Farm Credit Bank of Texas v. Snyder Nat. Bank

• Decision Date: 20 September 1990
• Docket Number: No. 11-89-238-CV,11-89-238-CV
• Citation: 802 S.W.2d 709
• Parties: FARM CREDIT BANK OF TEXAS, f/k/a The Federal Intermediate Credit Bank, Successor in Interest to the Sweetwater Production Credit Association, Appellant, v. SNYDER NATIONAL BANK, Appellee.
• Court: Texas Court of Appeals

Page 709

802 S.W.2d 709

FARM CREDIT BANK OF TEXAS, f/k/a The Federal Intermediate Credit Bank, Successor in Interest to the Sweetwater Production Credit Association, Appellant, v. SNYDER NATIONAL BANK, Appellee.

No. 11-89-238-CV.

Court of Appeals of Texas Eastland.

Sept. 20, 1990.

Rehearing Overruled Jan. 17, 1991.

Dan G. Young, McCleskey, Harriger, Brazill & Graf, Lubbock, for appellant.

Teena Tatom, Thomas Choate, Glandon, Erwin, Scarborough, Baker & Choate, Robert L. Jones, Crenshaw, Dupree & Milam, Michael Puryear, Carr, Evans, Fouts & Hunt, Lubbock, for appellee.

OPINION

ARNOT, Justice.

Farm Credit Bank of Texas (Farm Credit) appeals a summary judgment which held that the lien of Snyder National Bank (Snyder) was superior to the interest of Farm Credit in the debtors' property. Farm Credit also appeals the trial court's ruling that it did not have standing to challenge the attorney's fees awarded to Snyder's counsel. We affirm in part, and we reverse and remand in part.

Parks-Walker Cattle Company, Inc. and Parks-Walker Land & Livestock Company, the debtors, filed for protection under the Bankruptcy Act, Title 11 of the United States Code. The debtors had two main assets: an oil and gas producing property, known as the "Silver Ranch," and a subdivision of the City of Snyder, known as the "Round Top Acres." The debtors had two main creditors: Sweetwater Production Credit Association (Sweetwater Production), Farm Credit's predecessor in interest, which held a pre-petition security interest in the "Silver Ranch" and Snyder which held a post-petition security interest in "Round Top Acres."

On March 21, 1984, the debtors proposed a plan of reorganization. The plan proposed to pay the debtors' indebtedness to Sweetwater Production by transferring the "Silver Ranch" in full satisfaction of their obligation. After filing for bankruptcy, the debtors received court permission to incur a debt of $150,000.00 to pay for the construction of a city water line to its "Round Top Acres" subdivision. This post-petition debt was funded by Snyder and secured by a deed of trust. As part of the plan, the debtors proposed to repay this obligation from the cash proceeds from the future sale of lots at "Round Top Acres."

On September 11, 1984, prior to confirmation, the plan was modified. Under the terms of the modification, the debtors were free to develop the "Silver Ranch" minerals. If at the end of three years the property had not sold, the debtors would immediately convey this property to Sweetwater Production. At that time, Sweetwater Production would be free to market the property for the best price available. The modification then stated:

If such sale is made, [Sweetwater Production] may then look to the other assets of Debtors for satisfaction of the balance of any deficiency after first giving Debtors thirty (30) days notice to propose a plan for liquidating its other assets to satisfy said deficiency.

With regard to the "Round Top Acres," the modification provided that the debtors would be free to develop and sell the same within the usual course of business without court approval of any sale unless the sale was of three or more lots to any one individual or business.

On September 20, 1984, the modified plan was confirmed. It provided that "all property of Debtors' respective estates is vested in Debtors free of claims of creditors, [and] equity security holders of other claimants."

On July 23, 1986, the debtors executed a document entitled Extension of Real Estate Note and Lien, and Snyder advanced them $150,000.00. This extension recited that it was taken in renewal and in extension of a prior $150,000.00 debt of July 1, 1985, which was secured by a deed of trust lien covering "Round Top Acres." In fact, the prior debt of July 1, 1985, had been paid. On January 14, 1988, the debtors and Snyder executed a "Correction Deed of Trust" to reflect that the $150,000.00 represented a new advance.

After the modified plan did not work, on June 23, 1988, the bankruptcy court ordered the debtors to propose a plan for liquidating their other assets to satisfy the deficiency of Sweetwater Production. On July 5, 1988, in lieu of foreclosure, the debtors deeded "Round Top Acres" to Farm Credit "subject to" any lien interest that Snyder might have.

