               United States Bankruptcy Appellate Panel
                                FOR THE EIGHTH CIRCUIT

                                          ______

                                     No. 01-6061WM
                                         ______

In re:                                      *
                                            *
Gaela A. Crawford,                          *
f/k/a Hedrick                               *
                                            *
         Debtor.                            *
                                            *
Eastern States Life Insurance               *
Company,                                    *
                                            *
         Plaintiff-Appellant,               *   Appeal from the United States
                                            *   Bankruptcy Court for the Western
               v.                           *   District of Missouri
                                            *
Bruce E. Strauss, Trustee, and              *
Gaela A. Crawford, f/k/a Hedrick            *
                                            *
         Defendants-Appellees,              *
                                            *

                                         ______

                                Submitted: January 25, 2002
                                  Filed: March 22, 2002
                                         ______

Before KRESSEL, SCHERMER and DREHER, Bankruptcy Judges.
                             ______

KRESSEL, Bankruptcy Judge.
       Eastern States brought an adversary proceeding against the defendants
asserting that it was entitled to a portion of the annuity payments which the
defendants were receiving pursuant to a personal injury settlement obtained by the
debtor prepetition.1 The complaint alleged that the debtor had assigned a portion of
those payments to Eastern States and that Eastern States held a properly perfected
security interest in those payments. Eastern States filed a motion for summary
judgment and subsequently, a trial was held. Following the trial and a review of the
summary judgment motion, the bankruptcy court entered judgment in favor of the
defendants.2 The bankruptcy court based its decision upon its finding that Eastern
States did not hold a properly perfected security interest. The court therefore
concluded that Eastern States’ interest was subordinate to the trustee’s interest
pursuant to 11 U.S.C. § 544. We affirm to the extent that the bankruptcy court
granted judgment in favor of the trustee as to the bankruptcy estate’s 25 percent
interest in the annuity payments. To the extent that the judgment ruled that Eastern
States’ interest is subordinate to the debtor’s, or otherwise avoided Eastern States’
interest in favor of the debtor, we reverse and remand.

                                  BACKGROUND
      The debtor brought a personal injury lawsuit against several defendants which
was settled pursuant to a Release and Settlement Agreement on May 25, 1995. Under
the terms of that agreement, the tort defendants assigned to Metropolitan Life


      1
         As explained below, in accordance with the terms of a previous court order,
the trustee was entitled to 25 percent of the payments and the remainder was exempt
and going to the debtor.
      2
        Although the judgment did not mention the summary judgment motion, in the
accompanying Memorandum Opinion, the court stated that it would “enter an Order
denying Eastern States [sic] motion for summary judgment and a judgment in favor
of the Trustee as to this adversary proceeding.” We construe the court’s judgment as
denying Eastern States’ motion for summary judgment and entering judgment for the
defendants based upon the merits.
                                         2
Insurance & Annuity Company, the defendants’ obligation to pay the debtor
$3,413.00 per month for a 30 year term commencing on July 1, 1995.3 The amount
increases by 3 percent on July 1st of every year. The agreement has a non-assignment
clause.4

       On December 29, 1997, the debtor entered into an agreement with Colonial
Financial Services. The bankruptcy court found that under the terms of this
agreement, which was not made part of the record on appeal, the debtor
unconditionally and irrevocably assigned to Colonial her right to receive a portion of
the Metropolitan annuity payment in exchange for a lump sum of $128,000.00. The
court found that the agreement provided that Colonial was to receive $2,000.00 per
month from each Metropolitan payment for a 10 year period beginning on February
1, 1998, and ending on January 1, 2008. Colonial would also receive a 3 percent
increase in payment each July 1st. The debtor testified that Metropolitan sent
monthly checks made payable to the Gaela Hedrick Irrevocable Trust to Colonial’s
address. Colonial would then stamp the check with the debtor’s signature, cash the
check and keep its payment and send the balance to the debtor.

       On January 19, 1998, Colonial assigned its rights to Eastern States. On January
30, 1998, Colonial filed a UCC-1 financing statement with the Missouri Secretary of
State, attempting to perfect a security interest in the debtor’s rights and interests in
the Metropolitan annuity policy. This financing statement was not filed in the
debtor’s then county of residence, Taney County, Missouri.


