Charles Benn, Jr. v. James S. Cole ( 2006 )


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  •                United States Bankruptcy Appellate Panel
    FOR THE EIGHTH CIRCUIT
    ________
    No. 04-6053EM
    ________
    In re:                                 *
    *
    Charles Benn, Jr.,                     *
    *
    Debtor.                       *
    *
    Charles Benn, Jr.,                     * Appeal from the United States
    * Bankruptcy Court for the
    Debtor - Appellant.           * Eastern District of Missouri
    *
    v.                      *
    *
    James S. Cole,                         *
    *
    Trustee - Appellee.           *
    ________
    No. 04-6054EM
    ________
    In re:                                 *
    *
    Steven Mohrhard and                    *
    Jennifer Mohrhard,                     *
    *
    Debtors.                      *
    *
    Steven Mohrhard and                    * Appeal from the United States
    Jennifer Mohrhard,                     * Bankruptcy Court for the
    * Eastern District of Missouri
    Debtors - Appellants.         *
    *
    v.                            *
    *
    James S. Cole,                             *
    *
    Trustee - Appellee.                  *
    ________
    Submitted: March 2, 2006
    Filed: April 6, 2006 (Corrected June 30, 2006)
    ________
    Before KRESSEL, Chief Judge, VENTERS, and MAHONEY, Bankruptcy Judges.
    ________
    MAHONEY, Bankruptcy Judge.
    These cases were consolidated for purposes of oral argument on appeal. The
    appeal in each case is from an order of the bankruptcy court filed September 24, 2004,
    overruling a claim of exemption to a federal and state tax refund and ordering turnover
    of the refund to the Chapter 7 Trustee. This matter was originally submitted after oral
    argument on February 8, 2005. The panel remanded the matter to the bankruptcy
    judge for particular findings. The findings have been made and the matter was
    reargued on March 2, 2006. For the reasons stated below, we reverse.
    STANDARD OF REVIEW
    The findings of fact are uncontested and no review thereof is sought by the
    parties. The matter before the court concerns a conclusion of law. Conclusions of law
    are reviewed de novo. Ardrey v. Blackwell (In re Ardrey), 
    316 B.R. 531
    , 532 (B.A.P.
    8th Cir. 2004). A bankruptcy court’s denial of a claim of exemption is a final,
    appealable order. 
    Id. 2 BACKGROUND
    Mr. Benn filed a petition under Chapter 7 on December 31, 2003. In his third
    amended schedules, he claimed an exemption in all possible 2003 tax refunds under
    Mo. Rev. Stat. § 513.427, 26 U.S.C. § 6402, and 31 U.S.C. § 3727. The trustee filed
    an objection to the claimed exemption. Prior to an order being entered concerning the
    claim of exemption, the debtor received a refund of the 2003 federal income tax
    withholdings in the amount of $1,502. He also received a refund of the 2003 state
    income tax withholding in the amount of $36. The attorney for the debtor is holding
    the refunds pending a final judgment. After the debtor received the refund checks, the
    Trustee filed a motion for turnover of the refunds to which the debtor objected.
    Steven Mohrhard and Jennifer Mohrhard filed a Chapter 7 petition on
    November 14, 2003. In their original schedules, the debtors claimed an $800
    exemption in their 2003 tax refunds, which were estimated in the total amount of
    $2,154. Thereafter, the Trustee filed a motion for turnover of the refunds. Prior to a
    hearing on the motion for turnover, the debtors received a refund of 2003 federal
    income tax withholdings in the amount of $8,091.60. They also received a refund of
    2003 state income tax withholdings in the amount of $1,080. The attorneys for the
    debtors are holding the original refunds pending a final judgment. After receiving the
    refund checks, the debtors filed an amended Schedule C claiming that all of the 2003
    tax refunds are exempt pursuant to Missouri statutes. The Trustee then filed an
    objection to exemptions.
    In each case, the bankruptcy judge found, based upon prior case law in the
    district, that a debtor’s anticipated tax refund is not exempt. The court therefore
    sustained the Trustee’s objection to exemptions and ordered turnover to the Trustee.