Farm Credit, as the successor in interest to Sweetwater Production, claimed that the plan gave its lien priority over Snyder's lien. Snyder claimed that its post-confirmation lien had priority. The bankruptcy court held that it did not have jurisdiction to determine the validity of the post-confirmation debt and referred this matter to State court. At the trial court level, both Snyder and Farm Credit moved for summary judgment. The trial court entered an interlocutory summary judgment holding that Snyder had a superior lien. Farm Credit appeals from the order making the summary judgment final.

In its first two points of error, Farm Credit contends that the trial court erred in granting Snyder a summary judgment and in not granting Farm Credit's motion for summary judgment. In its third and fourth points of error, Farm Credit claims that Snyder's lien is void as a matter of law or, alternatively, that Snyder's lien is inferior to the interest of Farm Credit.

When reviewing a summary judgment, this Court will adhere to the following standards:

(1) The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to a judgment as a matter of law (2) In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true; and

(3) Every reasonable inference must be indulged in favor of the non-movant, and any doubts resolved in its favor.

TEX.R.CIV.P. 166a; Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979). When both parties file motions for summary judgment, an appellate court determines all questions presented including the propriety of the order overruling the losing party's motion. Jones v. Strauss, 745 S.W.2d 898 (Tex.1988).

First, Farm Credit complains that the trial court erred because Snyder failed to support its motion for summary judgment with any proof to show that there were no issues of any material fact. However, TEX.R.CIV.P. 166a(c) provides that:

The judgment sought shall be rendered forthwith if ... the pleadings, admissions, affidavits, stipulations of the parties, and authenticated or certified public records, if any, on file at the time of the hearing ... show that ... there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.... (Emphasis added)

Farm Credit seeks to limit Snyder's summary judgment proof to that evidence filed with the motion. We disagree with Farm Credit's attempt to limit the evidence the court could consider. Clearly, the rule states that the trial court is to look at the evidence that is on file on the day of the hearing. When both parties move for summary judgment, the trial court may consider the combined summary judgment evidence. Woods v. Applemack Enterprises, Inc., 729 S.W.2d 328 (Tex.App.--Houston [14th Dist.] 1987, no writ). See Nicholson v. Memorial Hospital System, 722 S.W.2d 746 (Tex.App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.); Trinity Universal Insurance Company v. Patterson, 570 S.W.2d 475 (Tex.Civ.App.--Tyler 1978, no writ).

Next, Farm Credit argues that Snyder's debt and lien are void because the debtors did not receive proper authority from the bankruptcy court to incur this additional debt. The issue is whether Snyder's post-confirmation debt is in compliance with the plan.

11 U.S.C.A. § 1141(b) (West 1979) provides: "Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor." The plan specifically states that title to the property vests in the debtors. After confirmation, a debtor can manage its affairs without any further order of the court and without restriction on its activities except for any stipulations placed upon it by virtue of the plan. See Alabama Fuel Sales Co., Inc. v. Newpark Resources, Inc., 45 B.R. 365 (Bankr.N.D.Ala.1985). After confirmation, the debtor is no longer a "debtor-in-possession" and may carry on as any other business subject only to the requirements stated in the plan. See Lindsey v. MBank Alamo, N.A., 85 B.R. 397 (Bankr.W.D.Tex.1988); Ford v. Independence Bank of Madison, 61 B.R. 913 (W.D.Wis.1986). Because this was a post-confirmation debt, the debtors did not need court permission to incur additional debt since this was not prohibited by the plan.

Next, we must determine if Snyder's post-confirmation debt was created in compliance with the plan and the order confirming the plan. See Section 1141(b). We have carefully reviewed the plan, the modification of the plan, and the order confirming the plan as modified. We find nothing that would prevent the debtors from incurring additional debt on the "Round Top Acres." Sweetwater Production was a party to the plan. Had the parties wanted to prevent the debtor-in-possession from pledging the property, they could have asked the bankruptcy court to insert such a provision in the plan. Moreover, there is evidence that $60,000.00 to $70,000.00 of the $150,000.00 borrowed from Snyder was used to pay the debt owed to Sweetwater Production.

Also, Farm Credit urges that the Snyder's lien is void because the extension of lien dated July 23, 1986, stated that its purpose was to renew and extend a debt of July 1, 1985. Because it was later determined that the July 1, 1985, debt had been paid in full, Farm Credit urges that a deed of trust securing a paid obligation is void. See First Baptist Church of Fort Worth v. Baptist Bible Seminary, 347 S.W.2d...