In re Loague, Bankruptcy No. S81-10214

• Decision Date: 23 December 1982
• Docket Number: Bankruptcy No. S81-10214,Adv. No. S81-1180.
• Citation: 25 BR 940
• Parties: In re Shelby Gean LOAGUE, Debtor. EQUILEASE CORPORATION, Plaintiff, v. Shelby Gean LOAGUE, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Mississippi

25 B.R. 940 (1982)

In re Shelby Gean LOAGUE, Debtor EQUILEASE CORPORATION, Plaintiff, v. Shelby Gean LOAGUE, Defendant.

Bankruptcy No. S81-10214, Adv. No. S81-1180.

United States Bankruptcy Court, N.D. Mississippi.

December 23, 1982.

Edwin H. Roberts, Jr., of Roberts & Clisby, P.A., Oxford, Miss., for plaintiff.

Sam M. Reedy, Fulton, Miss., for defendant.

Jacob C. Pongetti, Columbus, Miss., trustee.

MEMORANDUM OPINION

EUGENE J. RAPHAEL, Bankruptcy Judge.

Debtor, Shelby Gean Loague, filed a petition under Chapter 7 of the 1978 Bankruptcy Code on April 28, 1981. On June 30, 1981, Equilease Corporation, a creditor, as plaintiff, filed a complaint naming only Shelby Gean Loague, debtor, as defendant, but plaintiff's attorney appended to the original complaint certificates of service indicating service of copies of the original complaint both on Honorable Sam M. Reedy, debtor's attorney and Honorable Jacob C. Pongetti, trustee. The complaint prayed for modification of the automatic stay so as to permit Equilease Corporation to take possession of "its property" and dispose of "said property" according to its "lease agreement", for the release of plaintiff and its surety on a bond which plaintiff had posted with the trustee for the release of such property, and that the property (a 1979 Freightliner motor vehicle) be "finally removed" (abandoned) from the estate of the bankrupt (debtor). Both certificates of service were dated July 7, 1981. Also on June 30, 1981, this court entered its order shortening time to answer so as to require answer or motion not later than July 22, 1981. Said order also set the trial of said complaint for July 28, 1981. The only named defendant, Shelby Gean Loague, did not answer or otherwise respond to the complaint, but Jacob C. Pongetti, trustee, describing himself as a defendant in the heading of his pleading, filed a document in this adversary proceeding in the form of an answer, but styled "Objection to Abandonment of Motor Vehicle", on July 20, 1981. Included in the trustee's answer is a counterclaim which concludes with the following allegations which are tantamount to prayers for relief:

"Wherefore, the trustee is entitled to judgment holding that the `automotive lease\' is in fact a security agreement, that Shelby Loague is in fact owner of the vehicle in question, that the security interest is invalid as against the trustee, the same having not been properly perfected, that the vehicle should be preserved for the estate, that Equilease Corporation deliver over possession of said vehicle to the trustee at its expense, all costs of this cause and such further relief as may be just."

Equilease Corporation, plaintiff, filed its "Response to Objection to Abandonment of Motor Vehicle", including an answer to trustee's counterclaim, on July 27, 1981. Although such "response" filed by plaintiff again named only Shelby Gean Loague as a defendant, plaintiff's attorney again included certificates of service both on the trustee and debtor's attorney.

On July 28, 1981, the adversary proceeding was continued by court-approved stipulation of plaintiff and the trustee. The hearing on the merits of the complaint was conducted on September 22, 1981.

There is in evidence a written document described on the face thereof as "Automotive Lease" made on April 27, 1979, between Equilease Corporation, "Lessor" and Shelby Loague, "Lessee", for what is described in Schedule A-1 forming a part thereof as a leasing of a new 1979 Mack vehicle for a term of forty-eight months on the rental bases of one monthly rental of $1,500.00 and forty eight monthly rentals of $1,236.69. The signature section to the general provisions pages of said document reflects the April 27, 1979, signature of Shelby Loague (witnessed by Jack Wilson, described in the record as an employee of Equilease Corporation), and includes the lessor's date line notation "Accepted and Executed by Lessor this 7th day of May, 1979", but does not reflect the corporate signature of Equilease Corporation. However, the said Schedule A-1 forming a part of said lease and constituting the last page thereof includes both the April 27, 1979, signature of Shelby Loague (described as lessee) and the ostensible corporate signature of Equilease Corporation shown as follows: "AGREED TO: EQUILEASE CORPORATION ________, LESSOR By (partially illegible signature) (Title)".

The next exhibit in the record is a "bill of sale" from Parker Used Parts to "Equilease Corporation (Shelby Loague)", 5100 Poplar Avenue, Memphis, Tenn. 38104, for a WHITE 1979 FLT 8664T TRACTOR, Serial Number CA213HP160783 NEW. The total consideration shown as "cash on delivery" is $42,252.50. The bill of sale is signed by J.R. Parker (ostensibly for Parker Used Parts, seller) and by the aforementioned Jack Wilson (shown in this record to be a representative of Equilease Corporation), who signed on a line provided for "purchaser".