    3
    DISCUSSION
    Each of the debtors claimed that the federal and state tax refunds were exempt
    under Missouri law, relying upon a specific Missouri statute, Section 513.427.1 That
    statute permits debtors to exempt any property that is not subject to attachment and
    execution under Missouri or federal law. The Missouri legislature has specified which
    property may be seized and sold upon attachment and execution in Section 513.090.
    In addition, the Missouri legislature has defined in Section 521.240 other types of
    property which may be attached. Neither statute specifically mentions an anticipated
    state or federal tax refund as property which may be attached.
    The phrase “exempt from attachment and execution” is not defined in Missouri
    statutes. It is also apparently not defined in Missouri case law. However, Missouri
    practitioners have ample authority with regard to the meaning of the terms attachment
    and execution. As discussed in appellants’ consolidated reply brief, at 2-3, the
    meanings have been clearly defined in Missouri in various treatises and practice aids.
    See, e.g., 2 Mo. Practice Series, Methods of Practice: Litigation Guide § 23.2 (West
    4th ed. 2002) (“An ‘execution’ is the writ or process by which a judgment creditor is
    able to enforce the court’s judgment and reach the nonexempt assets of the judgment
    debtor.”); 7 C.J.S. Attachment § 1 (West 2004) (“Attachment is a remedy by which
    1
    513.427. Bankruptcy, exemptions allowed.
    Every person by or against whom an order is sought for relief under Title
    11, United States Code, shall be permitted to exempt from property of
    the estate any property that is exempt from attachment and execution
    under the law of the state of Missouri or under federal law, other than
    Title 11, United States Code, Section 522(d), and no such person is
    authorized to claim as exempt the property that is specified under Title
    11, United States Code, Section 522 (d).
    Mo. Rev. Stat. § 513.427.
    4
    the defendant’s property is secured and held to satisfy a debt that the plaintiff hopes
    to prove or the writ by which the purpose of the proceeding is accomplished.”). Pre-
    judgment attachments are in derogation of the common law. State ex rel. Froidl v.
    Tillman, 662 S.W.2. 907 (Mo. Ct. App. 1983). Prejudgment attachments are a
    creature of statute. 7 C.J.S. Attachment § 2 (West 2004). See also Mo. Rev. Stat. §
    521.010 et seq.
    Two bankruptcy decisions from the Eastern District of Missouri relied on a
    straightforward view of the terms “attachment and execution” in the statute. In re
    Sanders, 
    69 B.R. 569
    (Bankr. E.D. Mo. 1987) and In re Mitchell, 
    73 B.R. 93
    (Bankr.
    E.D. Mo. 1987). In Sanders, the court was required to determine whether a certain
    amount of pre-petition wages could be exempted pursuant to Section 513.427. The
    court ruled that the Missouri wage garnishment statute, when read in conjunction with
    Section 513.427 made certain pre-petition wages exempt under Missouri law. The
    Sanders court, when discussing Section 513.427, observed that “the ‘opt-out’ statute
    itself clearly implies that bankrupt and non-bankrupt debtors are to be treated alike in
    terms of the exemptions available to them.” 
    Sanders, 69 B.R. at 576
    . The Mitchell
    court quoted that language with 
    approval. 73 B.R. at 95
    .
    The Mitchell case dealt with whether an unliquidated pre-petition claim for
    personal injury was exempt under Section 513.427. Since there was not a specific
    statute dealing with exemption of personal injury claims, the debtors had claimed their
    interest in the cause of action for personal injury as exempt under the statutory
    language of Section 513.427. The court, when discussing the type of items of
    property which may be subject to attachment, stated the following:
    In a 1970 case the Missouri Court of Appeals cited an 1876
    Missouri Supreme Court case for the proposition that “‘The debt for
    which an attachment may issue must possess an actual character and not
    be merely possible, and dependent upon a contingency which may never
    happen.’” State, Government Employees Ins. Co. v. Lasky, 
    454 S.W.2d 5
          942, 950 (Mo. App. 1970); citing, Hearne, et al. v. Keath, et al., 
    63 Mo. 84
    , 89 (1876). The court in the Lasky case further noted that “by an
    unbroken line of decisions since that time our Courts have held that to
    be the subject of a garnishment the debt must be certain and not
    contingent.” 
