Loeb v. Schafer Bros. (In re the Austin Group, Inc.)

80 B.R. 255, 1987 Bankr. LEXIS 2278
CourtDistrict Court, D. Georgia
DecidedNovember 12, 1987
DocketBankruptcy No. A86-04875; Adv. No. 87-0140A
StatusPublished

This text of 80 B.R. 255 (Loeb v. Schafer Bros. (In re the Austin Group, Inc.)) is published on Counsel Stack Legal Research, covering District Court, D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Loeb v. Schafer Bros. (In re the Austin Group, Inc.), 80 B.R. 255, 1987 Bankr. LEXIS 2278 (gad 1987).

Opinion

MEMORANDUM OF OPINION AND ORDER

JOYCE BIHARY, Bankruptcy Judge.

The Plaintiff-Trustee filed the above-styled adversary complaint to set aside an allegedly preferential transfer pursuant to 11 U.S.C. § 547. The transfer at issue is the repossession by the Defendant, Schafer Bros., Inc. (“Schafer”), of some furniture and equipment on April 15, 1986, less than ninety days prior to the filing of the Chapter 11 petition by the Debtor. The Defendant contends that it did business with an entity other than the Debtor, and that the transactions at issue did not involve an antecedent debt of the Debtor within the meaning of 11 U.S.C. § 547(b)(2).

The case was tried on October 15, 1987. There is no dispute that this matter constitutes a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). After consideration of the testimony and the documentary evidence, the Court hereby makes the following findings of fact and conclusions of law.

The Debtor, The Austin Group, Inc. (“Debtor”), was formed as a Georgia corporation in December, 1984, by Gary W. Austin. Prior to that time, Mr. Austin operated a business called Austin Design Associates. Both Austin Design Associates and the Debtor were in the business of selling office furniture and equipment. Once the Debtor corporation was formed, the corporation used the name Austin Design Associates, but did not register it as a trade name as required under Georgia law. O.C. G.A. § 10-1-490.

The name The Austin Group, Inc. did not appear on any documents involved in the transactions at issue. The purchase orders involved in the transactions at issue were signed by Gary Austin in July, 1985 and were issued by Austin Design Associates without any mention of The Austin Group, Inc. Schafer’s invoices issued between September, 1985 and January, 1986 were addressed to Austin Design Associates. The financing statements executed in August, 1985 and February, 1986 list the debt- or’s name as Austin Design Associates, and they are signed by Gary Austin without any mention of The Austin Group, Inc.1

Schafer delivered the goods in several shipments beginning in September, 1985, but because Schafer never received substantial payment on the debt, the parties agreed to Schafer’s repossession on April 15,1986 of most of the furniture and equipment from four locations, including Mr. Austin’s home.

The Plaintiff maintained that the Defendant should have known that it was dealing with the corporate Debtor and not with Mr. Austin individually; however, the only evidence put forth by the Plaintiff in support of that position was Mr. Austin’s testimony that a logo in the reception area of the business described Austin Design Associates as a subsidiary of The Austin Group, Inc.

The Debtor filed for relief under Chapter 11 of the Bankruptcy Code on July 7,1986, and the case was converted to a Chapter 7 case on November 4, 1986. Gary W. Austin filed a Chapter 7 personal bankruptcy on November 17,1986, and Schafer is listed as a creditor in Mr. Austin’s personal schedules.

[257]*257The parties agree that The Austin Group, Inc. was insolvent when its bankruptcy petition was filed. The parties also agree that the sole issue in this case is whether this debt was an antecedent debt owed by this debtor, The Austin Group, Inc. If this is a debt owed by the debtor, the transfer can be avoided by the Plaintiff trustee. If, on the other hand, the debt is owed by another party and is not owed by the Debtor, the transfer cannot be avoided, for a key element of a preferential transfer is that the transfer be “for or on account of an antecedent debt owed by the debtor”. 11 U.S.C. § 547(b)(2). The Plaintiff has the burden of proof on this issue. 11 U.S.C. § 547(g).

