In the Matter of Gary J. Borba, Debtor. Frank L. Lang, Jr., as Trustee of the Estate of Gary J. Borba v. Michael S. And Cynthia D. Graham

Gary J. Borba filed a petition in bankruptcy under Chapter 7 of Title 11, U.S.C., on December 16, 1981. Under 11 U.S.C. § 544 (b), Lang, the trustee in bankruptcy, sought to avoid a sale by the bankrupt to appellees Michael and Cynthia Graham for non-compliance with the bulk sales provisions of California Commercial Code Division 6, and under California Civil Code § 3440.

A building was located on land which was part of the Southern Pacific Railway right of way. Pursuant to an agreement of sale, the bankrupt sold the “building” to the Grahams for $30,000, payable in installments. It was agreed between the court and the parties that the trial of the case would be bifurcated and that if the statute of limitations applicable to bulk sales had run on the transaction, as contended by the buyers, this would be dispositive of the entire case. The Bankruptcy Judge decided that the statute had run and this ruling was concurred in by the District Court on review, and is now challenged by appellant. The only issue before this court is whether the statute of limitations has run.

The Bankruptcy Court found that the parties agreed to the sale on November 5, 1980, and that the buyers took…