    Lasky, 454 S.W.2d at 950
    .
    73 B.R. at 95.
    In this case, the tax refunds that the trustee argues are not exempt did not exist
    in fact on the petition dates. Both petition dates precede the end of the tax year. The
    refunds, if any, could not be determined by the Internal Revenue Service or anyone
    else on the petition date, because of income which could have been earned following
    the filing of the petition, or of deductions or credits for which the debtors/taxpayers
    may have been eligible following the petition date. Therefore, the “refunds” in
    question were contingent and not certain on the petition date. Under the Lasky
    analysis as discussed in Mitchell, such contingent interest could not be attached under
    Missouri law by any creditor.
    Section 513.427 was again discussed in Gaines v. Nelson (In re Gaines), 
    121 B.R. 1015
    (W.D. Mo. 1990). In Gaines, the debtors had argued that ERISA-qualified
    pension plans and individual retirement accounts were exempt under Section 513.427
    because they could not be attached or executed upon.
    The district court, sitting in an appellate capacity, wrote:
    It would seem that the same plain reading of the statute given §
    513.427 by the Sanders and Mitchell courts results in ERISA funds
    being covered by the state exemption statute. In other words, 1)
    Missouri has opted-out and has chosen to allow as exempt in bankruptcy
    “any property that is exempt from attachment and execution under . . .
    Missouri or . . . federal law”; 2) ERISA benefits are made exempt from
    6
    attachment and execution by Section 206(d) of ERISA; so therefore, 3)
    ERISA pension benefits are exempt in bankruptcy in 
    Missouri. 121 B.R. at 1020
    .
    The Gaines court then stated: “This Court holds that the debtors’ interest in
    their ERISA pension plans are exempt under Missouri’s state exemption statute
    (§ 513.427) if the statute has not been preempted by ERISA.” 
    Id. He then
    found that
    the statute had been preempted by ERISA and therefore the debtors could not use
    Section 513.427 to exempt the ERISA benefits.
    The Sanders, Mitchell, and Gaines cases indicate that those courts felt the
    statutory language was clear and should be applied as written. That reading of Section
    513.427 is consistent with what has now become known as “plain meaning doctrine”
    when analyzing and interpreting statutory language. The United States Supreme
    Court, in United States v. Ron Pair Enterprises, Inc., 
    489 U.S. 235
    , 241 (1989),
    requires such statutory analysis to begin with “the language of the statute itself.”
    Similarly, under Missouri non-bankruptcy case law, when considering the
    meaning of a statute, a court
    “is to ascertain the intent of the legislature from the language used, to
    give effect to that intent if possible, and to consider the words used in
    their plain and ordinary meaning.” Wolff Shoe Co. v. Dir. of Revenue,
    
    762 S.W.2d 29
    , 31 (Mo. banc 1988) [sic]. There is no need to construe
    legislative provisions when the language is clear and unambiguous. 
    Id. “In determining
    whether the language is clear and unambiguous, the
    standard is whether the statute's terms are plain and clear to one of
    ordinary intelligence.” 
    Id. The plain
    and ordinary meaning of statutory
    language not expressly defined by statute is typically found in the
    dictionary. Westrope & Assocs. v. Dir. of Revenue, 
    57 S.W.3d 880
    , 883
    (Mo. [Ct.] App. 2001). “Only when the language is ambiguous or if its
    plain meaning would lead to an illogical result will the court look past
    7
    the plain and ordinary meaning of a statute.” Lonergan v. May, 
    53 S.W.3d 122
    , 126 (Mo. [Ct.] App. 2001).
