply a legal nullity.

In sum, we answer the certified question as follows:

1. A joint declaration of homestead by husband and wife, recorded on November 13, 1981, is valid, but only as to the declarant whose signature appears first.

End Of Decision