MEMORANDUM OPINION
Dеfendant filed a motion for summary judgment on the ground that a repossessed vehicle is not property of the estate as a matter of law. Plaintiff seeks turnover of the vehicle, inter alia. All parties were present and represented by counsel at a scheduled hearing on April 2, 1997. The Court requested supplemental briefs. The *560 Court has jurisdiction over this core proceeding. 28 U.S.C. §§ 1334(b) and 157(b)(2)(E). Based on the findings of fact and conclusions of law stated herein the motion is denied.
I. FACTS
The parties have stipulated the material facts relevant to this inquiry. In 1990, Thomas F. Turner borrowed funds from DeKalb Bank using his 1979 Ford pickup truck as collateral. The bank was listed on the certificate of title as a lienholder. The note was renewed several times and still owing in July of 1995 when Thomas Turner and his wife, the plaintiff-debtor, divorced. The divorce court awarded ownership of the truck to Carol Turner and directed Thomas Turner to make the remainder of payments owed to DeKalb Bank.
Mr. Turner defaulted on this obligation and on May 15,1996, filed a petition for relief under Chapter 7, case number 96-41364-JSS-7. He failed to reaffirm the indebtedness on the truck and on October 15, 1996, DeKalb Bank repossessed it from Carol Turner. From the time of the divorce until the creditor’s repossession, the truck had been in the exclusive possession of Ms. Turner. On November 8, 1996, she filed a petition for relief under Chapter 13, case number 96-43302-JSS-13. Her unconfirmed plan treats the debt owed to DeKalb Bank as secured and proposes full payment plus eight percent interest. The debtor also claimed the truck as exempt property pursuant to Ala.Code § 6-10-6 (1975). The hearing on confirmation has been continued pending resolution of this motion.
Once the petition was filed, counsel for the debtor contacted DeKalb Bank demanding the rеturn of the truck to Ms. Turner. The bank declined based upon its belief that complete ownership in the truck transferred to it upon default. The debtor filed an adversary complaint in this Court on February 27,1997, seeking turnover of the property pursuant to 11 U.S.C. § 542, contempt, and an injunction against the creditor to prevent the sale of the repossessed truck. Further, the debtor requested damages for violation of the automatic stay. 1
A motion for summary judgment was then filed by DeKalb Bank asserting that the vehicle was not property of the estate; and, therefore, not subject to turnover. Consequently, the creditor denied violation of the automatic stay and denied contempt. The issue of whether the truck is property of the estate under § 541(a), and whether the debt- or’s ownership interests in the truck terminated upon default was taken under submission on April 10, 1997. DeKalb Bank has agreed to retain possession of the truck until the rights and interests of the parties can be resolved by this Court.
II. DISCUSSION
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett,
a. Turnover
The right of a debtor to compel turnover of property is contingent upon the interests the debtor has in the property. 11 U.S.C. § 542 states:
Except as provided in subsection (c) or (d) of this section, an entity ... in possession, custody or control, during the case, of property that the trustee may use, sell, or leаse under section 363 of this title, or that the debtor may exempt under section 522 of this title, shall deliver to the trustee, and account for such property or the value
*561 of such property, unless such property is of inconsequential value or benefit to the estate.
In other words, if the property is such that the trustee may use, sell, or lease pursuant to § 363 or that the debtor may exempt pursuant to § 522, then the debtor may compel the creditor to release possession. A Chapter 13 debtor has the exclusive authority to exercise the rights and powers of a trustee under § 363(b). 11 U.S.C. § 1303. Thus, the Court must determine what property falls within the purview of these provisions. Section 363 grants the trustee with the authority to use, lease or sale “property of the estate.” 11 U.S.C. § 363(b)(1). Property of the estate is defined as “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). Pursuant to 11 U.S.C. § 522, a debtor may exempt certain property from property of the estate. “The right to claim property exempt presupposes that the debtor must have a property interest in that property.” Gerold v. Compass Bank (In re Gerold), Ch. 13 Case No. 97-01188-TOM-13, Adv. No. 97-00076, slip op. at 4 (Bankr.N.D.Ala. April 18, 1997). Therefore, in order to compel turnover, the debtor must have a legal or equitable interest in the collateral for purposes of § 363 or have a property interest in it pursuant to § 522.
“Property of the estate” includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). This statute is to be broadly construed to effectuate the intent of Congress that “a broad range of property be included in the estate.”
