Opinion ID: 534895
Heading Depth: 1
Heading Rank: 7

Heading: Plaintiff's Good Faith

Text: 29 The remaining error urged by Far West Bank consists of the district court's conclusion that the plaintiff acted in good faith in presenting the check for payment. 9 The district court, in its findings of fact and conclusions of law, simply finds that [p]laintiff did not act in bad faith in presenting the check for payment. Findings of Fact and Conclusions of Law. R., Tab 48. The defendant states that it does not contend on appeal that the testimony adduced at trial is contrary to the court's finding, but defendant asserts that based on the stipulated facts, plaintiff did not act in good faith as a matter of law. Brief of Appellee, p. 25. It appears the defendant is arguing that the evidence--as stated in the stipulated facts--was undisputed and conclusive. Thus, it is the defendant's position that the district court was required as a matter of law to conclude that the plaintiff acted in bad faith in presenting the check. The pertinent undisputed facts relied upon by the defendant 10 are: 30 3. When plaintiff accepted the check, it knew that the Check's drawer, Afton W. Johnson, and her husband, Kent D. Johnson, dba Brookside Ice, were debtors under Chapter 11 of the Bankruptcy Code and were then operating a retail ice business as debtors-in-possession. While the Chapter 11 case was pending, Mr. Ice provided the debtors with open account credit, and the Check was to have been credited by plaintiff toward payment of the unpaid open account balance arising from purchases made by the debtors during the pendency of their Chapter 11 case. 31 11. Plaintiff did not advise Valley Bank at the time the Check was deposited that the drawer of the check was involved in insolvency proceedings. 32 These facts do not conclusively establish the plaintiff's bad faith in presenting the check for payment because a debtor-in-possession under Chapter 11 generally is authorized to continue operating its business. 11 U.S.C. Secs. 363(c)(1), 1107, 1108. A debtor-in-possession also may obtain unsecured credit and incur unsecured debt in the ordinary course of business. 11 U.S.C. Sec. 364(a). Under these circumstances, the plaintiff's acceptance of a check drawn on the account of Chapter 11 debtors-in-possession does not, as a matter of law, constitute bad faith. 11