Court Opinion

ID: 1974143
Source: CourtListenerOpinion
Date Created: 2013-10-30 07:57:32.140882+00
Date Added: 2024-06-11T15:14:14.641539
License: Public Domain

322 B.R. 411 (2005)
In re David M. and Glinda N. OWENS, Debtors.
First National Bank of Stuttgart, Arkansas, Plaintiff,
v.
David M. and Glinda N. Owens, Defendants.
Bankruptcy No. No. 2:03-BK-17378M. Adversary No. 2:04-AP-1171.
United States Bankruptcy Court, E.D. Arkansas, Helena Division.
March 7, 2005.
*413 Edward H. Schieffler, Schieffler Law Firm, West Helena, AR, for Debtors.

MEMORANDUM OPINION
JAMES G. MIXON, Bankruptcy Judge.
On June 20, 2003, David and Glinda Owens ("Debtors") filed a voluntary petition for relief under the provisions of Chapter 7. On April 26, 2004, First National Bank of Stuttgart, Arkansas ("Bank") filed a complaint to determine the dischargeability of a debt in the sum of $1,499,203.10 owed to the Bank by Owens Planting Company ("Partnership"), a partnership consisting of four individuals, including the Debtors. Both of the Debtors guaranteed the debts of the Partnership to the Bank.
The complaint alleges that the debt to the Bank should be determined to be nondischargeable because the Debtors, on behalf of the Partnership, submitted a false financial statement in writing upon which the Bank reasonably relied in violation of 11 U.S.C. § 523(a)(2).
Trial on the merits was held in Helena, Arkansas, on October 4, 2004, and the matter was taken under advisement. The proceeding before the Court is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I)(2000), and the Court may enter a final judgment in this case. The following shall constitute findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.

FACTS
The facts are not substantially in dispute. The Debtors are married and reside in Clarendon in Monroe County, Arkansas. They were general partners in the Partnership, which was engaged in the farming and trucking business. The Partnership leased and farmed a total of 6913 acres and produced rice, soybeans, wheat, and corn. The Debtor, Mr. Owens, acknowledged that he managed the Partnership's business affairs and that he also worked on the farm, driving tractors, running combines and performing similar tasks. Mrs. Owens taught preschool.
Waylon Wiggins ("Wiggins"), executive vice president of the Bank, handled the loan to the Debtors that is the subject of this complaint. Wiggins is a loan officer with 25 years of experience in agricultural lending. He previously worked for Production Credit Association for about eight years and for BancorpSouth[1] for about 15 years before taking a position with the Bank, where he has been employed for approximately two years.
When he was employed by Bancorp-South or its predecessors, Wiggins facilitated loans to the Partnership over the course of approximately ten years. In 2002, the Bank hired Wiggins as Executive Vice President. Wiggins acknowledged that he actively and successfully solicited the Debtor's business for the year 2003 on behalf of his current employer.
The financial statement that is the subject of this complaint was completed by the *414 Debtor, Mr. Owens, with the assistance of Wiggins. (See Pl.'s Ex. 1.) The Bank required the completed statement, termed an "Agriculture Balance Sheet," in order to extend the crop production loan for 2003 and two other loans for the Partnership's grain bins and farming equipment.
The statement purported to show the financial condition of the Partnership as of November 6, 2002.[2] The statement reflected current assets consisting of cash; accounts receivable; hedging account equity; products on hand, such as seed and unsold commodities consisting of rice, soybeans and corn; and 1052 acres of growing wheat. The Debtor valued the liquid assets at $1,539,764.00.
As to liabilities, the Debtor indicated a debt to BancorpSouth of $792,480.00, which was the unpaid balance of the 2002 crop production loan and some other liabilities unrelated to this litigation. The Debtor did not list any 2002 crop production liabilities other than the debt to BancorpSouth. All liabilities listed totaled $1,549,742.00. The total assets of the Partnership were valued at $2,736,414.00, which, when compared to the liabilities listed, indicated a net worth of $1,186,672.00.
Wiggins testified for the Bank. He stated that as part of the loan agreement, he required the updated financial statement identified as Plaintiffs Exhibit 1. He stated that he did not remember discussing with the Debtor that it was unnecessary to disclose certain existing debts on the financial statement. (Tr. at 62.) On direct examination, Wiggins testified as follows:
MR. BERRY: Q. [You heard Owens'
                  testimony] That over
                  the years, y'all had developed
                  a relationship
                  so that it was not necessary
                  for him to disclose
                  certain indebtedness
                  to you?