The term “debtor” is defined to mean “[a] person or municipality concerning which a case under this title has been commenced!].]”. 11 U.S.C. § 101(12). The debtor in this case is The Austin Group, Inc. State law determines the identity of the entity with which Schafer contracted. See Kallen v. Ash, Anos, Freedman & Logan (In re Brass Kettle Restaurant, Inc.), 790 F.2d 574 (7th Cir.1986).

The purchase orders, invoices and financing statements were all either signed by Gary Austin or addressed to Austin Design Associates. The name The Austin Group, Inc. did not appear on any of these documents, nor did Mr. Austin ever indicate he was signing the documents as a representative of The Austin Group, Inc. Georgia law provides that the maker of a document is individually liable if he does not clearly indicate he is signing as a representative of another entity. O.C.G.A. § 10-6-86. None of these documents indicated that Mr. Austin was signing as a representative of the debtor. Compare O.C.G.A. § 11-3-403; Bostwick Banking Company v. Arnold, 227 Ga. 18, 178 S.E.2d 890 (1970); Cooley v. Dickerson & Swift Entertainment, Inc., 177 Ga.App. 855, 341 S.E.2d 504 (1986); Goodwynne v. Moore, 170 Ga.App. 305, 316 S.E.2d 601 (1984); Yeomans v. Coleman, Meadows, Pate Drug Company, 167 Ga. App. 646, 307 S.E.2d 121 (1983); Whitfield v. Broadview Plaza, Ltd., 161 Ga.App. 248, 288 S.E.2d 313 (1982); Blayton v. Ford Motor Credit Company, 118 Ga.App. 517, 164 S.E.2d 262 (1968). See also Horn v. Wright, 157 Ga.App. 408, 278 S.E.2d 66 (1981).

To determine whether the signer acted individually or in a representative capacity, the trier of facts must consider all the circumstances. Byrd v. Brand, 140 Ga.App. 135, 230 S.E.2d 113 (1976). The knowledge and intent of the parties to the contract are controlling. Hawkins v. Turner, 166 Ga.App. 50, 303 S.E.2d 164 (1983); Bowers v. Salitan, 97 Ga.App. 877, 104 S.E.2d 667 (1958). The Plaintiff argued that Schafer should have known it was selling furniture and equipment to the corporate debtor for several reasons.

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Related

Byrd v. Brand
230 S.E.2d 113 (Court of Appeals of Georgia, 1976)
Southern Oxygen Supply Company v. De Golian
197 S.E.2d 374 (Supreme Court of Georgia, 1973)
Yeomans v. Coleman, Meadows, Pate Drug Co.
307 S.E.2d 121 (Court of Appeals of Georgia, 1983)
Horn v. Wright
278 S.E.2d 66 (Court of Appeals of Georgia, 1981)
Cooley v. Dickerson & Swift Entertainment, Inc.
341 S.E.2d 504 (Court of Appeals of Georgia, 1986)
Blayton v. Ford Motor Credit Company
164 S.E.2d 262 (Court of Appeals of Georgia, 1968)
Bowers v. Salitan
104 S.E.2d 667 (Court of Appeals of Georgia, 1958)
Hawkins v. Turner
303 S.E.2d 164 (Court of Appeals of Georgia, 1983)
Whitfield v. Broadview Plaza Ltd.
288 S.E.2d 313 (Court of Appeals of Georgia, 1982)
Bostwick Banking Co. v. Arnold
178 S.E.2d 890 (Supreme Court of Georgia, 1970)
Goodwyne v. Moore
316 S.E.2d 601 (Court of Appeals of Georgia, 1984)

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Bluebook (online)
80 B.R. 255, 1987 Bankr. LEXIS 2278, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loeb-v-schafer-bros-in-re-the-austin-group-inc-gad-1987.