United States Court of Appeals,

                          Fifth Circuit.

                          No. 95-10491.

         In the Matter of MAPLE MORTGAGE, INC., Debtor.

John James JENKINS, Trustee for Maple Mortgage, Inc., Appellant,

                                v.

           CHASE HOME MORTGAGE CORPORATION, Appellee.

                         April 30, 1996.

Appeal from the United States District Court for the Northern
District of Texas.

Before REYNALDO G. GARZA, WIENER and STEWART, Circuit Judges.

     STEWART, Circuit Judge:

     Jenkins, trustee for Maple Mortgage (Maple) appeals from a

judgment dismissing its claim that a payment to Chase Home Mortgage

Corporation (Chase) was either preferential or fraudulent and thus

avoidable under 11 U.S.C. § 547 or 11 U.S.C. § 548.     Because we

conclude that Maple had only legal title to the funds in question

and no equitable interest in them, we AFFIRM the district court's

grant of summary judgment to Chase.

                               FACTS

     On December 2, 1988, debtor Maple entered into a Mortgage

Servicing Purchase and Sale Agreement with Chase.   Maple agreed to

purchase the servicing rights to a portfolio of 7,140 single-family

mortgage loans. The purchase price for the servicing rights was an

amount equal to 1.21% of the aggregate unpaid principal balances of

the mortgages and was later calculated as $4,573,159 ($4.5 million)

on a principal balance of $377,947,054.     Chase did not own the

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underlying mortgages and conveyed only the servicing rights to the

mortgages included in the portfolio.

     The Agreement provided that, prior to the sale, Chase was

required to perform certain servicing duties including keeping a

complete, accurate, and separate account of all sums collected by

it from the mortgagors.          Chase was also required to deposit all

funds received on account of the mortgages in a segregated trust or

custodial     demand     deposit       account    and    maintain      records    in

conformance with applicable rules and regulations of the Government

National Mortgage Association ("GNMA") and the Federal Home Loan

Mortgage Corporation ("FHLMC").

     The payment of the $4.5 million purchase price was made

pursuant to the Agreement as follows.                   First, Maple's parent

company,     Western     Community       Money    Centre      of   Alberta,      Ltd.

("WesCom"), executed a debenture to Chase to secure payment of the

purchase price.         Then, in accordance with the Agreement, the

following    items     were    wired   from   Chase     to   Maple's   account     at

Fidelity National Bank on February 3, 1989: (1) mortgage payments,

(2) tax and insurance escrows, (3) outstanding receivables, and (4)

unearned fees.       The total amount of these funds transferred from

Chase   to   Maple   was      approximately      $9.7   million.       Immediately

afterwards, Maple wire transferred back to Chase the $4.5 million

purchase price from the same Fidelity account. Once Chase received

the purchase price, it stamped the WesCom debenture "canceled" and

returned it to WesCom.           As of the transfer date, Maple had not

taken any action to service the mortgages;                   therefore, Maple had


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not earned any servicing fees relating to those mortgages.

     Prior to the wire transfer of the $9.7 million, Maple's

Fidelity account contained a balance of $28,400.59.                    The only

transactions made from this account on February 3, 1989 were the

two wire transfers to and from Chase.            Less than forty-five days

after the Chase-Maple transfer, on March 17, 1989, Maple filed its

petition for bankruptcy.

     John   Jenkins,   trustee    for    Maple   ("Trustee"),     brought    an

adversary action to avoid the $4.5 million transfer on the theory

that it was either a preferential transfer under 11 U.S.C. § 547(a)

or a fraudulent transfer under 11 U.S.C. § 548(a).            Chase filed a

motion for summary judgment, arguing that the $4.5 million conveyed

was not "an interest of the debtor in property" and thus that the

Trustee had   failed   to   establish     the    existence   of   an    element

necessary to both claims.

     The bankruptcy court agreed with Chase's argument, and granted

summary judgment in favor of Chase.              The court held that the

Trustee had failed to establish that the property transferred from

Maple to Chase was "an interest of the debtor in property" because

neither Chase nor Maple ever had equitable ownership of these

funds.   The district court affirmed, and Trustee appeals.