MR. WIGGINS: A. I don't remember
                those conversations.
MR. BERRY:   Q. Well, let's go overeach
                year, these financial
                statements would
                be reviewed with Mr.
                Owens; would they
                not?
MR. WIGGINS: A. Yes, sir.
MR. BERRY:   Q. The same format
                we're talking about
                that was used in 2002?
MR. WIGGINS:   A. Yes, sir.
MR. BERRY:   Q. Did you make him
             aware of the significance
             of these financial
             statements that
             were being provided
             to you?
MR. WIGGINS: A. Throughout the years,
                yes, sir.
MR. BERRY:     Q. And how would you do
                  that?
MR. WIGGINS: A. Well, we would go
                over his financial position
                and compare it to
                the prior year.
MR. BERRY:  Q. Was any mention
               made of him not being
               required to disclose
               certain indebtedness?
MR. WIGGINS: A. No, sir.
MR. BERRY:   Q. Specifically, Mr. Owens
                owed how much
                outside indebtedness
                in November of 2002,
                to your recollection?
MR. WIGGINS: A. $650,000.
MR. BERRY:   Q. Was there any discussion
                between you and
                Mr. Owens with regard
                to this outside indebtedness?
MR. WIGGINS: A. No, sir.
MR. BERRY:  Q. Did you go over his
               financial statement?
MR. WIGGINS: A. Yes, sir.
MR. BERRY:   Q. Did you go over it in
                more detail in November
                of 2002 than you
                normally would have?
*415
MR. WIGGINS: A. I don't think I went
                over the financial
                statement in more detail,
                no sir.
MR. WIGGINS: Q. What kind of experience
                had you had with
                him up to this point in
                time, Mr. Wiggins?
MR. WIGGINS: A. I'd had very good experience
                with him in
                the past, up to this
                point.
MR. BERRY: Q. He had always provided
              you the financial information
              that was requested?
              Yes, sir.
MR. BERRY: Q. Had it always been
              truthful, as far you
               knew?
M.R. WIGGINS: A. As far as I know it
                 had, yes, sir.
                 Had you developed a
                 trust in the information
                 he was providing
                 you?
MR. WIGGINS: A. Yes, sir, I had.
(Tr. at 62-63.)
After the loan was made, the Debtor made payments on many outstanding debts incurred in the production of the 2002 crop from the proceeds of the 2003 crop production loan. These included the following:

____________________________________________________________________________
CHECK NO.      DATE           PAYEE              AMOUNT
____________________________________________________________________________
1001           11/25/02      PHI                  $201,052.40
_____________________________________________________________________________
1003           11/28/02      Pauline Everett      $  4,000.00     Rent
______________________________________________________________________________
1012           12/11/02      Jeff Calloway, Inc.   $ 16,431.13     Fuel
_______________________________________________________________________________
1032           1/08/03       BancorpSouth         $200,000.00
__________________________________________________________________________________
1025           1/03/03       Raymond R.Abramson   $ 15,395.60     Rent
_________________________________________________________________________________
1026           1/03/03       Raymond R.Abramson   $ 17,123.50     Rent
_________________________________________________________________________________
1031           1/06/03       FCC Equipment        $    712.99
_________________________________________________________________________________
1035           1/16/03       Pride Family         $ 28,000.00     Rent
                             Partnership
___________________________________________________________________________________
1070           2/19/03      BancorpSouth          $190,000.00     2002 operating loan
_________________________________________________________________________________________
1094           3/07/03      BancorpSouth          $100,000.00     2002 operating loan
____________________________________________________________________________________________

(PL's Ex. 12.) The Partnership also paid employees in November and December 2002 from the 2003 production loan extended by the Bank.
Wiggins testified that he first learned that the loan was in trouble in May 2003 when Mrs. Owens contacted the Bank to advise that Mr. Owens was suffering from depression and was not able to make business decisions. Wiggins learned that some crops had not yet been planted and that the partnership did not have sufficient funds remaining from the 2003 operating loan to complete production on the farmland that had been leased.
Wiggins stated that the Debtor's condition improved over the next ten days and he held a series of meetings with the Debtor to determine "where we were then, what bills were owed, what it was going to take to get the crop out, and to start looking at projections and seeing what the next step was." (Tr. at 66.)
