In re O'Neal, Adv. No. 81-0174(SE)
| Decision Date | 22 March 1982 |
| Docket Number | Bankruptcy No. 81-00305(SE).,Adv. No. 81-0174(SE) |
| Citation | 20 BR 13 |
| Parties | In re Gaylon Kieth O'NEAL, Carol Lee O'Neal, Debtors. Gaylon Kieth O'NEAL, Carol Lee O'Neal, Plaintiffs, v. UNITED STATES of America, Farmers Home Administration, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Missouri |
Paul H. Berens, Cape Girardeau, Mo., for debtors-plaintiffs.
Wesley D. Wedemeyer, Asst. U.S. Atty., St. Louis, Mo., for defendant.
Wm. H. Frye, Cape Girardeau, Mo., Trustee.
Debtors (on October 30, 1981) filed a Complaint To Avoid Lien, to avoid alleged nonpossessory, nonpurchase-money security interests in "certain tools or other mechanical instruments or appliances necessary to the practice of Debtors' trade, business or profession, and used in the practice thereof and implements of the trade of the Debtors". The Complaint came on for trial on January 29, 1982, when ruling was reserved.
27 separate items of property are sought, by the Complaint, to be relieved from Defendant's security interests.
Of these, the evidence adduced at the trial reflects that Defendant does not have or claim to have a lien or security interest in a 1978 Ford Pickup (4 Wheel Drive); and that Defendant does have a purchase-money security interest in a 1980 Case Tractor 990 Series, Serial No. 11094781, and in an AgTech Sprayer, 1980 model, 5002 Series, Serial No. 5002-3-05088. Thus, as to these three items, the relief sought will not be granted.
Subsection (b) of 11 U.S.C. 522, referred to in Subsection (f), supra, permits a debtor to claim available State exemptions, or the exemptions provided for by subsection (d), the so-called federal exemptions.
Here, Debtor (Plaintiff) Gaylon Kieth O'Neal1 claims, in his Schedule B-4 (Schedule of Exempt Property), filed on October 22, 1981, with his voluntary petition under Chapter 7 of the Bankruptcy Code, Missouri exemptions.2
In such Schedule, he claims, among other things:
In his Schedule B-2(i) referred to in Schedule B-4, Debtor O'Neal lists "Tractors, sprayer, mower, disc, blade etc. (see Security List with F.H.A.)", as having a value of $36,075.00.
The property, as to which O'Neal seeks to avoid Defendant's security interests,4 as described in the Complaint, are:
Value5
Ford Tractor, 4600 Series, 1976
Serial # C488566 $4,000
Ford Tractor, 4000 Series, 1969
Serial # G 304491 3,500
Meyers Sprayer, 400 gallons, 1966 1,500
Meyers Sprayer, 400 gallons, 1970 1,500
Burch Disc, 10', 1969 300
John Deere Disc, 13', 1970 300
Steel Bin Trailers (4), 80 Bushels 1,600
2 Whl. Wd. Trailer, 80 Bushels 100
Shop Made Brush Rake 450
Box Hitch Carry-All, 3 pt. 50
JD Plow, 3/14', 1969 250
Cooler, 600 Bushels, 1969 2,000
PreEmergent Spray Rig, 3 pt. 110 Gal
6 row 1977 350
Bore (Peach Tree) Spray Rig, 1977 275
JD Planter 400 # 247, 4 row 150
Ford Cultivator, 4 row rear mount 300
Ford Tractor, 5600 Series, 1977
Serial # C539473 5,000
Coontz Blade, Front Mount, 1977 1,000
Woods Bush Hog, 9' Offset, 1977 900
Cotey Disc, 10' 150
Rotary Hoe, 2 row, 3 pt. hitch 50
O'Neal is 35, and since 1975 has been a farmer and peach grower. Primarily he's been a peach grower, his farming of row crops being of a coincidental nature, utilizing land, under his control, on which peach trees were not growing. He's been "around peaches" all of his life. All of the items of property described in the Complaint were in fact used in his farming/peach growing operation, and were necessary to be used in that operation.6 None of these items was held by O'Neal for sale, barter or trade, and all were acquired for use in that operation.
