IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 95-10327

In The Matter Of: T.F. Stone Company, Inc.,

Debtor.

T.F. STONE COMPANY, INC.,

Appellant,

versus

LUCY HARPER, County Treasurer

of Bryan County, Oklahoma

Appellee.

Appeal from the United States District Court

for the Northern District of Texas

December 28, 1995

Before REAVLEY, HIGGINBOTHAM, and BARKSDALE, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

This appeal raises the question whether a peppercorn price

received in a noncollusive, lawfully conducted tax foreclosure sale

of the real property of a Chapter 11 debtor can constitute "present

fair equivalent value" within the meaning of § 549(c) of the

Bankruptcy Code, 11 U.S.C. § 549(c). T.F. Stone Companies, Inc.,

a reorganized debtor in possession, sought a money judgment in

bankruptcy court against the Treasurer of Bryan County, Oklahoma,

claiming that Bryan County's postpetition tax foreclosure sale of

Stone Companies' land was unauthorized and for insufficient value.1 Under § 3108, a cou nty treasurer may "bid off" property in

the amount of taxes due, giving the county the legal and equitable

rights of a purchaser. Bryan County's bid off memorialized a lien

on the Oklahoma property for taxes due at that time.

2 The bankruptcy court granted summary judgment for the Tre asurer,

and the district court affirmed. Stone Companies appeals. We

agree with the lower courts that because the tax sale was

noncollusive and complied with Oklaho ma law, it was "for present

fair equivalent value" as required by § 549(c). We affirm.

I.

In July 1985, T.F. Stone Companies, Inc., acquired title to

approximately five acres of land in Bryan County, Oklahoma. On

July 3, 1989, Stone Companies petitioned for Chapter 11 bankruptcy,

listing the Oklahoma property in its schedule of assets at a value

of $65,000. Though Stone Companies failed to pay ad valorem taxes

on the Oklahoma property for 1989, it did not list Bryan County as

a creditor on its schedules and never filed notice of its

bankruptcy in Bryan County.

On October 1, 1990, the County Treasurer of Bryan County, Lucy

Harper, conducted a tax foreclosure sale of the Oklahoma property

in an attempt to satisfy Stone Compan ies' delinquent tax

obligation, as authorized under Oklahoma law. See Okla. St. Ann.

tit. 68 §§ 3105 & 3107. No bids were tendered at this tax sale, so

title to the Oklahoma property was deemed transferred to Bryan

County. S ee Okla. St. Ann. tit. 68 § 3108. 1 During the two years

after Bryan County took tit le to the Oklahoma property, Stone3

Companies had a right to redeem the Oklahoma property by satisfying

its outstanding tax debt. S ee Okla. St. Ann. tit. 68 § 3113.

Stone Companies did not exercise this right, however, and did not

pay ad valorem taxes on the Oklahoma property for 1990, 1991, or

1992.

On June 14, 1993, Bryan County conducted a "Tax Resale" of the

Oklahoma property and sold it to Dickie and Carolyn Kidd for $325,

which was used to satisfy Stone Companies' delinquent tax debt.

See Okla. St. Ann. tit. 68 § 3125 (provid i ng for resale of

unredeemed properties after two-year redempti on period). This

resale to the Kidds extinguished Stone Companies' redemption right

and thereby eliminated Stone Com panies' remaining equity in the

Oklahoma property. See Okla. St. Ann. tit. 68 § 3113.

On October 21, 1993, Stone Companies sued in bankruptcy court

under § 549 of the Bankruptcy Code, 11 U.S.C. § 549, seeking to

void the effects of Bryan County's acquisition of title to the

Oklahoma property and subsequ ent resale to the Kidds as an

unauthorized postpetition transfer. S ee In re T.F. Stone Cos.

, 170

B.R. 884 (Bankr. N.D. Tex. 1994). On January 6, 1994, however,

Stone Companies repurchased the Oklah oma property from the Kidds

for $39,500 and agreed to dismiss the Kidds from this litigation.

Since Bryan County's resale to th e Kidds was a transfer to a

subsequent good faith purchaser, Stone Companies' repurchase of the

Oklahoma property in January meant that its only remedy under the

Bankruptcy Code was to pursue a money judgment from the "initial

transferee" for the value of property improperly transferred. S ee2 Section 550(a) provides: "Except as otherwise provided in

this section, to the extent that a transfer is avoided under

section

. . . 549

. . . of this title, the trustee may recover, for

the benefit of the estate, the property transferred, or, if the

court so orders, the value of such property, from

— (1) the initial

transferee of such transfer or the entity for whose benefit such

transfer was made

. . . ." The bankruptcy court determined that

Bryan County became the "initial transferee" when it acquired title

to the Property at the original October 1990 tax foreclosure sale,

prior to the resale to the Kidds. Bryan County has not challenged

that determination on appeal.

