In re Searcy
| Decision Date | 23 June 1987 |
| Docket Number | Bankruptcy No. 83-02656-S-2-11. |
| Citation | 75 BR 149 |
| Court | U.S. Bankruptcy Court — Western District of Missouri |
| Parties | In re James Ralph SEARCY & Betty Louann Searcy, Debtors. |
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James L. Bowles, Springfield, Mo., for Bank of Lockwood.
Danny R. Nelson, Springfield, Mo., for debtors.
William A. Wear, Springfield, Mo., trustee.
These debtors filed in 1983 a Chapter 11 Reorganization of their farming operation, never were able to obtain confirmation of a plan of reorganization, and were finally liquidated under a confirmed plan filed by the creditors. Now the final chapter is reached in hearings on debtors' claims for exemptions and on one creditor's claim for secured status in certain personalty, two issues that although independent of each other nevertheless are somewhat intertwined since they concern the same property and probably impinge thereby on one another.
Debtors had been married for over thirty-five years and had always farmed. Like so many farm couples, the husband did the farming and the wife kept the house and raised the children. However, without contradiction the debtors' testimony established that the wife in this case "helped out" her husband in the farming operation, drove trucks for him and pitched in wherever she was needed. Debtors did their banking business, inter alia, with the Farmers Bank of Lockwood. On or about October 31, 1979, both debtors signed a "Guaranty" agreement with said bank, cross guaranteeing any debts of the other. There are two significant factors in that agreement. First, the agreement speaks only of debt payment and is silent as to any collateral or security for such payment. Second, the "Guaranty" specifically states that it is "Unsecured" rather than the other possibility of being "Secured" by a described security interest. On December 11, 1981, debtor James R. Searcy signed a promissory note for $63,931.75 and a security agreement on certain described farm machinery, equipment and livestock. The security agreement was both nonpossessory and nonpurchase money. As might be expected that security agreement also covered all after acquired property together with additions, accessions and substitutions as well as proceeds thereof. On May 6, 1982, the Farmers State Bank filed a financing statement executed by both debtors on the farm machinery and on October 25, 1972, had filed a financing statement on all cattle. This latter financing statement had been continued from time to time with a last maturity date of September 8, 1987.
The Trustee sold ten Holstein cows and two Holstein heifers for a gross of $3,072.14. The Trustee sold the farm machinery for a gross of $8,070.00. It is noteworthy that the debtors claimed ten Holstein cows, 3 Holstein heifers, 4 beef cows and 2 calves as exempt property but the Trustee, the auctioneer, and the U.S. Marshals (who accompanied them because of alleged or perceived threats of debtor James R. Searcy) could only find and sell twelve head of cattle. What happened to the missing Holstein heifer, the missing four beef cattle and the missing two calves has never been explained by the debtors and the Court might well speculate that they were exempted by self help.
The debtors claim that they are entitled to exempt all of the cattle as "personal animals" using the argument that the milk from the Holsteins was partially consumed by the family and the rest sold and the proceeds used for family living expenses. As to the beef cattle debtors claim that they were for personal consumption also. The total exemption claims of the debtors are shown by the attached Exhibit A. Taking those exemptions item by item, the Court will set out the allowable exemptions. Going first to the § 513.430(1), R.S.Mo. exemption, the household goods, wearing apparel, appliances, books and musical instruments are set off to each debtor. These were not touched by the Trustee. The Court finds that the thirteen (13) Holstein and six beef cattle are not animals held for personal use.1 The eight (8) missing cattle are more than ample to fill both the milk and meat requirements. No further allowance from the sale proceeds will be set off to the debtors.
The § 513.430(2) R.S.Mo. exemption of jewelry is set off to each debtor. Again, the Trustee did not touch any jewelry so there is no allowance from the sale proceeds.
The § 513.430(3) R.S.Mo. exemption (sometimes called the wild card exemption) is allowable from the sale proceeds and the Trustee is directed to pay $400.00 to each debtor from the funds on hand.
The § 513.430(4) R.S.Mo. exemption of tools of the trade is available to each debtor as a farmer. See In the Matter of John D. Rasmussen, 54 B.R. 965 (Bkrtcy. W.D.Mo.1985). The Trustee is directed to pay $2,000.00 to each debtor from the sale proceeds of the farm machinery.
The § 513.430(5) exemption of $400.00 to any motor vehicle is not applicable to this hearing because the Trustee touched no vehicles. Further, it was not clear who owned what vehicle and one of said vehicles seemed to be titled in a daughter's name. There would be no allowance from the sale proceeds.
The § 513.440 R.S.Mo. exemption (sometimes called the head of household exemption) is and may be claimed by James R. Searcy. The Trustee is directed to pay $1,100.00 from the sale proceeds to debtor James R. Searcy.
The § 513.475 R.S.Mo. exemption (sometimes called the homestead exemption) in the amount of $8,000.00 is claimed by debtor James R. Searcy. That is not applicable to this hearing since it applies only to real estate, not the proceeds of personalty.
Arithmetically then, it would appear that debtor James R. Searcy would receive $3,500.00 from the Trustee and debtor Betty Searcy would receive $2,400.00 from the Trustee.
The Court then passes to the question of whether the Farmers State Bank of Lockwood is secured or not. On the answer to that question, hangs also the answer as to whether the Trustee or the bank gets the somewhat meager balance.2 Counsel for the bank relies on Citizens State Bank of Nevada, Missouri v. Marvin W. Davison and Betty S. Davison, an unpublished opinion by the Honorable Scott O. Wright, Chief District Judge for the Western District of Missouri. That opinion is controlling on this Court if it is in point, so the facts need to be briefly detailed.3
Marvin and Betty Davison were the owners of 51 shoe stores located across Southern Missouri and extending into Champaign, Illinois, to the east, Rogersville, Arkansas to the south, and mid-Kansas to the west. The question at issue was whether the failure of the Citizens State Bank of Nevada to obtain the signature of Betty Davison on the UCC-1's or financing statements invalidated the bank's lien since she was an owner (with Marvin Davison) of the property. It was uncontroverted that Betty Davison had signed the note and the security agreement. The Honorable Scott O. Wright, in the last of five opinions involving this issue, ruled that the "Davison business" had to be either a sole proprietorship, owned by Marvin Davison or a partnership between Marvin Davison and Betty Davison. If it was the former, then Betty's signature was not required. If it was the latter, then Marvin Davison (as a partner) could bind Betty Davison the other partner in a trading partnership. See Citizens State Bank of Nevada, Missouri, Appellant v. Marvin W....
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