Another exhibit is the statutory and regulatory State of Mississippi, Motor Vehicle Comptroller, Title Division, form for Application for Certificate of Title to a certain motor vehicle described as 79 FL FLT New Body DS, vehicle identification number CA 213HP160783, purchased from Parker Used Parts, indicating the owner to be "Equilease Corp. c/o (SHELBY LOAGUE)", 5100 Poplar Ave. 2410, Memphis, Tenn. 38117. Said application for certificate of title bears the signature of Parker Used Parts by J.R. Parker, and the owner's signature is shown as the aforementioned Jack Wilson. The date of said application is 4-27-79.

Included also in the record is a document entitled "SUBSTITUTION OF COLLATERAL", dated May 21, 1979, showing Equilease Corporation as "Lessor" and Shelby Loague as "Lessee". Said substitution of collateral mentions that as to a certain lease bearing date the 27th day of April, 1979, the Lessor did lease to Lessee certain property therein described, and that Lessor, at the request of the Lessee, has agreed to substitute, subject to said lease, a 1979 Freightliner S/N CA213HP160783 for a 1979 Mack S/N RWS767LST42221.

Still another documentary exhibit is a copy of the statutory and regulatory Mississippi Certificate of Title of a Motor Vehicle, bearing title date 03/03/81, describing the aforementioned 1979 Freightliner, indicating the owner to be "Equilease Corp c/o Shelby Loague", 5100 Poplar Ave. 2410, Memphis, TN 38101 and similarly indicating the first lienholder to be "Equilease Corp. c/o Shelby Loague", 5100 Poplar Ave. 2410, Memphis, TN 38101.

The final document in evidence is the bond of Equilease Corporation, signed by said corporation on June 23, 1981, in the penal sum of $35,000.00, given to the trustee contemporaneously with the release of the aforementioned 1979 Freightliner by the trustee to said Equilease Corporation, conditioned on the prosecution to effect of "this Writ of Abandonment" and requiring the return of said 1979 Freightliner if return thereof be adjudged. Said bond is shown as approved by "Jacob Pongetti" (no title shown) on June 29, 1981.

Without objection the witness, Gerald Carr, Assistant Vice-President in the legal department of Equilease Corporation, New York, New York, testified not only from the standpoint of business records information, but also as to his hearsay information as to the circumstances in this case. He affirmed that the first transaction between Equilease and the debtor was the April 27, 1979, leasing of the 1979 Mack motor vehicle by Equilease as lessor to Shelby Loague as lessee. He averred that the 1979 Freightliner was purchased by Equilease from Parker Used Parts and on May 21, 1979 was substituted as "collateral" for the 1979 Mack mentioned in the April 27, 1979, lease. He vouched for the fact that in the meantime, promptly after the purchase of the 1979 Freightliner by Equilease, Equilease applied for and was granted a certificate of title in accordance with the laws of the State of Mississippi. He indicated that when debtor became delinquent by not paying certain installments which had accrued under the lease in June, 1981, at which time the 1979 Freightliner was stored with a third party in Mississippi, Equilease arranged with the trustee in this Chapter 7 proceeding to post bond in the amount of $35,000.00 in order to obtain possession of said 1979 Freightliner. Equilease then took said 1979 Freightliner to the State of Missouri and sold it, applying the proceeds of the sale to the leasehold indebtedness. Mr. Carr testified that debtor at that time had paid rental payments aggregating $23,954.03 under the lease, that sale of the subject vehicle was made for $22,000.00 and that debtor then remained indebted to Equilease for a balance of $11,984.38.

The debtor, Shelby Gean Loague, was called as a witness. He conceded that there was a delinquency at the time when he filed his Chapter 7 petition herein. He also indicated that he cannot dispute the fact that the balance owing by him to Equilease after applying the proceeds of the sale of the truck to such indebtedness is "almost $12,000.00". On the other hand, Mr. Loague did not concede the assertion of ownership of the 1979 Freightliner by Equilease. Mr. Loague sought by parol evidence to show that there was an oral agreement between him and Equilease at the time of the execution of the lease agreement and that after he completed his obligation to pay all installments under the lease, the motor vehicle would become debtor's property. However, he conceded that no purchase agreement appears in the written lease.

Ralph G. Roy, Tax Assessor and Tax Collector of Lafayette County, Mississippi, when called as a witness, simply described the general routine followed by his office in handling applications for title certificates to motor vehicle under the Mississippi Title Registration Law.

When recalled to the witness stand debtor, Shelby Gean Loague, conceded that he clearly understood that all of his lease payments as to the subject...