In re Jaggers, Bankruptcy No. 6-81-00076
| Decision Date | 30 January 1985 |
| Docket Number | 6-83-1392.,Bankruptcy No. 6-81-00076 |
| Citation | 48 BR 33 |
| Parties | In re Joseph N. JAGGERS, Jr., Debtor. Patrick C. HARGADON, Plaintiff, v. COVE STATE BANK, Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Texas |
Patrick C. Hargadon of Martinec & Hargadon, Austin, Tex., for trustee.
Frank Oliver of McGinnis, Lockridge & Kilgore, Austin, Tex., for Cove State Bank.
On the 20th day of September, 1984, came on for consideration in the above styled and numbered cause, the Trustee's Objection to Allowance of Claim of Cove State Bank, Claim No. 17, and Trustee's Complaint to Recover Preference. The Court, having heard the arguments and authorities of counsel and having considered the briefs in support of the parties' respective positions, hereby renders the following Memorandum Opinion in support of its finding that the payment of $12,900.43 by the Debtor to Cove State Bank constituted a preferential transfer in violation of 11 U.S.C. Section 547(b).
In that connection, all Findings of Fact, made herein, may be considered Conclusions of Law, if appropriate. All Conclusions of Law, made herein, may be considered Findings of Fact, if appropriate. All Findings of Fact and Conclusions of Law not specifically made herein are deemed made in support of this Memorandum Opinion.
The facts relevant as revealed by the Stipulation of Facts can be summarized as follows:
On May 7, 1981, Joseph N. Jaggers, the Debtor herein filed his petition under Chapter 7 Title 11, United States Code. As of that date the Debtor was indebted to Cove State Bank, the defendant herein, in the amount of $51,040.60. Cove State Bank timely filed its Proof of Claim for this amount of June 30, 1981.
The indebtedness of the Debtor arose under a promissory note in the original principal sum of $68,736.27. This note was executed by Mr. Jaggers on November 18, 1980, and was payable to the Cove State Bank. The stock of Astroglass Boat Company, a Tennessee Corporation owned by Maurice Hall and Joseph Jaggers, was pledged by North American Financial Company as security for the $68,736.27 loan.
On February 23, 1981, Cove State Bank received a payment in the amount of $7,900.43 which was applied by the Bank to the Debtor's promissory note. This payment was received in the form of check number 260 drawn on the account of T-Vest Corporation (Account No. X-XX-XXX-X) at First National Bank, Temple, Texas. The check was signed by Dorothea M. Kerr on behalf of the T-Vest Corporation. Dorothea M. Kerr was an authorized signatory on the T-Vest account at the time of the signing of check number 260.
The T-Vest Corporation is a Texas Corporation. The Debtor and his wife were directors of the corporation. The Debtor was the Chairman of the Board of Directors and his wife was the secretary of the corporation. One Hundred percent of the stock of T-Vest Corporation was owned by the Debtor and his wife. The Debtor controlled and directed the disbursement of the funds from the T-Vest Corporation account. At the direction of the Debtor, payments of both personal and business expenses were made as well as payments to the Debtor and his associates for consulting fees.
Account number X-XX-XXX-X maintained by the T-Vest Corporation and controlled by the Debtor was a "conduit" or depository account for funds received by the T-Vest Corporation from Astroglass Boat Company, Star Custom Trailers, and other entities with which the Debtor was associated. Funds belonging to the various entities and funds belonging to the Debtor were commingled in the T-Vest account. At the time of the payments in question the Debtor exercised effective control over Astroglass Boat Company and Star Custom Trailers. The T-Vest account was also used for the receipt of consulting fees earned by the Debtor, Monty Tounsend, and other associates of the Debtor.
During the period of January 31, 1981 to February 23, 1981, five deposits were made into T-Vest Account number X-XX-XXX-X. The beginning balance in that account on January 31, 1981 was $9,780.10. The source of these funds is unknown. Of the five deposits made only two deposits represent personal consulting fees payable to the debtor. These deposits were from Hughes-Helicopter on February 17, 1981, in the amount of $8,701.69 and from Martin-Maritta on February 20, 1981, in the amount of $19,032.97. However, no records were kept or presently exist which would permit identification of which portion of the consulting fees were earned by the Debtor.
On March 23, 1981, Cove State Bank received a payment from the Debtor in the amount of $5,000.00 which the Bank applied to the Debtor's promissory note. The payment was received in the form of check number 222 drawn on the account of J. & D. Finance Co. (account no. XXX-XXX-X) at Ashland City Bank & Trust Company in Pleasant View, Tennessee. The check was signed by the Debtor who was an authorized signatory on the J. & D. Finance Co. account.
J. & D. Finance Co. was not a corporation. The account in the name of J. & D. Finance was used for both personal and business purposes of the Debtor. All disbursements from this account were controlled by the Debtor. Funds from Astroglass Boat Company and Maiden-Craft, a Tennessee Corporation wholly owned and controlled by the Debtor and his wife, were funneled through the J. & D. Finance Co. account for payment of various operating and business expenses. The J. & D. Finance Co. account was used as a depository account for funds from Astroglass Boat Co., Maiden-Craft and the T-Vest Corporation. Funds belonging to these entities and the Debtor were commingled in the account.
The beginning balance in account number XXX-XXX-X on March 13, 1981, was zero. All deposits into the account during the period from March 13, 1981, until the $5,000.00 check to Cove State Bank...
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