In re Angelle

• Decision Date: 31 January 1977
• Docket Number: B-74-271.,No. B-74-270,B-74-270
• Citation: 425 F. Supp. 823
• Parties: In re Simon ANGELLE, d/b/a Angelle's Lumber Company, and Jo Ann Kidder Angelle, Individually, Bankrupts. Dr. Kenneth P. REED, Plaintiff, v. Simon ANGELLE, Defendant. Joseph M. TRAHAN, Plaintiff, v. Simon ANGELLE, Defendant. Roy Lee BERGERON, Plaintiff, v. Simon ANGELLE, Defendant. Joseph B. and Rita SYLVESTER, Plaintiffs, v. Simon ANGELLE, Defendant. Moses DYES, Plaintiff, v. Simon ANGELLE, Defendant.
• Court: U.S. District Court — Western District of Louisiana

425 F. Supp. 823

In re Simon ANGELLE, d/b/a Angelle's Lumber Company, and Jo Ann Kidder Angelle, Individually, Bankrupts.

Dr. Kenneth P. REED, Plaintiff, v. Simon ANGELLE, Defendant.

Joseph M. TRAHAN, Plaintiff, v. Simon ANGELLE, Defendant.

Roy Lee BERGERON, Plaintiff, v. Simon ANGELLE, Defendant.

Joseph B. and Rita SYLVESTER, Plaintiffs, v. Simon ANGELLE, Defendant.

Moses DYES, Plaintiff, v. Simon ANGELLE, Defendant.

Nos. B-74-270, B-74-271.

United States District Court, W.D. Louisiana, Lafayette Division.

January 31, 1977.

Bennett Boyd Anderson, Jr., Domengeaux & Wright, Lafayette, La., for defendant.

David S. Cook, DeVillier, Ardoin & Morrow, Eunice, La., for Dr. Kenneth P. Reed.

Larry Dupuis, Crowley, La., for Joseph M. Trahan.

Frederic G. Hayes, Lafayette, La., for Roy Lee Bergeron.

Clement Story, III, Lafayette, La., for Joseph B. and Rita Sylvester.

Peter C. Piccione, Sr., Lafayette, La., for Moses Dyes.

MEMORANDUM OPINION

W. EUGENE DAVIS, District Judge.

This case is on appeal from judgments by the Bankruptcy Court determining the dischargeability of various claims of creditors in this bankruptcy proceeding.

FACTS

The bankrupt, Simon Angelle, was engaged in the business of selling lumber and building supplies and the construction of homes. On February 14, 1974, Angelle filed a voluntary bankruptcy petition. Subsequently, several parties with whom the bankrupt had contracted to build homes filed objections to the discharge of their claims in bankruptcy under 11 U.S.C.A. § 35. Each claimant alleged that he advanced funds for the construction of his home and the bankrupt failed to apply these funds to the individual construction job.

Objections to Angelle's discharge in bankruptcy filed by Roy Lee Bergeron, Dr. Kenneth P. Reed, and Joseph Trahan were consolidated for hearing and on July 2, 1975, these debts were determined non-dischargeable in an opinion rendered by the Honorable Alex L. Andrus, Jr., Bankruptcy Judge.

The Honorable Leroy Smallenberger, Bankruptcy Judge, heard the objections to discharge filed by Joseph and Rita Sylvester and Moses Dyes and on May 5, 1976, held that these debts were discharged.

The bankrupt admits that during the period in question he operated one bank account and made all deposits and withdrawals from that account. He made no effort to segregate funds paid to him by the various parties for whom he was constructing a home. The factual basis of the creditors' claims in this action are essentially the same; the creditors advanced to the bankrupt various sums to be applied by him in constructing their homes and the bankrupt failed to render the equivalent in contractual services.

An individual chronology of the operative facts as they relate to each creditor in this action follows:

1) Roy Lee Bergeron contracted on June 7, 1973, with the bankrupt for the construction of a residence for the sum of $15,500.00. Advances totalling $13,800.00 were made by Bergeron to the bankrupt between January 24, 1973, and January 23, 1974. Judge Andrus found that Bergeron was required to pay an additional $2,254.45 to complete his home due to the bankrupt's misapplication of funds.

2) Dr. Kenneth P. Reed contracted during April, 1973, with the bankrupt for construction of a home for the sum of $45,390.00. Advances totalling $36,000.00 were made by Dr. Reed to the bankrupt between April and September, 1973. Judge Andrus found that Dr. Reed was obligated to pay an additional $23,911.95 to complete his home in accordance with the contract. The difference between the total sum paid by him $59,911.95, and the contract price left a sum of $14,322.45 that Judge Andrus found to be attributable to the bankrupt's misapplication of funds.

3) Joseph Trahan contracted on November 20, 1972, with the bankrupt for construction of a residence for the sum of $46,000.00. Trahan made advances totalling $46,000.00 to the bankrupt between November, 1972, and February, 1974. Judge Andrus found that Trahan was required to pay an additional $26,121.28 to complete his home due to the bankrupt's misapplication of funds.

4) Joseph and Rita Sylvester executed a collateral mortgage on December 11, 1973, for $21,000.00 to obtain funds for construction of their home by the bankrupt. On December 12, 1973, the bankrupt pledged the collateral mortgage note as security to obtain $9,000.00. Judge Smallenberger found that the bankrupt's conduct would not preclude his discharge from this claim and found further that labor and materials amounting to $1,000.00 had been used on this job.

5) Moses Dyes entered into an agreement with the bankrupt for the construction of a home for the sum or $33,500.00 on January 10, 1974. On January 11, 1974, Dyes executed a collateral mortgage note of $36,500.00 to obtain funds for constructing his home by the bankrupt. On January 16, 1974, the bankrupt pledged the Dyes collateral mortgage note as security for a $13,000.00 loan. The entire $13,000.00 was immediately transmitted by Angelle to the Internal Revenue Service to pay employment taxes owed by the bankrupt in his business operations. Judge Smallenberger found that the bankrupt's conduct would not preclude his discharge from this claim. The Bankruptcy Court made no finding of the extent of work done on this job.

The bankrupt admitted at the first meeting of creditors and also at the various hearings held on the instant claims that he did not consistently apply funds advanced to him to the construction job for which the advances were made. Angelle claimed, however, that he maintained sufficient supplies at his lumber yard and warehouse to fulfill the individual contracts to the extent of the sums advanced. It is impossible to verify this assertion by the bankrupt from the record because the bankrupt kept no records of his inventory and was unable to specify at the hearings what materials were earmarked or otherwise committed to any particular job at any given time.

LAW

The facts presented here require an interpretation of 11 U.S.C.A. § 35, which provides in part:

"(a) A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except such as . . . (2) are liabilities for obtaining money or property by false pretenses or false representations . . . or for willful and malicious conversion of the property of another; . . . (4) were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity; . . ."

LSA-R.S. 14:202¹ makes a Louisiana criminal offense conduct by a contractor who applies money received on account of any construction contract for any purpose other than settlement of claims for material and labor due or to become...