In re Schaurer Agr. Enterprises, Bankruptcy No. 3-87-00905.

• Citation: 82 BR 911
• Decision Date: 08 February 1988
• Docket Number: Bankruptcy No. 3-87-00905.
• Parties: In re SCHAURER AGRICULTURAL ENTERPRISES, Debtor.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Southern District of Ohio

82 B.R. 911 (1988)

In re SCHAURER AGRICULTURAL ENTERPRISES, Debtor.

Bankruptcy No. 3-87-00905.

United States Bankruptcy Court, S.D. Ohio, W.D.

February 8, 1988.

Steven R. Fansler, West Liberty, Ohio, trustee.

David M. Martin, Springfield, Ohio, for debtors.

DECISION AND ORDER DENYING MOTION FOR DISMISSAL

WILLIAM A. CLARK, Bankruptcy Judge.

This matter is before the court upon the motion to dismiss filed by the trustee, supported by memorandum, and the opposing memorandum of debtor. The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the general order of reference entered in this district. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), matters concerning the administration of the estate.

The issue presented to the court for resolution is the eligibility of Schaurer Agricultural Enterprises, a partnership, to file and maintain a bankruptcy case under chapter 12 of the Bankruptcy Code. To reach the decision, the court has been directed to 11 U.S.C. § 101(17) which reads as follows:

(17) "family farmer" means —

(A) individual or individual and spouse engaged in a farming operation whose aggregate debts do not exceed $1,500,000 and not less than 80 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation), on the date the case is filed, arise out of a farming operation owned or operated by such individual or such individual and spouse, and such individual or such individual and spouse receive from such farming operation more than 50 percent of such individual\'s or such individual and spouse\'s gross income for the taxable year preceding the taxable year in which the case concerning such individual or such individual and spouse was filed; or

(B) corporation or partnership in which more than 50 percent of the outstanding stock or equity is held by one family, or by one family and the relatives of the members of such family, and such family or such relatives conduct the farming operation, and

(i) more than 80 percent of the value of its assets consists of assets related to the farming operation;

(ii) its aggregate debts do not exceed $1,500,000 and not less than 80 percent of its aggregate noncontingent, liquidated debts (excluding a debt for one dwelling which is owned by such corporation or partnership and which a shareholder or partner maintains as a principal residence, unless such debt arises out of a farming operation), on the date the case is filed, arise out of the farming operation owned or operated by such corporation or such partnership; and

(iii) if such corporation issues stock, such stock is not publicly traded.

FACTS

The pertinent facts in this case were developed by the evidence presented at the hearing, the schedules of the debtor and proofs of claims. On March 13, 1979 Claude Schaurer and Joseph D. Schaurer, who are brothers, formed a partnership under the name Schaurer Agricultural Enterprises at about the time they borrowed $183,500 and mortgaged a 63.68 acre farm to Farmers Home Administration (FmHA). On June 29, 1978 the two Schaurers and Paulette M. Schaurer, wife of Joseph D. Schaurer, borrowed $372,300 and $27,200 from FmHA. In 1973 Claude H. Schaurer had borrowed from Federal Land Bank against a sixty-five (65) acre tract in Darke County, Ohio upon which he later granted a second mortgage to FmHA. Claude Schaurer and Joseph Schaurer contracted other debts in the farming operation over the next several years which are itemized in Schedule A-3 of the bankruptcy petition.

DECISION

A careful reading of 11 U.S.C. § 101(17) leads this court to the conclusion that Congress intended that a farming operation owned by several individuals in the same family is eligible for the relief of chapter 12. Subparagraph (A) of the section provides the requirements for an individual or individual and spouse to qualify as a "family farmer" and, thereby, for eligibility pursuant to 11 U.S.C. § 109(f) for relief under chapter 12 of the Bankruptcy Code. Subparagraph (B) sets out the requirements for a corporation or partnership to qualify for such eligibility. For a partnership to qualify as a "family farmer," (1) more than 50 percent of the equity must be held by one family or by one family and the relatives of the members of such family; (2) such family or such relatives must conduct the farming operation; (3) more than 80 percent of the value of the partnership assets must consist of farming operation related assets and (4) the aggregate debts of the partnership do not exceed...