HERBERT A. ROSS
U.S. Bankruptcy Judge

Index			Page
1.	INTRODUCTION		318
2.	PROCEDURE AND PLEADINGS		319
	2.1.	The Complaint	319
	2.2.	Ames Children's Answer and Counter-Claim, and Other Matters Tried Though Not Pled	319
	2.3.	Patrick Ames' Severance	321
	2.4.	Joan Ames' Homestead Exemption	321
1 ABR 317
3.	FACTUAL BACKGROUND		321
4.	DISCUSSION		328
	4.1.	The Trustee Prevails Over the Rights of the Ames Children and Debtor Under the "Inter Vivos Trust"	328
	4.2.	The Trustee Prevails Over the Rights of the Ames Children As Heirs of William O. Ames	331
	4.3.	Other Theories of Ames Children, Waiver Or Estoppel, Are Not Persuasive	335
	4.4.	Sale Free and Clear Is Appropriate	336
	4.5.	Debtor Is Not Entitled To A Homestead Exemption Because She Voluntarily Conveyed It Away Postpetition	337
6.	CONCLUSION		338

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      The trial of this case was held in Fairbanks on December 17 and 18, 1990. In the court's oral decision on December 18, 1990, it found for plaintiff Harley Adamson on the issue of who owned the property in question.

      The court also ruled that the trial concerning Patrick Ames, incarcerated in California at Lompoc, was severed and a separate trial will have to be held with respect to him. This memorandum decision does not bind Patrick.

      After research, the court concludes that Joan Marie Ames is not entitled to an Alaskan homestead exemption in the property.

      Finally, the court will allow the sale free and clear of the interest of co-owners. A Rule 54(b) judgment will be entered on that aspect, and the trustee should notice out a hearing for Patrick Ames to object to the sale of any alleged co-ownership interest he asserts. This is discussed further in the Conclusion.

Tract F of JOLLEY ACRES SUBDIVISION, according to the plat filed on June 19, 1959 as Instrument No.190,052, Records of the Fairbanks Recording District, Fourth Judicial District, State of Alaska, EXCEPTING THEREFROM that portion conveyed to the State of Alaska by deed recorded March 2, 1961 in Book 125, Page 172.

      Gary Copus, the predecessor to the current trustee, Harley Adamson, brought an adversary proceeding in 1987 to set aside the transfer, and for a declaration from the court that Tract F was property of the estate and that the trustee's rights were superior to the rights in Tract F held by the Ames Children Trust and three of Joan Ames' six children: Daniel, Mark, and Michael Ames. The court entered a judgment for trustee Copus September 19, 1987 setting aside the transfer to the Ames Children Trust.

      In 1989, the present trustee, Harley Adamson, found a buyer for Tract F and filed a motion in the main case for an order approving the sale. The Ames children and Joan Ames objected to the sale, claiming that the prior adversary proceeding had failed     1 ABR 319  to name three of the Ames children or Joan Ames herself, and did not resolve all issues or theories under which the Ames children might own some interest in Tract F.

I agreed with the Ames clan that the first adversary had not resolved all issues and that the matter would have to proceed under adversary rules. I denied the motion to sell without prejudice to the trustee seeking to clear up title in another adversary proceeding. This is that proceeding.

      The Ames children state in cursory fashion in their answer, the defenses of: (a) laches; (b) statute of limitations; (c) equitable reconversion; and (d) waiver.

      The children also state a counter-claim against the trustee. They allege that when Joan Marie Ames and William Ames divorced, Tract F was awarded to Joan Ames in the decree, to be conveyed to her if she fulfilled certain conditions, and that she did not comply with those conditions and was not entitled to a deed of William's interest in Tract F.

      Tract F was held as tenants in common until William Ames died sometime before the bankruptcy. The children claim to be the heirs of William, entitled to one-half of Tract F with the trustee owning the other half.

      In their trial brief, the children raised other issues which were not pled. They argue in the brief that several of the children, in reliance on Joan Ames assurances that she held the property in trust for them and that "they were the owners of the property," expended substantial sums on Tract F and lived there from time to time. They say she was just "a caretaker or trustee" for the children. The children argue that the bankruptcy trustee is now time barred from seeking to avoid any interest the children have. They cite 11 U.S.C. §  546(a) which limits avoidance     1 ABR 321  actions under §§ 544, 545, 547, 548, and 553 to two years from the appointment of the trustee.

