FOR THE NORTHERN DISTRICT OF CALIFORNIA In re TECHNICAL EQUITIES CORP.,                                                                      No. 3-86-00366 LK        Debtor. ___________________________/ In re TECHNICAL REAL ESTATE INVESTMENTS, INC.,                                                                                      No. 3-86-00760 LK        Debtor.                                                                                                          (Consolidated) ____________________________/ JEROME E. ROBERTSON, Trustee,        Plaintiff,    v.                                                                                                                     A.P. No. 3-89-0298 LK FIRST NATIONAL BANK, et al.,        Defendants. ______________________________/ Memorandum of Decision      Despite a considerable amount of argument over the admissibility of evidence, the facts do not seem to be subject to substantial dispute. Prior to bankruptcy, as part of what the plaintiff Trustee describes as a Ponzi-type scheme, the debtor created partnerships, sold property to them, and then entered into management agreements with them. In order to entice new investors, the debtor would pay each partnership's expenses regardless of that partnership's income generated from its property.      Now before the court is a dispute between the Trustee and Great Western Savings & Loan Association, which had been the holder of a first trust deed to property owned by Pacific Real Estate Investments, one of the debtor-created entities. The Trustee alleges that before bankruptcy the debtor paid out approximately $170,000.00 on behalf of Pacific, but received only $100,000.00 in income relating to Pacific properties. It therefore seeks recovery of those amounts it paid to Great Western on Pacific's behalf as fraudulent transfers pursuant to section 548(a)(2) of the Bankruptcy Code and state law. Section 550(a)(1) of the Code gives the Trustee the option of recovering avoided transfers from either Pacific or the entities the debtor paid on Pacific's behalf. Although the payments were only $926.00 per month, the total sought from Great Western over the four-year period of avoidability asserted by the Trustee is about $30,000.00. Significantly, rents collected by the debtor from the property subject to Great Western's lien exceeded the amount paid to Great Western. Now before the court are cross-motions for summary judgment as to the avoidability under section 548(a)(2) of about $11,000.00 of that total paid during the year prior to bankruptcy.      Great Western defends the action by pointing out that while in the aggregate the debtor may have paid out more on behalf of Pacific than it took in, the rents the debtor received from the property which secured Great Western's lien exceeded the payments the debtor made to Great Western. Since Great Western had a security interest in the rents, it argues that there were no payments for less than equivalent value as to it and it is therefore entitled to summary judgment.      It is clear that Great Western's position is the correct one. Generally speaking, a payment on a third party's debt which benefits only the third party is avoidable as a fraudulent transfer. However, if the debtor receives any benefit at all, even indirectly, the court may find that it received reasonably equivalent value. Klein v. Tabatchnick, 610 F.2d 1043, 1047 (2nd Cir.1979); In re Burbank Generators, Inc., 48 B.R. 204, 207 (Bkrtcy.C.D.Cal.1985). What constitutes reasonably equivalent value is a question of fact to be determined in each particular case. Matter of Christian & Porter Aluminum Co., 584 F.2d 326 (9th Cir.1987). In this case, the rents on the property were the collateral of Great Western, and they went to the debtor estate only because Great Western, being paid by the debtor, had no need to enforce its rights in the rents. The debtor estate therefore received equivalent value from Great Western for its payments to Great Western.      The essential legal issue in this case is whether the estate can recover from an immediate transferee a payment the debtor made on a third party's behalf, even if the transferee gave equivalent value to the debtor. The court answers this question in the negative; if the transferee gave enough to the debtor to keep the estate whole, it is not liable merely because the overall payments made on behalf of the third party exceed the overall value received by the estate. In other words, section 548 is to be applied to each transfer, not all transfers as a whole.      For the foregoing reasons, the Trustee's motion will be denied and Great Western's motion will be granted. Moreover, since the same principles discussed above apply equally to state law, judgment shall be entered in favor of Great Western and against the Trustee as to the entire case. Great Western shall recover its costs of suit. Counsel for Great Western shall submit an appropriate form of judgment.
Dated: March 19, 1991                                                                              _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy