Court Opinion

ID: 9686219
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:33:59.978929+00
Date Added: 2024-06-11T18:18:16.150197
License: Public Domain

ABRAHAMS, Bankruptcy Judge,
concurring.
I concur in the majority opinion and write this separate statement only to discuss three aspects of the dissent.
1. Actual claims. The dissent states that Shamrock’s interest can only be avoided to the extent necessary to pay the actual or proved claims. (Dissent, Part III, A, 1.) This defies the clear meaning of section 544(a)(1) which arms trustees with the rights and powers of creditors who could have obtained a judicial lien “whether or not such a creditor exists.” See 124 Cong. Rec. H 11,097 (Sep. 28th, 1978); S 17,413 (Oct. 6, 1978); 4 Collier on Bankruptcy ¶ 544.01 n. 3 (15th ed. 1982). It makes no sense to allow trustees to hypothecate creditors but require that these hypothetical creditors have actual claims.
2. Windfall. A basic premise of the dissent is that the cattle sale proceeds may exceed the creditors’ claims and the debtor will keep this excess. Absent Shamrock’s consent, this will not happen because Shamrock surely has an unsecured claim, and this claim should be paid before there is any distribution to the debtor. 11 U.S.C. § 726(a) and 1129(a)(7). This claim would be based on the loss to Shamrock and the obvious unjust enrichment to the debtor.1 The policy favoring recording these cattle agreements is not so strong that violators must lose both their cattle and their claims against the bailees. See In re Verco Industries, 704 F.2d 1134 (9th Cir.1983) where similar equitable principles were discussed.
3. Reliance. Finally, I disagree with the dissent’s reasoning that anyone who relies on the cattle should inspect the brands. Even if reliance is required, many creditors would extend credit on the basis that Black & White owned thousands of cows, but these creditors would not be expected to examine each cow’s brand. By way of example, a telephone utility, a hardware merchant, and a newspaper carrier could advance credit in good faith reliance on the apparent ownership without individual brand examination at a pasture or feed lot.

. It is unnecessary to decide at this time the exact nature or form of Shamrock’s claim; for example, it could be a claim under 11 U.S.C. § 502(h) or be based upon subrogation to the claims of those paid with the proceeds of Shamrock’s cattle.