During the course of the meetings, Wiggins instructed the Debtor to complete a *416 revised financial statement reflecting the partnership's liabilities and assets as of November 15, 2002. This statement was introduced as Plaintiffs Exhibit 9. The revised financial statement contained several substantial liabilities not reported on the original financial statement. These included the following:
1. Helena Chemical      $244,000.00
2. PHI Wheat            $200,000.00
3. CCC (Rice)           $ 57,394.00
4. CCC (Corn)      $239,261.00
TOTAL:                  $740,655.00
Wiggins explained the program operated by Commodity Credit Corporation ("CCC"). He stated that farmers typically use crops as collateral for a governmentbacked, low-interest loan from the CCC. Farmers use the proceeds to pay down the existing crop production loan at a commercial bank. A CCC crop loan secured by crops already encumbered by an existing production loan is only available to a farmer if the existing commercial lender agrees to subordinate its security interest to CCC's subsequent security interest.
The revised financial statement had only minor adjustments in assets and demonstrated an adjusted net worth of $407,668.00 rather than $1,186,672.00 as reported on the original financial statement. The Debtor testified that the original financial statement was filled out the way it had been in past years and that Wiggins knew of the omitted 2002 crop expenses but agreed that it was unnecessary to reflect the debts on the statement. Owens' statement directly contradicted Wiggins' testimony on direct examination that he never indicated to the Debtor that he did not have to show obligations to suppliers.
Mr. Owens testified that he had omitted other assets from the November 2002 financial statements including receivables from truck operations in the sum of $36,767.00, government payments totaling $281,298.00 and Riceland base capital valued at $32,195.00, which, when compared to the revised liabilities, added up to a net worth of $862,890.00 (Def.'s Ex. 15.)
There is considerable evidence to suggest that the Bank was aware of the omitted liabilities. Wiggins obtained a lien search from the Circuit Clerk of Monroe County, Arkansas, which reflected liens filed by the CCC, dated November 5, 2002, encumbering the 2002 rice crop and another lien filed by the CCC on August 12, 2002, encumbering the 2002 corn crop. (Def.'s Ex. 1.)
The Debtor also introduced a lien search Wiggins had ordered the previous year when he worked for BancorpSouth that reflected nine separate filings by the CCC. (Def.'s Ex. 2.) The Debtor introduced the financial statements prepared by the Debtor and submitted to Wiggins as the loan officer for BancorpSouth or First United Bank dated December 20, 2001; December 1, 2000; November 16, 1999; November 19, 1998, and November 18, 1997. None of these financial statements listed any liability to CCC or liabilities for farm supplies except the statement dated November 16, 1999, which listed an outstanding CCC loan secured by the rice crop of $124,800.00.
On direct examination, Wiggins specifically stated that he never advised the Debtor he did not have to list crop production liabilities. He stated the following:
MR. BERRY:     Q. You have heard Mr.
                  Owens' testimony with
                  regard to that?
MR. WIGGINS: A. Yes, sir.
(Tr. at 61.)
MR. BERRY:  Q. That over the years,
               y'all had developed a
               relationship so that it
               was not necessary for
               him to disclose certain
               indebtedness to you?
*417
MR. WIGGINS: A.I don't remember
             those conversations.
(Tr. at 61-62.)
MR. BERRY:   Q.  Was any mention
                 made of him not being
                 required to disclose
                 certain indebtedness?
MR. WIGGINS:     A. No, sir.
MR. WIGGINS: Q. Was there any discussion
                between you and
                Mr. Owens with regard
                to this outside indebtedness?
MR. WIGGINS: A. No, Sir.
(Tr. at 63.)
MR. BERRY: Q.  Now, during the period
               of time that you've
               been working with
               Mr. Owens, did you
               ever indicate to him
               that he would not
               need to show any obligations
               he owed to
               suppliers that were
               not currently being
               paid?
MR. WIGGINS: A. No, sir
(Tr. at 70-71.)
Wiggins stated on cross examination that he did not remember seeing the lien in favor of CCC that appeared on the lien search he ordered in late 2002. He acknowledged that he did not contact CCC to inquire as to the amount owed to CCC. When asked about the lien search he ordered the previous year when he worked at BancorpSouth, Wiggins testified that the fact that the liens shown on the lien search did not appear on the financial statement did not send up a red flag. (Tr. at 83.)
Thereafter he admitted that when he worked for BancorpSouth he was the person who agreed to subordinate Bancorp-South's security interest to the indebtedness owed to the CCC secured by the 2002 crop. Wiggins stated the following:
THE COURT:  Q.  So you were aware
                that there were CCC
                loans that weren't reported
                on the financial
                statements?