4 11 U.S.C. §§ 549(c) & 550. 2 Stone Companies amended its complaint

accordingly to seek recovery, under § 549 and § 550, of the value

of the Oklahoma property from the Treasurer of Bryan County.

The Treasurer raised several affirmative defenses, including

a claim that the deemed transfer to Bryan County and subsequent

resale to the Kidds could not be avoided under § 549(c) because

these transactions produced a transfer to a "good faith purchaser

without knowledge of" Stone Companies' bankruptcy and "for present

fair equivalent value." The bankruptcy court granted summary

judgment for the Treasurer on the basis of this § 549(c) defense,

denying recovery to Stone Companies. The district court affirmed.

II.

A trustee in bankruptcy — or, in a Chapter 11 case, a debtor

in possession

— m ay avoid an unauthorized postpetition transfer

under § 549(a) of the Bankruptcy Code, 11 U.S.C. § 549(a), subject

to certain exceptions set forth in the Code. One such exception

provides: "The trustee [or debtor in possession] may not

avoid . . . a transfer of real property to a good faith purchaser

without knowledge of the commencement of the case and for present5

fair equivalent value . . . ." § 549(c). The Treasurer concedes

that Bryan County's postpetition sale of the Oklahoma property to

the Kidds, in extinguishing Stone Companies' right under Oklahoma

law to redeem the Oklahoma property, effectuated an unauthorized

transfer of the Oklahoma property within the meaning of § 549(a).

Stone Companies in turn concedes that Bryan County and the Kidds

transacted in good faith and without knowledge of Stone Companies'

bankruptcy. The parties thus agree that the sole question in this

appeal is whether the transfer completed via Bryan County's initial

acquisition of the Oklahoma property in October 1990 and subsequent

resale to the Kidds for $325 in June 1993 was a transfer made "for

present fair equivalent value."

To answer this question, we must determine the applicability

of the Supreme Court's recent decision in BFP v. Resolution Trust

Corp.

, 114 S. Ct. 1757 (1994). The Court decided BFP on May 23,

1994, after Stone Companies filed this suit b ut before the

bankruptcy court disposed of Stone Companies' claims. B FP involved

a prepetition mortgage foreclosure sale of a home previously owned

by BFP, a Chapter 11 debtor in possession. BFP's mortgage creditor

had sold the home for $433,000 shortly before BFP's bankruptcy

petition. BFP sued to avoid the transfer under § 548 of the

Bankruptcy Code, 11 U.S.C. § 548, alleging that the property was

worth over $725,000 at the time of the foreclosure sale, and that

therefore the prepetition transfer was avoidable under § 548(a)

because BFP "received les s than a reasonably equivalent value in

exchange for [the] transfer or obligation." § 548(a)(2)(A). The6

issue before the Court was whether the $433,000 obtained at the

foreclosure sale satisfied this § 548 requirement that a transfer

be made for "reasonably equivalent value." The Court, per Justice

Scalia, held 5-4 "that a fair and pro per price, or a `reasonably

equivalen t value,' for foreclosed property, is the price in fact

received at the foreclosure sale, so long as all the requirements

of the State's foreclosure law have been complied with." B FP

, 114

S. Ct. at 1765.

In the case before us, while the bankruptcy court acknowledged

that B FP addressed § 548's requirement of " reasonably equival ent

value" in the context of a pre petition mortgage foreclosure sale,

it re lied on B FP in determining that Bryan County's post petition

tax foreclosure sale of Stone's lan d satisfied the requirement

under § 549 that a transfer be "for present fair equivalent value."

The bankruptcy court concluded that "[t]he price obtained at a noncollusive tax foreclo sure sale, conducted in accordance with all

state laws, presumptively meets the `present fair equivalent value'

st andard in § 549(c)." I n re T.F. Stone

, 170 B.R. at 892. The

district court agreed that "the reasoning of BFP should be applied

in the context of tax foreclosures," and concluded that "therefore,

BFP controls the issue presented in the case at hand."

