In re Tinker
| Decision Date | 18 May 1989 |
| Docket Number | Adv. No. 88-0591-C.,Bankruptcy No. 88-01882-C |
| Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Western District of Missouri |
| Parties | In re Loyd Richard TINKER & Geraldine Viola Tinker, Debtors. Loyd Richard TINKER & Geraldine Viola Tinker, Plaintiffs, v. STURGEON STATE BANK, Defendant. |
Norman W. Lampton, Columbia, Mo., for plaintiff.
Elton W. Fay, Columbia, Mo., for defendant.
Fred Dannov, Columbia, Mo., for debtors.
J. Michael Gillaspie, Kansas City, Mo., for F.D.I.C.
Jack E. Brown, Columbia, Mo., Trustee.
Loyd Richard Tinker and Geraldine Viola Tinker filed under Chapter 7 on April 25, 1988. Geraldine Viola Tinker was and had been an employee of Sturgeon State Bank for over fifteen years. Sturgeon State Bank was one of two principal creditors of the Tinkers and held security interests in the Tinkers' real estate, livestock and equipment. The Tinkers sold $27,697.20 of livestock on March 30, 1989, through an auction house in Columbia, Missouri. The check therefor was issued on March 31, 1989, to the Tinkers only, and they turned same over to Mr. Fred Dannov, their bankruptcy counsel. Mr. Dannov shares office space with Mr. Elton Fay, counsel for the Sturgeon State Bank, but there is no partnership or association between counsel. On or about April 10, 1988, Sturgeon State Bank learned of the sale. On or about April 20, 1988, Sturgeon State Bank terminated Geraldine Viola Tinker's employment. On or about August 15, 1988, this adversary action was filed under 11 U.S.C. § 525(b).
Discovery took considerable time, primarily because of the desires of the Tinkers to obtain information from the F.D.I.C. which had been conducting an audit of Sturgeon State Bank during early April. Fortunately, through the good offices of J. Michael Gillaspie counsel for the F.D.I.C., a compromise was established that provided limited access to said material and that point is not in issue as far as the Court knows.
Trial was had on April 13, 1989. The parties have filed their briefs, and this opinion follows. For the purpose of the opinion, Geraldine Viola Tinker will be referred to as plaintiff; Loyd Richard Tinker will be referred to as debtor; the term debtors will denominate both Tinkers; and Sturgeon State Bank will be referred to as Bank.
Like so much of the Bankruptcy Reform Act of 1978, 11 U.S.C. § 525 was a compromise between advocates of the "born again debtor faction" which proposed that past bankruptcy could not be considered by anyone for any purpose, including prospective credit granters, in evaluating the past as prologue to the future. The opponents who might be characterized as "each dog gets only one bite faction" would have preferred the status quo of the old Bankruptcy Act wherein prior bankruptcy was as much a part of a person's credit history as any other factor bearing on the likelihood that they would fulfill their future obligations. The compromise worked out as part of the "fresh start" concept provided:
"That a governmental unit (except under the Perishable Agricultural Commodities Act, the Packers and Stockyards Act, or Section 1 of 57 Stat. 422; 7 U.S.C. 204) could not in any way use bankruptcy or insolvency before bankruptcy as a basis for its treatment of any person."
Said mandate is broadened appreciably by the definitions of "governmental unit" in 11 U.S.C. Section 101(26) and "person" in 11 U.S.C. Section 101(35).
Then in 1984, Congress amended 11 U.S.C. § 525 to add:
That a private employer could not terminate employment or discriminate with respect to employment of any individual solely because of the bankruptcy or prefiling insolvency of an individual, or even the failure to pay a debt dischargeable or discharged under the Bankruptcy Act.
Most of the cases reported to date have involved the first section paraphrased above (11 U.S.C. § 525(a)) and so cases under the second section paraphrased above (11 U.S.C. § 525(b)) provide less guidance as to application, there being no circuit and only two district court cases reported as on point since the 1984 amendment.
At trial the evidence presented established that plaintiff had been an employee of the Bank for 15 years. Plaintiff had started as a proof operator, then became a teller, and then became a loan secretary. Her last employee evaluation was dated March 16, 1988. The Bank used a scale of 1 (Excellent) to 5 (Unsatisfactory) and plaintiff averaged 2.73 or slightly above the category average and somewhat more below superior. She had only two of the twenty-six categories rated below average. These were "Personality" and "Cooperation" in both of which categories plaintiff received a 3.5 rating (midway between average and needs improvement). The only suggested improvement on the evaluation was: "attitude at times."
The cattle were trucked to Columbia on March 29, 1988, sold on March 30, 1988, and the check for the proceeds issued on March 31, 1988, and delivered to Fred Dannov on March 31, 1988, with whom debtors had been discussing bankruptcy because they could not pay their creditors. The debtors owed some taxes as of April 15, 1988 (as who did not) and would have liked to use some of the proceeds to pay same.
The Bank claims that it discovered the sale on April 10, 1988, in a phone conversation initiated by an officer of the Bank to the debtors' home. Although there is disagreement between the parties, the Court must believe that the Bank did not know about the sale on March 31, 1988, or that the funds were in the hands of Mr. Dannov before April 10, 1989. By April 11th or 12th they knew of that fact and knew that Mr. Dannov was determining if the Bank was properly secured in said proceeds. By April 13, 1988, the Bank knew that debtors were filing bankruptcy as soon as Mr. Dannov had all of his material together to complete schedules and statements of affairs. The petition was mailed April 22, 1988, received and filed by the clerk's office on April 25, 1988.
Among the exhibits are two letters. The first is from Mr. Fay to Mr. Dannov. It is dated April 12, 1988. It makes demand for immediate payment of the funds Mr. Dannov was holding. On April 13, 1988, Mr. Dannov wrote to Mr. Fay that he would hold the funds until a Court determination as to the Bank's or trustee's right to said funds and would be filing a bankruptcy forthwith.
It was the Bank's evidence that this withholding of funds was improper, intransigent and uncooperative on the part of both debtors and Mr. Dannov. The Bank decided if those three parties were going to hold up the funds, the Bank was going to terminate plaintiff's employment. An extract of the minutes of the April 15, 1988 meeting of the directors of the Bank reflects that decision. The reason stated is:
"The Board feels the employment of Gerry Tinker must be terminated because mortgaged property was sold and the refusal to pay proceeds on loan."
The first portion of said statement is frankly self-serving and not in consonance with the past conduct between the Bank and the debtors. The Bank had been the principal credit extender to the debtors for over 20 years. Debtors had repeatedly marketed livestock pledged to the Bank at the same auction barn where these cattle were sold. The Bank had at least encouraged debtors to sell the instant livestock...
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