    Polzin v. Bank of Holden, 
    153 S.W.3d 353
    , 357 (Mo. Ct. App. 2005). Accord
    Southwestern Bell Yellow Pages, Inc. v. Director of Revenue, 
    94 S.W.3d 388
    , 390
    (Mo. 2002) (en banc) (“A court is to consider statutory terms not defined by the
    legislature in ‘their plain or ordinary and usual sense.’ . . . If some ambiguity persists
    in the statute after consulting a dictionary, courts derive meaning from the intent of
    the legislature. Courts cannot add words to a statute under the auspice of statutory
    construction.” (internal citations omitted)). See also State ex rel. Nixon v. Boone, 
    927 S.W.2d 892
    , 896 (Mo. Ct. App. 1996) (“Judicial construction of a statute should
    effectuate the plain meaning of statutes and not surmise what the legislature may have
    intended to say or inadvertently failed to say. If the provisions of a statute are express
    and not ambiguous, the court is not at liberty to construe the language in accordance
    with the intentions of supporters or opponents of the legislation because the court
    functions to enforce the law as it is written.” (internal citations omitted)).
    The question of whether a tax refund is the type of property which is exempt
    from “attachment and execution” within the meaning of Section 513.427 was first
    discussed in the case of Davis v. Robinson (In re Robinson), 
    152 B.R. 956
    (Bankr.
    E.D. Mo. 1993). The debtors in that case relied on the language of 26 U.S.C. § 6402,
    a provision of the Internal Revenue Code which restricts garnishments or interception
    of tax refunds in the possession of the IRS.
    The debtors in the cases before this court similarly relied upon the most recent
    version of that statute. Section 6402 was summarized by the Robinson court as
    follows:
    Section 6402 of the Internal Revenue Code restricts garnishment
    or interception of tax refunds in the possession of the IRS. Subparagraph
    (a) of this section states the general rule that the IRS will refund the
    8
    balance of any overpayment to a taxpayer subject only to reduction in the
    amount of the refund for other outstanding tax liabilities and for payment
    of selected obligations described in subparagraph (c) and (d) of § 6402.
    . . . Subparagraph (d) authorizes the IRS upon notification from any
    federal agency that the taxpayer owes a legally enforceable debt to that
    agency to reduce the amount of the tax refund and remit payment to the
    appropriate federal agency . . . . Pursuant to § 6402, the IRS may pay a
    taxpayer’s refund only to the taxpayer and to those entities described in
    § 6402; all other attempts to garnish a tax refund are ineffective against
    the 
    government. 152 B.R. at 958
    (internal citations omitted).
    The statutory authorization permitting the IRS to act as described in the
    Robinson case remains the same in today’s version of Section 6402.
    The debtors in Robinson filed their bankruptcy petition after the end of the tax
    year. Therefore, at the time of the petition, all income, deductions and credits which
    could have accrued to the benefit or the detriment of the debtors with regard to the
    potential refund had occurred. The IRS actually held funds in the form of a refund
    obligation.
    The Robinson court acknowledged that most creditors may not attach or execute
    upon a tax refund in the possession of the IRS, but found that because certain
    governmental creditors may “reach” the refund, the refund actually was equivalent to
    property subject to attachment and 
    execution. 152 B.R. at 959
    .
    In contrast to the Robinson case, in these cases there was no refund available
    on the petition date and there was no means by which any creditor, including the
    federal or state governments, could have obtained “access” to, “reached,” or set off
    against the contingent interest of the debtors.
    9
    Section 513.427 clearly states that property is exempt if it is “exempt from
    attachment and execution under the law of the state of Missouri or under federal law.”
    As a matter of federal law, tax refunds are not subject to attachment, execution or
    garnishment in the hands of the Internal Revenue Service. See, 26 U.S.C. § 6402 and
    
    Robinson, supra, at 958
    . In addition, the United States, the states and their political
    subdivisions and agencies cannot be summoned as garnishees in any action, without
    statutory authorization or consent or waiver. See, 6 Am. Jur. 2d, Attachment and
    Garnishment § 78, and the cases cited therein. Congress has provided a specific
    example of an authorization of garnishment of the federal government in 42 U.S.C.
    § 659. That statute permits garnishment of the wages due from the government to a
    federal employee, but only to enforce the legal obligations of the employee to pay
    child support or alimony.