On appeal, Stone Companies challenges the conclusions of the

lower courts on two grounds. First, Stone Companies contends that

the proceeds from Bryan County's sale of the Oklahoma property were

used to satisfy Stone Companies' antecedent tax debt and therefore

do not qualify as "present" value for purposes of § 549(c)'s7

requirement o f "present fair equivalent value." Second, Stone

Companies argues that BFP is distinguish able from this case and

thus ought not guide our § 549(c) analysis. We address each of

these arguments in turn.

III.

Stone Companies argues that because Bryan County used the $325

from the sale of the Oklahoma property as a credit ag ainst Stone

Companies' outstanding tax debt on the Oklahoma property, the sale

was in satisfaction of antecedent debt and therefore did not yield

" present fair equivalent value" as required by § 549(c).

"Antecedent" debt refers to debt incurred before the debtor's

insolvency. According to Stone Companies, federal courts have

historicall y viewed the bankruptcy laws' inclusion of the word

"pr esent" in the phrase "present fair equivalent value" as

establishing that an amount used to satisfy antecedent debt cannot

qualify as "value" received. S ee, e.g.

, Kass v. Doyle

, 2 75 F.2d

258, 262 (2d Cir. 1960) (holding that "liquidation of an antecedent

debt" cannot be used to satisfy r equirement of "present fair

equivalent value" in § 70, sub. d of pre-Code Bankruptcy Act).

Stone Companies emphasizes that the bankruptcy courts have

consi stently embraced this understanding of "present" value in

interpreting § 549(c)'s requirement of "present fair equivalent

value." S ee, e.g.

, Purnell v. Citicorp Homeowners Servs., Inc. (In

re Purnell)

, 92 B.R. 625, 630 (Bankr. E.D. Pa. 1988) (explaining

that "satisfaction of an antecedent debt has not been viewed as a8

`present value'"); Anderson v. Briglevich (In re Briglevich) , 147

B.R. 1015, 1021 (Bankr. N.D. Ga. 1992) (holding that satisfaction

of antecedent debt does not qualify as "present" fair value); Davis

v. Bank of Commerce (In re Wilson) , 52 B.R. 637, 638 (Bankr. E.D.

Tenn. 1985) (same). Stone Companies urges that a construction of

§ 549(c)'s "present fair equivalent value" language that excludes

satisfaction of antecedent debt is essential to preserv ing the

bankruptcy estate existing at the time of the bankruptcy petition.

We need not resol ve this issue at this time. Even assuming

that an amount used to satisfy antecedent debt cannot qualify as

"present" value for purposes of § 549(c), this claim is unavailing

to Stone Companies. Much of Stone Companies' tax debt arose from

its failure to pay ad valorem taxes on th e Oklahoma property for

1990, 1991, and 199 2 — a fter its 1989 bankruptcy petition.

Moreover, Tommy F. Stone himself suggested in an affidavit to the

bankruptcy court that even the 1989 tax debt was postpetition debt:

"In 1990 the Treasurer caused the Oklahoma property to be seized

for the purposes of satisfying its claim against the Debtor arising

from property taxes allegedly due on and secured by the Oklahoma

property for tax year 1989 (which would be taxes that accrued post

bankruptcy )." (emphasis added). In short, Bryan County used at

least some, if not all, of the $325 received from the Kidds to

liquidate Stone Companies' postpetition debt, not just its

antecedent debt. Stated more directly, some, if not all, of the

$325 tax credit conferred "present" value within the meaning of

§ 549(c).9

Even if Stone Companies could show that Bryan County applied

the $325 only to Stone Companies' antecedent tax debt, we would

s till have to consider whether B FP guides this case. As we will

explain, the BFP Court's analysis of § 548 expressly eschewed any

considera tion of the substantive value received in a forced-sale

context and instead pinned the validity of the transfer on whether

the forced sale was noncollusive and conducted in compliance with

state law. In other words, if B FP controls this case , a finding

that Stone Companies received all its value as a credit against

antecedent debt does not bar us from concluding that the tax sale

satisfied § 549(c) on the ground that it was noncollusive and

conducted in conformity with Oklahoma law.

IV.

Stone Companies contends that the Cour t's decision in B FP

cannot govern this, a § 549 case, because BFP dealt with different

language in a different Bankruptcy Code provision, in the context

of a different kind of transfer. We disagree.

