In re Thomasson

• Decision Date: 27 October 1986
• Docket Number: Adv. No. 83-1143-S-2-11.,Bankruptcy No. 83-00633-S-2-11
• Parties: In re David D. THOMASSON & Joanne R. Thomasson, Debtors. James & Nancy WOLFE, Plaintiffs, v. David D. THOMASSON & Joanne R. Thomasson, Defendants.
• Court: United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Western District of Missouri

66 B.R. 503 (1986)

In re David D. THOMASSON & Joanne R. Thomasson, Debtors.

James & Nancy WOLFE, Plaintiffs, v. David D. THOMASSON & Joanne R. Thomasson, Defendants.

Bankruptcy No. 83-00633-S-2-11, Adv. No. 83-1143-S-2-11.

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

October 27, 1986.

Mark Gardner, Springfield, Mo., for plaintiffs.

Fred Charles Moon, Springfield, Mo., for defendants.

MEMORANDUM OPINION AND ORDER

FRANK W. KOGER, Bankruptcy Judge.

This adversary action comes before the Court to be ruled on a single point, namely are plaintiffs secured by virtue of a lien created by their state court judgment, or are they unsecured. The parties have stipulated to all other facts and present an (as yet) unruled by the Bankruptcy Courts of the Western District of Missouri issue that necessitates the following opinion:

Briefly stated, the underlying facts are as follows. Plaintiffs obtained judgment against debtors/defendants (hereinafter defendants), on or about September 23, 1982, in the Circuit Court of Greene County, Missouri, for $33,197.00 with interest at 12% compounded quarterly. The petition was grounded in fraud and the defendants entered into a payment and judgment stipulation and paid some $3,000.00 to plaintiffs as of the judgment date. By virtue of Mo. R.S. Section 511.360, that judgment became a lien on all real estate of defendants in Greene County, Missouri, from rendition date for three years until September 22, 1985.¹ Defendants filed their petition for reorganization under Chapter 11 on or about March 10, 1983. Obviously the preference provisions of Section 547 of the Bankruptcy Code did not operate against said lien because more than ninety (90) days had passed from the judgment date to the date of filing. Prior to September 22, 1985, the plaintiffs did not seek permission of this Court to revive the judgment as provided in Section 511.370 Mo.R.S. by issuing a Writ of Scire Facias.²

Missouri courts have held that following the mandate of Section 511.370 Mo.R.S constitutes exclusive mode of reviving the judgment. (See Papenberg v. Papenberg, 289 S.W.2d 468 (Mo.App.1956)). Likewise, Missouri courts have held that the mandates of Section 511.430 Mo.R.S. by revival of the judgment through issuance and service of the Scire Facias on the defendant is the exclusive mode to continue the lien on real estate for another three year period from the date of the revival (see Longlett v. Eisenberg, 222 Mo.App. 805, 10 S.W.2d 317 (1928), Armstrong v. Crooks, 83 Mo. App. 141, and Holt v. Mansfield, 83 Mo. App. 191).³ By reason of the foregoing, defendants argue that since the judgment was not revived, the lien was not renewed, and therefore at 12:01 A.M. on September 23, 1985, plaintiffs' real estate lien, like Cinderella's coach, turned back into a pumpkin and plaintiffs were relegated to the ashes and cinders of an unsecured creditor.

Plaintiffs do not agree and have cited to the Court the case of In re Pennington, 47 B.R. 322 (Bkr.E.D.Va.1985) and In re Catamount Dyers, Inc., 50 B.R. 788, (Bkr.D.Vt. 1985). The former case held that a statutory lien on personal property did not expire upon the return date of a writ of fieri facias where bankruptcy intervened between the creation of the lien by the issuance of the writ and its return date. Citing an unpublished opinion from the District Court of the Eastern District of Virginia, the Court determined that

"... if a creditor\'s lien is extant under state law prior to commencement of the bankruptcy, the lien remains viable even if under the terms of the law creating the lien it would expire absent some action of the creditor. For example, in the instant case, the creditor would not be obliged to seek a new writ of fieri facias to keep the lien in effect. Thus the lien of fieri facias remains viable during the pendency of the bankruptcy proceedings". Id. p. 327.

The latter case dealt with the effect of a bankruptcy filing on the passage of five years from the previous filing of a UCC1 that by law would have otherwise expired subsequent to the bankruptcy filing but prior to the date of the hearing to determine secured status. The Court there held that it was the status (secured or unsecured) at the instant of the bankruptcy filing that determined the status throughout and the lien survived to the end of the bankruptcy proceeding. Ibid. p. 790. The Court cited a number of cases including an Act case decided by the United States Supreme Court in 1931 and gives a partial quote from that opinion. The entire quote from that opinion is as follows:

"Thus, while valid liens existing at the time of the commencement of a bankruptcy proceeding are preserved, it is solely within the power of a court of bankruptcy to ascertain their validity and amount and to decree their method of liquidation". Isaacs v. Hobbs Tie & Timber Co., 282 U.S. 734, 51 S.Ct. 270, 75 L.Ed. 645 (1931).

Although that decision predates the automatic stay of the 1978 Act by some 67 years, this Court apprehends it to be the law under the Act and to continue to be the law under the Code. The St. Louis Court of Appeals (now Missouri Court of Appeals-Eastern District) in 1966 held:

"If a valid lien exists it presents a different situation and where the judgment remains unpaid the adjudication in bankruptcy is no bar to the continuation of the lien". Pruellage v. The DeSeaton Corporation, 407 S.W.2d 36, l.c. 39.

Clearly then before the enactment of the 1978 Bankruptcy Code, the lien survived and we are now left to determine if any change has occurred. Under the 1978 Code, Section 362 creates the automatic stay. That stay operates to stay all entities from (in part):

1. the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that arose before the commencement of the

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