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Tenancy by the entirety property is deemed inaccessible to all creditors except those to whom husband and wife are jointly indebted.
Appellee husband was a general partner in a Missouri law firm that filed bankruptcy, and the trustee obtained a deficiency judgment. Appellees, husband and wife, acquired a sketch jointly in Missouri, and while domiciled in Missouri, placed the sketch on consignment at a gallery in New Mexico. Appellees then relocated to Montana, their present domicile. The trustee filed a writ of execution in New Mexico, and appellees moved to quash the petition, arguing that they owned the sketch as tenants by the entirety, such that it was exempt from execution in satisfaction of the deficiency judgment. The district court quashed the appellant’s petition for writ of execution. Appellant challenged the decision.
Was the writ of execution properly quashed?
The appellate court ruled that, pursuant to conflict of laws rules, Missouri law governed the characterization of the property at issue, and that the appellees held the sketch as tenants by the entirety. Based on the time-and-manner-of-acquisition rule, the sketch was held by appellees as tenants by the entirety. In conformity with the general rule by which tenancy by the entirety property was deemed exempt from all but joint creditors, the sketch was not subject to the claims of the trustee. Also, because the deficiency judgment was the separate debt of the husband, the petition for writ of execution was properly quashed.