Our analysis starts with the statutory texts. While § 548

requires "reasonably equivalent value," § 549 demands "present fair

equivalent value." Stone Companies contends that B FP 's reading of

" reasonably equivalent value" cannot control our construction of

" present fair equivalent value," highlighting the following

statement in BFP : "`[I]t is generally presumed that Congress acts

intentionally and purposely when it includes particular language in

one se ction of a statute but omits it in another,' and that10

presumption is even stronger when the omission entail s the

replacement of standard legal terminology with a neologism.'" 114

S. Ct. at 1761 (quoting Chicago v. Environmental Defense Fund

, 114

S. Ct. 1588, 1593 (1994)). This textual argument has some force.

Though the Court invoked this proposition to explain why

"reasonably equivalent value" cannot always be measured against

"fair market value," we agree that Congress likely meant something

different in § 549 when it used the language "present fair" instead

of "reasonably."

We are unable, however, to perceive a meaningful difference

between "reasonably" and "present fair" as applied in the context

of this forced-sale case. Again, assuming that the word "present"

in § 5 49(c)'s requirement of "present fair equivalent value" is

intended to exclude satisfact ion of antecedent debt, our

determination that Stone Companies did receive "present value" in

the form of a credit against its postpetition tax debt leaves us

with a necessary comparison of " reasonably equivalent val ue" and

" fair equivalent value." To be sure, the words "reasonably" and

"fair" are nominally distinct, and may in some circumstances have

divergent substantive meanings. Nevertheless, we think that in a

forced-sale context, a value that is "reasonably e quivalent" is

also "fair equivalent," and vice versa. Indeed, the B FP Court used

the words "reasonably" and "fair" in tandem, in such a manner as to

belie the notion that they have different meanings. S ee 114 S. Ct.

at 1765 ("[A] fair or proper price, or a ` reasonably equivalent

value,' for foreclosed property, is the price in fact received at11

[a lawfully c onducted] foreclosure sale . . . ."); i d. at 1762

(expressing doubt as to whether courts can or should "judge there

to be such a thing as a `reasonable' or `fair' forced-sale price").

Moreover, the Court's decision in BFP relied on intermediate

principle s that are directly applicable in determining whether a

forced sale is made "for present fair equivalent value" as required

by § 549. First, "reasonably equivalent value" in § 548 cannot be

measured by reference to "fair market value," since Congress could

have used the language of "fair market value" had it intended such

a benchmark. I d. at 1761. Second, reference to the fair market

value of real property is especially inappropriate in the context

of a forced sale. I d. at 1761-62 ("Market value cannot be the

criterion of equivalence in the foreclosure-sale context.").

Third, any effort to ascertain what constitutes a "reasonable" or

"fair" forced-sal e price requires a policy judgment that courts

ought not attempt. I d. at 1762 ("[S]uch judgments represent policy

determinations which the Bankruptcy Code gives us no apparent

au thority to make."). Fourth, judicial interpretation of § 548

implicates an " essential state interest" in that "`the general

welfare of so ciety is involved in the security of the titles to

real estate,' and the power to ensure that security `inheres in the

very nature of [state] government.'" I d. at 1764 -65 (quoting

American Land Co. v. Zeiss , 219 U.S. 47, 60 (1911)).

These four principles are instructive in deciding this case.

First, § 549(c)'s use of the phrase "present fair equivalent value"

and its corresponding exclusion of "fair marke t value" rhetoric12

raises at least a "suspicion," as Justice Scalia put it, "that fair

market value cannot

— or at least cannot always

— be the benchmark"

under § 549. I d. at 1761. Second, Bryan County's sale of the

Okl ahoma property to the Kidds was a forced sale — and "market

value, as it is commonly understood, has no applicability in the

forced-sale context; indeed, it is the very antithesis of a forcedsale value." I d. That Bryan County's sale to the Kidds was a tax

sale rather than a mortgage foreclosure sale does not change the

reality that it was a forced sale.

