In re Perdue Housing Industries, Inc.
| Decision Date | 17 June 1977 |
| Docket Number | No. 76-85.,76-85. |
| Citation | 437 F. Supp. 36 |
| Parties | In re PERDUE HOUSING INDUSTRIES, INCORPORATED, a/k/a Perdue Industries, Inc. FIRST NATIONAL BANK OF STIGLER, OKLAHOMA, Plaintiff-Appellant, v. PERDUE HOUSING INDUSTRIES, INCORPORATED, a/k/a Perdue Industries, Inc., Defendant-Appellee. |
| Court | U.S. District Court — Western District of Oklahoma |
John B. Estes, Oklahoma City, Okl., Edwin L. Gage, Muskogee, Okl., for plaintiff-appellant.
W. Rogers Abbott, II, Larry G. Cassil, Oklahoma, City, Okl., for defendant-appellee.
This is an appeal by the First National Bank of Stigler (Bank) from a Judgment of the Bankruptcy Court avoiding a lien claimed by the Bank on certain real property owned by Bankrupt Perdue Housing Industries, Inc. (Perdue) and located in Muskogee County, Oklahoma. The Court's jurisdiction herein is pursuant to 11 U.S.C. § 67(c). This appeal is taken in conformity with Bankruptcy Rules 801-814.
Although no transcript of the proceedings before the Bankruptcy Judge is before this Court, the basic facts of this case do not appear to be disputed. The Bank obtained a judgment against Perdue and filed a certified copy of said judgment with the Court Clerk of Muskogee County, Oklahoma, within four months of Perdue's filing of a petition in bankruptcy and the Bank claimed a lien on the above property as a result of said filing. Subsequently, the Bank filed a complaint in the bankruptcy proceedings seeking to foreclose this lien. The Bankruptcy Court conducted an evidentiary hearing at which the only witness called to testify was called by Perdue who was Bob L. Mansell, President of Perdue (Mansell). Based primarily on Mansell's testimony, the Bankruptcy Court found that on the date the Bank obtained its lien, Perdue was insolvent within the meaning of 11 U.S.C. § 1(19) and therefore, said lien was invalid under 11 U.S.C. § 107. The Bank then perfected this appeal.
Bankruptcy Rule 806 requires an appellant to designate the issues to be presented on appeal. The Bank has designated the sole issue on appeal to be whether the Bankruptcy Court erred in finding Perdue insolvent.
11 U.S.C. § 1(19) provides in part as follows:
"A person shall be deemed insolvent . . . whenever the aggregate of his property . . . shall not at a fair valuation be sufficient in amount to pay his debts."
In the instant case, the Bankruptcy Court based its determination of the fair valuation of Perdue's property on the testimony of Mansell concerning the financial status of Perdue rather than relying on the financial statements from which Mansell testified and that showed Perdue to be solvent. The Bankruptcy Court found that these financial statements were prepared on the basis of a "going concern value or cost of acquisition," whichever was lower rather than on the basis of what could have been realized out of Perdue's assets within a reasonable time after the date the Bank acquired its lien. The Bankruptcy Court applied the latter method of valuation as shown by paragraph 10 of the Findings of Fact which reads:
The Bank contends that the Bankruptcy Court erred in applying the above standard rather than the going concern valuation.
This Court has previously determined the meaning of "fair valuation" in Darby v. Shawnee Southwest, Inc., 399 F.Supp. 587 (W.D.Okl.1975), wherein the Court quoted from In re Schindler, 223 F.Supp. 512 (E.D. Mo.1963), as follows:
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