    Although the Robinson court determined that tax refunds could not be attached
    or executed upon pursuant to Section 6402 of the Internal Revenue Code, it found that
    the debtors could not exempt the tax refund because Section 6402 permitted the
    federal government and the state government, in limited circumstances, to reach the
    tax refund.
    Section 6402 of the Internal Revenue Code does not authorize attachment,
    execution, or garnishment of the federal government. Instead, it provides an exception
    to the general rule that refunds will be paid by the Internal Revenue Service directly
    to the taxpayer. It permits, by statute, an “off set” of past due child support against
    tax overpayments. Section 6402(c). In addition, it permits the Internal Revenue
    Service, upon receiving appropriate notice from a federal agency that a taxpayer owes
    a past-due legally enforceable debt other than support, to use the taxpayer’s refund to
    pay such debt. Section 6402(d). Finally, Section 6402(e) authorizes the Internal
    Revenue Service, upon receiving notice from any state that a taxpayer owes past-due
    legally enforceable state income tax obligations, to pay the amount of the refund over
    to the state to the extent of the amount of the past-due tax obligation.
    10
    The authorization granted in Section 6402 to the Internal Revenue Service is
    statutory. The procedure for implementing the statute, whether by a state or a federal
    agency, does not involve “attachment and execution.” In contrast to 42 U.S.C. §
    659(a) referred to above, which permits the federal government to be garnished for
    employee wages for child support or alimony, there is no similar federal statute which
    permits garnishment, attachment or execution upon the federal government when it
    holds tax refunds, anticipated or liquidated.
    In addition to the requirement that courts give a plain meaning to statutory
    language, courts construing the Missouri exemption statutes must consider that such
    statutes were enacted for the relief of the debtor, and more particularly for the family,
    and should be liberally construed. Murray v. Zuke, 
    408 F.2d 483
    , 487 (8th Cir. 1969).
    Following the plain meaning doctrine, and giving liberal construction to the
    Missouri exemption statutes, we find the intent of the legislature, when enacting
    Section 513.427, was to permit debtors to exempt any property that was not subject
    to “attachment and execution” as those terms are commonly used. Because tax
    refunds are not subject to “attachment and execution,” under Missouri or federal law,
    tax refunds are exempt under the Missouri statutory provision, Section 513.427.
    CONCLUSION
    The order of the bankruptcy court disallowing the exemption of the tax refunds
    in each of the argued cases is reversed, and the matters are remanded to the
    bankruptcy court for further proceedings consistent with this opinion.
    11
    Venters, J. Concurring.
    I write in concurrence for the sole purpose of underscoring my belief that tax
    refunds are exempt because they are immune from attachment and execution under
    federal common law.
    A great deal of attention in this case has been directed to a consideration of
    whether the tax refunds in the hands of the I.R.S. are exempt under Missouri law,
    raising such difficult questions as, “What is the meaning of attachment and
    execution?” and “Does defining attachment and execution to exclude non-traditional
    forms of attaching assets render § 513.427 unconstitutional?” But this focus is
    misplaced and unnecessarily complicated.
    Section 513.427, standing alone, does not create any new exemptions. It simply
    states the obvious – that bankrupt debtors in Missouri may claim as exempt any
    property that other, non-bankrupt debtors may claim as exempt, and that is “any
    property that is exempt from attachment and execution under the law of the state of
    Missouri or under federal law.” These exemptions are not limited to property that is
    expressly or specifically exempted by statute, as the dissent seems to suggest, nor are
    they limited to property exempt under Missouri law.
    At the risk of oversimplification, under federal law, creditors cannot attach or
    execute on a debtor’s property in the hands of the federal government without a
    specific waiver of sovereign immunity. Neither the federal government nor any of its
    agencies (including the Department of the Treasury and the Internal Revenue Service)
    12
    have waived sovereign immunity to allow the attachment and execution of tax
    refunds owed to taxpayers. The procedure for intra- or inter-governmental set-off
    does not constitute “attachment or execution,” regardless of whether § 513.427 is
    interpreted broadly or narrowly. Therefore, undistributed tax refunds are exempt.