United States v. Whiting Pools, Inc.,
b. Defining Property Interest
The issue in the present ease is whether Alabama law provides the debtor with any property rights in collateral that has been repossessed after default, and if so, whether those rights are sufficient so that the debtor may compel turnover of the property into the estate or may exempt it from property of the estate. State law determines the extent of any property interests a debtor may have, and federal law determines whether those rights are sufficient to constitute property of the estate or property exempt from the estate.
Southtrust Bank v. Thomas (In re Thomas),
DeKalb Bank relies upon Charles R. Hall Motors, Inc. v. Lewis, et. al., Case No. CV- *562 94-B-1471-E (D.N.D.Ala.1997). In that adversary proceeding, this Court found that a creditor’s refusal to return a repossessed vehicle to a debtor after notification of a bankruptcy filing constituted a -willful violation of the stay. On appeal, the District Court reversed because the automobile was not property of the estate. Id. at 5. To reach this conclusion, the District Court found that Alabama common law transferred title and right of possession at the time of default to the creditor, leaving debtors with only a right to redeem the propеrty. Id. at 6.
The District Court next addressed federal law and concluded that “(t)he right to redeem the property was not sufficient to propel the automobile into the property of the estate.”
Id.
at 7
(citing Southtrust Bank v. Thomas (In re Thomas),
For the reasons discussed below, this Court respectfully disagrеes with both findings in
Hall Motors v. Lewis.
First, Alabama law, which includes the Uniform Commercial Code in addition to common law, provides that only the right to possession passes to the creditor upon default by a debtor, not title. The debtor retains title in the repossessed property, together with several other rights, until it is sold to a bona fide purchaser. Further, the creditor’s right of possession transferred to it by Alabama statute is returned to the debtor upon the filing of a bankruptcy petition. The Bankruptcy Code replaces the creditor’s right to possession with other rights, such as adequate protection.
United States v. Whiting Pools, Inc.,
This issue deserves close scrutiny by the courts. A large majority of Chapter 13 cases filed in Alabama involve a vehicle, on which the payments are in default. Hundreds of turnover complaints in Chapter 13 cases are filed in Alabama each year. These figures do not include the majority of situations where the creditor voluntarily returned collateral to the debtor, upon demand, without the need to file a complaint. The importance of this issue probably applies in every other state as a result of rights determined by the Uniform Commercial Code and the Bankruptcy Code. This issue determines whether Chapter 13 relief is available to these very large numbers of debtors.
c. Supreme Court Authority
Analysis begins with
Whiting Pools,
in which the United States Supreme Cоurt addressed the question of whether a debtor has “legal or equitable interests” in property seized by a creditor prior to a bankruptcy petition.
According to the facts of that case, the 1.R.S. held a tax lien of approximately $92,-000 аgainst the debtor.
U.S. v. Whiting Pools, Inc.,
However, the Supreme Court also pointed out that if levy or seizure statutes transfer ownership from a debtor to a creditor at the time of repossession, then the power to order turnover of the property pursuant to § 542 “may not apply.”
Id.
at 209,
This Court agrees with the holding in
SPS Technologies, Inc. v. Baker Material Handling Corporation,
d. State law
The rights of a debtor in property are defined by state law.
Commercial Federal Mortgage Corp. v. Smith (In re Smith),
The Uniform Certificate of Title and Antitheft Act of Alabama, § 32-8-39(d), provides that “(a) certificate of title issued by the department is prima facie evidence of the facts appearing on it.” The official comments for this provision state that other evidence may be used to rebut the certificate. The Alabama Supreme Court has also recognized that ownership may be established by evidence outside of the certificate' of title, such as a party’s taking possession of the vehicle, evidence of a bill of sale that manifests intent to sell and grant dominion and control, source of payment, and purchase of insurance coverage.
Crowley v. State Farm,
In the present case, the divorce decree dated July 25, 1995 states that Thomas Turner “hereby transfers and assigns to (Carol Turner) as her separate property, all of his interest in the 1979 Ford truck.” First, in the stipulated facts submitted by the parties, Carol Turner remained in possession of the truck until it was repossessed on October 15, 1996.' Second, although not a bill of sale, the divorce decree is evidence of the court’s intent to transfer the vehicle and grant dominion and control over it to the debtor. Further, the debtor provided in her plan for full payment of the truck to the creditor and listed it as an exemption. These facts provide sufficient evidence for this Court to conclude that in accordance with Alabama law, ownership was effectively transferred to the present debtor.
