IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
WOODLAND VALLEY RANCH CO., No. 95-10321
WOODLAND VALLEY RANCH CO.,
v. A.P. No. 95-1063
BANK OF AMERICA, et al.,
Memorandum of Decision
Debtor Woodland Valley Ranch Company, Inc. ("Woodland"), is the owner of a resort in
Garberville, California. In May of 1994, it leased the resort to Scott Tree. Since Tree did not
immediately establish a merchant credit account for deposits of credit card slips, Woodland
agreed to let Tree use its account. Until the middle of July, Tree deposited his credit card slips
into Woodland's account. Woodland deducted its rent and paid Tree the rest.
By late July, Tree became seriously delinquent in his rent and had stopped using Woodland's
credit card account. Woodland became increasingly insistent upon payment, even threatening
to terminate Tree's telephone service which was still in Woodland's name. In response to the
demands for payment, Tree deposited a total of $14,900.00 in merchant credit card slips into
Woodland's credit card account during the last two days of August and September 1.
Just after Tree made the above deposits, his own merchant account was finally opened. Tree
then created credit vouchers totalling the $14,900.00 he had deposited and processed them
through Woodland's account, seeking to undo the deposits. Bank of America at first transferred
the funds to Tree's account, then froze them when Woodland howled as its checks started
bouncing. Bank of America has interpleaded the funds. Tree assigned any rights he has in the
funds to attorney Robert Zigler in January, 1995, as payment for unpaid legal fees. Zigler has
intervened and is now the real party in interest. The only issue is whether the interpleaded
funds belong to Woodland or Zigler.
The parties have cited no commercial law to cover the unusual situation they created.
However, two facts appear clear. First, the nature of the deposits into Woodland's merchant
account was different for the 8/30 - 9/1 deposits than for the deposits made in June and July.
The earlier deposits were made because Woodland was allowing Tree to use its account as an
accommodation. The deposits at issue here were made as a result of Woodland's demands for
payment. The deposit of the $14,900.00 at issue here was intended by both parties to be a
payment on account; use of the merchant account was not at that time intended to be a mere
Second, the method by which Tree sought to get the funds back from Woodland was not
justified by any law or agreement of the parties. The court can see no justification for this
self-help mechanism. In fact, it appears to have been fraudulent.
For the above reasons, the court finds that the funds in question belong to Woodland.
Judgment shall be entered in favor of Woodland, which shall recover its costs of suit from
This memorandum constitutes the court's findings and conclusions pursuant to FRCP
52(a) and FRBP 7052. Counsel for Woodland shall submit an appropriate form of judgment
Dated: November 6, 1995 _______________________