In re Bulger
| Decision Date | 19 July 1988 |
| Docket Number | Bankruptcy No. 87-02608-APG. |
| Citation | 91 BR 129 |
| Parties | In re Eddie BULGER, Minnie Bulger, Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Alabama |
Cody W. Foote, Opelika, Ala., for movant.
Cecil M. Tipton, Opelika, Ala., trustee.
ORDER AVOIDING SECURITY INTEREST
In accordance with an opinion to be entered in this case in this matter, the court finds that the creditor, Rice Acceptance Company, has a security interest in a 1965 International truck, Model 1200, of the debtor, which is the kind of property (see 11 U.S.C. § 522(f)(2)(A)(B) and (C)) on which such a lien may be avoided. That security interest is a nonpossessory and nonpurchase-money security interest and impairs an exemption to which the debtor would have been entitled. Therefore, it is
ORDERED that the motion is granted and that the security interest of the creditor, Rice Acceptance Company, in the 1965 International truck, Model 1200, is declared void to the extent that such lien impairs the personal property exemption of the debtor claimed and allowed in these proceedings.
Pursuant to Rules 4003(d) and 9014, Bankruptcy Rules, the debtor filed a motion to avoid the nonpossessory, nonpurchase-money security interest of a creditor on the debtor's 1965 International truck, Model 1200, valued at $500, under 11 U.S.C. § 522(f)(2). The truck is used by the debtor in his pulpwood hauling business and is necessary to the business.
Under 11 U.S.C. § 522(f)(2), a debtor may avoid a nonpossessory, nonpurchase-money security interest in property of the kind included in subsections (A), (B), or (C) to the extent that it impairs an exemption to which the debtor would otherwise be entitled. Thus, to avoid a nonpossessory, nonpurchase-money security interest the property must pass two tests: (1) the property must be exempt to the debtor under state law, not section 522(b)(1) and (d) (), and the security interest lien must impair the exemption; and (2) the property must be of the kind included in subsections (A), (B), or (C), which in this case would be "implements . . . or tools, of the trade of the debtor . . ." from subsection (B).
The pulpwood truck passes the first test. It may be exempted as personal property under Ala.Code § 6-10-6 (1975). The property exempted by the debtor in Schedule B-4 includes wearing apparel, $200; family portraits, $25; and 75 percent of wages, $380.62, totalling $405.62. Other personal property exempted in the schedule amounts to $2,864.88 and includes the $500 truck. The plain language of section 6-10-61 shows that the property valued at $2,864.88 (including the truck) is exempt under section 6-10-6 in addition to wearing apparel and family portraits. The wages are exempt under Ala.Code § 6-10-7 (1975), which section provides an exemption in addition to the section 6-10-6 personal property exemption. See In re Ezekiel, No. 85-922, slip op. (Bankr.M.D. Ala., October 24, 1985).
The truck, however, is not exempt under Ala.Code § 6-10-126, as claimed by the debtor. Section 6-10-126 is not an exemption statute. See First Ala. Bank v. Mims, 66 B.R. 20 (M.D.Ala.1986). Section 6-10-6, which exempts the truck, exempts personal property generally and does not confer a right of exemption in tools of the trade as such. Since the truck is exempt under section 6-10-6, however, it is immaterial that the debtor sought to exempt it under the wrong statute.
The lien of the creditor on the truck obviously impairs the exemption in this property, since the lien diminishes the value of the exemption.
The more difficult issue presented is whether the pulpwood hauler's truck passes the test as an implement or tool of the trade under section 522(f)(2)(B).
Since implements and tools come in various sorts and sizes, it is difficult in many cases to decide whether a particular thing owned by a debtor should be called a tool or implement. The result is inconsistency among decisions of the bankruptcy courts. That is unfortunate because a federal statute should be construed to give it uniform application throughout the nation. 73 Am Jur 2d Statutes § 144 (1974).
"Tools" and "implements" as used in subsection (B) are not words of art.2 It is a well-established principle of statutory construction that absent clear evidence of a contrary legislative intention, a statute should be interpreted according to its plain language. United States v. Apfelbaum, 445 U.S. 115, 121, 100 S.Ct. 948, 952, 63 L.Ed.2d 250 (1980). Absent unusual circumstances the court is bound by the plain meaning of the language Congress has enacted. Hills v. I.R.S., 691 F.2d 997, 1000 (11th Cir.1982). A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979).
