In re Brandenburg, 71 B.R. 719 (S.D. 1987)

1) That they have not paid either Beadle or Hand County its 1985 real estate taxes and accruing interest;

2) That by reason of this tax nonpayment, both counties acquired a prepet-

3) That by reason of these statutory tax liens, both counties’ claims are secured “liens” subject to Bankruptcy Code Section 506(a) application;3

4) That the value of the real property subject to the tax liens greatly exceeds the amount of claims; and

5) That because the value of the real property exceeds the amount of both counties’ tax lien claims, they are ov-ersecured creditors as defined by Bankruptcy Code Section 506(a).4

To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.

If one reads § 506(b) to say that an over-secured creditor is entitled to interest— and also, if the agreement of the parties provides it, reasonable fees, costs or charges — then the [nonconsensual lien holder] is entitled to interest computed at some rate. On the other hand, if one reads the section to state that an over-secured creditor is entitled to interest, fees, costs, and charges, but only if the agreement with the debtor so provides, then the [nonconsensual lien holder] may not be entitled to interest.

Not being an authority on English grammar and punctuation, we find that the words and punctuation of the statute are hopelessly ambiguous, and so move on to

Before there was a Bankruptcy Code there was a Bankruptcy Act. Many of the issues courts now struggle over were fought and resolved decades ago. If Congress disapproved of those decisions, it had the opportunity in 1978 to undo them in the Bankruptcy Code. For example, Congress enacted § 523(a)(6), which provides that debts arising from willful and malicious conduct by the debt- or may be excepted from discharge. The House Committee on the Judiciary stated that “ ‘willful’ means deliberate or intentional. To the extent Tinker v. Colwell [193 U.S. 473, 24 S.Ct. 505, 48 L.Ed. 754 (1904) ] (citation omitted) held that a looser standard is intended, and to the extent that other cases have relied on Tinker to apply a ‘reckless disregard’ standard, they are overruled.”, (citations omitted) Or, if Congress particularly approved of a judicial result, it codified it. For instance, § 510(c), which authorizes bankruptcy courts to equitably subordinate certain claims, is “intended to codify case law, such as Pepper v. Litton [308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281 (1939)] (citation omitted) and Taylor v. Standard Gas & Electric Co. [306 U.S. 307, 59 S.Ct. 543, 83 L.Ed. 669 (1939) ] (citation omitted).” (citation omitted) Where no change was effected, it is presumed that the then current state of the law was intended to be retained, (citations omitted) •

All five circuits of the Court of Appeals which were called upon to decide whether the Bankruptcy Act provided for post-petition interest to be paid to fully secured tax lien claimants held that it did not. (citations omitted) These Court of Appeals decisions noted:

Despite the general prohibition on the payment of post-petition interest, three exceptions have been developed by the federal courts. Interest may accrue: (1) where the bankrupt ultimately proves to be solvent; (2) where securities, held by the creditor produced income after the filing of the petition; and (3) where the amount of the secured creditor’s security is sufficient to satisfy both the principal and interest due on the secured claim.

(citations omitted) Only the third exception is at issue here. These opinions all carved out an exception to the third exception, by holding that only creditors with consensual liens are entitled to post-petition interest....

We cannot believe that Congress would overrule an unbroken line of five court of appeals decisions on an issue involving the federal fisc without even one word of explanation of its intention. Likewise, we cannot find that the mere placement of a comma under the circumstances ' evidences such an intention. Therefore, we agree with those courts which found that § 506(b) creates no material change from prior practice, and are persuaded to follow the nearly unbroken line of cases which hold that creditors holding nonconsensual liens are not entitled to post-petition interest thereon in bankruptcy cases.

[This] view strains the plain meaning of the language and grammar of the provision. Congress stated: “there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.” The phrase “interest on such claim” is set off by commas, and the following phrase is introduced by “and any.” The effect of this usage is to make “interest on such claim” a separate and distinct clause to which “provided for under the agreement” does not apply. If Congress had wanted the agreement proviso to limit “interest on such claim” to consensual claims, it could have easily