Monsanto Industrial Chemicals, Inc. v. Harris

161 B.R. 385, 1993 U.S. Dist. LEXIS 11766, 1993 WL 523492
CourtDistrict Court, E.D. Michigan
DecidedJuly 9, 1993
DocketNo. 92-4921
StatusPublished
Cited by1 cases

This text of 161 B.R. 385 (Monsanto Industrial Chemicals, Inc. v. Harris) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Monsanto Industrial Chemicals, Inc. v. Harris, 161 B.R. 385, 1993 U.S. Dist. LEXIS 11766, 1993 WL 523492 (E.D. Mich. 1993).

Opinion

[386]*386OPINION AND ORDER AFFIRMING DECISION OF BANKRUPTCY COURT

EDMUNDS, District Judge.

This cause comes before the Court on defendant/appellant Richard Harris’ appeal of an order issued by the Bankruptcy Court on July 8, 1992 granting Plaintiff Monsanto Industrial Chemical Inc.’s motion for summary judgment and denying Defendant’s motion for summary judgment. For the reasons stated in this opinion, the decision of the bankruptcy court is affirmed.

Facts

The facts, as set forth in the Bankruptcy Court’s opinion, are basically undisputed. Sometime in late 1969 or early 1970, a Judgment of Divorce was entered in the case of Edna Pearl Harris v. Richard L. Harris, Wayne County Circuit Court No. 69-138469-DM. Pursuant to that judgment, Mrs. Harris was granted custody of the couple’s two children, and Richard Harris (“Harris”) was ordered to pay child support. Apparently, Harris failed to meet his child support obligations, and in 1988 a receiver was appointed to collect past due support payments out of sums owed to Harris from a workers’ disability compensation claim pending against Monsanto. By mistake, inadvertence or neglect, Monsanto paid the disability benefits to Harris rather than to the receiver. Upon Receiver’s Order to Show Cause, a judgment was entered against Monsanto on January 23, 1991, in favor of the receiver and Monsanto paid the judgment.1

On February 20, 1991, Monsanto filed a motion in state court seeking subrogation and contribution and obtained a judgment against Harris. The February 20 order stated in pertinent part:

IT IS HEREBY ORDERED AND ADJUDGED that the Defendant, RICHARD L. HARRIS shall be and is hereby liable to the Respondent, MONSANTO INDUSTRIAL CHEMICALS, CO. for child support paid on his behalf as a result of an Order entered on 1-23-91 against MONSANTO in the amount of $14,162.51 plus interest.

(Emphasis added).

On September 4, 1991, an Amended Order of Judgment was entered in favor of Monsanto against Harris. The Amended Judgment stated in pertinent part:

IT IS HEREBY ORDERED AND ADJUDGED that MONSANTO INDUSTRIAL CHEMICALS CO., shall be and is hereby subrogated to all legal rights and remedies of the Plaintiff, EDNA PEARL HARRIS against RICHARD L. HARRIS under the Child Support and Visitation Enforcement Act to the extent of the amount of this judgment, in addition to all other rights and remedies at law.

(Emphasis added). Approximately one hour before the Amended Order of Judgment was entered, however, Harris filed a Chapter 7 bankruptcy petition.

Monsanto filed a motion for summary judgment asserting that its state court judgment against Harris was not a dischargeable debt pursuant to 11 U.S.C. § 523(a)(5). That section provides:

(a) A discharge under section 727, 1141, 1228(a), 1228(b) or 1328(b) of this title does not discharge an individual debtor from any debt—
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with state or territorial law by a governmental unit, or property settlement agreement, but not to the extent that—
(A) such debt is assigned to another entity, voluntarily, by operation of law, or [387]*387otherwise (other than debts assigned pursuant to section 402(a)(26) of the Social Security Act, or any such debt which has been assigned to the Federal Government or to a State or any political subdivision of such State);

(Emphasis added). Harris filed a cross motion for summary judgment asserting that Monsanto’s judgment was dischargeable be-cáuse the amount involved was payable to a third party rather than to a spouse, former spouse or child of the debtor as required by the statute. Harris also asserted that the debt was in essence, an assignment to Monsanto, and thus was dischargeable pursuant to § 523(a)(5)(A). The Bankruptcy Court rejected Harris’ arguments and held that Monsanto’s state court judgment was not a dis-chargeable debt. This appeal followed.

Standard of Review

On appeal, the district court reviews the bankruptcy court’s findings of fact under the clearly erroneous standard. Bankr.R. 8013; Newton v. Johnson, 845 F.2d 1395, 1400 (6th Cir.1988); DuVoisin v. Foster, 809 F.2d 329, 331 (6th Cir.1987). Questions of law or mixed questions of law and fact are reviewed independently. Kent Holland Die Casting and Plating, Inc. v. Lievense Insurance Agency, Inc., 126 B.R. 733 (W.D.Mich.1990), aff'd, 928 F.2d 1448 (6th Cir.1991). Because the facts in the case at bar are undisputed, this Court need only decide whether the Bankruptcy Court properly applied the law.

Non-Dischargeable Support Debt: 11 U.S.C. § 523(a)(5)

Harris first asserts that the Bankruptcy Court improperly held that Monsanto’s judgment constituted non-dischargeable support debt to a spouse, former spouse or child of the debtor. In light of the bankruptcy code’s “fresh start” policy for debtors, Harris argues that any exception to dischargeability should be narrowly construed; since the code does not say that debts owed to third parties (other than the state or federal governments) are not dischargeable, such debts are dis-chargeable.

In holding Monsanto’s judgment non-dischargeable, Judge Shapero, found that the bankruptcy code does not require that the support debt be directly payable to the spouse, former spouse or child to be non-dischargeable. The debt retains its character as support debt notwithstanding the fact that it is payable to Monsanto. “What we are dealing with is ... the support debt itself, not to whom that debt might be payable”. (Opinion of the Bankruptcy Court at 4); In re Morris 14 B.R. 217 (Bankr.D.Colo.1981) (section 523(a)(5) includes cases where the child’s only right to payment is the right to payment of a third party). This Court agrees with the Bankruptcy Court that:

To decide otherwise would be to in effect render dischargeable an obligation which Congress clearly said is non-dischargeable in most situations where the party with the support obligation refuses to pay and enforcement procedures involving third parties are invoked to enforce that obligation. One should not lightly find such congressional intent or so reward the recalcitrant.

(Bankruptcy Court opinion at 4).2

Wihile no case law was cited with facts precisely analogous to the case at bar, Judge Shapero’s reliance on In re Morris appears wholly appropriate.3 Monsanto’s brief cites additional support (some of it indirect) for the proposition that debt to third parties may be non-dischargeable under § 523(a)(5). See, e.g., In re Bedingfield, 42 B.R. 641 (D.C.Ga.

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161 B.R. 385, 1993 U.S. Dist. LEXIS 11766, 1993 WL 523492, Counsel Stack Legal Research, https://law.counselstack.com/opinion/monsanto-industrial-chemicals-inc-v-harris-mied-1993.