Appeal from the United States Bankruptcy Court for the Southern District of California. BK. No. 91-05063-H7. Adv. No. 91-90441-H7. Honorable John J. Hargrove, Bankruptcy Judge, Presiding
Before: Ashland, Volinn, and Ollason, Bankruptcy Judges.
VOLINN, Bankruptcy Judge:
A lender allegedly presented a check to the debtor for the purpose of transferring the funds to the lender's borrower. Prior to consummation of the transfer, the debtor's bank accounts were seized and the debtor was placed in receivership. The lender appeals a summary judgment of the bankruptcy court that the funds became property of the estate.
FACTS AND PROCEEDINGS BELOW
The debtor, Golden Triangle Capital, Inc. (Triangle), performed various real estate transaction functions. In the instant case, Triangle was to act as a loan servicing agent for a loan evidenced by a promissory note and secured by a deed of trust. In June of 1990, appellant Golden Mortgage Fund #14, (Fund #14) agreed to loan $95,000 to Camino Del Norte Partners II (Camino). Triangle would receive a fee to collect the loan payments from Camino and distribute them to Fund #14. Triangle was also to act as an intermediary in the execution of the loan. Although Camino delivered a promissory note directly to Fund #14, Fund #14 was to transfer the loan amount to Camino through Triangle.
According to Fund #14, the loan was funded on July 10, 1990, when a cashier's check for $95,000 was delivered to Robert Braun, the president of Triangle. A cashier's check dated July 6, 1990 was made payable to the order of Fund #14's principal, Robert Brandt. Language on the face of the check states, "RE: FINDLEY." On the back of the check, Brandt endorsed it restrictively, "Pay to GTC/Findley." Findley was Camino's principal. Braun apparently deposited this check in one of Triangle's general accounts. The evidence presented is unclear whether this, in fact, occurred.
Fund #14 asserts that Triangle deposited the $95,000 check in Triangle's general account in American Savings Bank. The Chapter 7 trustee of Triangle contends that there is no evidence that the $95,000 was deposited in a Triangle bank account. The evidence shows that a deposit was made in Triangle's American Savings Bank on July 6, 1990, which included a $95,000 deposit among various deposits totalling $102,345.80. The bank code for a $95,000 check deposited on the July 6 deposit slip indicates that the check was drawn on the same bank as Fund #14's cashier's check. However, the declaration of Fund #14's Robert Brandt states that he delivered the cashier's check to Triangle on July 10, 1990 at 3:30 p.m.
It is undisputed that the parties intended that Triangle would transfer the $95,000 to Camino, minus a nominal service fee for acting as transfer agent. However, on July 10, 1990, before the transfer occurred, the California Department of Real Estate and the FBI seized the funds in Triangle's bank accounts, including the $95,000 deposited on July 6.
The funds seized were turned over to a court-appointed receiver for Triangle. In March 1991, Fund #14 filed a motion in the state court receivership proceedings for turnover of the $95,000 held by the receiver, alleging that the funds were not part of the receivership estate. After being informed that the receiver intended to file bankruptcy, the court denied Fund #14's motion without prejudice to allow it to revive the motion in the bankruptcy court.
On May 7, 1991, Triangle filed its Chapter 7 bankruptcy petition. On June 24, 1991, Fund #14 filed a complaint for declaratory relief in the bankruptcy court to determine entitlement to the funds. The Chapter 7 trustee brought a motion for summary judgment. The bankruptcy court requested additional briefing on whether the funds in question were held by the debtor in a resulting trust.
The court subsequently filed a memorandum decision which granted the trustee's summary judgment motion. The court determined that under California law, a resulting trust did not arise under the circumstances presented. Further, the court placed the burden on Fund #14 to demonstrate that the equities favored imposition of a trust, and found that Fund #14 failed to meet this burden. Judgment for the trustee was entered on May 11, 1992, and Fund #14 filed a timely notice of appeal. We reverse.
Whether the bankruptcy court erred by granting the trustee summary judgment on the basis that Triangle did not hold the funds in a resulting trust, and by requiring the claimant to demonstrate that the ...