Gordon R. Stahn, Appellant, v. Ray Haeckel, Appellee, 920 F.2d 555 (8th Cir. 1990)

Gordon Stahn filed for chapter twelve bankruptcy in South Dakota on July 25, 1988.¹  Under 11 U.S.C. § 1224 (1989), a confirmation hearing on the plan must be held within forty-five days after the filing. There had been no confirmation hearing in this bankruptcy proceeding because the bankruptcy court granted another creditor relief from the stay to allow the creditor to determine a deficiency action in a Minnesota district court. Ray Haeckel, a creditor, moved to dismiss the present proceeding on July 26, 1989, pursuant to 11 U.S.C. § 1208 (1989).²  After a hearing on the motion, the bankruptcy judge ordered Stahn to make payments to the trustee until the case was confirmed or dismissed. Stahn appealed and the district court affirmed the order of the bankruptcy court.

Stahn now argues that the bankruptcy court erred in ordering him to make payments to the trustee prior to confirmation of the plan. See 11 U.S.C. § 1226(a) (1989). Stahn argues that there is no express provision authorizing the court to order payments prior to plan confirmation. He notes that under chapter thirteen it is expressly provided that " [u]nless the court orders otherwise, the debtor shall commence making the payments proposed by a plan within 30 days after the plan is filed." 11 U.S.C. § 1326(a) (1) (1989). Stahn argues, however, that Congress chose to exclude the pre-confirmation payment requirement of section 1326(a) (1) in section 1226(a) and that requiring such payments has not been authorized by Congress. The trustee argues that section 1226(a) provides implied approval for such payments. Section 1226(a) states that:

[p]ayments and funds received by the trustee shall be retained by the trustee until confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan. If a plan is not confirmed, the trustee shall return any such payments to the debtor....

11 U.S.C. § 1226(a) (1989).

The Supreme Court has stated that when " 'Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.' " Russello v. United States, 464 U.S. 16, 23, 104 S. Ct. 296, 300, 78 L. Ed. 2d 17 (1983) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)).³  We find little legislative history on this section and no judicial precedent. Congress did state that chapter twelve was "designed to give family farmers facing bankruptcy a fighting chance to reorganize their debts and keep their land." 132 Cong.Rec. 28,144 (1986) (overview of the family farm subtitle of the conference report). Congress also observed that chapter twelve was modeled after chapter thirteen. Id. However, Congress stated that "the new chapter [twelve] alters those provisions that are inappropriate for family farmers--the requirement that the plan be filed within 15 days of the petitions; the requirement that plan payments start within 30 days of the plan confirmation."⁴  Id. Congress added subsection (a) to section 1326, requiring plan payments to begin within thirty days after the filing of the plan, because of the variation among the bankruptcy courts as to when payments were to begin, the long delay in distribution to creditors, and the better plan success rate when payments began promptly. 5 Collier on Bankruptcy p 1326.01 (15th ed. 1990).

It is true Congress did not preclude a court from ordering pre-confirmation payments under the language of section 1226(a). In addition, as the trustee argues, the language implies that pre-confirmation payments may be received because the section prescribes what trustees are to do with any pre-confirmation payments they receive. In the event a plan is not confirmed the trustee is required to return any pre-confirmation payments to the debtor. 11 U.S.C. § 1226(a) (1), (2) (1989).

Stahn asserts that an added detriment to the court-ordered payment is that the trustee may deduct any unpaid administrative claim allowed under 11 U.S.C. § 503(b) (1989), and the percentage fee for a standing trustee. 11 U.S.C. § 1226(a) (1), (2) (1989). Chapter twelve is unique in that a standing trustee may deduct a fee. 5 Collier, supra, p 1226.01, at 1226-2 n. 4. On the other hand, a chapter thirteen standing trustee may not deduct a percentage fee if a plan is not confirmed. Id. Thus, a debtor in a chapter twelve proceeding may be subjected to involuntarily paying trustee fees and a commission if a bankruptcy judge orders pre-confirmation payments. See 5 Collier, supra, p 1226.01, at 1226-2. A long delay in confirming the plan, such as in this case, could be punitive to the debtor.

The bankruptcy court's order directed the trustee to use a portion of the funds to pay the accrued and accruing real property taxes. Joint App. at 11. The debtor did not contest that portion of the order in the district court. Apparently, it was the debtor's suggestion to pay the taxes.⁵  According to the debtor, he is contesting the bankruptcy court's creation, by its drafting of the order, of mandatory pre-confirmation plan payments. Joint App. at 24. The language of section 1226(a), although not requiring pre-confirmation payments, does not state that a bankruptcy court is powerless to order such payments. In light of the facts of this case, in that the parties wanted to pay the taxes and pre-confirmation plan payments were a way to achieve that goal, the bankruptcy court had the power, pursuant to 11 U.S.C. § 105(a) (1989), to order pre-confirmation plan payments.⁶ 

Although there is no express provision authorizing pre-confirmation payments there is also no provision prohibiting them. Because the language of the statute also contains procedures to deal with any pre-confirmation payments made, we hold that the bankruptcy court may in its discretion require a debtor to make payments prior to plan confirmation. Therefore, we affirm.

It is so ordered.