UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 95-30696
Summary Calendar
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In the Matter of ARK-LA CONCRETE COMPANY, INC.
Debtor
FARMERS BANK & TRUST OF MAGNOLIA, ARKANSAS,
Appellant-Defendant,
versus
JOHN CLIFTON CONINE,
Trustee for the Estate of Ark-La Concrete Company, Incorporated,
Appellee-Plaintiff.
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Appeal from the United States District Court
for the Western District of Louisiana
(CA-94-2320)
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November 28, 1995
Before DAVIS, BARKSDALE, and, DeMOSS, Circuit Judges.
PER CURIUM:*
Farmers Bank and Trust Company of Magnolia, Arkansas, appeals
the district court's decision affirming the bankruptcy court, which
allowed the trustee to recover funds transferred by the debtor,
Ark-La Concrete Company, to Farmers. We AFFIRM.
*
Local Rule 47.5.1 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that rule, the court has determined that this opinion
should not be published.
I.
In December 1991, Dewey Williams deposited $57,859.83 into the
bank account of Ark-La Concrete Company, Inc., consisting of a
$34,626.73 check drawn on the account of Lamar Smith, made payable
to "Dewey Williams, d/b/a Ark-La Concrete", and proceeds of
$23,233.10 from a certificate of deposit owned by Williams.
Williams then paid to Farmers the $57,859.83 against three personal
loans for which Ark-La bore no liability.
Ark-La filed a petition under Chapter 11 of the Bankruptcy
Code on April 15, 1992, and converted to a Chapter 7 on May 24,
1993. Upon the Chapter 7 conversion, the bankruptcy court
appointed John Clifton Conine to serve as trustee. Conine filed an
adversary proceeding pursuant to § 548 of the Code, seeking to
recover the $57,859.83 from Farmers as a transfer for which the
debtor's estate did not receive reasonably equivalent value.
A trial was held, at the conclusion of which, the bankruptcy
judge ruled from the bench that the trustee was entitled to recover
$34,626.73 (check payable to Williams d/b/a Ark-La), which the
bankruptcy court found was an asset of the estate, but dismissed
the claim for the remaining $23,233.10 (CD proceeds), which the
court found was not.
Farmers appealed the ruling to the extent that the trustee was
allowed to avoid the transfer, and the trustee cross appealed on
the amount that the estate had not been allowed to recover. The
district court affirmed the bankruptcy court. (The trustee does
not appeal from the adverse ruling on its cross appeal.)
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II.
Before us are two questions: (1) whether the $34,626.73 was an
asset of the debtor's estate; and (2) whether, even though the
parties stipulated that Williams was the alter ego of Ark-La, no
reasonably equivalent value could be said to have accrued to the
estate as a result of paying Williams' personal loans.
A.
In support of its finding regarding the $34,626.72, the
district court noted several factors relied upon by the bankruptcy
court. These factors included Williams' classification of the
funds as corporate monies for tax purposes, and the fact that
Farmers retained no control over the funds after Williams deposited
them in the debtor's account. We review mixed questions of law and
fact in a bankruptcy appeal by subjecting the factual premises to
the clearly erroneous standard and the legal conclusions to de novo
review. E.g., Matter of Clark Pipe and Supply Co., Inc., 893 F.2d
693, 697 (5th Cir. 1990).
Applying these standards, we conclude that the support offered
for the factual aspects of the court's decision establishes that
they were not clearly erroneous, and that the legal conclusion that
followed from that premise, that the funds constituted an asset of
the debtor's estate, was not error. See 11 U.S.C. § 541(a)
(establishing that estate comprised of all property in which debtor
has interest on date of filing, by whomever held or wherever
located); see also §§ 547 and 548 (affording trustee rights to
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avoid certain transfers and defining funds so recovered as part of
debtor's estate).
B.
Farmers asserts that reasonably equivalent value should be
deemed to have accrued to the debtor's estate due to the alter ego
status of Williams and Ark-La. While Farmers concedes that,
generally, transfers made solely to benefit a third party do not
result in the debtor's estate realizing reasonably equivalent
value, Farmers asserts also that, in this case, such value should
be deemed received because Williams and Ark-La "are so related or
situated that they share an `identity of interests,' because what
benefits one will, in such case, benefit the other to some degree".
In re Royal Crown Bottlers of North Alabama, Inc., 23 B.R. 28, 30
(Bkrtcy.N.D.Ala. 1982). In support of its position, the bank notes
that the parties stipulated that Williams was the alter ego of the
debtor.
The alter ego doctrine has been recognized under the
Bankruptcy Code. See, e.g. In re Royal Crown, 23 B.R. at 30. It
provides courts with discretion to substitute the benefit to the
alter ego for the reasonable value to the debtor that is required
to shelter a transfer from a trustee seeking to recover it under §
548. Mayo v. Pioneer Bank & Trust Company, 270 F.2d 823, 829-30
(5th Cir. 1959), cert. denied, 362 U.S. 962 (1960). While we note
that the trustee stipulated the alter ego status of Williams, the
applicability of the doctrine does not automatically thwart the
trustee's effort to avoid a transfer. Rather, as Mayo articulates
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clearly, the doctrine merely affords the court discretion to
utilize the exception to shelter the transfer.
The district court noted that the bank had failed in the
bankruptcy court to prove any benefit which accrued to the debtor,
and, instead, relied solely on the alter ego doctrine. Moreover,
the court found that application of the doctrine would prejudice
innocent third parties. We cannot say that the court, having
stated a reasonable basis for declining to protect the bank by
applying the alter ego doctrine, abused its discretion.
III.
For the foregoing reasons, the challenged portion of the
judgment is
AFFIRMED.
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