In re Brueckner, Bankruptcy No. 90-3485-BM

Decision Date13 November 1992
Docket NumberBankruptcy No. 90-3485-BM,Adv. No. 92-0169-BM.
Citation147 BR 685
PartiesIn re Edward R. BRUECKNER and Dorothy M. Brueckner, Debtors. Mark L. GLOSSER, Trustee, Plaintiff, v. David P. BEBOUT and Jacqueline A. Bebout, Defendants.
CourtU.S. Bankruptcy Court — Western District of Pennsylvania

Steven T. Shreve, Stone, Glosser & Stone, Pittsburgh, Pa., for plaintiff/trustee.

William R. Haushal ter, Rosenberg, Kirshner, P.A., Pittsburgh, Pa., for defendants/debtors.


BERNARD MARKOVITZ, Bankruptcy Judge.

The chapter 7 Trustee ("trustee"), has paid the sum of $42,395.27 from estate assets to satisfy a debt owed to Equibank which debtors and defendants had guaranteed. The trustee maintains that he is entitled to recover from defendants one-half of the amount paid to Equibank because they were co-obligors with respect to the debt.

Defendants admit that they, along with debtors, guaranteed the obligation in question but insist that debtors orally agreed that they (i.e., debtors) would be the primary obligors and that defendants would not be liable to debtors for contribution.

For reasons set forth below, judgment will be entered in favor of the trustee and against defendants in the amount of $21,197.64.


Wellington Service, Inc. ("Wellington") was incorporated in August of 1984 by debtor Edward Brueckner and defendant David Bebout. Its major asset was a service station located at 525 Perry Highway, Pittsburgh, Pennsylvania. They incorporated Wellington with the expectation of eventually making a profit from it.

Mr. Brueckner and Mr. Bebout each owned fifty percent (50%) of Wellington's shares. Mr. Brueckner served as President of Wellington. Mr. Bebout served as its Vice-President and Secretary.

Both were experienced businessmen prior to the formation of Wellington. Mr. Bebout was a principal in several other successful business ventures, including an equipment leasing venture. Mr. Brueckner owned a body repair shop and also worked for Mr. Bebout in connection with the equipment leasing business.

The service station was a going concern which was purchased from its previous owner. Wellington applied to several lending institutions in order to finance the purchasing of the service station.

On August 28, 1984, Equibank approved a term loan to Wellington. Equibank required as security for the loan that debtors and the Bebouts grant it mortgages against their personal residences and that they personally guarantee payment of Wellington's obligation.

On September 30, 1984, Wellington executed a promissory note payable to Equibank in the principal amount of $73,750.00 and a security agreement which granted Equibank a security interest in all of its equipment, inventory, and accounts receivable. Equibank in turn loaned $73,500.00 to Wellington, which it then utilized to purchase the service station.

Also on September 30, 1984, debtors granted Equibank a mortgage against their personal residence and executed a document wherein they personally guaranteed payment of Wellington's obligation to Equibank.

That same day, defendants also granted to Equibank a mortgage against their personal residence and executed a document wherein they personally guaranteed payment of Wellington's obligation to Equibank. The latter document was identical in all relevant respects to the one executed by debtors.

Mr. Brueckner worked at the service station after it was purchased by Wellington and was in charge of its daily operations.

When the service station turned out not to be profitable, Wellington defaulted on its obligations on the promissory note it had executed on September 30, 1984. In order to minimize its losses, Wellington located a buyer who agreed to purchase its assets for $31,000.00.

On May 13, 1986, Wellington, Equibank, debtors in their individual capacities, and defendants in their individual capacities executed an agreement which facilitated the sale of the service station.

Wellington "reconfirmed" and "ratified" the note and the security agreement it had executed on September 30, 1984 and "confirmed" that they "continued in full force and effect" at all times subsequent thereto.

Debtors and defendants "reconfirmed" and "ratified" the mortgages and guarantees they had executed on September 30, 1984 and "confirmed" that they "continued in full force and effect" at all times subsequent thereto.

Equibank consented to the sale of Wellington's assets on the condition that the sale proceeds, in the minimum amount of $31,000.00, be paid to it and agreed to release its security interest in those assets upon its receipt of the proceeds.

Debtors agreed to execute a promissory note in favor of Equibank in the amount of $37,483.11 and agreed to grant it an additional mortgage against their personal residence. They further acknowledged that the note they were to execute was given pursuant to the guarantee they had executed on September 30, 1984 and was not in replacement of the note executed by Wellington on that date. Equibank in turn agreed that it would not seek to collect on the Wellington note as long as payment was made on the note debtors were to execute.

Defendants agreed to guarantee payment of the note debtors were to execute and agreed to grant Equibank an additional mortgage against their personal residence.

Finally, debtors and defendants acknowledged that they were not released from the guarantees and mortgages previously executed by them and "ratified" their liability to Equibank as sureties under the various guarantees.

The proceeds from the sale of Wellington's assets were paid to Equibank in accordance with the agreement of May 13, 1986.

Payments were...

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