                                 DISCUSSION

Standard of Review

      Summary judgment is proper when no genuine issue of material

fact exists and the moving party is entitled to judgment as a

matter of law.   Fed.R.Civ.P. 56(c).       Questions of law are reviewed


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de novo.     In re Southmark, 

, 1114 (5th Cir.1995).

Summary judgment must be granted to the nonmovant if the movant

cannot make a showing sufficient to establish the existence of an

element essential to his case and on which he bears the burden of

proof.     Celotex Corp. v. Catrett, 

, 322, 

, 2552, 

(1986).

"An interest of the Debtor in Property "

      A trustee in bankruptcy can avoid a transfer that is either

preferential, as defined by § 547(b) or fraudulent, as defined by

§ 548(a).    But in either case, the transfer must be "of an interest

of the debtor in property."      11 U.S.C. §§ 547(b), 548(a).    The

reach of this avoidance power is limited to transfers of "property

of the debtor."    Begier v. IRS, 

, 58, 

,

2263, 

(1990).

         The scope of the debtor's bankruptcy estate includes "all

legal or equitable interests of the debtor in property as of the

commencement of the case."    11 U.S.C. § 541(a)(1).   Section 541(d)

further explains that where the debtor holds only legal title and

not an equitable interest, the interest becomes property of the

estate only to the extent of the debtor's legal title.    "Because a

debtor does not own an equitable interest in property he holds in

trust for another, that interest is not "property of the estate.'

Nor is such an equitable interest "property of the debtor' for

purposes of § 547(b)."    

, 110 S.Ct. at 2263.

     The primary consideration in determining if funds are property
     of the debtor's estate is whether the payment of those funds
     diminished the resources from which the debtor's creditors
     could have sought payment.

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           Conversely, if funds cannot be used to pay the debtor's
      creditors, then they generally are not deemed an asset of the
      debtor's estate for preference purposes. A common example is
      when a debtor holds funds in trust for another.

In re Southmark, 

, 1117 (5th Cir.1995).

      Based on the facts of the transaction and the Agreement, both

the district court and the bankruptcy court determined that because

Chase   neither    owned   nor     attempted       to    transfer     the   mortgages

themselves,    neither     Chase    nor    Maple        ever   held   the   equitable

ownership of the funds transferred from Chase to Maple. Therefore,

the transfer of the $4.5 million to Chase did not diminish Maple's

estate, and was not avoidable as either a preferential or a

fraudulent transfer.

The Burden of Proof

        The   Trustee    argues    that       In   re    Southmark    establishes    a

presumption that the Debtor's possession of funds in a bank account

in   its   name,   coupled   with    the       unfettered      discretion     to   pay

creditors of its own choosing, demonstrates a sufficient "interest

of the debtor in property" for purposes of preference law.                     See In

re Southmark, 

, 1116 (5th Cir.1995).                  Furthermore, the

Trustee argues that, once it established that Maple had legal title

to the funds, Chase had the burden of establishing that it did not

have equitable title to the funds that had been deposited in its

Fidelity account, and that the funds constituted a "trust."                        The

Trustee insists that Chase failed to meet this burden.

        The District Court and the bankruptcy court properly placed

the burden of proof on the Trustee because 11 U.S.C. § 547(g)

specifically provides that "the trustee has the burden of proving

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the avoidability of a [preferential] transfer."      Similarly, the

trustee has the burden of proving the elements of a fraudulent

transfer.    See In re McConnell, 

, 665 n. 1 (5th

Cir.1991).   However, the Trustee is correct in asserting that the

burden of proof was reallocated in Southmark.     See 

.

     At issue in Southmark was a payroll check drawn from a

commingled account.    

.    The account,

which was owned by the debtor company, contained commingled funds

belonging to the debtor's parent and affiliate companies, as well

as its own funds.     

company had complete control

over the account and could have totally depleted it to pay its own

creditors without regard to any other subsidiary's contribution to

or balance remaining in the account.   

