In re Lewis, Bankruptcy No. 81-40162-COL
| Decision Date | 25 June 1981 |
| Docket Number | Bankruptcy No. 81-40162-COL,Adv. No. 81-4122-COL. |
| Citation | 12 BR 106 |
| Parties | In re Thomas Lee LEWIS, Argentina Williams Lewis, Debtors. Joe M. FLOURNOY, Chapter 13 Trustee, Plaintiff, v. CITY FINANCE, Defendant. |
| Court | U.S. Bankruptcy Court — Middle District of Georgia |
Charles C. Carter, Columbus, Ga., for plaintiff.
William L. Slaughter, Columbus, Ga., for defendant.
This proceeding is before the Court for decision on respective motions for summary judgment. The sole question is whether the Defendant is a "custodian," and, herein, this is answered in the negative.
The facts are not disputed:
1. Defendant has a perfected (Title Certificate) security interest in a 1970 Pontiac automobile securing an indebtedness of $426.
2. Debtor, Argentina Williams Lewis, defaulted, and Defendant took possession of the automobile by self-help as authorized in the security agreement.
3. Defendant acquired such possession within a ten-day period immediately preceding the filing of the Chapter 13 case.
4. The title to the automobile is in the name of Argentina Williams Lewis, and the Title Certificate shows Defendant as holding a security interest.
5. Defendant continues to have possession of the automobile.
Plaintiff filed a complaint seeking possession of the automobile contending that Defendant is a custodian of property. Plaintiff asserts that by reason of the definition of custodian contained in 11 U.S.C. § 101(10) and the duty of a custodian in 11 U.S.C. § 543(b), Defendant should be required to deliver the automobile to Plaintiff. No other ground for recovery of possession is asserted by Plaintiff. Defendant contends that it is not a custodian within the definition of 11 U.S.C. § 101(10) and, therefore, is under no duty to deliver the possession of the automobile under 11 U.S.C. § 543(b) to the Plaintiff.
The question for decision is whether Defendant is a custodian within the definition of 11 U.S.C. § 101(10). If Defendant is a custodian, the possession of the automobile should be delivered to Plaintiff. If Defendant is not a custodian, the possession of the automobile should not be delivered to the Plaintiff.
The Defendant is not a custodian.
The conclusion reached herein is different from In re Williams, 6 B.R. 789, (Bkrtcy.1980), and this is the only case found or cited.
The only applicable part of 11 U.S.C. § 101(10), which defines custodian, is subsection (C) as follows:
To fall within this definition of custodian, an entity must be a "trustee, receiver, or agent," and Defendant is none of these. Defendant is a creditor. Defendant is one of two parties to a security agreement and is a repossessing creditor.
To fall within the definition Congress saw a third party taking charge of property for the benefit of the debtor's creditors, and not a repossessing secured creditor acquiring possession of property for its own benefit.
"Such property" is used twice in the definition and each time refers back to the property which the trustee, receiver, or agent is appointed or authorized "to take charge of." "Such property" is taken "charge of" for one of two purposes, either to enforce a lien or general administration. In the latter it is clear that it is "for the benefit of the debtor's creditors," not a single creditor. In the former for whose benefit is not stated, and for this reason the last phrase "for the benefit of the debtor's creditors" applies to the former.
In addition to not being a "trustee, receiver, or agent," not being a third party, and not having possession of the automobile for the benefit of debtor's creditors, Defendant also is not appointed "under applicable law by any court," and is not a "trustee, receiver, or agent" authorized to take charge of property of the debtor by contract to enforce a lien or administer the property for "the benefit of debtor's creditors." The Defendant's contractual authority (security agreement) is permissive only — it is not mandatory. The Defendant's contractual authority gives it an option to repossess or not repossess. The definition in 11 U.S.C. § 101(10) anticipates a third party without option. It anticipates mandatory duties of the trustee, receiver, or agent arising from court appointment or contract.
There is a certain ambiguity in the 11 U.S.C. § 101(10)(C) definition of custodian. Should there be error in the above conclusions, the definition might be construed to include the Defendant as one who by contract has possession of property to enforce a lien should importance be given to the comma following the words "enforcing a lien against such property." If importance is given to the comma, the definition fails to state for whose benefit the lien is to be enforced. In the instant case the benefit runs only to a single creditor, and this is contrary to the tenor of 11 U.S.C. § 543(b) and the legislative history of 11 U.S.C. § 101(10). 11 U.S.C. § 543(b), turnover of property by a custodian, seems to be addressed not to a repossessing creditor but to a third party having custody of property for the benefit of the debtor's creditors. From the tenor...
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