Dictionary definitions of "tools" and "implements" are of help in discovering the plain meaning of these terms. By definition a tool can be an object3 or an implement used in performing an operation or carrying on work of any kind, or an apparatus necessary to a person in the practice of a vocation or profession. See Webster's Third New International Dictionary of the English Language Unabridged (1976). An implement can be a thing used or employed in a trade or occupation or employment. See Black's Law Dictionary 679, 1338 (5th ed. 1979). Webster's gives as examples of tools, a hammer, a saw, a machine for shaping metal, a barber's chair, a photographer's camera, and books. The Black's definition of "implement" refers to trade implements and farm implements as examples. From these definitions, it is apparent that, for all practical purposes, these two terms are synonymous. In re Yparrea, 16 B.R. 33, 35 (Bank.D.N.M.1981). Also, it appears that it is the use of the property — not necessarily the size or shape — that determines whether it is a tool. These definitions would certainly include not only hand tools, but also things of much greater size and complexity.
In interpreting the meaning of "implements" or "tools of the trade," some courts have refused to regard certain kinds of property as tools or implements without regard to use.4 Some courts have said that only property of limited value may be a tool or implement under section 522(f)(2)(B).5 Some courts, faced with the dearth of legislative history, have attempted a holistic approach to construction of section 522(f)(2)(B).6 Other courts have examined the ratio of the value of the property to total capital assets to define a tool or implement.7 Some cases use more than one, sometimes all, of these approaches to interpretation. See Matter of Patterson, 825 F.2d 1140 (7th Cir.1987); In re Harrell, 72 B.R. 107 (Bankr.N.D.Ala.1987). All of this has led to uneven results and no doubt will continue to do so in the absence of legislative rectification.
This court has no difficulty in finding that a pulpwood hauler's truck is a tool of the trade.8 First the truck passes the "use" test, In re Walkington, 42 B.R. 67 (Bankr.W.D.Mich.1984), because it is necessary and used by the debtor in his business. See also In re Dubrock, 5 B.R. 353 (Bankr. W.D.Ky.1980). Second, Congress did not place a limit on the value of a tool of the trade under subsection (B). "Neither legislative history nor persuasive case authority compel a holding that only liens on tools or implements of nominal resale value may be avoided under subsection (B)." In re Taylor, 73 B.R. 149 (Bankr. 9th Cir.1987). In Alabama, as in most states, the value of a tool on which a lien may be avoided is limited as a practical matter by the amount of the personal exemption available. Under Ala.Code § 6-10-6 (1975), as already seen, the maximum amount is $3,000.
Third, with respect to statutory construction, the court agrees with the Taylor court that
Fourth, the court will not deny lien avoidance on the truck as a tool of the trade merely because it may also be called a capital asset. Broadly speaking, all assets are capital except those specifically excluded. Major categories of noncapital assets include: property held for resale in the normal course of business, trade accounts and notes receivable, depreciable property and real estate used in a trade or business. See Black's, supra, at 108. Thus, it appears that tools that are depreciable (generally understood to be tools having a life of more than one year, see 34 Am Jur 2d Federal Taxation ¶ 6064 (1988)) are not capital assets. Under a less technical definition, arguably such tools might be called capital assets. The practice, however, of excepting property classified as capital assets from the operation of subsection (B) introduces another uncertainty and merely adds existing confusion on interpretation of the subsection. The plain language of the subsection makes no exception for tools or implements that are capital assets.
Finally, it has been said that Congress, which first provided for lien avoidance on tools or implements of the trade under the Bankruptcy Code, took over a familiar term from state law as a basis for the modest federal exemption. Patterson, supra, at 1147. Under state law it was not clear in 1978 when the Code became law or in 1850 (at least in Alabama, Connecticut, and Massachusetts) that a tool of the trade need be of "modest" value. See Sallee v. Waters, 17 Ala. 482 (1850), which held that a printer's...
To continue reading
Request your trial