Liebzeit v. Intercity State Bank, FSB

Dist. Ct. did not err in granting defendant-bank’s motion for summary judgment in review of Bankruptcy Judge's order in adversary proceeding in which plaintiff-Trustee attempted to avoid bank’s mortgage lien on debtors’ property, where such property was subject to land contract in which debtors sold property to third-party with understanding that debtors would obtain mortgage in their own name, and that buyers of said property would pay off mortgage at future date. Trustee argued that: (1) under Wisc. law instant mortgage attached lien to nothing, since debtors’ interest in instant land contract, which consisted of future payments from buyers, was only personal property that could not be subject to any real estate mortgage; and (2) payments under said contract accordingly would be available to unsecured creditors rather than bank. Ct. of Appeals, though, found that: (1) debtors’ interest as vendors under land contract was sufficient to secure bank’s mortgage loan as matter of law; and (2) while bank did not perfect its security interest under UCC procedures, it did properly record instant mortgage in county land records, which was sufficient to preclude Trustee from using strong-armed powers to avoid bank’s lien on debtors’ interest under land contact.