      The Ames children state that, even if the trustee does possess avoiding powers, he could not avoid the constructive notice he should have been put to by observing the children's presence on the property. Cf. In re Probasco, 839 F.2d 1352 (9th Cir. 1988).

      They also argue that Joan Ames should lose her interest due to waiver of her right to enforcement of the Second Amended Decree of divorce by her actions and representations.

      Patrick Ames was not able to explain, in response to my questions, what type of interest he had in Tract F, but nonetheless, I severed the trial as to him so that he have a chance to present his own case.

      Joan Ames did not list Tract F in her schedules or indicate in the schedules and statements that she held the property for the benefit of her children. About two weeks after the bankruptcy petition, she quitclaimed Tract F to "Ames Children Trust" (Plaintiff's Exh. 27). When she was challenged by Gary Copus, the original trustee, she claimed the property has been held since about 1972 in trust for her children. She produced at that trial and at the present one a handwritten "Inter Vivos Trust" (Children's Exh. W) which states:

      This inter vivos trust being drawn from a divorce decree of William Oliver Ames and Joan Marie (Keegan) Ames executed January 5, 1965 in the Forth [sic] Judicial District, Fairbanks Alaska.

      The principals are as follows:
Patrick Michael Ames, born August 10, 1952
Michael William Ames, born January 5, 1954
Annmarie Ames, born July 2, 1957
Daniel Oliver Ames, born February 25, 1961
Mark Allen Ames, born April 7, 1962
Mariann Ames, born April 7, 1962.
Also as principal is mother, guardian of same
above named children, Joan Marie Ames.

    1 ABR 323  Tract F. of Jolley Acres Subdivision, (7½) seven and one half acres; with a log structure, (30' x 50'). thirty by fifty. Structure being on a cement block basement.

      At this writing, August 10, 1972, is declared to be a irrevocable inter vivos trust. This being executed as a protection for the minor children of William Oliver Ames and Joan Marie Ames.

      I has been agreed by all principals to this inter vivos trust. It is further agreed that Joan Marie Ames, mother and guardian of said children may remain through her lifetime in residence of said same acers [sic] and structure.

Signed this 10th day
of August, 1972
Joan Marie Ames
mother + guardian

      In Witness Whereof I have set my hand and seal in the month of August on this 10th day of the year 1972.

Ruth A. Hanson
    Notary Public in and for the State of Alaska
My Commission expires: July 2, 1976.

      This instrument does not name a trustee. It does not specifically dedicate Tract F to a trust, although that might be inferred. It first surfaced, as far as the children's testimony reflects, about the time when the Frank Keegan litigation was going on and he was attempting to execute on his judgment against Tract F.

      Joan Ames testified at both the 1987 adversary trial to avoid the postpetition transfer of Tract F and the present trial that the Superior Court judge who heard her divorce ordered that Tract F be held for the children until they were adults. There is     1 ABR 324  no documentary evidence of this. The only direct testimony that there was such an order, other than the testimony of Joan Ames, is that of Michael Ames. He said he had attended a divorce hearing and heard the divorce judge say the property was to be held for the children. Michael, who was 14 years old at the time (in the late 1960s) admitted, however, that he could not remember if the judge had said the house would be available to the children when they were minors or transferred to them after they were adults.

      There is no believable evidence that the superior court in Fairbanks, as part of its decree, ordered that Tract F be held for the children's adulthood. A superior court judge in an interim order stated that the family home would be retained so the children had a place to live at that time, when they were children (Children's Exh. Z). This was a stormy divorce. Michael said his father had put the entire family out of the family home on Tract F. Everything points to the fact that if there was any order, it was the type to protect the children during the divorce and not to make them the chief beneficiary of over one-half of Joan Marie Ames' share of the marital property. The family was often at the poverty level and lived on welfare during those years shortly after the divorce, so it boggles the mind that a judge would have taken this asset from the spouses and given it to the children.

