Barney v. Rigby Loan & Investment Co.
Citation | 344 F. Supp. 694 |
Decision Date | 26 June 1972 |
Docket Number | No. BK 69-656,BK 69-657.,BK 69-656 |
Parties | In the Matter of Clyde H. BARNEY and Rita H. Barney, Bankrupts, Kenneth F. Clarke, Trustee, Appellants, v. RIGBY LOAN & INVESTMENT CO., a corporation, Respondent. |
Court | U.S. District Court — District of Idaho |
Kenneth F. Clarke, Blackfoot, Idaho, for trustees-appellants.
Gordon S. Thatcher, of Rigby & Thatcher, Rexburg, Idaho, for respondent.
This case is before the court upon a Petition for Review of Findings of Fact, Conclusions of Law and Judgment Denying Trustee's Motion to Set Aside Preference. 11 U.S.C.A. § 67.
The parties have stipulated that this matter may be disposed of upon the briefs of counsel and the record made before the Referee in Bankruptcy and without oral argument.
The basic facts are as follows:
The Bankrupts were involved in farming operations, as tenants, and were indebted to the Respondent in the sum of $13,346.10. Respondent commenced suit in the State District Court with attachment proceedings against the crops of the Bankrupts and because of a default with respect to the obligation. A voluntary petition in bankruptcy was filed herein on August 12, 1969. By a Stipulation of Fact filed July 26, 1971, the following facts are conclusive (83 C.J.S. Stipulations §§ 13, 17), though there has been some effort by the Trustee to quarrel with them and to seek to avoid their full impact:
While the checks were in the possession of the Trustee, Mr. Albaugh, prior to the four-month period under Section 60, 11 U.S.C.A. Sec. 96, they were negotiated within four months of the filing of the bankruptcy petitions.
The Referee's Memorandum Decision states:
(1) "All of the facts essential for this decision have been stipulated by the parties in their formal stipulation filed herein on July 26, 1971, and their stipulation incorporating part of Respondent's Trial Brief made at the time of hearing."
(2)
(3) "The `instruments' covered by this section were negotiable checks which were held in trust by Mr. Ralph Albaugh, attorney for the bankrupts, under an oral agreement which recognized the interest of Respondent in those checks as well as the interest of various other creditors and bankrupts' landlord."
(4)
The Trustee's objections to Referee's findings are as follows:
(1) That the trust was not authorized by the court. But Sec. 28-9-305, Idaho Code, does not require a trust nor court intervention. It says:
"If such collateral other than good covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest."
Thus, Respondent's perfected security interest is not contingent upon whether the State court recognized the trust or the bailment. Here, the bailee-trustee, Mr. Albaugh, received notification of the secured party's interest well before the four-month period and the Respondent's possession became effective simultaneously therewith. In addition, the Trustee stipulated that "Prior to February 17, 1969, all crops were sold and checks received and held in trust . . ."
(2) That the Trustee had bare possession of the checks but since the checks were not endorsed by the Bankrupt, no legal title passed to Mr. Albaugh.
It seems that bare possession is enough to satisfy Sec. 28-9-305, Idaho Code. Legal title in the bailee-trustee is not required. In addition, Sec. 28-9-202, Idaho Code, states:
"Each provision of this chapter with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor."
Possession was full and complete and entirely beyond the control of the debtor-bankrupt and well before the four-month period. While in the possession of Mr. Albaugh, the Bankrupt could not pass...
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