Court

held that when property that otherwise would be considered part of

a debtor's estate is alleged to be held in trust for another,

"[t]he burden of establishing the existence of the constructive

trust rests on the claimant."    

at 1118.

     In the case sub judice, however, both Chase and Maple were

required to service the mortgages in accordance with applicable

regulations and prudent mortgage banking practices.        They were

required to timely collect all payments due under the terms of each

mortgage, and were required to keep a complete, accurate, and

separate account of each mortgage and its appropriate tax and

insurance escrows.    All funds received on account of the mortgages

were to be kept in a segregated trust or custodial demand deposit


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account, and detailed records of each individual mortgage were to

be maintained in a manner complying with applicable federal law.

From the funds in the segregated trust or custodial demand account,

both Chase and Maple were required to timely pay the proper

parties, including taxes, insurance, and all amounts of principal

and interest collected under each mortgage.   Thus, while Maple had

discretion over the account itself, any presumption that it had

unfettered discretion over funds at issue in the transfer was

clearly rebutted by the specific terms of the Agreement.

Property held for the benefit of another

      In Southmark, this Court distinguished generally between two

types of "equitable interests." In a contractual relationship, the

creditor may possess an "equitable claim" to property actually

owned by the debtor, but there is no division of ownership or title

in the property at issue, and the debtor is entirely free to

dispose of the property as he sees fit.    In a trust relationship,

by contrast, the law actually divides the bundle of rights in the

property, and only when legal title to the property is held by the

bankrupt in trust for the benefit of another is the property

properly excluded from the bankrupt's estate.    

.    For example, in Begier, the Supreme Court found no

preference where funds were held in trust for the benefit of

another.   The Court found that the money the debtor paid to the IRS

out of its general operating fund as a payment of withholding taxes

was a statute-based trust for the benefit of the IRS, and not

"property of the debtor."    

, 110 S.Ct. at


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2264.

        In   contrast      to   Begier    where     federal   law   established     a

statutory trust, in the absence of controlling federal bankruptcy

law, the substantive nature of the property rights held by a

bankrupt and its creditors is defined by state law.                 See Matter of

Haber Oil Co., 

, 435 (5th Cir.1994) (cited in 

   n.    28).      Under    the   usual   version    of    the

constructive trust doctrine, one who has been unjustly enriched at

another's expense is treated under state law much like a trustee,

holding legal title for the injured party's benefit.                     

.      Looking at Texas state law to determine whether the

Southmark creditor had adequately demonstrated that the property at

issue was held in trust for another, this Court found that there

was no evidence of unjust enrichment, and no evidence of either an

actual or a constructive trust.                

.

        Unlike Southmark, however, the conclusion in this case that

Maple had only legal title to the transferred funds does not depend

on the remedy of constructive trust, but rather on the terms of the

contract     between      Maple     and    Chase.        Under   Texas     law,   an

interpretation of a contract is a question of law, and if a

contract is written so that a court may properly give it a certain

definite legal meaning or interpretation, it is not ambiguous.

Threadgill        v.     Farmers       Ins.     Exchange,     

(Tex.App.—Dallas 1995);            see Matter of Oxford Management, Inc., 

, 1334 (5th Cir.1993).               Under the terms of the Agreement

it is readily apparent that neither Chase nor Maple owned the


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underlying mortgages, and that the funds consisted of mortgage

payments, net escrows, outstanding receivables, and unearned fees.

As of the transfer date, Maple had not yet even earned any of the

servicing fees for which it had contracted; therefore, while Maple

had legal title to the funds, it was holding those funds for the

benefit of those to whom the money was owed, and therefore, Maple

had no equitable interest in the funds transferred.   As Maple had

no equitable interest in the funds transferred to Chase, that

transfer cannot be avoided under either § 547 or § 548 of the

Bankruptcy Code, and thus Chase was properly granted summary

judgment as a matter of law.   AFFIRMED.




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