      Nonetheless, each of the children that testified (I heard from five of the six) said that they had childhood or adult memories that they were to receive a pro rata interest in Tract F when the last child was 21 years old. They had often talked about     1 ABR 325  what to do with "their" property, but because of the diversity, could not agree on a plan. They only agreed they would not kick Mom (Joan Marie Ames) out on to the street while she wanted to live there.

      Michael testified that there was a plan to improve the structure to provide for several rental units in the basement or lower floor and living quarters for Joan Ames on the top. It was in furtherance of that plan that Frank Keegan was doing the work on the structure for which he recovered an $11,289.34 judgment. The testimony about this was conflicting. Joan Ames' and Michael Ames' spin on the events was that Frank was working on the Slope, but when he was off or out of work, he offered to renovate the structure. It is inconsistent with the children's claims that this was their property that Joan Ames did all the negotiations with her brother. Frank testified that there was no inter vivos trust for the children, and that Joan Ames owned the property outright.

      An original decree was entered in 1965 (Children's Exh. Z), and gave Tract F to Joan Ames. Shortly before the Second Amended Decree of Divorce was entered in December, 1969, Joan Ames conveyed Tract F to her boyfriend at the time, Joe Hill. She got it back from Hill in December, 1970 at the insistence of William Ames and after some court proceedings, apparently to force the return.

      She also conveyed Tract F to her mother, Francis Keegan, in January, 1974. She testified that this was to "protect" the property from Hill and her ex-husband. I find that the "inter     1 ABR 326  vivos trust", if it was done in 1972, was a similar device to put an artificial barrier between her and her creditors or opponents, but that up to the time of the bankruptcy she owned equitable interest in the property in total and could do with it what she wished. I believe she intended that the children inherit the property, but that she did not give up her right to deal with Tract F fully as fee owner, and that she held that right when she filed her chapter 7 petition on December 6, 1986.

      Each of the children who testified (and, by stipulation the parties agreed that the one who we could not have reached would have testified similarly) said that the property had been given to Joan Marie Ames in some kind of a trust relationship for them. The Ames children testified that they had put money into the property in addition to time and effort on the representation of Joan Ames that it was their property, or to be conveyed to them when they were adults.

      The children testified to things which might be indicia of their ownership interest. For example: (a) some received mail at a nearby North Pole mail box; (b) some periodically came back to live there; (c) they helped with maintenance or improvements; and (d) payment of real property taxes. None of these establish ownership. The amount of work to maintain or improve the property seemed to me to be relatively minimal and not inconsistent with a child helping a parent. The real property tax payment was minimal, and Joan Ames listed the child paying it as a creditor on her schedule A-2. Michael moved back to Tract F in a trailer and paid     1 ABR 327  rent in the 1970s. Ann Marie Ames moved back in 1978 and 1985 due to domestic problems. Some of the children kept property on the premises which was over seven acres and apparently had some storage capacity.

      Frank Keegan testified that the "trust" was a hoax to beat him out of his judgment.

      I would find that the testimony of Joan Ames that she held the property in trust was at best mistaken and at worst perjury. I have observed her at two trials, and she is a devastating witness against her own cause.

      The Second Amended Decree in Joan Marie Ames v. William O. Ames, Case No. 64-426 in the Superior Court in Fairbanks was entered on December 3, 1969 (Children's Exh. B). It provided:

      By way of the final division of the marital property of the parties, plaintiff is awarded Tracts F and G, Jolley Acres Subdivision, and the defendant is awarded Tracts C, D, and E of that subdivision. The parties shall exchange deeds conveying their respective interests in the properties. The plaintiff shall pay the delinquent taxes on Tracts F and G and the defendant shall pay the delinquent taxes on Tracts C through E.

For some reason, deeds to effect these transfers have been held for years in the possession of the superior court in Fairbanks. There was no testimony why the deeds were not delivered or that William O. Ames was deprived of his property (Tracts C, D, and E) as alleged in the children's counter-claim as grounds for denying Joan Ames' interest in the one-half of Tract F she acquired from William in the divorce.