    Finally, this analysis does not turn on whether the tax refunds are liquidated or
    unliquidated. Although the tax refunds at issue here were unliquidated, inasmuch as
    the cases were filed before the end of the tax year, I do not believe that it can be
    logically argued that liquidation of the tax refund is dispositive or even relevant. Tax
    refunds that have not been paid to the taxpayer/debtor are exempt from attachment and
    execution under federal law, regardless of when the bankruptcy case is filed.
    KRESSEL, Chief Judge, dissenting.
    Because I disagree with the majority’s premise that “not being subject to
    attachment and execution” is the equivalent of “exempt” or exempt from attachment
    and execution,” I dissent.
    Before October 1, 1979, the concepts of exempt property and property not
    subject to attachment were explicitly distinct. Under § 70(a) of the Bankruptcy Act
    of 1898 (“Act”), the trustee was “vested by operation of law with the title of the
    bankrupt . . . except insofar as it is to property which is held to be exempt . . . .” 11
    U.S.C. § 110(a) (repealed). In other words, exempt property never came into what
    we now call the estate. The bankrupt could claim property as exempt under § 6 of
    the Act, which provided, inter alia, the “Act shall not affect the allowance to
    bankrupts of the exemptions which are prescribed by the laws of the United States or
    by the State laws in force at the time of the filing of the petition in the State wherein
    they have had their domicile . . . .” 11 U.S.C. § 24 (repealed).
    In contrast with the concept of exempt property under the Act, the trustee was
    vested by operation of law with title to all of the bankrupt’s other property, which
    included, inter alia, “property, including rights of action, which prior to the filing of
    the petition [the bankrupt] could by any means have transferred or which might have
    been levied upon and sold under judicial process against him, or otherwise seized,
    impounded, or sequestered . . . .” 11 U.S.C. § 110(a)(5) (repealed). In other words,
    like exempt property, rights of action not subject to levy did not become property of
    the estate, but for a different reason. If the lack of ability to be levied on resulted in
    property being exempt, then the latter provision would have been superfluous. See
    TRW, Inc. v. Andrews, 
    524 U.S. 19
    , 31 (2001) (quoting Montclair v. Ramsdell, 
    107 U.S. 147
    , 152 (1883) “It is our duty ‘to give effect, if possible to every clause and
    word of a statute.’”)
    A debtor’s right to a tax refund is nothing more than a right of action and the
    United States Supreme Court held that an “income tax refund [was] ‘sufficiently
    rooted in the pre-bankruptcy past’ to be defined as ‘property’ under § 70a(5).”
    Kokoszka v. Belford, 
    417 U.S. 642
    , 648 (1974) (quoting Segal v. Rochelle, 
    382 U.S. 375
    , 380 (1966)). Thus, the Supreme Court made clear that a distinction must be
    made between exempt property and property of the estate which was capable of being
    “levied upon and sold under judicial process . . . .” under 11 U.S.C. § 110(a)(5)
    (repealed). Current Department of the Treasury regulations support the premise that
    a properly executed income tax return constitutes a claim for a refund. See, 26 C.F.R.
    14
    § 301.6402-3(a)(5) (1994) (The Code of Federal Regulations provides that “[a]
    properly executed individual . . . original income tax return or an amended return . .
    . shall constitute a claim for refund or credit within the meaning of section 6402 and
    section 6511 for the amount of the overpayment disclosed by such return (or amended
    return).”).
    The Bankruptcy Code eliminated exclusion from the estate based on inability
    to be levied on, but left essentially untouched the concept of exemption, at least for
    those debtors who choose not to or cannot use the bankruptcy exemptions iterated in
    § 522(d). There is nothing in the Code which indicates an intent on the part of
    Congress to retain the concept of exclusion from the estate based on inability to be
    levied on, but now as part of exemption law. See Dewsnup v. Timm, 
    502 U.S. 410
    ,
    419 (1992) (“When Congress amends the bankruptcy laws, it does not write ‘on a
    clean slate.’” quoting Emil v. Hanley, 
    318 U.S. 515
    , 521 (1943)). However, I think
    that is exactly what the majority is doing.
