In re Wegner, Bankruptcy No. 485-00002

• Decision Date: 17 March 1988
• Docket Number: Bankruptcy No. 485-00002,Adv. No. 485/0026.
• Citation: 83 BR 750
• Court: U.S. Bankruptcy Court — District of Montana
• Parties: In re Albert J. WEGNER, Margie A. Wegner, Debtors. Gregory G. MURPHY, Trustee, Plaintiff, v. William C. GRIFFEL, Defendant.

83 B.R. 750 (1988)

In re Albert J. WEGNER, Margie A. Wegner, Debtors Gregory G. MURPHY, Trustee, Plaintiff, v. William C. GRIFFEL, Defendant.

Bankruptcy No. 485-00002, Adv. No. 485/0026.

United States Bankruptcy Court, D. Montana.

March 17, 1988.

Robert C. Smith, Billings, Mont., for defendant.

Gregory G. Murphy, Billings, Mont., trustee.

Douglas James, Billings, Mont., for trustee.

Stephen C. Mackey, Billings, Mont., for creditor.

ORDER

JOHN L. PETERSON, Bankruptcy Judge.

After reversal of this case by the Ninth Circuit Court of Appeals, Griffel v. Murphy, 839 F.2d 533, (1988), the Trustee, over objection of Griffel, moved to amend the Judgment of May 13, 1986, to reduce the Judgement to $17,839.00. The Ninth Circuit reversed the decision of this Court and remanded for disposition in accordance with its ruling. The basis of the Trustee's motion is that under the Ninth Circuit decision the preference of $17,839.01 paid by checks to Griffel shortly before bankruptcy was not reversed, and is a separate and distinct issue from the executory contract issue addressed by the Court in its decision of January 28, 1988. Griffel responds that the Ninth Circuit decision also decided the preference issue concerning the payment of $17,839.00, because the Court stated:

"The Trustee filed an adversary complaint to void two preferences. The first was the transfer of the debtor\'s interest in cattle and machinery to appellant in December 1984. The second is the payment of $17,839.01 the debtor made on December 10, 1984. The bankruptcy court found that because the contract for sale of cattle and machinery was not an executory contract, both transfers in question were preferential under section 547 of the Code. Therefore, the Court ordered appellants to surrender cash (representing the checks and sale proceeds of some cattle), the remaining cattle, and the farm equipment. The issue we must decide is whether BAP erred when it concluded that the contract for sale and purchase of personal property between debtor and appellant was not an executory contract and that the transfers in question were preferential under 11 U.S.C. § 547." (Emphasis supplied). At 535-36.

The Circuit Court concluded:

"We hold that the contract is in fact executory.

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The last issue to be determined is whether the sales agreement was terminated prior to January 3, 1985, the date on which debtor filed for bankruptcy. If so, the property would have automatically reverted back to appellant, leaving debtor, and thus also the trustee in bankruptcy, with no interest in the property. Since the bankruptcy court held that the 1982 sales agreement was not an executory contract, it did not determine whether the sales agreement terminated prior to the date debtor filed for bankruptcy.

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To implement our conclusion that the contract was executory, we hold as a matter of law that the return of possession by debtor effectuated a termination of the contract on December 12, 1984. By that time, the debtor had written appellant expressing his inability to continue to fulfill his purchase obligations, returned the cattle and equipment to appellant\'s possession, and signed over three checks representing proceeds of sale of certain cull cows. * * *

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Based upon the finding of facts made by the

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