Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-07002/USCOURTS-ca10-90-07002-0/pdf.json

Parties Involved:
Gregory L. Watkins
Appellee
Janet Watkins
Appellant

Document Text:

( 

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

JANET WATKINS, ) 

) 

Plaintiff-Appellant, ) 

) 

v. ) 

) 

GREGORY L. WATKINS, ) 

) 

Defendant-Appellee. ) 

FIT.RD 

UniU!<i St: · .. ,, ,! . ,, J 

'f'entn c1rc1..m 

JAN 1 4 1991 

ROBERT L. HOEC:SE'? 

Clerk 

No. 90-7002 

Appeal from the United States District Court 

for the Eastern District of Oklahoma 

(D.C. No. 89-386-C) 

Submitted on the briefs: 

Austin R. Deaton, Jr. of Deaton & Davison, Ada, Oklahoma, for 

plaintiff-appellant. 

Richard C. Lerblance, Hartshorne, Oklahoma, for defendantappellee. 

Before LOGAN, SEYMOUR, and TACHA, Circuit Judges. 

LOGAN, Circuit Judge. 

Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 1 
Janet Watkins and Gregory Watkins divorced in Oklahoma in 

1986. One of the assets, apparently owned in joint tenancy by the 

two parties, was a tract of commercial real estate in the same 

county as that in which the divorce proceedings were held. The 

divorce decree set aside, in a formal judgment of the court, the 

commercial real estate as a separate property to the husband, 

because it contained his dental office. It awarded the wife 

alimony to be paid over a certain period of time and "impressed 

and imposed upon the real property . a lien in favor of the 

[wife] guaranteeing satisfaction of the award which is hereby 

reduced to judgment." R. tab 26, exh. A, at 703. This judgment 

was on record pre-bankruptcy in the office of the clerk of the 

district court. 1 

After the ex-husband filed a voluntary petit~on in 

bankruptcy, the ex-wife filed a copy of the divorce judgment as a 

lien in the county clerk's office. Although the ex-husband listed 

the debt as unsecured, the ex-wife apparently made no appearance 

and the bankruptcy court never specifically treated the ex-wife's 

alleged lien in the bankruptcy proceeding itself. The instant 

proceeding arose out of the ex-husband's motion to reopen the 

bankruptcy case and to have the lien declared null and void. 

The bankruptcy court invalidated the lien. This was affirmed 

on appeal, the district court holding that, because the divorce 

judgment had not been filed in the county clerk's office at the 

1 After examining the briefs and appellate record, this panel has 

determined unanimously to honor the parties' request for a 

decision on the briefs without oral argument. See Fed. R. App. P. 

34(f); 10th Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

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Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 2 
time of the bankruptcy filing, the lien was unenforceable. See 12 

Okla. Stat. Ann.§ 706 ("No judgment, whether rendered by a court 

of the state or the United States, shall be a lien on the real 

estate of a judgment debtor in any county until it has been filed 

in this manner.") The ex-wife has appealed, arguing that that 

statute is not relevant under various grounds and asserting that 

her lien is valid and her claim secured by the lien must be 

excepted from the discharge. We agree, and reverse the 

determination of the district court. 

Janet Watkins cites several cases in which bankruptcy courts 

have found a lien like that involved in the instant case to be 

excepted from discharge by various analyses, because marriage 

dissolution situations are treated differently than other claims. 

In re Williams, 38 B.R. 224, 228 (Bankr. N.D. Okla. 1984) 

(judicial lien in divorce decree encumbered ex-husband's property 

at the time of acquisition and was not avoidable as an interest of 

debtor in property); In re Thomas, 32 B.R. 11, 12-13 (Bankr. D. 

Ore. 1983) (lien interest in marital property upon divorce does 

not arise out of debtor/creditor relationship and therefore is not 

a judicial lien that could be avoided); In re Scott, 12 B.R. 613, 

615 (Bankr. W.D. Okla. 1981) (husband's lien on marital home, 

which was granted in same divorce decree that conveyed home to 

wife, did not fix on an interest of the debtor in property and 

thus was not subject to avoidance). We do not have to agree or 

disagree with those cases but resolve this case on a different 

basis. 

