In Re Jennings
MEMORANDUM OPINION
LaGene and Kitty Jennings object to the alleged secured claim of Mary Lou Kennedy. This is a core proceeding under
FACTUAL BACKGROUND
Mr. Jennings borrowed $30,000 from Ms. Kennedy, and both parties signed a “Promissory Note” (the “Note”) to that effect on May 4, 1994. At the same time, they executed a “Deed of Trust,” (the “Deed”) which was recorded by the Recorder of Deeds for Ray County, Missouri on January 17, 1995. Pat F. Newland, a Notary Public, acknowledged both the Note and Deed on the date they were executed. But she affixed her seal only to the Deed.
On September 9,1994, Ms. Kennedy filed a Chapter 7 bankruptcy case. She failed, however, to list the Note on her schedules as an asset of her bankruptcy estate. David Stover was appointed as the Chapter 7 trustee, Ms. Kennedy received a discharge, and the case was closed without incident until February 29,1996.
On that date Mr. and Mrs. Jennings filed a Chapter 13 bankruptcy petition. Mr. Jennings listed Ms. Kennedy as a secured creditor on his bankruptcy schedules. He listed a debt to Ms. Kennedy for $30,000 secured by a third Deed of Trust on real property located at 204 East Fifth Street, Lawson, Missouri. His Chapter 13 plan, eventually confirmed on October 22, 1996, provided for payment of Ms. Kennedy’s claim outside the plan. After this Court confirmed the plan, Frank Brown, counsel for Mr. Jennings, be
DISCUSSION
A. THE VALIDITY OF THE NOTE AND DEED
The Note is not well drafted. It does, however, make clear that it is a promissory note, that it is a demand note, and that it is secured by a Deed of Trust:
FOR VALUE RECEIVED, the undersigned, LaGene Leo Jennings, promises to pay to the order of Marylou Harper Kennedy, a sum equal to forty-nine percent the assessed value at the time of satisfaction of this note, of the property located at 202 East 5th Street, Lawson, Ray County, Missouri, or $30,000.00 with accrued interest of one percent per annum from the date of this note. The principal of this note is payable upon demand, but in no event later than January 18,1998.
This note is secured by a Deed of Trust of even date herewith encumbering the real property described above. This note is construed according to the laws of the state of Missouri. 1
Both Jennings and Kennedy signed this document and Pat Newland purported to notarize it. Ms. Newland signed the document attesting that the Note was subscribed and sworn before her on May 4, 1994, and that her commission expires on August 18, 1996. 2 There is a heading for a seal on the Note, but no seal is present. Debtors’ counsel argues that the absence of the seal taints the acknowledgment, and, therefore, the mortgage is not valid. It is undisputed that the Note is a mortgage on property owned by Mr. Jennings, given in exchange for $30,000. A mortgage is either a deed or contract specifying the terms of a pledge. 3 While the form of the acknowledgment on the Note may not be perfect, it is not apparent to me that any acknowledgment was necessary on the Note itself, since the parties do not dispute that Ms. Kennedy did, indeed, loan Mr. Jennings $30,000.
The Deed, on the other hand, is a written instrument by which land is conveyed.
4
To convey an interest in land in Missouri, the person 'having the authority to convey the interest must do so by deed, properly acknowledged and recorded.
5
And the deed must be signed by the grantor.
6
It is properly acknowledged if done so by a court having a seal, by a judge, justice, or clerk, or by a notary public.
7
The acknowledgment must also contain language stating that the person who signed the deed is who he or she purports to be.
8
The Deed in this case does not literally comply with the requirements of Missouri law. But the Deed does contain the signatures of both LaGene Jennings and Marylou Kennedy; it is in writing; it properly describes the property; it was executed in the presence of a notary public whose commission had not expired; and it was “subscribed and sworn to before”
The language of Section 442.210 ... is permissive ... and ... substantial compliance with statutory provisions pertaining to acknowledgment will suffice. 11
In Hatcher the document failed to state the official status of the person who provided the acknowledgment. Nor did the document indicate that the person purporting to take the acknowledgment was authorized to do so. Finally, the person purporting to take the acknowledgment did not attach a seal. These three facts combined caused the court to conclude that the document did not substantially comply with Missouri law. 12 Conversely, an acknowledgment is sound if the omission is merely technical, and the Recorder of Deeds still records the document:
An objection to the validity of the acknowledgment to a deed attested by the notary as “given under hand,” on the ground that the notary failed to fix his seal to the same, will not be sustained where the instrument was admitted to record as duly acknowledged and certified. [Mitchener v. Holmes,117 Mo. 185 ,22 S.W. 1070 , 1077 (1893) ].
Ultimately, the Court must look to the intention of the parties at the time the documents were executed to determine the nature of the transaction. 13 While the Note is not well drafted, and the language in the acknowledgment of the Deed fails to parrot the requirements of the statute, there is no doubt that Mr. Jennings and Ms. Kennedy intended this transaction to be a loan secured by a Deed of Trust on real property. Moreover, the notary public affixed her seal to the Deed, and it was recorded by the Ray County, Missouri Recorder of Deeds. The rights, therefore, of no third party are at risk here. Thus, I find that the Note and Deed, as executed, acknowledged, and recorded, create a secured claim in the Jennings’ bankruptcy. The next question is who owns this claim.
B. OWNERSHIP OF THE CLAIM
The following facts are undisputed: (1) after executing the Note and Deed, and before any payments were made on the debt, Ms. Kennedy filed a Chapter 7 bankruptcy petition; (2) David Stover was the duly appointed trustee in Ms. Kennedy’s bankruptcy case; and (3) Ms. Kennedy received a discharge, and her case was closed. I must determine if this debt, therefore, is now the property of Ms. Kennedy or of her bankruptcy estate.
The filing of the bankruptcy petition creates an estate, and any property owned by the debtor at the time the case is filed becomes property of the bankruptcy estate.
14
The Bankruptcy Code makes no exceptions for property that was not included in the bankruptcy schedules, or for property that was discovered after the case was closed. If the debtor had an interest in property when the petition was filed, and if there are no grounds for exempting the property,
15
it becomes property of the bankruptcy estate. The duly appointed trustee is the representative of this estate.
16
The trustee then distributes all property of the estate in the manner prescribed by the Bankruptcy
An Order in accordance with this Memorandum Opinion will be entered this date.
Notes
. Proof of Claim of Mary Lou Kennedy, Attachment A.
. Id.
. Black’s Law Dictionary 423 (Bryan Gamer ed., 1996).
. Id., at 172.
. Mo.Stat.Aim. § 442.020 (1986).
. Id., at § 442.130 (1986).
. Id., at § 442:150(1).
. Id., at § 442.210.1
. Proof of Claim of Maiy Lou Kennedy, Attachment B.
. Id.
.
Hatcher v. Hall,
. Id.
.
Abberton v. Stephens,
. 11 U.S.C.i 541(a)(1).
. Id., at § 522(b).
. Id., at § 323(a).
. Id., at § 726.