In re Glinz
| Decision Date | 20 November 1984 |
| Docket Number | Adv. No. 83-7399.,Bankruptcy No. 83-05004 |
| Citation | 46 BR 266 |
| Parties | In re Bruce GLINZ and Cecelia Glinz, Debtors. NORWEST BANK-JAMESTOWN, formerly known as First National Bank of Jamestown, Plaintiff, v. OSTLUND CHEMICAL COMPANY; K.L. Corporations; Spring Valley Simmental, Inc.; Farmers Home Administration, an agency of the United States of America; Farmers Union Oil Company of Drayton, North Dakota; Marvin Johnson; Florimond Desprez; Gary Cameron, Trustee of Bruce Glinz and Cecelia Glinz; Arvel Glinz and Marjorie Glinz, Debtors in Chapter 11 proceedings No. 83-05121, Defendants. |
| Court | U.S. Bankruptcy Court — District of North Dakota |
David T. DeMars, Fargo, N.D., for plaintiff Norwest Bank.
Lawrence DuBois, Cavalier, N.D., for defendants Johnson and Desprez.
First Asst. U.S. Atty. Gary Annear, Fargo, N.D., for defendant FHA.
Dwight F. Kalash, Grand Forks, N.D., for defendant Farmers Union.
William A. Schlossman, Jr., Fargo, N.D., Steven C. Turner, Omaha, Neb., for defendant Ostlund Chemical.
Gary Cameron, Trustee, Moorhead, Minn., for defendant Gary Cameron.
The Plaintiff, Norwest Bank-Jamestown, commenced the present adversary proceeding by Complaint filed with the Court on December 29, 1983. Norwest Bank seeks through its Complaint a turnover of funds now held by the Trustee and generally requests that the Court determine that its interest in those proceeds are superior to those claims of the various Defendants. The Defendants, K.L. Corporations and Spring Valley Simmental, Inc., did not file an answer to the Bank's Complaint in this action. Trial in this matter was held on September 10, 1984. The Defendants, Spring Valley Simmental, Inc., K.L. Corporations, and Arvel and Marjorie Glinz, failed to appear and assert any interest in the proceeding. Thereafter, the Court entered on October 18, 1984, an Order dismissing those Defendants from this action, precluding them from asserting any claim to the subject matter of this proceeding. The Plaintiff and remaining Defendants submitted at trial a Stipulation of Uncontested Facts, various exhibits, and an executed Waiver of Foundation with respect to the exhibits presented to the Court at trial. All parties claim a prior interest in and to the funds held by the Trustee as against all other parties to this action. Based upon the record submitted to the Court, the relevant facts are found to be as follows.
The Debtors, Bruce and Cecelia Glinz, filed for relief under Chapter 11 of the Bankruptcy Code on January 28, 1983. The Debtors' Chapter 11 proceeding was converted to a case under Chapter 7 of the Bankruptcy Code on May 27, 1983. Gary Cameron was appointed Trustee in the Chapter 7 proceeding on June 1, 1983. Pursuant to a stipulation of parties who asserted a secured interest in the Debtors' crops, the Trustee sold stored grain of the Debtors for the gross sum of $113,934.83. In his Affidavit filed in connection with this matter, the Trustee states that he sold 7,054 bushels of barley for $12,697.30. All the barley which the Trustee sold had been stored in Kittson County, Minnesota. The Trustee also states in his Affidavit that he sold 16,667 bushels of wheat which was stored in Kittson County for the sum of $47,500.95. The accounting which the Trustee supplied in connection with this matter indicates that a total of 35,646 bushels of wheat were sold. The difference of 18,979 bushels of wheat was wheat which the Trustee found stored in Pembina County, North Dakota. The Trustee obtained $53,736.58 for the grain stored in Pembina County.