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Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 3 
At the time of bankruptcy filing, the trustee in bankruptcy 

assumes the position of a bona fide purchaser of real property 

from the debtor and may avoid any liens on the property that a 

bona £ide purchaser could avoid. 11 U.S.C. § 544(a)(3). The 

trustee, however, assumes the bona fide purchaser position subject 

to the state's constructive notice law. See In re Hagendorfer, 

803 F.2d 647, 649 (11th Cir. 1986) (Bankruptcy Code does not set 

aside trustee's state law duty to examine the record of title); In 

re Probasco, 839 F.2d 1352, 1354-55 (9th Cir. 1988) (debtor-inpossession's constructive notice of unrecorded real property 

interest precluded avoidance of the interest); In re Flaten, 50 

B.R. 186, 193 (Bankr. D. N.D. 1985) ("constructive notice imposed 

by state law will destroy the bona fide purchaser's priority claim 

to the property and, as a result, the trustee's avoidance power 

under section 544(a)(3)"). 

Under Oklahoma law, a purchaser of land takes the property 

with constructive notice of whatever appears in the conveyances 

constituting his chain of title. Jonas v. Dunn, 132 Okla. 204, 

270 P. 46, 50 (1928). See also Rogers v. Jones, 40 F.2d 333, 335 

(10th Cir. 1930) (purchaser bound by instrument in his chain of 

title). Moreover, a purchaser from one in whom title has been 

vested by judicial decree is deemed to have constructive notice of 

title defects apparent on the face of the record in proceedings in 

which the decree was entered. Bradbury v. Green, 207 Okla. 586, 

251 P.2d 807, 809 (1952). 

The trustee in bankruptcy had constructive notice of the 

wife's security interest, even though she did not perfect her 

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Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 4 
interest by recording it in the county clerk's office. The 

divorce judgment--a judicial decree--vested undivided title to the 

entire property in the husband. Before the divorce, the husband 

owned only a one-half interest. Therefore, under Bradbury, 251 

P.2d at 809, a bona fide purchaser at the time of the bankruptcy 

filing was on constructive notice of any defects in the exhusband's title that were contained in the divorce decree, 

including the ex-wife's lien on the property. 

Further, on the general principles in Jonas, 270 P. at SO, a 

bona fide purchaser would have been on constructive notice of 

whatever security interests might appear in a title search. A 

search of the real property records would have shown that the wife 

was a co-owner of the property. To establish title in the 

husband, the title examiner would have to secure a copy of the 

divorce decree, which vested sole title in the husband. An 

examination of that same decree would also show the lien given to 

the wife on this real estate. A bona fide purchaser, having 

constructive notice of the ex-wife's security interest, could not 

have avoided her lien. Likewise, the trustee in bankruptcy could 

not avoid her lien. 

The cases cited by the district court are distinguishable on 

this basis. Two of them, Smith v. Citizens Nat'l Bank in 

Olanulgee, 204 Okla. 586, 232 P.2d 618 (1951), and Will Rogers Bank 

& Trust v. First Nat'l Bank of Tahlequah, 710 P.2d 752 (Okla. 

1985), did not involve a divorce decree and were the standard 

failure-to-record cases where the bona fide purchaser searching 

the title would have seen nothing. Knight v. Armstrong, 303 P.2d 

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Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 5 
421 (Okla. 1956), involved a divorce, but one in which the lien 

the ex-wife claimed arose under a separate judgment. The second 

Knight judgment creating the lien would not have been discovered 

in a normal search required to be made by a bona fide purchaser, 

because it was not contained in the earlier document that 

established the ex-husband's separate title. 

We need go no further to determine that the lien survived the 

bankruptcy and is enforceable against the ex-husband. There is no 

claim of res judicata based upon an explicit determination of this 

issue at some earlier time in the proceeding and a failure of the 

wife to appeal. 

REVERSED. 

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Appellate Case: 90-7002 Document: 010110016171 Date Filed: 01/14/1991 Page: 6