Lovald v. Tennyson (In re Wolk)

Citation:
(8th Circuit, Dec 31,1969)
Tag(s):
Ruling:
The trustee's status as a bona fide purchaser under section 544 must be considered in the context of a motion under section 363(h). Failure to assert the argument at the lower level was not detrimental to his position since a trustee is not required to take some affirmative action to acquire bona fide purchaser status that is automatically conferred by section 544. The trustee is not bound to just the rights of the debtor by standing in his shoes, but they may actually be greater as a bona fide purchaser under section 544.
Procedural context:
The Chapter 7 Trustee appealed to the BAP the bankruptcy court's final judgment in favor of the defendant which denied the trustee's request to sell jointly owned real estate free and clear of the defendant co-owner's interest pursuant to 11 USC 363(h).
Facts:
Debtor and his spouse owned a single-family residence as tenants in common in Rapid City, South Dakota. A divorce was pending at the time of the bankruptcy filing. Debtor did not claim a homestead exemption in the property. Trustee filed a motion seeking approval to sell the property under section 363(h). Trustee argued that partition would be impracticable, sale of only the debtor's interest would realize signficantly less than a sale free of the co-owner's interest, and that the sale's benefit to the estate outweighed any harm to the co-owner. The only element under section 363(h) in dispute was the benefit to the estate versus the co-owner's harm. The South Dakota Bankruptcy Court applied the standard in Cudmore v. Cudmore and concluded that the co-owner was successful in rebutting the presumption that each co-owner held an equal share. With all of the equity attributable to the co-owner's input, the bankruptcy court determined that the estate could not benefit from the proposed sale and denied the motion.
Judge(s):
Kressel, Federman, Saladino

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