However, whether Alabama law transfers ownership to the creditor upon default by the debtor is a mоre complicated question. Prior to the adoption of the U.C.C. by the State of Alabama as Title 7, the law was clear. “Upon a debtor’s default, title and right of possession pass to creditor.”
Rhodes-Carroll Furniture Co. v. Webb,
On the other hand, the U.C.C. states that particular provisions displace common law. Ala.Code § 7-1-103 (1975). According to the official comments accompanying that statute, unless “explicitly replaced” by the U.C.C., however, its provisions will merely supplement the common law. The debtor argues that although there is no one provision that expressly overrules the common law, when read together, several U.C.C. provisions do replace it. According to the debtor, Title 32, or the Uniform Certificate of Title and Anti-theft Act, and Title 7, the Secured Transactions portion of the Code, define “owner” to expressly exclude “lienholder.” Second, portions of Article 9 in Title 7, which address default and rights and duties of the parties thereаfter, displace the common law rule because they retain title in the name of a debtor until the vehicle is sold to a bona fide purchaser.
Title 32 of the Alabama Code does define an owner as “a person, ... other than the lienholder, having the property in or title to a vehicle.” Ala. Code § 32-8-2(13) (1975). However, this particular title deals with the
voluntary
transfer of title from one entity to another.
See
Ala.Code § 32-8-44 (1975). Article 9 of the U.C.C., in Title 7, addresses security interests and the
involuntary
transfer of title, and it defines the parties not in terms of “owner” and “lienholder” but as “debtor” and “secured party.”
See
Ala.Code § 7-9-105 (1975). Further, the definition for “secured party” does not exclude that party from ownership. Finally, the preamble to Title 32 states that “(f)or the purpose of this chapter, the following terms have the following meaning.” That those definitions were to be confined to usage within Title 32 is evidenced by ease law. In
Larry Savage Chevrolet, Inc. v. Richards,
The more plausible argument by debtor is that several provisions within Title 7 displace the common law rule. By analyzing these provisions chronologically, from the time of a debtor’s default until the vehicle is sold to a bona fide purchaser, it becomes clear that displacement of the common law occurred. As previously discussed, Ala.Code § 7-9-507(1975) grants to a secured party the right to take possession after default. The purpose of this statute is not to grant title to the creditor, but to allow creditors to repossess without a judicial process, commonly referred to as self-help.
See General Finance Corp. v. Smith,
The secured party is permitted to sell the vehicle after default, but must dispose of it in accordance with Ala.Code § 7-9-504(3)(1975). This means that “reasonable notification of the time and place of any ... sale” must be sent to the debtor. Should the sale fail to adhere to this provision, the debt- or has a cause of action in conversion.
Ab
*566
ston v. Central Bank of the South,
The common law of Alabama defines conversion as the “exercise of dominion over personal property of another to exclusion or in defiance of an
owner’s
rights.”
Davis v. Huntsville Production Credit Assoc.,
The debtor also has a right to redeem the collateral at any time before the secured party has disposed of or entered into a contract for its disposition. Ala.Code § 7-9-506 (1975). She is entitled to any surplus received on the sale. Ala.Code § 7-9-504 (1975). Finally, § 7-9-504 provides for the transfer of ownership from the debtor to the bona fide purchaser, NOT from the creditor to the bona fide purchaser. “When collateral is disposed of by a secured party after default, the disposition transfers to a purchaser for value all of the debtor’s rights therein, dischаrges the security interest under which it is made and any security interest or lien subordinate thereto.” If ownership transferred at the time of default, this statute would not provide for the transfer of the debtor’s rights, but those of the creditor. Further, if the right to redeem was the only remaining right belonging to the debtor, the term “rights” would be in the singular tense. Finally, that same section provides the creditor with the right to purchase the property at a public sale under certain circumstances. No circumstances come to mind under which an owner would need the statutory authority to bid on its own property.
DeKalb Bank cites two cases decided after the adoption of the U.C.C. for the proposition that the common law transferring ownership to the creditor upon default remains intact,
Pierce v. Ford Motor Credit Co.,
The
Rainey,
case involved a debtor pursuing a conversion action against a creditor who had repossessed the debtor’s truck.
