Source: https://casetext.com/case/in-re-jones-28
Timestamp: 2018-12-14 12:57:15
Document Index: 78069751

Matched Legal Cases: ['§ 552', '§ 552', '§ 552', '§ 552', '§ 552', '§ 552', '§ 552', '§ 552']

In re Jones, 908 F.2d 859 | Casetext
908 F.2d 859 (11th Cir. 1990)
United States Court of Appeals, Eleventh CircuitAug 9, 1990
In re Englander
…Second, Debtors argue that First Union misled them by allowing Debtors to continue paying the premiums on the…
Matter of James Cable Partners, L.P.
…The creditor contended that the increase in value was either an inseparable part of its interest in the…
Timothy O. Davis, Gardner, Willis, Sweat Goldsmith, Albany, Ga., for defendant-appellee.
Before CLARK, Circuit Judge, RONEY, Senior Circuit Judge, and ATKINS, Senior District Judge.
Subsequently, the Chapter 7 trustee of the debtor's estate filed a complaint against First Atlanta, the creditor. The trustee contended that the increase in the cash surrender value after the case was filed under Chapter 7 was after acquired property which becomes property of the estate. First Atlanta, the creditor objected, contending that the sum in question was part of the security for its loan and was either an inseparable part of its interest in the policy under its assignment or represented proceeds of its collateral to which it would also be entitled. On August 2, 1988, the United States Bankruptcy Court for the Middle District of Georgia ruled that the post-petition payments to the life insurance policy were not funds paid within the meaning of 11 U.S.C. § 552, and First Atlanta's security interest did not attach to those monies.
The post-petition treatment of security interests is addressed in 11 U.S.C. § 552. The general rule is stated in section 552(a): "[P]roperty acquired by the estate or by the debtor after the commencement of the case is not subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case." 11 U.S.C. § 552(a). The sole exception to the general rule of subsection (a) is provided in § 552(b):
11 U.S.C. § 552(b) (emphasis added). The application of this exception to the instant case therefore, turns on whether the post-petition payments to the subject life insurance policy were funds paid within the meaning of 11 U.S.C. § 552(b).
First Atlanta argues that the above exception applies and that the sum in question is subject to their lien. They contend that the increased cash value resulting from the post-petition payments were funds paid within the meaning of § 552(b) for the reason that it was part and parcel of property which existed prior to the filing of the bankruptcy petition, and not separate, distinct and identifiable property in and of itself. The bankruptcy trustee contends that the exception does not apply and the sum in question is not subject to First Atlanta's lien.
There is no case on point on this issue. First Atlanta urges us to extend their security interest to the sum in question. However, the arguments presented in their favor are not persuasive. Instead we follow the reasoning set forth in the Bankruptcy Court's Memorandum Opinion. An analogy was made to bank accounts in which a creditor has a security interest into which deposits are made post-petition. In that situation, the bankruptcy court has held that any lien that a creditor has on the bank account is limited to the amount on deposit at the time that the case commenced. In re Executive Associates, 24 B.R. 171 (Bankr.S.D.Tex. 1982). The subsequent post-petition deposits into a bank account are very similar to subsequent post-petition payments of premiums that increase the cash surrender value of a life insurance policy. In addition, analogies can also be drawn to post-petition account receivables. In re Walker, 35 B.R. 237 (Bankr.N.D.Ga. 1983) (the post-petition receivable were implicitly held to be property "acquired by the estate or by the debtor after the commencement of the case").
The increased cash surrender value of the life insurance policy is not any form of "proceeds, product, offspring, rents, or profits" within the meaning of § 552(b). In other words, the subsequent premium payments made by the debtor's wife and son from their own separate assets which occurred from the date of the filing of the debtor's Chapter 11 petition to its conversion to Chapter 7 was property of the estate and such funds are not subject to First Atlanta's lien.