MR WIGGINS: A. I'd have to release
               those and subordinate
               them back. So the answer
               to that is yes, sir.
THE COURT: Q. So his testimony about
              you-all routinely not
              putting those CCC
              loans on the financial
              statements is true;
              isn't it?
MR. WIGGINS: A. Well
THE COURT:   Q. Since you were the
             one that was releasing
             and subordinating
             them, you knew about
             them?
MR. WIGGINS: A. Yes, Sir, I knew they
                were there up front.
                It's up to the farmer
                to sell that grain at
                any point in time and
                bring those proceeds
                back in.
THE COURT: Q. So his testimony is
              true that you knew
              y'all weren't putting
              those on there?
MR. WIGGINS: A. Yes, Sir, to a certain
                extent.
THE COURT: Q. Well, to the extent of
                the CCC loans?
M.R WIGGINS: A. To the CCC loans,
                right.
THE COURT: Q. Is his testimony not
              true, though, as to the
              other creditors who
              would have been supplying
              him seed and
              fertilizer, that you-all
              would have sort of
              agreed just to leave
              those off; that testimony
              is false?
MR. WIGGINS: A. No, Sir. My testimony
                is that year in and
                year out, he paid his
                bills or even prepaid
                bills at the end of the
                year. He paid ahead
                in order to get a tax
                benefit out of those at
                year end.
THE COURT: Q. Did he tell you he did
              that or did you assume
              he did?
THE WIGGINS: A. He told me.
                But you never discussed
                with him any
*418
                outstanding production
                expenses other
                than the CCC that
                wouldn't be reflected
                on the financial statements?
MR. WIGGINS: A. That's right.
THE COURT: Q. So on this 2002 financial
              statement, you
              pretty much knew
              that there was an outstanding
              CCC balance
              in some amount;
              didn't you?
MR. WIGGINSl: A. I did not even think
                 about the CCC loans.
THE COURT: Q. All right. So it would
              be correct that had
              you thought of it,
              there would have been
              the possibility of a
              $400,000 or $500,000
              CCC loan outstanding
              at the time you did
              this financial statement?
MR. WIGGINS: A. There would be
                 around a $250,000
                 CCC loan at that
                 point, which still
                 wouldn't have thrown
                 the operation into a
                 negative cash flow for
                 2002.
THE COURT: Q. That's the big problem;
              isn't it?
MR. WIGGINS: A. In looking at any of
                these, even the CCC
                loan would not throw
                any of these years into
                a negative cash flow
                position for that particular
                year.
THE COURT: Q. As a banker, why in
              the world would you
              agree to do a financial
              statement and leave
              off a significant liability
              like the CCC in
              those other years?
MR. WIGGINS: A. I would not intentionally.
                Well, you've already
                said you knew of the
                existence of the loans
                year in and year out.
MR. WIGGINS: A. Well, my answerI
                tried to answer that it
                was my responsibility
                to release that. So I
                 knew at some point,
                 which would have
                 been like two or three
                 months prior to this;
                 but at the time that he
                 came in, I obviously
                 forgot about those.
THE COURT: Q. But you did that several
              years in a row,
              didn't you?
MR. WIGGINS: A. Or we would have netted
                them out on the
                other side, the inventory
                side, one or the
                other, but I don't
                know what we did
                with them.
THE COURT: Q. But didn't you do that
              several years in a row
              in previous years?
MR. WIGGINS: A. It looks like two or
                three years, yes, Sir.
                So you knew that
                CCC liabilities were
                not showing up on
                these annual financial
                statements. As a
                banker, why would
                you do that?
MR. WIGGINSl: A. I can't tell you that I
                 did it intentionally.
                 As a banker, I
                 wouldn't have done
                 that intentionally.
THE COURT: Q. So was this an oversight?
MR. WIGGINS: A. Yes, Sir.
(Tr.at 107-110.)
Wiggins also testified that a crop production loan is intended to cover the expense of putting in the current crop, but there are no written or oral restrictions on the borrower that prohibit him from using the money to pay existing production expenses resulting from the previous year's crop or some other indebtedness such as rent. Wiggins testified that the Bank ceased advancing money on the 2003 crop loan with $90,000.00 left to draw and had a receiver appointed to finish out the crop.
*419 Owens stated that in his several years of dealing with Wiggins that by agreement they did not include outstanding crop production expense debts on the financial statement even though Wiggins was aware of the indebtedness (Tr. at 19.) In response to the Court's questions, Owens answered as follows:
THE COURT: Q. What's the purpose of
              filling out a financial
              statement that doesn't
              list all the liabilities?
