Matter of Sturgell, Bankruptcy No. 3-80-00948

• Decision Date: 29 October 1980
• Docket Number: Bankruptcy No. 3-80-00948,Adv. No. 0348.
• Citation: 7 BR 59
• Parties: In the Matter of William Andrew STURGELL, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

7 B.R. 59 (1980)

In the Matter of William Andrew STURGELL, Debtor.

Bankruptcy No. 3-80-00948, Adv. No. 0348.

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

October 29, 1980.

Paul R. Valente, Springfield, Ohio, for plaintiff.

Carl E. Juergens, Springfield, Ohio, for defendant.

James R. Warren, Springfield, Ohio, trustee.

MEMORANDUM DECISION AND ORDER

CHARLES A. ANDERSON, Bankruptcy Judge.

This matter is before the Court for disposition of the plaintiff's complaint to determine the dischargeability of her claim against the above debtor. The following decision is based upon the stipulations in the pretrial order, the evidence adduced at the trial held August 15, 1980 and post-trial legal memoranda submitted by the parties.

William A. Sturgell, the defendant, filed his petition for relief under Title 11 United States Code Section 701 et seq. on April 10, 1980. He has been an employee of International Harvester Company for the past 17 years. In 1978, his annual income was $19,950.00, and in 1979, it was $15,550.00. The defendant and the plaintiff, Sandra K. Sturgell, filed a Petition for Dissolution of Marriage with the Court of Common Pleas of Clark County on August 7, 1979. Their marriage was subsequently dissolved. According to the Separation Agreement which forms the basis of the present dispute and which is attached to the parties' Petition for Dissolution, marked Exhibit A herein, the defendant had custody of his daughter, Stephanie, age 17; however, according to his testimony at trial, the defendant relinquished custody of Stephanie to the plaintiff on or about November, 1979 when he went on strike from his employment with International Harvester Company. The record contains no evidence that the debtor has had any other dependents since his dissolution of marriage. Exhibit A also indicates that the plaintiff has had custody of the parties' two other children, Shelly, age 14, and Susan, age 8, since the dissolution and that the defendant has been obligated to the plaintiff for child support of $27.50 per week for each of these children. The record is unclear as to whether the defendant was additionally responsible for $27.50 per week for Stephanie when he relinquished her custody in November, 1979. In any event, the defendant is in arrears for his child support in the amount of $1,225.00 through June 26, 1980.

The debtor has listed three secured creditors in Schedule A-2. Associates Financial Services Company has a claim for $694.00 secured by a mortgage on five rooms of furniture in the plaintiff's possession; Crown Finance Corporation has a claim for $4,039.55 secured by a mortgage on an automobile, a television and various other items of furniture; International Harvester Employees Credit Union has a claim for $11,000.00 secured by a mortgage on a 1979 Datsun automobile. Schedule A-3 listing unsecured creditors originally showed total claims to be $496.21, but the debtor amended A-3 to include two claims of the plaintiff for $1,850.00 bringing total unsecured claims to $2,346.21. The debtor shows no ownership in real property and claims $5,331.00 worth of personal property.

The case at bar arises out of the following language in the above-mentioned Separation Agreement:

DEBTS AND OBLIGATIONS (13) Husband shall pay the debts and obligations to Associates Finance Company, Crown Finance Company, Sears, and the International Credit Union. The wife shall pay the mortgage to the Kissell Company on the real estate and further she shall be responsible for taxes, insurance and all of the utilities therein.

Exhibit A. Apparently, the defendant did not meet his obligations under this term, and Associates Financial Services Company sued both the plaintiff and defendant in Municipal Court of Springfield, Ohio. Associates was awarded judgment in the sum of $694.16 plus interest at 6% per annum from March 20, 1980. By filing his petition with this Court, the defendant seeks to have his liability on that judgment discharged in bankruptcy; the result would be that the plaintiff will become solely liable for the Associates judgment. Consequently, the plaintiff has instituted this action to determine, first, the nature of the defendant's debt to Associates and, second, the dischargeability of that debt. Also, the plaintiff seeks a determination that the defendant's liability to her for child support arrearages is not dischargeable in bankruptcy.

With regard to the disputed obligation to Associates Financial Services, the plaintiff claims the debtor should not be discharged from this claim because his liability for payment pursuant to the parties' Separation Agreement constitutes a form of alimony, support or maintenance of the plaintiff and, thus, is nondischargeable under 11 U.S.C. § 523(a)(5). In opposition, the defendant claims he assumed responsibility for paying Associates as his part of the parties' division of their mutual debts at the time of their dissolution. He testified that he did not intend his payment to Associates to be in the nature of alimony.

This Court has, in several previous cases, analyzed (under Ohio case precedents) similar fact situations and issues pertaining to the dischargeability of state court divorce and alimony decrees-all precipitated by ambiguous, inartistic and controversial use of legal terms in the decrees or separation agreements incorporated therein by reference. The conclusions reached on the facts instanter would be the same. As pointed out by this Court in Horner v. Horner, B-3-77-800 (1978), the term alimony, as employed in the bankruptcy act, connotes maintenance and support, conformably to the decision in Waller v. Waller (6th Cir. 1974) 494 F.2d 447. Without reiterating the rationale of the decisions by this Court in Wray v. Wray, B-3-77-296, Shaw v. Butler, B-3-77-1328, and Horner v. Horner, B-3-77-800, a crucial factor is the custody award and the maintenance of the family home. See this Court's decision on Bryant v. Bryant, Case No. B-3-78-609 (1978).

Turning now to the issues as posed under the Bankruptcy Reform Act of 1978 (Bankruptcy Code) we find that the rationale should not be materially changed.

The first issue facing the Court is what is the nature of the defendant's assuming responsibility for payment of the Associates debt. The legislative history states, and one commentator agrees, that

what constitutes alimony, maintenance, or support, will be determined under the bankruptcy laws, not State law. Thus, cases such as In re Waller, 494 F.2d 447 (6th Cir. 1974) . . . are overruled, and the result in cases such as Fife v. Fife, 1 Utah 2d 281, 265 P.2d 642 (1952) is followed. This provision will, however, make nondischargeable any debts resulting from an agreement by the debtor to hold the debtor\'s spouse harmless on joint debts, to the extent that the agreement is in payment of alimony, maintenance, or support of the spouse, as determined under bankruptcy law considerations that are similar to considerations of whether a particular agreement to pay money to a spouse is actually alimony or a property settlement.

H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 363 (1977), U.S.Code Cong. &...