Thе Production Credit Association of St. Cloud (PCA) appeals from the district court’s order affirming a bankruptcy court decision in favor of the debtors, Jerome and Charlotte LaFond. The LaFonds filed a voluntary Chapter 7 рetition in 1984. The PCA had made a farm-operating loan to them in 1981, secured by a nonpossesso-ry, nonpurchase-money security interest in “all equipment, motor vehicles and fixtures.” The bankruptcy court granted the LaFonds’ motion to avoid this lien on certain large items of farm equipment valued at $10,475, finding that the pieces of equipment are exempt from the lien in bankruptcy because they are “implements * * * or tools, of the trаde of the debtor” under 11
I. DISCUSSION.
Section 522(f) of 11 U.S.C. provides in relevant part:
(f) Notwithstanding any waiver of exemptions, the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—
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(2) a nonpossessory, nonpurchase-money security interest in any—
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(B) implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor
The PCA’s first contention is that the La-Fonds’ farm equipment may not be considered implements or tools of their trade because they are not engaged in the trade of farming. To be engaged in the trade of farming under section 522(f), the PCA contends that the LaFonds must meet the definition of “farmer” set forth in 11 U.S.C. § 101(17):
(17) “farmer” means pеrson that received more than 80 percent of such person’s gross income during the taxable year of such person immediately preceding the taxable year of such person during which the case under this title concerning such person was commenced from a farming operation owned or operated by such person.
If this definition is applied, the LaFonds could not be considered farmers because their primary income came from Mr. La-Fond’s part-time job as policeman.
Further, it is significant that § 101 contains definitions for only five trades or occupations. Had Congress intended that special definitions of particular trades or occupations be imposed for the purposes of proceedings under § 522(f), it would have defined more trades or occupations in § 101, and would have specified in § 522 that these special Bankruptcy Code definitions would apply-
In Re LaFond,
The district court, adopting the view of the bankruptcy court, held that
[a] more realistic definition should take into account the intensity of a debt- or’s pаst farming activities and the sincerity of his intentions to continue farming, as well as evidence that debtor is legitimately engaged in a trade which currently and regularly uses the specific implements or tools exempted and on which lien avoidance is sought. See Middleton v. Farmers State Bank of Fosston,41 B.R. 953 , 955 (D.Minn.1984); In Re Yoder, 32 B.R. 777 (Bankr.W.D.Pa.1983).
We find this view well supported by the language and legislative history of the Bankruptcy Code, the case law and by the policy behind section 522 which is “to give debtors a fresh start.” Augustine v. United States,
Applying this test, wе find no clear error in the lower court’s factual conclusion that the LaFonds are farmers. Although hard economic times resulted in the LaFonds’ loss of their farm in Aitken County in November, 1983, the LaFonds have invested over $20,000 in thеir current farming operations, and continue their bona fide effort to earn a living at farming. We agree with the bankruptcy court’s statement that
“[t]his conclusion is not barred by the fact that Debtor Jerome LaFond derivеs income from his outside employment. Given the economics of small-farm agriculture under the harsh climatic conditions of Northeastern Minnesota, it is nearly impossible for most farmers to subsist without outside employment.”
In Re LaFond,
Further, we find sufficient evidence to support the district court and bankruptcy court conclusion that Mrs. LaFond is engaged in the trade of farming. The LaFonds’ tax returns reveal that she has no significant source of income оther than farming, and we agree that, in light of the nature of the LaFond family’s farming and cattle-raising operations and Mr. LaFond’s 100-hour per month policeman’s job, it is reasonable to assume that Mrs. LaFond was tending to farm сhores. In Re LaFond,
Next, we reject the PCA’s contention that large items of farm equipment may not be considered “implements or tools of the trade.” This argument has been rejected by several bankruptcy and district courts, see, e.g., In Re Middleton,
The PCA raises two arguments why this Court should not adopt the rule set forth in Augustine. First, it argues that this Court’s decision in In Re Thompson,
Congress, in setting the tools of the trade lien avoidance language in a separate subsection than that provided for household, personal, and family goods, intended that tools and implements could be of more than nominal resale value. * * * Congress could not have been totally unaware of the fact that many “tools” or “implements” of the trade are more expensive than ordinary household goods. The literal meaning of the tools of the trade subsection indicates an intention to allow avoidance of liens on large farm implements and tools, items necessary to a debtor-farmer’s new beginning. As was insightfully stated in In Re Pommerer:
One primary purpose of the Bankruptcy Code is to afford the financially beleagured a fresh start by readjusting financial rights and liabilities ... (Citations omitted). A fresh start cannot be attained by returning a debtor to point zero. Sec. 522(f) encompasses property which Congress envisioned as necessary to give substance to the concept of a fresh start. This property is required for the maintenance, health and welfare of the debtor and his family, and avoids literal destitution. Eliminate them and the debtor would be left financially fresh, but without a start. (Citations omitted).
See also Augustine,
We also find little weight to PCA’s second argument thаt allowing avoidance of liens on large farm implements will damage farmers by reducing the amount of collateral they can use to obtain loans. Whether or not these considerations outweigh the value of providing a fresh start for the bankrupt is not for us to decide. See Augustine,
The PCA’s final contention is thаt the LaFonds’ equipment is not exempt from the lien under the section 522(f)(2)(B) exemption because the items are not necessary for the operation of the LaFonds’ farm. The bankruptcy court and the district cоurt applied the third part of the “tools of the trade” test set forth in Middleton,
The equipment at issue consists of such items as a tractor, a plow, a wagon and silage box, a haybine, and a cylinder and hoses. The PCA contends that the LaFonds have not used these items and that they are in storage; the LaFonds disagree and point out that the items were simply in storagе when the PCA viewed
Affirmed.
Notes
. The LaFonds had the following amounts and types of income for the three years preceding the filing of their bankruptcy petition:
Employment as Police Officer Gross Farm Income Taxable Farm Income (Schedule F)
¡1 $14,011.06 $16,768.47 ($14,415.05)
(2 $ 7,524.01 $20,780.49 ($20,587.68)
13 $ 8,991.00 $17,551.64 ($21,658.21)
(Parenthesis designate a net loss.)