MR. OWENS: A. There were certain assets
              and liabilities that
              we didn't traditionally
              list.
THE COURT: Q. Well, that's not my
              question. What's the
              purpose ofI mean,
              you're obviously a
              very intelligent man
              and understand finances.
              Why would
              you fill out a sheet like
              this and leave off liabilities
              and leave off
              assets?
MR. OWENS. A. I guess we just had a
              grouping of things
              that we normally put
              on there. We'd been
              doing it that way for
              eight to ten years;
              and when it came time
              to do it again, we did
              it the same way, your
              Honor. Typically, it
              did not include CCC
              loans or outstanding
              debts; but there are
              some othersand Mr.
              Schieffler will get into
              those loansthat
              were on the asset side
              that we typically did
              not include.
THE COURT: Q. Were these CCC loans
           in significant
           amounts?
MR. OWENS: A. There was a $197,000
              loan for corn and a
              $56,000 or $57,000
              [loan] for rice.
THE COURT: Q. Were they secured by
           the crops?
MR. WIGGINS: A. Yes, Sir.
THE COURT: Q. Were they behind
              BancorpSouth?
MR.OWENS: A. BancorpSouth gave
             CCC a waiver for
             those.
THE COURT: Q. Did you divert any of
              BancorpSouth's collateral
              without their permission?
MR. OWENS: A. No. They released
              everything.
THE COURT: Q. Okay.  When you say
              that was the way "we"
              always filled out the
              financial statement,
              who is we?
MR. OWENS: A. Well, I filled the financial
              statement out. I
              say we because there
              are four partners in
              the partnership. Mr.
              Wiggins and I had
              done this 10 or 15
              times over the last 10
              or 15 years, and we
              just kinda got into a
              scenario of this is
              what we include and
              we ignore these other
              things; and that's the
              way we filled it out.
THE COURT: Q. So while he was working
              for the bank, Mr.
              Wiggins agreed that a
              financial statement
              could be presented
               which did not contain
               all the liabilities?
MR. OWENS: A. Yes, Sir. It was kind
              of a mutual understanding.
              We never
              included any outstanding
              production expense
              liabilities that
              we had.
THE COURT: Q. Did he specifically
              agree to that; I mean,
              did you discuss it with
              him? Let's say on
              this particular one,
              Plaintiffs Exhibit 1,
              did you discuss with
              Mr. Wiggins that it
              didn't contain all the
              liabilities?
MR. OWENS: A. We did not specifically
              discuss it that year.
*420
THE COURT: Q. You'd discussed it in
              previous years?
MR. OWENS: A. Yes, sir.
THE COURT: Q. And what did he say?
MR. OWENS: A.I don't recall the exact
             conversation, but basicallyand
             I think
             when you see the adjusted
             financial statement
             that reflects all
             those, you'll see that
             we did not have a negative
             worth by any
             means.
THE COURT: Q. That's not my question.
              What did he
              say; did the banker
              say words to the effect
              that you didn't have to
              put those several hundred
              thousand dollars
              in liabilities?
MR. OWENS: A. Well, I wouldn't say it
              was several hundred
              thousand dollars every
              year.
THE COURT: Q. Well, you tell me then.
              When he talked about
              it, what did he say?
MR.OWENS: A. Well, if we talked
             about it and he said it
             was not necessary to
             put those, we didn't
             put those.
THE COURT: Q. That it wasn't necessary
              to put liabilities
              owed to individual
              creditors for crop production
              expenses as
              opposed to the bank?
MR. OWENS: A. That's correct.
              All right.  Did he say
              why?
MR. OWENS: A. Well, I think the financial
              always indicated
              that we were
              whether it was $1.1
              million in this case of
              $900,000 really didn't
              make any difference in
              terms of whether they
              made the loan or not.
              That was my assumption,
              that the net
              worth was significant
              enough and our production
              history was
              consistent enough that
              he felt like it was a
              good loan.
(Tr. at 42-47.)

DISCUSSION
With regard to false financial statements, the Bankruptcy Code specifically provides
a) a discharge under section 727 ... of this title does not discharge an individual debtor from any debt
...
2) for money... to the extent obtained by
...
B) use of a statement in writing
(i) that is materially false;
(ii) respecting the debtor's ... financial condition;
(iii) on which the creditor to whom the debtor is liable for such money ... reasonably relied; and
(iv) that the debtor caused to be made or published with the intent to deceive.
