________________

                              No. 96-1836 MNMI
                              ________________

Arthur Sholdan,                           *
                                          *
           Debtor,                    *
                                  *           Appeal from the United States
Earl Jensen, The Personal         *           District Court for the
Representative of the Probate     *           District of Minnesota
Estate of Arthur Sholdan,         *
                                  *           [PUBLISHED]
           Appellant(s),              *
                                  *
      v.                           *
                                  *
Michael Dietz, the Trustee        *
of the Bankruptcy Estate          *
of Arthur Sholdan,                *
                                  *
           Appellee.                *

                              ________________

                         Submitted: November 22, 1996

                           Filed: March 13, 1997
                              ________________

Before BEAM and LOKEN, Circuit Judges, and MOODY1, District Judge.
                            ________________

MOODY, United States District Judge.


      Earl Jensen, the personal representative of the probate estate of
debtor, Arthur Sholdan, appeals from the decision of the district court
affirming the bankruptcy court in sustaining the chapter 7 trustee’s
objection to Sholdan’s     homestead exemption.      Because the district court
failed to make a finding on whether Sholdan’s homestead exemption was made
with the “intent to defraud,” we remand.
      Sholdan was a retired farmer who sold his farm in 1980 and




  1
   The Honorable James M. Moody, United States District Judge for
the Eastern District of Arkansas, sitting by designation.
retained a mortgage against the property.            He moved from the farm into an
apartment where he lived for approximately 13 years.             In December, 1993,
Sholdan moved into Mineral Springs Board and Lodge, an assisted care living
facility.    In September, 1994, at which time Sholdan had reached the age
of 90, he surrendered approximately ten certificates of deposits and sold
his mortgage rights in the farmland to his nephew, Roger Jensen, for a
total of approximately $140,000.00.         Sholdan used this money      to purchase
a new home for approximately the same amount of money.           At all times while
living in his new home, Sholdan had the assistance of a nurse.              When the
nurse was unavailable to stay with him overnight at his home, Sholdan spent
the night at Mineral Springs Board and Lodge.             Following the liquidation
of all of his income producing assets to buy the home,                Sholdan’s sole
source of income was a social security payment of $486.00 per month.
Sholdan’s property taxes on his new home beginning in 1996 amounted to
$2,000.00 per year.           In December, 1994,       Sholdan filed a chapter 7
bankruptcy petition in which he listed his new home as exempt pursuant to
Minnesota law.2
See Minn. Stat. Ann. § 510.01 (West Supp. 1997).           Sholdan died on February
5, 1995.


      Earl Jensen, Sholdan’s nephew, is the representative of the probate
estate.    Earl Jensen’s and Roger Jensen’s children are contingent designees
of Sholdan’s will.       The Jensens consulted       a bankruptcy attorney and real
estate     agents   in   an   effort   to   assist    Sholdan   in   structuring   the
transactions concerning the disposition




  2
   Bankruptcy debtors may elect to use either the exemptions set
forth in the federal bankruptcy code or in the nonbankruptcy law
of the debtors' domicile. Compare 11 U.S.C. §§ 522(d) with 11
U.S.C. §§ 522(b)(2); Panuska v. Johnson (In re Johnson), 

(8th Cir. 1989). If Sholdan had chosen the federal
exemptions, conceivably he would have been able to exempt
sufficient cash and personal property to allow him to stay at
Mineral Springs Board and Lodge with no interruptions or changes.
See 11 U.S.C. § § 522(d), (d)(5), and (d)(10)(E).

                                            2
of his real property.   The record reflects that Sholdan did not originate
the idea of purchasing the home for himself and the Jensens were the ones
who actually undertook the search for Sholdan’s new home.


       Sholdan’s primary creditor is Raymond Olson who was severely injured
in 1992, when Sholdan, driving down the wrong side of the highway, ran into
him.   Olson filed a lawsuit for injuries received in the accident, and has
filed a proof of claim against the bankruptcy estate for $1,000,000.00.


