Johnson v. Home State Bank
United States Supreme Court
501 U.S. 78 (1991)
- Written by Steven Pacht, JD
Facts
Curtis Johnson (plaintiff) owned a farm that was subject to a mortgage from Home State Bank (bank) (defendant). The bank began foreclosure proceedings when Johnson defaulted. Johnson filed for Chapter 7 bankruptcy, in which the bankruptcy court discharged Johnson from his personal liability for the mortgage. The bank thereafter reinitiated a foreclosure action that resulted in the bank winning a state-court in rem judgment. Before the farm could be sold in foreclosure, Johnson filed for Chapter 13 bankruptcy. Johnson listed the bank’s mortgage as a claim against his estate and proposed fully repaying the bank in installments. The bank objected, but the bankruptcy court confirmed the plan. The district court reversed, ruling that the Bankruptcy Code (code) did not allow a Chapter 13 plan to include a mortgage for which the debtor’s personal liability was discharged in a Chapter 7 proceeding. The court of appeals affirmed. Johnson appealed, arguing that the mortgage qualified as a claim against his bankruptcy estate that could be included in his Chapter 13 plan. The bank responded that treating its post-Chapter 7 mortgage lien as a Chapter 13 claim would contravene Congress’s intent.
Rule of Law
Issue
Holding and Reasoning (Marshall, J.)
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