In re Fulton, Bankruptcy No. 182-04090

• Decision Date: 02 October 1984
• Docket Number: Adv. No. 183-0363.,Bankruptcy No. 182-04090
• Citation: 43 BR 273
• Parties: In re Walter Charles FULTON, Sr., a/k/a Walter C. Fulton, Sr., Ind. & d/b/a a partner in the partnership of C & F Trucking, Debtor. Mattie HOLCOMB and Padgett Carroll, Plaintiffs, v. Walter Charles FULTON, Sr., Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Tennessee

43 B.R. 273 (1984)

In re Walter Charles FULTON, Sr., a/k/a Walter C. Fulton, Sr., Ind. & d/b/a a partner in the partnership of C & F Trucking, Debtor Mattie HOLCOMB and Padgett Carroll, Plaintiffs, v. Walter Charles FULTON, Sr., Defendant.

Bankruptcy No. 182-04090, Adv. No. 183-0363.

United States Bankruptcy Court, M.D. Tennessee.

October 2, 1984.

Jane B. Forbes, Franklin, Tenn., Trustee.

Eugene Hallworth, Columbia, Tenn., for debtor.

Jerry C. Colley, Columbia, Tenn., for plaintiffs.

ORDER

GEORGE C. PAINE, II, Bankruptcy Judge.

This matter is before the court on the plaintiff's claim that the debtor wrongfully scheduled a 1972 Great Dane 42 foot van as an asset. The plaintiffs allege that they provided the funds for the purchase of the van but that the debtor wrongfully failed to register the title to the van in the plaintiffs' name. The Chapter 7 trustee, Jane Forbes, has intervened in the case alleging that the trailer is property of the Chapter 7 estate pursuant to 11 U.S.C. § 541 (West 1979). Upon consideration of the testimony of witnesses, exhibits, briefs of the parties, statement of counsel and the entire record, the court concludes that the van belonged to the partnership of C & F Trucking. The parties are ordered to engage in an accounting and to distribute whatever equity exists in the van pursuant to both the decision of this court and Tenn. Code Ann. § 61-1-139 (1980).

The following shall represent findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.

The plaintiff, Padgett Carroll, and the debtor operated a trucking business under the name of C & F Trucking. Mr. Carroll contributed a semi-truck which the debtor drove for the business. The profits earned from the business were to be divided between the parties. In July 1982, Mr. Carroll's grandmother, Mattie Holcomb, wired him $9,000.00. He used $4,600.00 of these funds to purchase a used trailer from Fruehauf Corporation for C & F Trucking. The seller's invoice for the trailer listed C & F Trucking as the purchaser of the trailer. The Arkansas certificate of title for the trailer was signed by the debtor and listed C & F Trucking as the owner.

On December 16, 1982, the debtor filed a voluntary Chapter 7 bankruptcy petition. On January 24, 1983, the debtor amended his petition to reflect that he had been engaged in business as a partner in C & F Trucking. The debtor's schedules listed the 42 foot trailer with a value of $4,000.00 as an asset of the debtor, listed the full value of the trailer as exempt pursuant to 11 U.S.C. § 522(d)(5) and listed the plaintiff, Mattie Holcomb, as an unsecured creditor in the amount of $4,000.00. Subsequently, the debtor amended his Schedule B-4 to list only $950.00 of the trailer as exempt.

I.

The court must decide two main issues in this proceeding. First, the court must determine who owns the trailer in question. Second, the court must determine whether the Chapter 7 estate has any interest in the trailer.

In determining ownership of the trailer, the court has before it three theories of ownership. First, the plaintiffs argue that the property belongs to them based on the theory that the debtor wrongfully failed to title the van in their name. Second, the trustee asserts that the property was originally owned solely by the debtor and thus, became property of the estate on the debtor's filing of his bankruptcy petition. Finally, the debtor argues that he and Padgett Carroll owned the trailer jointly subject to a debt owed to Mattie Holcomb.

The evidence at trial established that Padgett Carroll and the debtor were engaged in the business of C & F Trucking. Padgett Carroll agreed to provide the capital necessary to run the business while the debtor agreed to drive the truck. The profits earned from this business were to be divided between the parties. Based on this evidence, this court has no difficulty in determining that Padgett Carroll and the debtor were engaged in business as a partnership. See Wyatt v. Brown, 39 Tenn. App. 28, 281 S.W.2d 64 (1955); TENN. CODE ANN. § 61-1-106 (1980); 59 Am. Jur.2d Partnership § 39, et seq. (1971).

In determining whether property is partnership property or property owned by an individual, the court must focus primarily on the intentions of the partners at the time the property was acquired.

"The intent of the partners determines what property shall be considered partnership property as distinguished from separate property. Such intention of the partners must be determined from their apparent intention at the time the property was acquired, as shown by the facts and circumstances surrounding the transaction of purchase, considered with the conduct of the parties toward the property after the purchase."

60 Am.Jur.2d Partnership § 92 at 21 (1972). In viewing evidence surrounding the purpose and use of the property, Tennessee courts have held that when property is titled in the name of the partnership, the party asserting that the property is not partnership property has the burden of proof. Brown v. Brown, 45 Tenn.App. 78, 320 S.W.2d 721, 729 (1958). See also TENN.CODE ANN. § 61-1-107 (1980).

The evidence produced at the trial of this matter establishes that the trailer in question is indeed partnership property. The trustee introduced both a sales invoice and a certificate of title listing the owner of the trailer as C & F Trucking. The testimony established that the trailer was purchased by Padgett Carroll for use in the C & F Trucking business and that the debtor actually used the trailer in furtherance of the business.

The claims of ownership asserted by both the trustee and the plaintiffs lack substance. The plaintiffs failed to establish any grounds upon which this court could find either a constructive trust or a fraudulent transfer....