The grain sold by the Trustee was grain produced by the Debtors during the 1982 crop season. Bruce Glinz estimated at his deposition that in 1982 he put in 3,200 acres of wheat and 400 acres of barley in Pembina County. In his summary of chemical applications, Bruce Glinz enumerated by land owner his crop acreage, as follows:
Land Owner Crop Acreage
Wheat
David Peil 80 acres
Marvin Johnson 680 acres
Allen Duncklee 981 acres
Bruce Glinz 1,600 acres
Bruce Glinz 600 acres (Kittson County)
___________
TOTAL 3,941 acres
Barley
Bruce Glinz 400 acres
Soybeans
David Peil 80 acres
Verne Billings 150 acres
Grace Bellamy 318 acres
E.K. Olafson 260 acres
Bruce Glinz 400 acres
Bruce Glinz 160 acres
Bruce Glinz 80 acres
Sunflowers
80 acres
The summary of chemical applications provided by Bruce Glinz does not specify upon which tracts of a specific landowner's real estate a crop was grown. The creditors in this proceeding claimed interests in crops grown on various real estate parcels as enumerated in Appendix A. Bruce Glinz testified that crops were seeded on the Marvin Johnson property in June of 1982. The harvest of wheat in Pembina County began the fourth week of September and was concluded by the first part of November, 1982. Glinz recollected that all of the barley harvested in North Dakota was stored in Minnesota and that there was stored in Kittson County, Minnesota, one and one-half bins of hard wheat which had been grown in North Dakota. The Court takes judicial notice of the fact that an average sized grain storage bin on a farm in this area holds 5,000 bushels. The Court finds that the source of the proceeds held by the Trustee are, as follows:
Dollar Bushels/Grain Location Grown Location Stored
$12,697.30 7,054/barley Pembina County, ND Kittson County, MN
$26,138.77 9,167/wheat Kittson County, MN Kittson County, MN
$21,362.18 7,500/wheat Pembina County, ND Kittson County, MN
$53,736.58 18,979/wheat Pembina County, ND Pembina County, ND
NORWEST BANK-JAMESTOWN
On or about May 14, 1982, the Debtors executed and delivered to the Norwest Bank-Jamestown a promissory note in the principal amount of $250,000.00. As of September 10, 1984, the principal balance due on the note was $250,000.00 and accrued interest amounted to $110,095.88 for a total of $360,095.88. Interest accrues at the rate of $130.1370 per day.
On or about May 14, 1982, the Debtors executed and delivered to the Bank a promissory note in the principal amount of $340,000.00. As of September 10, 1984, the principal balance due on that note was $110,530.65 and accrued interest in the amount of $30,928.89 for a total of $141,459.54. Interest accrued on that note at the rate of $49.9659 per day.
On or about March 19, 1982, the Debtors executed and delivered to the Bank a promissory note in the principal amount of $434,224.49. As of September 10, 1984, the principal balance due on the note was $194,886.75 and accrued interest was $73,870.41 for a total sum due of $268,757.16. Interest accrues on that note at the rate of $85.4298 per day.
The two notes executed on May 14, 1982, were for new advances given by the Bank to the Debtors for their operations during the 1982 crop year.
On or about May 14, 1982, the Debtors executed and delivered to the Bank a security agreement conveying an interest in growing crops and the proceeds thereof.
The Bank filed a financing statement with the Pembina County Register of Deeds on May 18, 1982. The Bank also filed a financing statement with the Stutsman County Register of Deeds on May 17, 1982. Finally, a financing statement was filed by the Bank with the County Recorder for Kittson County, Minnesota, on May 18, 1982. All three financing statements indicated that the Bank was claiming an interest in crops grown by Bruce and Cecelia Glinz on enumerated parcels of real estate.
Norwest Bank obtained a subordination agreement executed April 16, 1982, wherein the Government subordinated its interest in the Debtors' 1982 crops which the Farmers Home Administration claimed through financing statements filed May 18, 1981.
On or about May 15, 1981, Bruce and Cecelia Glinz executed and delivered to the Farmers Home Administration a security agreement conveying an interest in growing crops, crops to be grown, and the proceeds of those crops. The Debtors delivered to the Farmers Home Administration an additional security agreement dated December 4, 1981, conveying a similar interest in crops.
The Farmers Home Administration filed an executed financing statement in Pembina County, North Dakota, on May 18, 1981. An executed financing statement was also filed on May 18, 1981, by the Farmers Home Administration with the County Recorder for Kittson County, Minnesota.
The claim of the Farmers Home Administration in this bankruptcy proceeding is in the principal amount of $663,345.48 with accrued interest as of September 10, 1984, amounting to $43,561.37.
Desprez is the owner of certain real estate in Pembina County, North Dakota. Marvin Johnson is attorney-in-fact for Florimond Desprez. A lease agreement dated November 20, 1980, was negotiated between Johnson and Bruce Glinz covering the Northwest Quarter, Southeast Quarter, and Southwest Quarter, Section 2-161-52 and the Southeast Quarter and the Northeast Quarter, Section 3-161-52, Pembina County, North Dakota. The lease agreement was executed by Bruce Glinz on November 28, 1980. The lease indicates that the real estate covered by the lease contains 693 tillable acres. Bruce Glinz estimated that he actually tilled 680 acres of the Marvin Johnson property. By its terms, the lease was to remain in effect for three (3) years ending at the conclusion of the 1983 crop year. Under the lease, fifty percent of the rental was due on or before April 1 of each year and the remaining rent was due on or before ...
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