Third, any judicial effort to determine the purported content

of "such a thing as a `reasonable' or `fair' forced-sale price,"

id. at 1762, would require policy judgments that are inappropriate

for courts and fraught with the same difficulties in the context of

both mortga ge foreclosure sales and sales conducted to satisfy

delinquent tax obligations. Finally, the essential state interest

in ensuring "security of the titles to real estate" is equally

salient in both mortgage foreclosure sales and tax sales of real

property. A reading of § 549(c) that contemplated a substantive

benchmark such as fair market value, however, "would have a

profound effect upon that interest: the title of every piece of

realty pu rchased at foreclosure [or a tax sale] would be under a

federally created cloud. " Id. at 1765. Given the presumption

against reading federal laws to impinge on traditional areas of

state regulation in the absence of a clear and manifest statutory

mandate, we find it inappropriate to adopt such an approach to our

interpretation of § 549(c).13

This case is illustrative of the BFP Court's teachings about

the inappropriateness of using a fair-market-value benchmark as a

federally impo sed constraint on the ability of states to permit

forced sales of real property. Bryan County itself was forced to

take title to the Oklahoma property at the original tax foreclosure

sale in October 1990 because there were n o bids on the Oklahom a

property. Given that this initial forced-sale value was apparently

close to zero, it should not be astonishing that Bryan County was

later able to sell the Oklahoma property for only $325.

We conclude that the logic of B FP trumps the differences

between the relevant language of § 548(a)(2)(A) and § 549(c) and

the contexts of mortgage foreclosure sales and tax sales. The only

remaining distinction between § 548 and § 549 that mandates caution

in extending BFP 's analysis to this case is the fact that § 548

addresses prepetition transfers while § 549 gover ns postpetition

transfers. Arguing against such an extension, Stone Companies

contends that Congress inten ded a stricter standard under § 549

than under § 548. Stone Companies urges that "[t]he preservation

of the bankruptcy estate is at th e core of the `present fair

equivalent value' standard," and that "the purpose of the more

stringent statutory requirement in section 549 is to protect the

estate of the debtor from depletion during the pendency of the

petition."

That Congress intended stricter limitations on postpetition

transfers, however, does not mean that such stringency must take

shape in the "equivalent value" received by the bankruptcy estate.3 Also, to the extent that Stone is correct that "present"

value excludes any amounts used to sati sfy antecedent debt, that

reading may offer another way in which § 549 is stricter than

§ 548, since, as Stone recognizes, satisfaction of antecedent debt

can be used to meet § 548 requirement of "reasonably equivalent

value."

14 In concluding that, under BFP

, there is no meaningful dif ference

between respective "equivalent value" re quirements of § 548 and

§ 549 in a forced-sale context, we do not render § 549 less strict

than § 548. Significantly, § 549(c) has requirements that are not

present in § 548

— requirements that address particular concerns in

the context of postpetition transfers. A postpetition transfer

must do more than garner "present fair equivalent value"; it must

also be made "to a [1] good faith purchaser [2] without knowledge

of the commencement of the case." § 549(c). For whatever reason,

S tone Companies declined to avail itself of a critical safegu ard

under § 549 when it never informed Bryan County of its bankruptcy.

Stricter rules under § 549 exist — Stone Companies did not take

advantage of them. 3

We are mindful of BFP 's caveat as to the narrow scope of its

decision. Justice Scalia's majority opinion stated: "We emphasize

that our opinion toda y covers only mortgage foreclosures of real

estate. The considerations bearing upon other foreclosures and

forced sales (to satisfy tax liens, for example) may be different."

Id. at 1761 n.3. For the reasons discussed above, however, we find

that BFP 's reasoning guides our reading of § 549(c)'s requirement

of "present fair equivalent value." The Court's disclaimer on the

breadth of its decision in BFP did not preclu de extension of its4 We decline to follow In re Shaw

, 157 B.R. 151 (Bankr. 9th

Cir. 1993), in which the bankruptcy court held that the different

language in § 549(c) compelled closer adherence to fair market

value than the language of § 548. Id. at 153-54. In re Shaw was

decided before BFP

, and the reasoning of BFP

, which disapproves of

a fair market value benchmark in a forced-sale context, casts doubt

on the bankruptcy court's analysis in In re Shaw

.

15 reasoning to a case, such as this one, where traditional rules of

statutory construction and deference to state regulatory interests

support the same outcome.

In sum, we read BFP to say that, in the context of a forced

sale, (1) § 549(c)'s requirement of "present fair equivalent value"

ought not be measured against the property's "fair market value";

and (2) given the State's essential interest in maintaining clear

titles to real property, we should not attempt to ascertain the

substantive content of "present fair equivalent value." 4 We hold,

in accordance with the logic of BFP

, that the tax-sale transfer of

Stone Companies' land to the Kidds

— which Stone Companies concedes

was n oncollusive and conducted in conformity with Oklahoma law —

satisfied § 549(c)'s requirement that the sale be "for present fair

equivalent value."

AFFIRMED.