At bankruptcy,7 Debtors owned 40 acres of land, upon which their residence was situated, having acquired this real estate in 1977, financed by the Defendant. Since acquisition, the 40 acres were devoted primarily to the growing of peaches. Other acreage was leased, at bankruptcy, by Debtors, and utilized in the growing of peaches. The total acreage owned/leased by the Debtors, at bankruptcy, was 250 to 260 acres. The number of employees employed by O'Neal, in his peach-growing operation, varied with the season, the maximum number being 15, employed at harvest time (June-August).
By the time of trial, Debtors had moved from their homestead acreage, but O'Neal had 120 acres of other peach orchard land then under lease, which he intended to operate if the subject property could be retained by him, whether because the security interests were avoided, or by reason of some other satisfactory arrangement.
The question is, whether any of the property, referred to in paragraph 1, of page 3 of this opinion constitutes "implements, . . ., or tools, of the trade of the debtor" within the meaning of 11 U.S.C. 522(f)(2)(B), supra. If so, there doesn't seem to be any limit to the value of the property as to which Defendant's nonpossessory, nonpurchase-money security interests8 may be avoided, under that Section, inasmuch as Missouri's exemptions in "tools of the trade" so-called is unlimited.
It should be noted, here, that Missouri's "tools of the trade" exemption (unlimited as to value) seems to be much more comprehensive than what is referred to in 522(f)(2)(B) as property as to which a security interest may be avoided. Missouri's 513.435(7) V.A.M.S. exemption is in "tools or other mechanical instruments or appliances necessary to the practice of any trade, business or profession, in contrast to the "implements, . . ., or tools, of the trade of the debtor" described in 522(f)(2)(B).9 I think the difference is extremely important, and should be noted especially, because Debtor takes succor in In re Seacord (Bkrtcy.W.D.Mo., 1980) 7 B.R. 121, where Bankruptcy Judge Barker holds, in a 522(f)(2)(B) setting, that a specially-equipped Van, used by the Debtor, engaged in the business of selling low cost, high value automotive parts to service stations, automobile repair shops, and used car lots in the greater Kansas City area, to transport a full stock of merchandise to his customer's sites, is a "tool or instrument" within the meaning of 513.435(7) V.A.M.S., and an item of property as to which a security interest may be avoided under 522(f)(2)(B).
I am not enamored of Seacord, because an "instrument" is not enumerated as an item of property in 522(f)(2)(B), and, of greater importance, it seems to me, because Judge Barker doesn't recognize that the practice of a "business", included in the Missouri exemption statute,10 is something different than the practice of a "trade". Thus, I do not perceive Seacord to be of persuasive authority.11
* * * * * *
Moreover, I believe Seacord substantially fails to consider that 522(f)(2) is not an exemptions statute, but is an avoidance, or a taking statute,12 and fails to consider the legislative history and purpose of the Section and its Fifth Amendment constitutional implications.
The legislative history, in respect of the Section, convinces me that it is to be utilized by consumer debtors, wage earners who work for a living, to protect property, believed to be necessities of family life or essential to the earning of a living, of nominal (or, less that substantial) commercial value. The legislative history of the Section is ably and comprehensively set out in In re Morris (Bkrtcy.N.D.Ill., 1981) 12 B.R. 321, 7 B.C.D. 1336, in an exhaustive opinion by Bankruptcy Judge Merrick, and in detail in In re Sweeney, supra (footnote 12). It is found, also, in In re Gifford, 669 F.2d 468 (7 Cir., 1982) para. 68,549 CCH Bankruptcy Law Reporter.
Further, as Morris and Sweeney teach us, the avoidance of a security interest in property of substantial commercial value, as here, would pose grave Fifth Amendment Constitutional questions, a construction to be avoided particularly in light of the recorded legislative history which does not support or require such construction.13
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