Nelson v. Lowery Building & Supply Co. (In re Satterfield)
Docket: Bankruptcy No. BK 86-01452; Adv. No. 88-0285
Court: United States Bankruptcy Court, N.D. Alabama; June 23, 1989; Us Bankruptcy; United States Bankruptcy Court
The Trustee's Motion to Sell Property Free and Clear of Liens is partially granted and partially denied by the Court. Findings reveal that a previous order allowed for the sale of property, with valid liens attaching to the proceeds. Twelve lien claims were assessed individually for validity.
1. **Lowery Building and Supply Co.**: Lowery's claim is invalid because it did not comply with Alabama Code Section 35-11-221, which requires action to enforce a materialman’s lien within six months after the debt's maturity. No evidence was presented to show compliance, resulting in a barred claim against the sale proceeds.
2. **Hammerblow Company**: Hammerblow's lien is invalid due to the expiration of the judgment after ten years, as mandated by Alabama Code Section 6-9-211. The Court found no evidence that Hammerblow had revived the judgment or rerecorded the certificate, leading to a barred claim against the sale proceeds.
3. **Peoples Bank and Trust Company**: The judgment in favor of Peoples Bank and Trust is also deemed non-compliant with Alabama Code Section 6-9-210, which outlines the requirements for filing a judgment certificate. Specific details required for validity were not provided, rendering the claim invalid.
The Court's analysis emphasizes strict adherence to statutory requirements for the enforcement of lien claims.
A judge is required to create an index for a judgment book that includes the names of all defendants and their addresses, organizing judgments chronologically. The Certificate of Judgment for Peoples Bank and Trust Company lacks the defendant's address, raising the question of whether this omission is fatal. According to Ball v. Vogtner, strict adherence to statutory requirements is necessary to establish a lien. However, Bank of Anniston v. Farmers, Merchants State Bank suggests that not all omissions are fatal, provided the purpose of the requirement—to notify those searching property titles—remains fulfilled. The statutory requirement for including addresses in the certificate is underscored, with case law consistently supporting this. Previous cases, including In re Langdon and Duncan v. Ashcraft, emphasize that substantial compliance is necessary, particularly regarding the address of the judgment debtor.
The Court concludes that the omission of the address in the Certificates of Judgment for both the First National Bank of Tuscumbia and First Security Bank of Utah invalidates their lien claims, as these omissions deviate from Section 6-9-210's requirements. In contrast, the address omission for First Security Bank does not bar a valid lien claim because sufficient notice has been provided, aligning with the principles outlined in Bank of Anniston. Thus, while some omissions can be overlooked if notice is adequately given, the complete absence of an address negates the lien for First National Bank.
The Court confirms that the property is correctly titled in the names of Windal and Marilyn Satterfield, with their address accurate on the certificate of judgment. The inclusion of their children's names does not invalidate First Security's lien claim, as the correct address of the title holders is present, satisfying the notice requirement. The omission of costs on the judgment does not constitute a material defect, aligning with Bankruptcy Judge Steele’s findings in In re Norman, thus preserving the validity of First Security's lien.
Conversely, Carl H. Decker and Uniroyal Inc. lack valid lien claims as their certificates of judgment do not include the defendants' addresses, violating Section 6-9-210. Regarding Schlumberger Technology, while the absence of costs does not invalidate the lien, the judgment must also be properly domesticated in Alabama to establish a valid lien. Although the address provided serves as notice, the Texas judgment's filing alone does not create a lien in Alabama, as it was not entered in that state.
Alabama Code Section 6-9-211 establishes that judgments filed under Section 6-9-210 create a lien. A Texas judgment has not been filed in accordance with Section 6-9-210, and thus cannot be a valid lien. The Court emphasizes that the correct approach would have involved filing a suit in Alabama to domesticate the Texas judgment, which is necessary for it to have lien status. Foreign judgments are not considered liens and lack execution rights in Alabama.
Regarding F.J.R. Oil and Gas, the Trustee argues that its judgment is a foreign judgment not domesticated in Alabama, lacking the defendant's address and cost details. This omission is sufficient to prevent the establishment of a lien, as previously discussed in the opinion. Consequently, F.J.R. Oil and Gas does not possess a valid lien on the sale proceeds.
For Hartford Casualty Insurance Co. and Carl H. Decker, their judgments were issued post-petition in dischargeability actions, meaning these claims do not attach to the proceeds of the sale.
Winston Industries contends that its judgment should secure proceeds from the sale despite its lien expiring on April 19, 1983. A chronological review reveals that Winston recorded its judgment in 1973 but failed to revive it, leading to the expiration of its lien ten years later. Although Winston successfully voided a fraudulent conveyance from 1985, it remained an unsecured creditor by the time the debtor filed for bankruptcy. Nonetheless, the Court acknowledges Winston's diligence in pursuing the fraudulent conveyance, potentially allowing it to take priority over other unsecured creditors, in line with established case law.
Itel Corporation is recognized as a secured creditor with a valid lien claim against the proceeds of a property sale. Winston, an unsecured creditor, has a preference over other unsecured creditors due to its diligence, but this preference does not allow it to supersede Itel's secured claim. The Court's July 21, 1988 order permitted the sale of Windal S. Satterfield's property free from liens, with valid liens attaching to the sale proceeds. After evaluating twelve asserted lien claims, only Itel's lien is deemed valid and will take precedence among lien claimants. Winston Industries will be prioritized among unsecured creditors following its successful fraudulent conveyance suit but will receive proceeds only after Itel’s claim is satisfied.
The Trustee's dispute over lien validity resulted in a ruling that ten claims are invalid, while First Security Bank of Utah has a valid lien. Winston's claim is invalid, yet its prior fraudulent conveyance suit grants it a preference over several invalid lien claimants. An amended order clarifies that Winston acquired a lien on Satterfield’s property on April 27, 1981, when the fraudulent conveyance suit was filed and served. The original order's first two paragraphs remain unchanged, while the third is rendered void. Winston now holds a valid lien claim as of April 27, 1981.
Winston’s lien, dated April 27, 1981, takes precedence over Itel’s lien, recorded by First Security Bank of Utah on July 1, 1981. Consequently, Winston Industries Inc. will be the first creditor to have its lien satisfied from any proceeds of the sale. After Winston's lien is fully satisfied, any remaining proceeds will be allocated to Itel to fulfill its lien. The document refers to a Title Opinion labeled as 'Exhibit A,' which provides a complete legal description of the relevant real property. Additional exhibits (C, D, E, F, G, H, I, J, K, B) are mentioned for supplementary details, including the certificate of judgment filed under First Security Bank of Utah and the role of Itel Rail Corporation as the agent for First Security. The timeline includes pertinent judgment dates to clarify Winston’s rights in relation to Itel Corp, referencing the case Pat Nelson, Trustee v. Windal S. Satterfield for legal context.