    Although the pertinent language of the Bankruptcy Act of 1898 morphed a bit
    as it was transformed into the corresponding provisions of the Bankruptcy Code, the
    same distinction remains today between property that is exempt and property that is
    “subject to attachment and execution” or capable of being “levied upon”, “attached,”
    etc. Indeed, the Supreme “Court has been reluctant to accept arguments that would
    interpret the Code, however vague the particular language under consideration might
    be, to effect a major change in pre-Code practice that is not the subject of at least some
    discussion in the legislative history.” 
    Dewsnup, 502 U.S. at 419
    (citing United
    Savings Assn. of Texas v. Timbers of Inwood Forest Assoc., Ltd., 
    484 U.S. 365
    , 380
    15
    (1988); Pennsylvania Dept. of Public Welfare v. Davenport, 
    495 U.S. 552
    , 563
    (1990); and United States v. Ron Pair Enterprises, Inc., 
    489 U.S. 235
    , 244-245
    (1989)).2 Under the Bankruptcy Code,
    An exemption is [still] an interest withdrawn from the estate (and hence
    from the creditors) for the benefit of the debtor. Section 522 determines
    what property a debtor may exempt. Under § 522(b), he [sic] must
    select between a list of federal exemptions (set forth in § 522(d)) and the
    exemptions provided by his State, “unless the State law that is applicable
    to the debtor . . . specifically does not so authorize,” § 522(b)(1)--that is,
    unless the State “opts out” of the federal list. If a State opts out, then its
    debtors are limited to the exemptions provided by state law.
    Owen v. Owen, 
    500 U.S. 305
    , 308 (1991).3
    2
    Had Congress wanted to insert the phrase “exempt from attachment and
    execution” (or “not subject to attachment”) in place of the word “exempt” in §
    522(b)(2)(A), it could have easily done so (and changed the Act concept of “exempt”).
    However, it did not do so.
    3
    As to this latter point in Owen, the Eighth Circuit has acknowledged that
    “Missouri, the residence of the [debtors] has exercised this option.” Garner v. Strauss
    (In re Garner), 
    952 F.2d 232
    , 234 (8th Cir. 1991) (citing Mo. Rev. Stat. § 513.427);
    Wallerstedt v. Sosne (In re Wallerstedt), 
    930 F.2d 630
    , 631 n.1 (8th Cir. 1991) (“In
    1982 the Missouri legislature [via Mo. Rev. Stat. § 513.427] opted out of the federal
    exemption scheme pursuant to 11 U.S.C. § 522(b)(2) (1988), thereby restricting
    Missouri residents to the exemptions available under Missouri law and under federal
    statutes other than 11 U.S.C. § 522(d).”); Abernathy v. LaBarge (In re Abernathy),
    
    259 B.R. 330
    , 333 (B.A.P. 8th Cir. 2001) (“As permitted by 11 U.S.C. § 522(b)(2)(A),
    Missouri has chosen to opt out of the exemption scheme provided under the
    Bankruptcy Code.”). Given this, I question whether Mo. Rev. Stat. § 513.427 is really
    an exemption statute at all or merely a wordily drafted opt-out statute. I think a fair
    reading of Mo. Rev. Stat. § 513.427 is that it is only an opt-out statute; not an
    exemption statute nor some hybrid of the two.
    16
    While exemption may mean different things in different contexts, in the context
    of § 522 it refers to laws enacted by the legislative branch which explicitly identify
    property judgment debtors can keep away from creditors for reasons of public policy.
    In re Pritchard, 
    75 B.R. 877
    , 879 (Bankr. D. Minn. 1987) (discussing the “central and
    common characteristic of exemption statutes” and noting that “exemptions have no
    legal existence independent of statute”).
