In Re Ferro

228 B.R. 700, 37 U.C.C. Rep. Serv. 2d (West) 1175, 1999 Bankr. LEXIS 45, 1999 WL 14309
CourtUnited States Bankruptcy Court, W.D. Missouri
DecidedJanuary 11, 1999
Docket17-40137
StatusPublished

This text of 228 B.R. 700 (In Re Ferro) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Ferro, 228 B.R. 700, 37 U.C.C. Rep. Serv. 2d (West) 1175, 1999 Bankr. LEXIS 45, 1999 WL 14309 (Mo. 1999).

Opinion

MEMORANDUM ORDER

FRANK W. ROGER, Chief Judge.

This matter is before the Court on .the Motion to Require Surrender of Property of the Bankruptcy Estate by John C. Wright, III, Individually and as Attorney in Fact for Vergie G. Wright (hereinafter “Motion to Surrender”), filed by the debtor, Ricardo Andres Ferro, and on the Objections to Respondent’s Brief and Motion to Strike Exhibits (hereinafter “Motion to Strike”), also filed by Ferro following a hearing on the Motion to Surrender. For the following reasons, the Court will grant the Motion to Strike and will grant the Motion to Surrender. The Court will order John C. Wright, III, acting individually and as attorney in fact for Vergie G. Wright, to surrender to Ferro the real property and business assets of Wright’s Studio seized by John C. Wright, III, acting individually and as attorney in fact for Vergie G. Wright, on or about the dates of October 8, *702 1998, through October 12, 1998, with the exception of the supplies and equipment specifically identified in Exhibit A to a Sales Contract dated January 22, 1985, entered into between Vergie G. Wright as seller and Ricardo A. Ferro as buyer.

Facts

On January 22,1985, pursuant to a written Sales Contract, Ferro purchased from Vergie G. Wright the business and assets of Wright’s Studio, located at 318 South Maple, Eldon, Missouri, specifically identified as the “goodwill of said business, including the right to the exclusive use of the name Wright’s Studio, and the telephone listing and the right to continue the use of the same telephone number,” and “[a]ll of the supplies and equipment of said business which are listed on the schedule which is annexed hereto and designated ‘Exhibit A.’ ” Ferro also contracted to use at the will and pleasure of Vergie G. Wright for no additional cost or compensation, specific items of furniture and fixtures of the business that were listed on a schedule annexed to the Sales Contract and identified as Exhibit B; to use the files of negatives of the business subject to the right of Vergie G. Wright to regain and dispose of the negatives at any time upon her request; and to use the display photographs on display at the business premises subject to the right of Vergie G. Wright to regain and retain or dispose of the display photographs at any time upon her request. 1

Upon closing the Sales Contract, Ferro paid $8000.00 cash and signed a Promissory Note dated February 1, 1985, for the balance of the purchase price in the amount of $7000.00. The Promissory Note required interest-only monthly payments for the first six months in the amount of $58.33, then 47 monthly installments of principal and interest in the amount of $184.33, and thereafter a balloon payment for the remaining principal balance due and owing. The Sales Contract stated that the Promissory Note “shall be secured by a first hen upon the items listed on ‘Exhibit A.’ ” The Promissory Note provided that it “is secured by a lien on all of the equipment of Wright’s Photo Studio in Eldon, Missouri.”

There was no evidence introduced at the hearing on Ferro’s Motion to Surrender that any UCC-1 financing statements were ever filed in the county in which the business was located, or with the Missouri Secretary of State.

Ferro and Vergie G. Wright also entered into a Lease dated January 31, 1985, by which Ferro agreed to lease from Vergie G. Wright a parcel of land and building located at 318 South Maple, Eldon, Missouri, that housed the business of Wright’s Studio for a term of 5 years beginning February 1, 1985. The rent for the first two years was $200.00 per month, and for the last three years was $300.00 per month. The Lease also required Ferro to make all required repairs to the premises, to insure the premises and to pay the real estate taxes on the premises during the lease term. At the expiration of the original five-year Lease term, Ferro continued to lease the premises from Vergie G. Wright on a month to month basis pursuant to an oral agreement for the sum of $300.00 per month.

Ferro has owned and operated Wright’s Studio since he purchased it in January 1985. Throughout the year’s, Ferro has purchased numerous cameras and other photographic equipment that he used in the operation of the business, which replaced obsolete equipment originally purchased in 1985. Ferro testified that he has not used the equipment purchased from Vergie G. Wright during the last five years of business operations. Ferro also purchased a computer and software, which contains all of his business records.

Since February 1,1985, Ferro has failed to make all of the payments due on the Promissory Note, and has failed to pay all the rent due pursuant to both the written Lease and the oral lease agreement. Ferro concedes that he “has made minimal payments on the promissory note,” and “has also been very delinquent in the payment of rent,” but testi *703 fied that Vergie G. Wright had always been willing to work with him.

Ferro also got behind in paying his personal bills. Sometime in late 1997 or in January of 1998, Ferro decided that he needed to find an additional source of income in order to be able to pay his mounting debts. Ferro planned to obtain a job as a merchant marine in the Gulf of Mexico beginning in March of 1998, and to keep the business of Wright’s Studio operating through his two employees, Sherry Ferrell and Doug Grayson, who had each worked for him for about three years. In January of 1998, Ferro talked to Vergie G. Wright and to her son, John C. Wright, III, about his plans. John Wright holds Vergie Wright’s durable power of attorney and has managed her affairs for the last couple of years. 2 Ferrell testified that she was present at the meeting and that John Wright stated that she could run the business for Ferro while he was gone. Ferro told Vergie Wright and John Wright that he wanted to keep Wright’s Studio and planned to catch up in his arrears on rent and the Promissory Note. John Wright testified that after the meeting he understood that Ferro was going to find another source of income to pay Ver-gie G. Wright and that Ferrell and Grayson would keep Wright’s Studio open for business. Ferro did go to work as a merchant marine in the Gulf of Mexico in March 1998, and continued working in the Gulf for several months. However, Ferro did not use the money he was making while working in the Gulf to pay the arrears due Vergie G. Wright. Instead, Ferro used the money to pay other bills.

While Ferro was in the Gulf, Ferrell and Grayson had control of the business of Wright’s Studio. Ferro testified that he was the owner of the business and that he paid Ferrell and Grayson a salary to run the business. Ferro would talk to Ferrell about every two weeks to discuss the business with her.

It appears that Ferro paid the rent for the months of January and February 1998, before he left for the Gulf. Since February 1998, Ferro has made no rent payments personally. Ferrell testified that she was on a friendly basis with John Wright, and that after Ferro left her in charge of the business, John Wright agreed that Ferrell could pay $400.00 to an exterminator, $400.00 to a contractor for repairs to the building and $400.00 for insurance for the premises in lieu of some of the rent payments.

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Bluebook (online)
228 B.R. 700, 37 U.C.C. Rep. Serv. 2d (West) 1175, 1999 Bankr. LEXIS 45, 1999 WL 14309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ferro-mowb-1999.