Peoples Bank & Trust Co. v. Burns (In Re Shelton)

ALICE M. BATCHELDER, Circuit Judge.

Peoples Bank & Trust Co. appeals from the order of the district court affirming the decision of the bankruptcy court declining to apply the “earmarking doctrine” to a post-bankruptcy petition transfer. We reverse.

I

In 1997, Frankie Shelton owned — either outright or with his father, Virgil Shelton — four tracts of land, on which were, among other things, a farm and a John Deere dealership. Frankie pledged his interest in this property, both real and personal (e.g., construction equipment and dairy cows), as collateral on $952,844 in loans from Firstar Bank.…