Court Opinion

ID: 3017520
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:17:31.765638+00
Date Added: 2024-06-11T11:47:05.418877
License: Public Domain

___________

                                    No. 95-4200
                                    ___________

In re: Junior Sebastian                 *
Hammrich; Joyce Marie Hammrich,         *
                                        *
           Debtors.                     *
     __________________                 *
                                        *
Junior Sebastian Hammrich;              *     Appeal from the United States
Joyce Marie Hammrich,                   *     District Court for the
                                        *     District of South Dakota.
              Debtors/Appellants,       *
                                        *
     v.                                 *
                                        *
John S. Lovald, Chapter 12              *
Trustee,                                *
                                        *
              Claimant/Appellee.        *

                                    ___________

                     Submitted:     July 12, 1996

                          Filed:    October 21, 1996
                                    ___________

Before WOLLMAN, JOHN R. GIBSON, and HANSEN, Circuit Judges.
                               ___________

WOLLMAN, Circuit Judge.

     Junior and Joyce Hammrich appeal the district court's1 judgment
affirming the bankruptcy court's2 order that they pay $95,885.86 in
disposable income to their unsecured and undersecured creditors before
receiving a discharge.    We affirm.

      1
       The Honorable Lawrence L. Piersol, United States District
Judge for the District of South Dakota.
          2
       The Honorable Irvin N. Hoyt, Chief Judge, United States
Bankruptcy Court for the District of South Dakota.
                                           I.

        Junior   and    Joyce   Hammrich     filed   a   voluntary   petition   for
reorganization under Chapter 12 of the Bankruptcy Code on January 26, 1987.
The plan was amended and went into effect in October of 1989 and was to
terminate on January 1, 1993.      The plan required that the debtors pay all
disposable income under 11 U.S.C. § 1225 (b)(1) over the three years of the
plan.

        The debtors filed their final report and account and requested a
discharge on March 11, 1993.        The trustee and Farm Credit Bank of Omaha
objected to the discharge and requested that the court make a disposable
income determination.     After two evidentiary hearings, the bankruptcy court
concluded the debtors had unpaid disposable income of $95,885.86 and
ordered them to pay that amount in order to obtain a discharge.                 The
district court affirmed, finding that the bankruptcy court "performed a
thorough analysis of the disposable income issue and made a carefully
considered decision."

                                           II.

        We review the bankruptcy court's findings of fact for clear error and
its legal conclusions de novo.      Markmueller v. Case, 51 F.3d 775, 776 (8th
Cir. 1995).      While the initial burden is on the trustee to show that the
debtors are not contributing all of their disposable income to the plan,
the ultimate burden lies with the debtors to show that they are satisfying
that obligation.       In re Kuhlman, 118 B.R. 731, 738 (Bankr. D.S.D. 1990).

        Debtors contend that the bankruptcy court erred in its calculation
of disposable income.      We agree with the district court's conclusion that
the bankruptcy court's findings in calculating disposable income were not
clearly erroneous.

        The Code defines "disposable income" as

                                       -2-
     income which is received by the debtor and which is not
     reasonably necessary to be expended (A) for the maintenance or
     support of the debtor or a dependent of the debtor; or (B) for
     the payment of expenditures necessary for the continuation,
     preservation, and operation of the debtor's business.

11 U.S.C. § 1225(b)(2).    Determining disposable income is "a fact-intensive
inquiry into whether debtor has `income which is in excess of that
reasonably required for maintenance and continuation of [its] farming
operation from one year to the next.'"         Broken Bow Ranch, Inc. v. Farmers
Home Admin., 33 F.3d 1005, 1008 (8th Cir. 1994) (emphasis in original)
(quoting In re Coffman, 90 B.R. 878, 885 (Bankr. W.D. Tenn. 1988)).                The
amount by which the debtors' income exceeds their obligations at the end
of their plan, after accounting for carryover funds sufficient to continue
the their farming operation, is deemed disposable income.           Broken Bow, 33
F.3d at 1009.

     The bankruptcy court found, and the district court agreed, that the
debtors' total inventories amounted to $281,601.00 and that their total
obligations amounted to $16,980.00, for a disposable income calculation of
$264,621.     The court then determined that the debtors would require
$168,735.14 to continue their farming operation and subtracted that amount
from its disposable income determination in arriving at a final figure of
$95,885.86.

     The    debtors   contend   first   that    the   bankruptcy   court   erred   by
including in total inventories 326 calves on hand at the termination of
their plan.     The debtors maintain that these calves were not marketable
commodities to be included in the inventory part of the calculation because
they had not yet reached the weight at which they are normally sold.               The
bankruptcy court found that the calves had some value and were saleable on
the date of

                                        -3-
termination.

      Although the debtors may not have received the same amount they would
receive upon a sale of these calves at their full weight, the calves were
of some value at termination of the debtors' plan.                   Simply having to sell
the calves before the date debtors normally brought calves to market does
not render them completely unmarketable.                    Thus, we conclude that the
bankruptcy court's finding that the calves were marketable commodities is
not clearly erroneous and its inclusion of them in the disposable income
calculation was proper.

      The debtors also assert that the court erred when it included in the
disposable      income       calculation       government    payments     received     after
termination of the plan.         Even though the payments were not received until
after termination of the plan, they were attributable to debtors' farming
operation during the plan and were thus properly included in the disposable
income calculation.          Broken Bow, 33 F.3d at 1009.

      Debtors'     contend      that     the   bankruptcy    court    erred   in   excluding
repayment of a loan and payment of 1992 real estate taxes from the expense
portion of the calculation.            Only those obligations that exist at the end
of the plan period are to be included in the disposable income calculation,
however.   See Broken Bow, 33 F.3d at 1009.             Neither the loan nor the real
estate taxes were due at the end of the plan period.                 Therefore, the court
did not err in excluding those amounts from its calculation of disposable
income.

      The debtors' final contention is that the court erred in not leaving
adequate   funds       for   them   to   continue    their    farming    operation.      The
bankruptcy court made a detailed analysis of the amount of funds necessary
to   continue    the    debtors'    farming      operation.     This     determination    is
supported by the record and is not clearly erroneous.

                                               -4-
The judgment is affirmed.

A true copy.

     Attest:

           CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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