Federal Land Bank of Columbia v. McNeal

77 B.R. 315, 16 Bankr. Ct. Dec. (CRR) 673, 1987 U.S. Dist. LEXIS 7939
CourtDistrict Court, S.D. Georgia
DecidedAugust 26, 1987
DocketCiv. A. 287-156
StatusPublished
Cited by4 cases

This text of 77 B.R. 315 (Federal Land Bank of Columbia v. McNeal) is published on Counsel Stack Legal Research, covering District Court, S.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Land Bank of Columbia v. McNeal, 77 B.R. 315, 16 Bankr. Ct. Dec. (CRR) 673, 1987 U.S. Dist. LEXIS 7939 (S.D. Ga. 1987).

Opinion

ORDER

ALAIMO, Chief Judge.

This bankruptcy appeal presents the question of whether a debtor who operates a service cleaning chicken houses and selling the manure for fertilizer is engaged in a “farming operation” as that term is defined in 11 U.S.C. § 101(20).

In an order entered on May 18, 1987, the bankruptcy court denied appellant Federal Land Bank’s motion to dismiss after finding that the debtor, Paul Douglas McNeal, received more than half of his income from farming operations and was, therefore, a “family farmer” as defined in 11 U.S.C. § 101(18). Only family farmers so qualified may proceed voluntarily under Chapter 12 of the Bankruptcy Code, the “Family Farmer Bankruptcy Act,” 11 U.S.C. § 1201 et seq., and thereby enjoy its shield from involuntary petitions. In appealing the bankruptcy court’s order, the Federal Land Bank contends that the cleaning of chicken houses and selling of manure is not a farming operation and that, consequently, any income derived therefrom should not be counted in determining whether the debtor was a family farmer. After reviewing the relevant caselaw, the Court agrees with appellant. Accordingly, the bankruptcy court’s order of May 18, 1987, will be reversed.

FACTUAL BACKGROUND

On March 3, 1987, Paul Douglas McNeal filed a voluntary petition for bankruptcy under Chapter 12 of Title 11 of the United States Code. The Federal Land Bank moved for relief from the automatic stay of Chapter 12, for alternative protection, that the petition be dismissed and for sanctions. The bankruptcy court held a hearing on the motion on May 6, 1987, during the course of which the following facts were established.

As a deputy sheriff for Jeff Davis County, Georgia, McNeal had earned $17,394.12 in non-farm income for 1986. In addition, McNeal earned $8,860 from cleaning out chicken houses owned by other farmers and selling chicken manure as fertilizer. McNeal maintained that this income, along with another $1,670 from machine work performed in the chicken house operation, was part of his total farm income of $23,-563 for 1986. Recognizing the paucity of authority on the question of whether a chicken coop cleaning service was a “farming operation,” the bankruptcy court declared that it was and determined that more than 50 percent of McNeal’s 1986 income, or $23,563, was derived from farming operations. Accordingly, in its written order of May 18, 1987, the bankruptcy court denied the Federal Land Bank’s motion to dismiss. At the hearing, the Bank failed to pursue its additional requests for relief, and the bankruptcy court treated them as waived.

*317 DISCUSSION

Under the Bankruptcy Code, a “farming operation” includes “farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry or livestock, and production of poultry or livestock products in an unmanufactured state.” 11 U.S.C. § 101(20). The courts have recognized that the definition of farming operations “does not provide an all-inclusive list of tasks and activities” and is, therefore, not limited to those operations specifically enumerated. See, e.g., In the Matter of Bernard Armstrong, 812 F.2d 1024, 1026 (7th Cir.1987); Collier on Bankruptcy, Sec. 101.20, P. 101-48 (1987). However, the courts have also sounded a warning against interpreting the statute so broadly as to eliminate the definition altogether by “bringing in operations clearly outside the nature or practices one normally associates with farming.” In re Dakota Lay’d Eggs, 57 B.R. 648, 653 and 655 (Banrk.D.N.D.1986). In any case, the scope of the term “farming operation” is central to a determination of whether the debtor, McNeal, is a “family farmer” entitled to avail himself of the voluntary bankruptcy procedures of Chapter 12, 11 U.S.C. § 1201 et seq.

A “family farmer” is defined under the Bankruptcy Code as an:

individual and spouse engaged in a farming operation whose aggregate debts do not exceed $1,500,000 and not less than 80 percent of whose aggregate noncon-tingent, liquidated debts (excluding a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation) on the date the case is filed, arise out of a farming operation owned or operated by such individual or such individual and spouse, and such individual or spouse receive from such farming operation more than 50 percent of such individual’s or such individual and spouse’s gross income for the taxable year preceding the taxable year in which the case concerning such individual or such individual and spouse was filed.

11 U.S.C. § 101(17) (emphasis added). The issue presented on appeal, then, is whether more than 50 percent of the debtor’s income was derived from a farming operation. Unquestionably, if the debtor’s chicken house cleaning is considered a farming operation, more than 50 percent of the debtor’s income during 1986 will have come from farming operations.

The Court’s review of the caselaw reveals at least four distinct tests that have been applied to determine whether a particular activity should be treated as a farming operation. First, in a case under the Fair Labor Standards Act, the former Fifth Circuit held in Mitchell v. Huntsville Wholesale Nurseries, 267 F.2d 286 (5th Cir.1959), that in order for an activity to be characterized as a “farming operation,” the “practices in question must relate to the farmer’s own farming operations and not to the farming operations of others.... ” Id. at 290. The Mitchell test has been rephrased in question form by the bankruptcy court in In re Dakota Lay’d Eggs, supra at 656. In that case, the court determined whether certain activities of an agribusiness were farming operations by asking: “Is it a typical farming activity and, if so, whose farming activity is it — [the debtor’s] or someone else’s?” Id.

Although the cleaning of chicken houses may fairly be considered a typical farming operation, it is undisputed that here the practice did not relate to the debtor’s own farming operation but, rather, to the farming operations of others. McNeal ran a chicken coop cleaning service for other farmers; he also sold and spread the manure collected in the cleaning process to other farmers as a side business. Since his customers were other farmers and since he spread fertilizer on their land or sold it to them for use on their land, it is clear that this activity related primarily to the farming operations of others. Under the

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Bluebook (online)
77 B.R. 315, 16 Bankr. Ct. Dec. (CRR) 673, 1987 U.S. Dist. LEXIS 7939, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-land-bank-of-columbia-v-mcneal-gasd-1987.