In re Greives
Decision Date | 17 March 1987 |
Docket Number | Adv. No. 86-4047.,Bankruptcy No. 86-40436 |
Parties | In re George Joseph GREIVES, Jr. and Janet Ann Greives, Debtors. George Joseph GREIVES, Jr. and Janet Ann Greives, Plaintiffs, v. BANK OF WESTERN INDIANA, Defendant. |
Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana |
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David A. Rosenthal, Lafayette, Ind., for debtors.
Thomas Ryan, Lafayette, Ind., for Bank of Western Indiana.
The Debtors filed their petition commencing their case on July 3, 1986. On July 7, 1986, the Plaintiffs herein, George Joseph Greives, Jr. and Janet Ann Greives (hereinafter: "Debtors" or alternatively George Joseph Greives, Jr, "Greives") filed their complaint praying that a turnover order issue versus the Defendant, Bank of Western Indiana (hereinafter: "Bank"), as to certain farm machinery and livestock pursuant to 11 U.S.C. § 542 or in the alternative § 543. The Debtors further alleged that they could provide adequate protection as the Court deemed necessary by periodic payments to the Bank pursuant to 11 U.S.C. § 361.
The Debtors' complaint asserts that the Bank obtained a pre-judgment order of possession in the Circuit Court of Warren County, Indiana, under Cause No. 86-C-72 on June 25, 1986, or prior to the Debtors' petition, as to certain equipment and livestock in which the Bank claims a security interest, that the Debtors had a right to use, sell or lease the same pursuant to 11 U.S.C. § 363, are necessary to the Debtors' rehabilitation, and are of consequential value.
Pursuant to the Debtors' motion for emergency hearing for turnover of said property on July 7, 1986, the Court, after holding an emergency hearing on July 10, 1986, ordered the Bank to turnover and deliver all property physically in the possession of the Bank to the Debtors upon the payment of $1,000.00 by the Debtors to the Bank as interim adequate protection to the Bank, together with delivery by the Debtors to the Bank of written proof of insurance of the property in an amount no less than $200,000.00. The Order also prohibited the Debtors from selling, transferring or disposing of the same and granting the Bank the right to physically inspect the same.
In that same order the Court set down the proceeding for a pre-trial conference as to what adequate protection, if any, should be provided by the Debtors to the Bank pursuant to 11 U.S.C. § 361. No formal, written motion requesting adequate protection was filed by the Bank, as this contested matter arose out of the Debtors' complaint for turnover.
On July 25, 1986, the Debtors filed their answer and affirmative defenses to the request by the Bank for adequate protection alleging as follows:
The Court set the final evidentiary hearing on the Bank's request for adequate protection for August 21, 1985. On the motion of the Bank, the same was continued to September 24, 1986 at which time a partial submission was made. The hearing was adjourned to October 16, 1986 for an additional partial submission and again adjourned to November 3, 1986, at which time submission was fully made.
By letter dated November 21, 1986, with enclosures, filed with the Court in November 1986, with a copy shown to Debtors' counsel, the Bank submitted two documents to the Court. The first was an agreed entry in which the Debtors agreed that in lieu of adequate protection payments to abandon to the Bank a 42 foot 1972 Wilson trailer, serial no. 5639, in which the parties agreed that the Bank has a security interest pursuant by virtue of a security agreement dated July 18, 1985, executed by the Debtors in favor of the Bank. The Bank agreed to dispose of said trailer in accordance with the Indiana UCC and apply the net proceeds therefrom to the indebtedness of the Debtors to the Bank. It was further agreed by the parties that this trailer was not included in the stipulated value of $63,500.00 for the non-titled equipment of the Debtors.
Per the instructions of the Court, at the hearing held on November 3, 1986, the Bank by letter dated November 21, 1986 submitted a market report as to the value of the 1979 Chevrolet truck to which value had not been agreed upon by the parties. The market report shows a value of $3,200.00 as a base price without options and accessories. This market report was by National Market Reports, Inc., Vol. 76, No. 4 dated October 1, 1986.
There was some confusion at the beginning of the hearing as to whether Farmers and Merchant's Bank claimed a security interest in the Debtors' equipment which was senior to that of the Bank. By letter dated November 7, 1986, the Bank filed a certified copy of a UCC termination statement filed by the Farmers and Merchant's Bank with the Warren County Recorder on October 8, 1986 as to the Debtors' equipment.
On November 17, 1986 the Debtors filed their post-hearing, legal memorandum in which they assert that the Debtors granted the Bank a security interest in the specific machinery (equipment) set forth in the list attached to the November 19, 1985 Security Agreement, in only the specific typewritten list of cattle signed by the Debtors as set out in the July 18, 1985 list attached to the November 19, 1985 Security Agreement, and in the 1985 crop, but not the 1986 crop. The Debtors admitted in their memo that the Bank had a valid security interest in titled equipment (i.e. vehicles) where title is retained by the Bank or set forth on the title, as well as a valid mortgage as to the Debtors' real estate.
On November 24, 1986, the Bank filed its post-trial brief asserting that the Bank has a valid security interest in the following property: 1) the proceeds of a lawsuit by the Debtors versus a Dr. Greenwood and others; 2) farm equipment owned by the Debtors and certain titled vehicles owned by George Greives, Jr.; 3) all cattle owned by the Debtors; and 4) the Debtors' 1986 crops.
The parties orally stipulated in open Court or at status conference to the following findings of facts for the purpose of this hearing only:
The Debtors expressly refused to stipulate that the Bank holds a valid security interest in the Debtors' 1986 crops and the proceeds thereof or what the ultimate value of that crop is or that the Bank has a valid security interest in any and all of the Debtors' cattle.
The Bank's initial witness was Dan Fehrenbach, the Bank's vice president in charge of lending.
Fehrenbach testified that on November 19, 1985, the Debtors executed to the Bank their most recent renewal note in the sum of $338,000.00. (Defendant's Exhibit No. 1). The note was on the Bank's own pre-printed form with appropriate blanks to be filled in as required. The note had attached thereto an "obligatory and/or discretionary line of credit agreement", also dated November 19, 1985, signed by Debtors and Fehrenbach on behalf of the Bank. This...
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