## Facts

- Sam and Annette Hedge entered a contract for deed to purchase a 160-acre farm and took possession.
- They assigned their vendees’ interest to Hedge Farm, Inc., a Minnesota family farm corporation.
- Annette Hedge was the sole shareholder; the corporation’s officers were family members.
- Sam Hedge purchased farm supplies and services on credit from Cargill, Inc., incurred substantial debt, and did not pay.
- Cargill obtained a confessed judgment against Sam Hedge and Hedge Farm, Inc.
- Cargill purchased the farm at an execution sale.
- Before the redemption period expired, the district court enjoined further execution proceedings, tolled redemption, and permitted Annette Hedge to intervene to assert a homestead exemption.
- The district court exempted 80 acres as the Hedges’ homestead; the court of appeals affirmed.

## Issues

1. Whether farm owner-occupants lose Minnesota homestead protection by placing their farm in a family farm corporation.
2. Whether the corporate entity may be reverse pierced, where the corporation is the alter ego of its owner-occupants, to allow assertion of a homestead exemption against a judgment creditor of an owner.

## Decision

- The Minnesota Supreme Court affirmed the exemption of 80 acres from execution.
- The court rejected the court of appeals’ reliance on a shareholder “equitable interest” theory as the basis for homestead “ownership.”
- The court held that, because the family farm corporation functioned as the alter ego of its owner-occupants, reverse veil piercing was available to treat the farm as owned by the occupants for homestead purposes.
- The court concluded that applying reverse piercing in this setting did not improperly prejudice third parties and was consistent with Minnesota’s strong constitutional and statutory homestead policy.

## Legal Principles

- Minnesota’s homestead exemption is constitutionally protected and implemented by statute, exempting the debtor’s owned-and-occupied dwelling and associated land from execution within statutory limits.
- Reverse veil piercing may be permitted where there is a close identity between the corporation and the insider seeking relief, such that the corporation is the insider’s alter ego.
- Reverse veil piercing requires consideration of potential harm to innocent third parties; the remedy should not be granted where it would create unjust injury to others.
- A family farm corporation’s ownership form does not, by itself, defeat homestead protection when the owner-occupants maintain the homestead and the corporation is not meaningfully separate from them.

## Conclusion

The court held that owner-occupants of a family farm did not forfeit homestead protection by holding the farm through a family farm corporation, and it allowed reverse piercing of the corporate veil to preserve an 80-acre homestead exemption against a judgment creditor’s execution.


Cargill, Inc. v. Hedge, 375 N.W.2d 477 (Minn. 1985)