      From the testimony of Mark A. Tomlinson, a title examiner at Fairbanks Title Agency, and the Ames children's answer (¶ 7), I find that legal title on the date of Joan Ames' bankruptcy petition was in the name of William O. Ames and Joan Marie Ames. The father of the Ames children, William O. Ames, died on September 10, 1983. No will was probated, but several were offered in evidence which indicate he left his estate to the children.

      The children's fall-back argument is that they succeed by intestate succession or by will to an interest in William's one-half of Tract F.

In judging the credibility of a witness and determining the weight to be given to his testimony, the trier of the fact may consider the witness' demeanor and manner while on the stand, the character of his testimony as being probable or improbable, inconsistencies, patent omissions and discrepancies in his testimony, or between the testimony of different witnesses, contradictory testimony, his interest in the outcome of the case, his relationship to the litigants, and many other factors bearing upon the truthfulness or untruthfulness of the witness' testimony. As stated in Mitsugi Nishikawa v. Dulles, 9 Cir., 235 F.2d 135, at page 140, reversed on other grounds 356 U.S. 129, 78 S.Ct. 612, 2 L.Ed.2d 659: 'The trier of fact need not accept the uncontradicted testimony of a witness who appears before, it, and the demeanor of that witness may be such as to convince the trier that the truth lies directly opposed to the statements of the witness. N.L.R.B. v. Howell Chevrolet Co., 9 Cir., 204 F.2d 79, 86, affirmed sub nom. Howell Chevrolet Co. v. N.L.R.B., 346 U.S. 482, 74 S.Ct. 214, 98 L.Ed. 215; Chow Sing v. Brownell, 9 Cir., 217 F.2d 140; 143; Lew Wah Fook v. Brownell, 9 Cir., 218 F.2d 924; Mar Gong v. Brownell, 9 Cir., 209 F.2d 448, 449, 450, Wigmore on Evidence, Third Ed., Vol. VII, 2034 n. 3; Zimmer v. Acheson, 10 Cir., 191 F.2d 209, 212. This     1 ABR 330  rule is particularly true where the witness is interested in the outcome of the case, or where his testimony is improbable or contains patent omissions and inconsistencies. Quock Ting v. United States, 140 U.S. 417, 420, 11 S.Ct. 733, 35 L.Ed. 501; Zimmer v. Acheson, supra.' See also Joseph v. Donover Co., 9 Cir., 261 F.2d 812, at page 824.

Even in the absence of direct testimony, a court may find against inherently improbable testimony. Wong Ken Foon v. Brownell, 218 F.2d 444, 446 (9th Cir. 1955).

      The Second Amended Decree of divorce does not say that Joan Ames was to hold Tract F for her children until they were adults. The most reasonable conclusion is that the Ames group has transmogrified some interim requirement, long since fulfilled or inapplicable, that Tract F provide a home for the growing children, into a conviction that the divorce court judge awarded them substantial property of the marriage when they became adults.

      The validity of the inter vivos trust is extremely questionable. Shortly before 1972 when Joan Ames said she prepared the inter vivos trust to fulfill the court's order and to protect the property from others (Joe Hill and her ex-husband, William Ames), Joan Ames freely had transferred it to Hill. She later conveyed Tract F to her mother, Francis Keegan, for various purposes. Even if the trust instrument existed, I find that Joan Ames essentially treated Tract F as her own and did not commit it to any trust for her children.

      The bankruptcy estate of Joan Marie Ames consisted of all her legal and equitable interests in property when she filed     1 ABR 331  bankruptcy. 11 U.S.C. § 541(a). Tract F was one of those interests in which she held an equitable interest as an owner, not just a life tenant.

      At the time of the bankruptcy, record title showed Joan Marie Ames and William O. Ames as owners. William died on September 10, 1983. Several holographic wills were introduced into evidence, but none has ever been probated.

      Assuming that the Ames children are his sole heirs by intestacy in Alaska under AS 13.11.005 et seq., their rights are not those of a bona fide purchaser for value, but they take no greater rights than William had at his death. 6A R. Powell & P. Rohan, The Law of Real Property ¶ 904[2][b], at 82-11 (fn 38) (1990). William Ames' rights in Tract F were given to Joan Ames by the Second Amended Decree in 1969. This was known by all the individual defendants well before William's death.