    Examples of non-bankruptcy federal exemption statutes include:
    -- foreign service retirement and disability payments, 22 U.S.C. §
    4060;
    -- social security payments, 42 U.S.C. § 407;
    -- injury or death compensation payments from war risk hazards,
    42 U.S.C. § 1717;
    -- wages of fishermen, seamen, and apprentices, 46 U.S.C. §
    11109;
    -- civil service retirement benefits, 5 U.S.C. § 8346;
    -- Longshoremen's and Harbor Worker's Compensation Act death
    and disability benefits, 33 U.S.C. § 916;
    -- Railroad Retirement Act annuities and pensions, 45 U.S.C. §
    231m;
    -- veterans benefits, 38 U.S.C. § 5301;
    -- special pensions paid to winners of the Congressional Medal of
    Honor, 38 U.S.C. § 3101;
    -- railroad unemployment insurance benefits, 45 U.S.C. § 352(e);
    -- government employees' disability or death benefits for work-
    related injuries, 5 U.S.C. § 8130;
    -- military survivors' benefits, 10 U.S.C. § 1450(i);
    -- military annuities, 10 U.S.C. § 1440;
    -- military pension benefits, 38 U.S.C. § 5301;
    -- insurance benefits paid under Servicemembers' Group Life
    Insurance or Veterans' Group Life Insurance, 38 U.S.C. §
    1970;
    17
    -- Central Intelligence Agency Retirement and Disability System
    payments, 50 U.S.C. § 2094; and
    -- federally insured or guaranteed student loans, grants, and work
    assistance, 20 U.S.C. § 1095a(d).
    4 Collier on Bankruptcy ¶ 522.02[3] (15th ed. rev. 2005). If nothing else, this list
    indicates that Congress knows full well how to create an exemption when it wants
    one.
    Examples of Missouri exemption statutes are found at Mo. Rev. Stat. §§
    513.430 (personal property exemptions), 513.440 (head of household exemption),
    513.460 (fire fighting equipment exemption), and 513.475 (homestead exemption).
    Each of these Missouri statutes identifies specific categories of property. However,
    there is no Missouri statute that exempts tax refunds.
    § 6402 requires the Secretary of the Treasury to pay a refund to the taxpayer,
    subject to certain rights of governmental setoff. Sorenson v. Secretary of Treasury of
    U.S., 
    475 U.S. 851
    , 854-856 (1986). While § 6402 of the Internal Revenue Code has
    been interpreted to mean that creditors cannot attach refunds (except for limited rights
    of setoff for certain governmental creditors), those limitations benefit the IRS, and the
    exceptions benefit the federal and state governments. See In re 
    Pritchard, 75 B.R. at 880
    . The limitation and its exceptions are not designed to benefit the taxpayer. § 6402
    is by no stretch of the imagination an exemption statute. Similarly, anti-assignment
    provisions do not make 31 U.S.C. § 3727 an exemption statute. “The fact that [it]
    contain[s] anti-assignment provisions is a mere fortuity.” In re 
    Pritchard, 75 B.R. at 879
    .
    The Missouri attachment statutes, §§ 521.240 and 513.090, which identify
    categories of property under Missouri law that are subject to attachment and subject
    18
    to sale under attachment and execution, respectively, are based on issues of choatness
    and practicality and are likewise not exemption statutes. See generally State ex rel.
    Auchincloss, Parker & Redpath v. Harris, 
    159 S.W.2d 799
    , 805 (Mo. 1942). In the
    same way statutory and even constitutional immunity from process are based on
    principles of protecting the government and the public fisc and do not create
    exemptions. See, U.S. v. Horn, 
    29 F.3d 754
    , 761 (1st Cir. 1994) (“sovereign
    immunity operates on the broadest possible level: it stands as an obstacle to virtually
    all direct assaults against the public fisc, save only those incursions from time to time
    authorized by Congress”).
    In addition to disagreeing with the majority on the law, I fear that there will be
    the proverbial unintended consequences of today’s decision. It will create two
    categories of debts: those owed by the government and those owed by others. I also
    think the logical application of the decision is to create an exemption for property
    outside the state whose exemptions are being used. For example, if these debtors
    owned property in Kansas, since that property would not be subject to attachment
    under Missouri law, it would be exempt. This cannot be the law. See, Drenttel v.
    Jensen-Carter (In re Drenttel), 
    403 F.3d 611
    (8th Cir. 2005).
    Since none of the Federal or Missouri statutes relied on by the debtors is an
    exemption statute, I think the bankruptcy court got it right and I would affirm.
    19