Future Time, Inc. v. Yates
| Decision Date | 01 February 1983 |
| Docket Number | Civ. A. No. 82-9-ATH. |
| Citation | 26 BR 1006 |
| Parties | FUTURE TIME, INC., et al., Plaintiffs, v. Louis Randolph YATES, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
Thomas A. Nash, Jr., Athens, Ga., for plaintiffs.
David W. Griffeth, Athens, Ga., for defendant.
This is an appeal from the order of United States Bankruptcy Judge Robert F. Hershner, Jr. entered December 4, 1981, denying the dischargeability of the hereinafter stated debt of the appellant-debtor Lewis Randolph Yates (appellant).
Appellant filed a voluntary petition under Chapter 7 of Title 11 of the United States Code on January 16, 1981. On April 16, 1981, Future Time, Inc. and Tommy E. Warner (appellees) filed a complaint objecting to appellant's discharge and in the alternative seeking a determination as to the dischargeability of certain debts owed to them by appellant. Appellees contended that appellant by his actions had attempted to defraud or hinder their efforts to collect on the debts owed to them.
Judge Hershner made the following findings of fact:
(1) On August 1, 1978, appellant purchased the Riverboat Restaurant in Athens from appellee Future Time, Inc. for $12,000.00;
(2) Appellant paid $6,000.00 down and executed a promissory note for the balance of the purchase price (3) In conjunction with the purchase of the restaurant, appellant entered into two lease agreements—one with appellee Warner for the real property on which the restaurant was located and the other with appellee Future Time for the restaurant equipment;
(4) Appellant made no payments on the promissory note and only sporadic payments on the two leases;
(5) On or about November 15, 1979, after discovering that Georgia Power had terminated service to appellant for nonpayment and that the insurance on the restaurant had lapsed, appellee Warner took possession of the premises;
(6) During a five-month period from November of 1979 to April of 1980 appellant was unemployed and depended on his wife to help support the family;
(7) In April of 1980, appellant started work with Hardee's Food System in Athens;
(8) Appellant's weekly take-home pay was approximately $198.00;
(9) After starting work with Hardee's, appellant did not utilize any personal bank accounts—he cashed his paychecks, paid selected creditors, and turned the remainder (sums ranging from $80.00 to $140.00 per week) over to his wife who deposited this money in her personal checking account and used it to pay household expenses, among them the monthly house payment;
(10) At an undisclosed time during 1980, appellees initiated suit against appellant in the Superior Court of Oconee County for breach of the agreements executed on August 1, 1978;
(11) This matter, originally set for trial in August of 1980, was rescheduled for sometime in January of 1981;
(12) On December 8, 1980, appellant transferred to his wife the remaining one-half undivided interest that he had in the family residence, thus making her the sole owner of the residence;
(13) At the time of transfer, appellant estimated the residence to have a fair market value of $62,000, while existing mortgages and tax liens against the property totalled over $70,000;
(14) Appellant admitted that his actions in transferring the residence were motivated by a desire to keep it throughout the bankruptcy proceeding; and
(15) On January 16, 1981, appellant filed his petition in the United States Bankruptcy Court seeking relief under Chapter 7 of the Bankruptcy Code—the trial in the Superior Court of Oconee County was thereby stayed under the operation of 11 U.S.C. § 362.
Based on the above findings of fact, the bankruptcy court found as a matter of law that appellant was not entitled to discharge of his debts because he had violated section 727(a)(2)(A) of the Bankruptcy Code.
Section 727(a)(2)(A) provides that:
The intent to hinder must be an actual intent. In re Harpe, 354 F.Supp. 59 (M.D.Ga.1973). That actual intent may be inferred from the actions of the debtor. 1A Collier on Bankruptcy, ¶ 14.47 (14th Ed. 1972). Appellant in the instant case complains that the evidence as to his intent was insufficient to authorize the court below to deny him a discharge. This court is unable to agree.
As was stated previously, actual intent may be inferred from the actions of the debtor. Rarely, if ever, has a debtor taken the witness stand and testified under oath that yes, he transferred the property in question with the intent to hinder, delay or defraud his creditors. Therefore, necessarily, the intent to defraud must usually be proved by circumstantial evidence. See, In re Bone, No. 80-89-ATH (M.D.Ga., filed April 13, 1981); In re Freudmann, 362 F.Supp. 429 (S.D.N.Y.1973), aff'd 495 F.2d 816 (2d Cir.1974), cert. denied 419 U.S. 841, 95 S.Ct. 72, 42 L.Ed.2d 69 (1974).
In the instant case there was evidence that appellant was months behind in his payments to appellees, that he was unemployed for five months, that after obtaining employment he transferred substantial portions of his weekly paycheck to his wife who deposited the money in her personal checking account, and that shortly before he was to go to trial in the Superior Court of Oconee County he transferred the remaining interest that he had in his residence to his wife, thus making her the sole owner. Appellant's actions during the year immediately preceding the filing of his petition were more than sufficient to authorize the bankruptcy judge's finding that he had transferred property with the intent to hinder, delay or defraud his creditors.
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