693 F. 2d 48 - Schwen's Inc George Benz Sons v. G Lovett H

This is an adversary proceeding under the Bankruptcy Act of 1898, as amended. The plaintiff, George Benz & Sons, is a secured creditor of the bankrupt, Schwen's, Inc., a maker of ice cream in Blue Earth, Minnesota. The plaintiff held a mortgage on the real estate used by Schwen's in its business. Plaintiff claims that James H. Levy, formerly trustee of the bankrupt estate, unlawfully sold some equipment that had been attached to Schwen's building as fixtures and had thus become subject to Benz's lien. Plaintiff seeks damages for this alleged conversion.

The Bankruptcy Court1 found on conflicting evidence that the equipment in issue was not a fixture under Minnesota law, and the District Court2 held that this finding was not clearly erroneous and affirmed. The principal question presented on Benz's appeal to us is whether the equipment in dispute should properly have been characterized as fixtures. In reviewing the Bankruptcy Court's findings of fact, the District Court was of course bound by the clearly-erroneous rule, and so are we. E.g., In re Windle, 653 F.2d 328 (8th Cir.1981).3 The legal definition of a "fixture" in this case is a question of Minnesota law, and on such questions we normally defer to the judgment of a district court sitting in the particular state involved. The District Court's legal conclusion is not contrary to any opinion of the Supreme Court of Minnesota, and in this case there is, by chance, the added factor that the district judge was himself at one time a Justice of the Supreme Court of Minnesota.

We are not persuaded that the District Court committed any error of fact or law, and accordingly the judgment is

Affirmed.