      None of the defendants qualify as bona fide purchasers entitled to supersede the rights of the trustee. A bona fide purchaser was described in State v. 18,018 Square Feet, More or Less, 621 P.2d 887, 890 (fn 5) (Alaska 1980) as follows:

    1 ABR 332  "To become a bona fide purchaser, one must have acquired title without notice, actual or constructive, of another's rights and also must have paid value for the same." Sieger v. Standard Oil Co., 155 Cal.App.2d 649, 318 P.2d 479, 484 (1957).

      The Ames children did not pay value to inherit. Had they been BFPs for value, they might have primed Joan Ames and the trustee by virtue of the Alaska recording statute. AS 34.15.290 provides that:

A conveyance of real property . . . is void as against a subsequent innocent purchaser . . . for a valuable consideration of the property . . . whose conveyance is first duly recorded. An unrecorded instrument is valid . . . as against one who has actual notice of it.

      To recover, the Ames children must show that the failure to record the deed bootstraps them into a superior position under the laws of intestate succession to the rights of Joan Ames and her successor trustee in bankruptcy. The Alaska Supreme Court has held that a divorce decree from a Washington court cannot affect the "record" title to Alaska property. Peter Pan Seafoods, Inc. v. Stepanoff, 650 P.2d 375, 377 (Alaska 1982). Almost by negative implication, the case implies that an Alaska decree could affect such title.

      Sovereign states are jealous of allowing another state to affect title to land within their respective borders. Even so, a foreign court can compel execution of a deed under its equitable powers. Taylor v. Taylor, 218 P.2d 756, 578 (Cal. 1923). Where a local forum enters a decree specifically awarding local real property, the decree becomes effective between the divorcing     1 ABR 333  parties when it is entered, and binding if not appealed. Badillo v. Badillo, 177 Cal.Rptr. 56, 58 (Cal. App. 1981).

      The Ames children cite four cases to establish that William still had an interest in Tract F at his death since the deed to Joan Ames had never been given to her or retrieved by her from the Superior Court in Fairbanks (Ames Parties Pretrial Memorandum at 7). Three of the cases seem to stand for the proposition that a divorce court that gives a judgment ordering the conveyance from one spouse to another in the decree retains authority to order the conveyance. Bonner v. Superior Court, 133 Cal.Rptr. 592, 598 (Ct.App. 1976), Dunkle v. Dunkle, 137 N.E.2d 170, 171 (Ct.Com.Pl.Ohio 1956); and, Marriage of Lawerence, 642 P.2d 1043, 1049 (Mont. 1982) (en banc). They do not infer that the decree itself is therefore unenforceable against someone who is not a BFP claiming through the spouse who has not made the transfer as directed by a decree.

      The fourth case cited by the Ames children, DeWitt v. American Family Mutual Ins. Co., 667 S.W.2d 700 (Missouri 1984), illustrates this point. A husband and wife were divorced and, by agreement adopted in their divorce decree, the husband was to get the home and the wife was to quitclaim her interest to him subject to mortgages which he assumed. She moved out. He died. She moved back in. The house burned. She made an insurance claim. The insurance company said she had no insurable interest and denied coverage.

      It is clear that if the proceedings are properly conducted, and the language of the decree is sufficient, the court in a marriage dissolution may convey title to real property without further action by the parties. However, the court also has the power to order spouses to execute deeds of conveyance. If a party does not comply the court may enforce its decree by issuing a supplemental order decreeing the transfer of title or proceed by contempt. Section 452.325, RSMo 1978. See R. Fowler & J. Krauskopf, Property Provisions, 29 J.Mo.Bar 508, 513-15 (1973).