Id.
at 140-41,
In Rhodes-Carroll Furniture v. Webb,230 Ala. 251 ,160 So. 247 (pre-U.C.C.), this court said as to some counts in trover: ‘But as defendant had the legal title and *567 the lawful right to the possession, manifestly there could be no recovery for a conversion, * * This statement is quoted with approval in First National Bank of Butler v. Sturdivant,288 Ala. 133 ,258 So.2d 715 (1972). This is also the theory of the Alabama cases that the defendant would have the right to use the truck after default and repossession.
Id.
at 143-44,
Chief Judge Mitchell points out that the
Sturdivant
ease, also mentioned in
Rainey,
did not hold that title passed to the creditor post-U.C.C., but instead found that the parties’ chattel mortgage agreement conveyed title upon default. This analysis tracks that of the Eleventh Circuit in
Southtrust Bank v. Thomas (In re Thomas),
Courts across the nation have interpreted their states’ versions of Ala.Code § 7-9-503, containing the identical language, to supplant, rather than supplement the common law rule. Citing an Alabama ease, the Supreme Court of Wyoming held that “(u)nder the U.C.C., default does not divest a debtor of all right and interest in the secured property, nor is the secured party, the creditor, vested with the unlimited power to deal with the property as it wishes.”
Comer v. Green Tree Acceptance, Inc.,
As a final point on this matter, we return to the Supreme Court’s decision of
Whiting Pools.
As already noted, the key to determining ownership of pre-petition post-default collateral is whether applicable law transfers ownership to the creditor. Provisional remedies, as the Court explained, do no more than bring the property into the creditor’s legal custody.
U.S. v. Whiting Pools, Inc.,
One final argument made by the creditor in this area needs to be addressed before the federal issue may be considered. DeKalb Bank argues that the U.C.C. explicitly provides that its statutory remedies are in addition to those provided under common law, and cites Ala.Code § 7-9-501 (1975) as authority for this position. That provision states:
When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this part and ... those provided in the security agreement ... The rights and remedies referred to in this subsection are cumulative.
The Official Comment which follows this provision states that its purpose is to provide remedies in addition to those provided by the security agreement. There is no mention of the common law. In fact, if the Alabama legislature had so intended, the statute would state that the rights and remedies in that section are in addition to those provided by the common law instead of stating that the rights and remedies “referred to in this subsection” are cumulative.
Having reached the conclusion that the debtor maintains property rights in the collateral, after default, pursuant to Alabama law, the issue of whether these rights are sufficient to bring the property into the bankruptcy estate or provide the debtor with the right to exempt it from the estate must be addressed.
e. Federal law
The second part of
Charles R. Hall Motors, Inc. v. Lewis, supra,
upon which DeKalb Bank relies, is that a right of redemption is insufficient to propel the property into the bankruptcy estate,
citing Southtrust Bank v. Thomas (In re Thomas),
Property of the estate is created by 11 U.S.C. § 541(a), which states in part:
The commencement of a cause under section 301, 302, or 303 of this title creates an еstate. Such estate is comprised of all the following property, wherever located and by whomever held: ... all legal or equitable interests of the debtor in property as of the commencement of the case.
So that a debtor may have the best opportunity to reorganize and ensure equal distribution of limited assets according to the priorities set forth in the Code, the bankruptcy estate must be all inclusive. “Congress’ intent to define property of the estate in the broadest possible sense is evident from the language of the statute ... It would be hard to imagine language that would be more encompassing.”
Collier on Bankruptcy
¶ 541.01, p. 541-7 (15th ed.1996). The United States Supreme Court adopted this policy.
U.S. v. Whiting Pools,
Despite this mandate there exists some confusion, at least within this Circuit, of what constitutes property of the estate. Two decisions rendered by the Eleventh Circuit appear to take divergent views. The first decision utilizes the broad interpretation.
Jim Walter Homes, Inc. v. Saylors (In re Saylors),
In
Saylors,
the debtor filed a petition under Chapter 7 listing Jim Walter Homes as the first mortgage holder.
In re Saylors,
The
Thomas
case caused the confusion. It appeared a few months after
Saylors
and failed to even mention the prior ease, even though both dealt with property of the estate issues. In
Thomas,
a debtor filed Chapter 13 and scheduled Southtrust Bank of Alabama, N.A. as a creditor on his mobile home.
Southtrust Bank v. Thomas (In re Thomas),
The issue before the Eleventh Circuit was whether the mobile home was property of the estate. After citing the oft quoted need for broad interpretation and
Whiting Pools,
the Court stated that another principle of bankruptcy law was equally applicable.
Id.
at 995. “(W)hatever rights a debtor has in property when his bankruptcy petition is filed continue in bankruptcy — no more, no less.”
