In Re Hagen
ORDER RE: DEBTORS’ OBJECTION TO TRUSTEE’S CLAIMS REPORT
Dеbtors Michael and Bonnie Hagen (HA-GENS or DEBTORS) object to the trustee’s claims report. Hearing was held on May 5, 1992 at Mason City, Iowa.
Debtors filed their jоint voluntary petition on June 11, 1991. Pursuant to Fed. R.Bankr.P. 2002(e), the Clerk of Court advised сreditors that it was unnecessary to file claims. Debtors owed 1990 taxes to the Internal Revenue Service (IRS) and the Iowa Department of Rеvenue (IDOR). During the pendency of the case, the taxing authorities requеsted payment from the debtors. Using their exempted homestead as collateral, debtors borrowed approximately $11,000.00 from Bonnie Hagen’s father, and on June 21, 1991, paid the 1990 taxes, penalties and interest. They paid $2,112.25 to IDOR and $9,096.42 to the IRS.
Subsequent to the payments, case trustee Habbo Fokkena recovered a preferential transfer. Pursuant tо Fed.R.Bankr.P. 3002(c)(5), the Clerk notified creditors of a claims deadline. Prior to the deadline, Ha-gens filed two priority claims — one on behalf of the IRS in the amount of $8,779.00 and the other on behalf of the IDOR in the amount of $1,929.99. 1 The Clerk notified the IRS and the IDOR that the claims had been filed. The taxing authorities did not file superseding proofs.
Trustee filed his final report, including his report оn claims. He objected to the allowance of the claims filed by Hagens on behalf of the IRS and the IDOR. Debtors’ timely objection to the сlaims report constitutes a response to the objection. Thе trustee contends that inasmuch as the taxing authorities have been fully paid, they have no allowable claims. Debtors argue that by virtue of thеir post-petition payment of the taxes, they should be equitably subrogаted to the claims of the IRS and the IDOR. Trustee responds that there is no legal basis for such subrogation. Indeed, because they are debtors, nоt codebt-ors, Hagens do not qualify as subrogees under 11 U.S.C. § 509.
In re Tygrett,
To employ thе doctrine of equitable subrogation, a claimant must fully satisfy a five-part test: (1) the claimant must have made payment to protect his own interests; (2) the claimant must not have been a volunteer; (3) the payment must satisfy debt for which the claimant was not primarily liable; (4) the entire debt must have been paid; and (5) subrogation must not cause injustice to the rights of othеrs.
Berliner Handels Und Frankfurter Bank v. East
Debtors do not qualify as subrogees because their payments to the tаxing authorities satisfied debts for which they were primarily liable. It is a generally accepted principle of subrogation law that “[a] right to subrоgation exists only when the subrogee pays or discharges a debt for which another is liable. One cannot seek subrogation for paying onе’s own debts.”
Rubenstein v. Ball Bros., Inc. (In re New England Fish Co.),
ORDER
IT IS ORDERED that debtors’ objection to trustee’s claims report is denied. The final report is aрproved. Distribution shall be made accordingly.
SO ORDERED.
Notes
. The proof of claims filed by the debtors does not include certain penalties and interest charges. See Exhibits 1 and 2. These may have accrued after the bankruptcy filing.