      We find merit in the plaintiff's claim that the decree of divorce was insufficient in its language to effectuate a conveyance without an affirmative act by her to convey her interest therein. The decree merely orders the parties to do certain acts and does not automatically convey the property by its plain language. A supplemental order would be a prerequisite to effect an exchange of title. However, the foregoing does not imply that the plaintiff's interest in the property remained unchanged. The terms of the property settlement agreement were contractual and Joseph C. DeWitt had a right to enforce the contract. We conclude that subsequent to March 5, 1979 [the date the divorce was final], Joseph C. DeWitt held title in equity to the property without deed and plaintiff held legal title in trust for him. [emphasis added; footnotes omitted]

      I find the testimony biased and unpersuasive. Very little money was put into the property. A small amount was advanced to Joan Ames by some of her children for real estate taxes. Some improvements were worked upon by some of the handier ones, but nothing to indicate that they were doing this for their own account as opposed to doing it for their mother. Joe Hill, the boyfriend, supplied part of the materials for the second floor that one of the children said he helped install.

      When Michael lived in his trailer on Tract F he paid rent to Joan Ames. I do not accept the rationalization that the rent     1 ABR 336  was paid in order to show he was not trying to take more than his share. When the property was being renovated by Frank Keegan, it was Joan Ames who was mainly involved, and not the children. Michael refused to sign as a comaker on a construction or remodeling loan which Keegan was attempting to get.

      The testimony is far short of establishing detrimental reliance on a promise or representation Joan Ames allegedly made to her children that the property "belonged to them." Cf. Interior Energy v. Alaska Statebank, 771 P.2d 1352, 1355 (Alaska 1989).

      11 U.S.C. § 363(h) permits the court to order that the trustee is authorized to sell both the estate's interest and a co-owners's interest if partitioning is impracticable, the sale of the estate's undivided interest would yield much less than a sale of the whole, and that the detriment to the co-owner is outweighed by the benefit to the estate. The trustee has met his burden.

      The only reason that the court is considering § 363(h) anyway is to cover any interest that Patrick may establish. By this memorandum, I have indicated none of the other defendants have an interest which is superior or even equal to the trustee's in Tract F. The court entered an order on December 19, 1990 in the     1 ABR 337  main case permitting the sale free and clear, and the trustee may proceed with that sale.

      An avoidance under §§ 522, 544-549 is normally preserved for the benefit of the estate under § 551 of the Bankruptcy Code so as not to benefit a junior lien creditor in preference to the estate. An individual debtor may nonetheless get an exemption out of property recovered under these avoiding powers "to the extent that the debtor may exempt such property under subsection (g) of this section • • •." § 522(i)(2) of the Bankruptcy Code.

      § 522(g) of the Bankruptcy Code only allows an exemption from recovered property if:

      (1)(A) such transfer was not a voluntary transfer of such property by the debtor; and

      (B) the debtor did not conceal such property; or

      (2) the debtor could have avoided such transfer under subsection (f)(2) of this section.

      Joan Ames cannot recover Tract F under § 522(f) and, since her transfer was both voluntary and surreptitious, she fails the test of § 522(g)(1). She has lost her exemption in Tract F. See, In re Laird, 6 B.R. 273, 277 (fn 10) (Bankr.E.D.Pa. 1980).

      Thus, the trustee can sell notwithstanding any appeal if the co-owners (the defendant children) do not get a stay on appeal. See 11 U.S.C. § 363(m). However, to give Patrick Ames an independent right to contest the sale under § 363(h), the trustee should request a hearing in the main case which the court will hold on an expedited basis so Tract F can be turned into cash. The court is presently considering whether to enter a default against Patrick Ames, but, in the event one is not entered, a hearing in the main case will allow the property to be sold.

      Since there will be no final judgment, except on the issue of a sale of a co-owner's interest under § 363(h) of the Bankruptcy Code, no appeal is necessary yet except on the sale of the co-ownership interests. If the effect of this ruling is not stayed, the trustee will be able to sell Tract F notwithstanding an appeal. § 363(m) of the Bankruptcy Code. If the court determines Patrick Ames should be defaulted, I will enter a final judgment shortly after that.

      On the date of her chapter 7 petition, Joan Marie Ames had an equitable interest in Tract F superior to any claims of her     1 ABR 339  children, whether those claims were as heirs of William Ames, through the "inter vivos trust," or because of any alleged estoppel or waiver they assert because of Joan Ames' behavior.

      Finally, by virtue of her actions postpetition, Joan Ames has forfeited her homestead exemption.