Id. citing In re Lolly,
Since
Saylors
and
Thomas,
the Eleventh Circuit returned to this issue in 1996 and once again applied the broad definition of property of the estate.
Commercial Federal Mortgage Corp. v. Smith (In re Smith),
We return to
Hall Motors v. Lewis,
the basis for the creditor’s argument in the present case, because it relied upon
Thomas
to find that the debtor had an insufficient interest in the vehicle after default to be property of the estate. That opinion misinterpreted
Thomas.
First,
Thomas
clearly rested on the terms of a contract retaining title to the mobile home in the creditor, and not the common or statutory law of Alabama defining title upon default. No such contractual provision was found in
Lewis.
Second,
Lewis
ignored
Saylors
and
Smith
which held that the right of redemption is property of the estate and instead found that
Thomas
stood for the opposite proposition. Notwithstanding the limiting language in
Thomas
that an estate has “no more, no less” rights than a debtor, the Eleventh Circuit recognizes that § 542 gives the estate a right of possession that a debtor has lost.
United States v. Challenge Air International, Inc.,
Other bankruptcy courts in Alabama have followed the precedent set by
Saylors
and
Smith.
“There is no question in this Circuit now that the statutory right of redemption under Alabama law is property of the estate in a bankruptcy proceeding.”
In re Bozeman,
The right to redeem being sufficient to propel property into the debtor’s estate, it is certainly clear that the debtor may recover the vehicle when, as in the present case, she retains many additional rights in repossessed property, including that of ownership (Ala. Code § 7-9-504), notice of sale (Ala.Code § 7-9-504), proper conduct of the sale (Ala. Code § 7-9-505), and the surplus from sale proceeds (Ala.Code § 7-9-504). The 1979 pickup truck being property of the estate or property capable of being exempted from the estate, the debtor has the right, and the bankruptcy court the authority, to compel the creditor to turnover the collateral to the estate. 7 Therefore, defendant’s motion for summary judgment is denied, and the adversary proceeding will proceed to trial as sсheduled. 8 A separate order consistent with this opinion will be entered.
Notes
. 11 U.S.C. § 362(h) allows a debtor to seek damages for a willful violation of the stay. Debt- or claims she is entitled to damages arising from borrowing or paying for alternative transportation.
. The Eleventh Circuit has recognized the expanded interest of the estate to include a right of possession.
See United States v. Challenge Air International, Inc.,
. In fact, Judge Mitchell found that the language in both Robertson and Pierce, also cited by the creditor in the case before her, to be “dicta” and contradictory to more recent rulings. Id. at 6. Because of this, she held that the U.C.C. did alter the common law and that legal title to collateral did not pass -until disposition of the property under § 7-9-504.
. 11 U.S.C. § 362(e) provides that the automatic stay is terminated automatically thirty days after a request for relief from the stay.
. Here are some possible explanations. The Court could have failed to consider equitable rights at all; or it could be that it erroneously considered the mobile home under real properly law, rather than the U.C.C., and as such, perhaps the debtors retained no right to redeem by their failure to move out of the mobile home prior to foreclosure; or perhaps the 11th Circuit felt that the contract provision retaining title in the creditor's name meant that the debtors never became entitled to a right of redemption in the first place. This logic appears faully because concerning real property, Alabama is a title theory, not a lien theory, state.
In re Thomas,
. Note that the property at issue in Saylors and Smith were homes, governed by the law of real properly. The property at stake in Thomas, Lewis, and the present case is personal property covered by the Uniform Commercial Code. Although Alabama is a title theory state in real property, it is neither under the U.C.C.. The Official Comment to Ala.Code § 7-9-101, adopted by Alabama states, "(t)his article ... adopts ... neither a ‘tide theory' or a 'lien theory' of security interests.”
. It is widely recognized that the Code implies an affirmative duty to voluntarily return property repossessed pre-petition without forcing the debtor to file a turnover action at all. See
California Employment Dev. Dept. v. Taxel,
. If the plaintiff succeeds in recovering the vehicle, the debtor will have the right to cure the default in the plan. 11 U.S.C. § 1322. "In fact, the 'cure' remedies available when a statutory right of redemption of personal property is in question are less restricted than where the property securing the debt is the principal residence.”
Compare
11 U.S.C. § 1322(b)(2)
with
§ 1322(b)(5);
See Commercial Federal Mortgage Corporation v. Smith (In re Smith),