       The bankruptcy court found that Sholdan had transferred non-exempt
property (the certificates of deposits and mortgage) to exempt property
(the new house) with the “intent to hinder or delay” his creditors in
violation of Minnesota law.     See Minn. Stat. Ann. §§ 513.41-.51 (West
1990).   Specifically, Minnesota    Statute Annotated § 513.44 states “[a]
transfer made . . . is fraudulent as to a creditor . . . if the debtor made
the transfer . . . with actual intent to hinder, delay, or defraud any
creditor of the debtor. . ..    Minn. Stat. Ann § 513.44(a)(1)(West 1990).
  The bankruptcy court reasoned that Sholdan intended to “hinder or delay”
his creditors by purchasing a house which was too large for his needs while
he still needed a live-in nurse, and by making improvements to the house
in the form of a large deck which was of little use to Sholdan because he
had no family in the residence with whom to enjoy it.   The bankruptcy court
did not rule on whether the debtor acted with “intent to defraud.”   Because
the bankruptcy court found that the debtor transferred the non-exempt
property to an exempt property, a homestead,    with the intent to “hinder
or delay” his creditors, the bankruptcy court sustained the trustee’s
objection applying Minnesota law.


       The district court upheld the bankruptcy court’s decision     holding
that it was not necessary to find “intent to defraud” to set




                                     3
aside a transfer of non-exempt property to exempt property.           The district
court held that a finding of an intent to “hinder or delay” was sufficient.
The district court also found that the bankruptcy court correctly inferred
Sholdan’s intent to “hinder or delay” based on the cost of the house with
the improvements being nearly equal to the debtor’s liquid assets which
left Sholdan with insufficient income to maintain the house and to pay
property taxes.      Finally, the district court upheld the bankruptcy court’s
factual findings by holding that the bankruptcy court’s use of observations
about the human interest aspects of the case were of no legal significance,
and that the actual findings regarding the intent to “delay or hinder”
creditors were not clearly erroneous, and supported by the record.


     Because the district court was acting as an appellate court, we
review the district court’s factual and legal conclusions de novo.              See
Wegner v. Grunewaldt, 

, 1320 (8th Cir. 1987).          If we conclude
that the bankruptcy court’s findings are silent or ambiguous as to an
outcome determinative fact question, we may not make our own findings but
must remand the case to the bankruptcy court for the necessary factual
determination. See Rine & Rine Auctioners v. Douglas County Bank & Trust
Co. (In re Rine & Rine), 

, 863 n. 7 (8th Cir. 1996).


     The trustee objects to the homestead exemption on the ground that
Sholdan had taken title to the real estate in question in specific
contemplation of his bankruptcy filing and with a specific intent to
“hinder,     delay   or   defraud”   his   scheduled   creditors.    The   trustee,
therefore, maintains that Sholdan’s successors in interest should be denied
the benefit of the statutory exemption.            Jensen argues that intent to
“hinder or delay” is insufficient to disqualify Sholdan’s                  homestead
exemption.     It is Jensen’s position that the bankruptcy court has to make
a finding that there was also an “intent to defraud.”          In addition, Jensen
argues that




                                           4
the bankruptcy court and district court used a value-limit analysis which
is not authorized in a Minnesota exemption case.    Alternatively he argues
that even if the value-limit test of Johnson were allowed, there was no
extreme degree of disparity between the exempt property and the debtor’s
needs.


     Under section 11 U.S.C. § 522(b), a debtor can choose to exempt from
property of the bankruptcy estate that property which is exempt under the
applicable state or federal law.    See Hanson v. First Nat’l Bank, 

, 868 (8th Cir. 1988).   Here, Sholdan elected a state-created exemption.
The scope of the exemption is fixed by state law.    See Panuska v. Johnson
(In re Johnson), 

(8th Cir. 1989);   Norwest Bank Nebraska, N.A.
v. Tveten, 

, 876 (8th Cir. 1988).


     Minnesota law does not allow a homestead exemption where a debtor
transfers property “with intent to hinder, delay or defraud” a creditor.
See Minn. Stat. Ann. §§     513.41-.51;   In re Tveten, 

, 556
(Minn. 1987).   Here the bankruptcy court     made no finding as to whether
Sholdan claimed his homestead exemption with the “intent to defraud.
While the facts of this case might well support a finding of “intent to
defraud,” we cannot make such a finding.     See Rine v. Rine Auctioners v.
Douglas County Bank & Trust Co. (In re Rine & 

n.7.


     Finally, we do not mean to say that the test of “hinder or delay”
might not prevail under another set of facts.    In this case, however, the
facts do not support such a finding.


     Accordingly, without reaching the merits of the remaining arguments,
we remand this case to the district court with instructions to remand to
the bankruptcy court for a factual finding on the issue of Sholdan’s
“intent to defraud.”




                                     5
A true copy.

     Attest:

           CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT




                             6