II U.S.C. § 523(a)(2)(B) (2000).
The plaintiff must establish the following factors:
(1) the existence of a statement in writing;
(2) the writing is materially false;
(3) the writing concerns the debtor's financial condition;
(4) the creditor reasonably relied on the statement; and
(5) the statement was made with intent to deceive.
First Nat'l Bank v. Pontow, 111 F.3d 604, 608 (8th Cir.1997); 4 Collier on Bankruptcy ¶ 523.08[2] (Alan N. Resnick & Henry J. Sommer, et at. eds., 15th ed. rev.1993). Each of the elements must be proved by a preponderance of the evidence. Pontow, 111 F.3d at 608 (citing Grogan v. Garner, 498 U.S. 279, 286-87, 111 S. Ct. 654, 112 *421 L.Ed.2d 755 (1991); Valley Nat'l Bank v. Bush (In re Bush), 696 F.2d 640, 644 n. 4 (8th Cir.1983)).
In this case, the facts are not in dispute that the Agriculture Balance Sheet is a statement in writing that is materially false and that it concerns the Debtor's financial condition. What is in dispute is whether the creditor reasonably relied on the statement and whether the statement was made with the intent to deceive.
Under the statute, the Bank must show that not only did the creditor rely on the false statement in writing but that the reliance was reasonable. Reasonableness is judged in light of the totality of the circumstances. Sinclair Oil Corp. v. Jones (In re Jones), 31 F.3d 659, 662 (8th Cir.1994) (quoting Coston v. Bank of Malvern (In re Coston), 991 F.2d 257, 261 (5th Cir.1993) {en banc)). In judging reasonableness, courts should consider " `whether there were any "red flags" that would have alerted an ordinarily prudent lender to the possibility that the representations relied upon were not accurate; and whether even minimal investigation would have revealed the inaccuracy of the debtor's representations.' " Jones, 31 F.3d at 662 (quoting Coston, 991 F.2d at 261).
The Bank has not established by a preponderance of the evidence that it actually or reasonably relied on the Debtor's 2002 financial statement. On direct examination, Wiggins repeatedly stated that he was unaware of any agreement with regard to the omission of certain indebtedness from the financial statement. Upon further examination, he admitted that he had knowledge of the CCC indebtedness when it was pointed out that he was the officer for BancorpSouth who had previously subordinated BancorpSouth's lien to the CCC's lien position.
Further, the evidence demonstrated that lien searches initiated by him documented the CCC's security interest in the Partnership's crops, even though the indebtedness was omitted from the financial statement. In support of the Debtor's testimony, the Partnership's financial statements submitted to Wiggins in previous years established a pattern that the CCC obligation not be included as a liability. Clearly, Wiggins knew of the existing but undisclosed CCC indebtedness; therefore, he did not actually rely on the financial statement as to these obligations.
Even if Wiggins had relied on the complete accuracy of the financial statement, the reliance was not reasonable because the lien search in late 2002 served as a red flag alerting him to undisclosed liabilities. By his own admission, Wiggins did not investigate the extent of the indebtedness to CCC although an ordinarily prudent lender without knowledge of the obligation would certainly have done so.
The testimony of Wiggins and the Debtor conflicted as to whether unpaid crop expenses from 2002 were also, by tacit agreement, omitted from the financial statement. The court credits the Debtor's testimony over that of Wiggins. The documentary evidence demonstrates that Wiggins did not testify truthfully, or at the very least was evasive, with regard to the CCC debts. His lack of candor with regard to the CCC debts undermines his credibility as to the omission of unpaid crop expenses.
Furthermore, because the Court draws the inference that Wiggins was aware of the unpaid crop expenses and other undisclosed liabilities, the Court also infers that the Debtor and Wiggins had agreed at some point in the relationship that these liabilities need not be listed on the yearly financial statement. Therefore, *422 there is insufficient evidence of intent to deceive on the part of the Debtor.
For these reasons, the plaintiffs complaint is dismissed, and the debt to plaintiff is determined to be dischargeable.[3]
IT IS SO ORDERED.
NOTES
[1]  Acccording to Wiggins' testimony' testimony, First Stuttgart Bank and Trust became First United Bank, Which was subsequently acquired by BancorpSouth.
[2]  Typically, all of the crops grown in 2002 would have been harvested by November.
[3]  The Bank never introduced any evidence that Mrs. Owens had any participation in the preparation of the financial statement.