      3
        In addition to Metropolitan, the structured settlement agreement between the
debtor and tort defendants provided for annuity payments to the debtor from
additional companies. Only the Metropolitan payments are at issue in this case.
      4
          The clause provided that the debtor and her beneficiaries “shall not have the
right to . . . [s]ell, mortgage, encumber or anticipate the periodic payments or any part
thereof, by assignment or otherwise.” Appellee’s App. at 13.
                                           3
       The debtor filed a Chapter 11 bankruptcy petition in California on April 5,
1999. This case was converted to Chapter 7 on July 20, 1999, and was subsequently
transferred to Missouri. The debtor attempted to exempt the full amount of all the
annuity payments she was receiving5 and the Chapter 7 trustee objected. The trustee
and the debtor agreed that 25 percent of the total monthly annuity payments she was
receiving from all sources, not just Metropolitan, belonged to the bankruptcy estate,
and the remaining 75 percent was exempt and did not belong to the estate. An order
was entered accordingly. In his brief on appeal, the trustee stated that the debtor was
receiving two monthly annuity checks. He explained that he passed the larger of the
two checks onto the debtor, and negotiated the smaller check, the Metropolitan check,
taking the estate’s total 25 percent portion from that check and relaying the remaining
funds to the debtor.6

       Following the conversion of debtor’s bankruptcy case to Chapter 7,
Metropolitan, in September 1999, ceased sending the payments to the Colonial or
Eastern States address, and began sending them to the Chapter 7 trustee. Eastern
States made a demand upon the trustee for its alleged portion of the Metropolitan
payments. Eastern States then filed a complaint against the trustee and the debtor
alleging that: Eastern States was the assignee of debtor’s right to receive monthly
annuity payments from Metropolitan; Eastern States held a properly perfected interest
in those payments; Eastern States was a secured creditor of the estate in the amount
of $250,000 as reflected by its Amended Proof of Claim; Eastern States was entitled
to a portion of the Metropolitan payments received by the trustee from October 1,

      5
          See supra note 3.
      6
         Perhaps belatedly realizing the unnecessary situation the trustee placed
himself in, he noted at oral argument that had he taken the estate’s portion from the
non-Metropolitan funds, he would not have been a party to this action. Indeed,
Eastern States could have attempted to accomplish what it is seeking by attacking
only the 75 percent interest the debtor is receiving, without including the trustee in
this adversary proceeding.
                                          4
1999 through February 1, 2001, in the sum of $36,570.80; and, Eastern States was
entitled to “its” portion of future payments. Notably, Eastern States’ complaint does
not allege that it had any ownership interest in the payments as a result of having
purchased an interest in the payments.

       The trustee and the debtor both answered that the debtor’s attempted
assignment to Eastern States’ predecessor-in-interest, Colonial, was invalid because
of the anti-assignment clause in the structured settlement agreement. The trustee also
offered the affirmative defense that Eastern States’ security interest was not properly
perfected and hence was subordinate to the trustee’s 25 percent interest.

      Eastern States filed a motion for summary judgment on June 4, 2001. Before
any ruling on the motion, the court held a trial on the merits of the action on June 18,
2001. On July 26, 2001, the bankruptcy court issued judgment in favor of both
defendants. In its accompanying Memorandum Opinion, the court found that Eastern
States’ failure to properly perfect its security interest was dispositive. The court
therefore did not reach the issue of the effect of the non-assignment clause.

                                 DISCUSSION
                               Standard of Review
      We review the bankruptcy court’s factual findings for clear error and its
conclusions of law de novo. Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764,
765 (8th Cir. 2000); Wendover Fin. Servs. v. Hervey (In re Hervey), 252 B.R. 763,
765 (B.A.P. 8th Cir. 2000).

     At trial, the parties presented conflicting evidence as to whether the transaction
between the debtor and Colonial should be characterized as a sale or loan. The
agreement, which we do not have, was apparently entitled “Purchase and Sale
Agreement” and stated “This is Not a Loan.” The debtor testified that she approached
Colonial seeking a loan in order to consolidate her debts and she thought the

                                           5
transaction was a loan despite the document’s alleged language. There is other
evidence supporting debtor’s assertion that the assignment was for the purposes of
creating a security interest to secure a loan, and not an absolute assignment.7 For
example, neither Colonial nor Eastern States ever took actual possession of the
annuity payments. They acted as more of a conduit and the checks from Metropolitan
were never made payable to them. Eastern States filed a claim declaring that it held
a secured claim in the amount of $250,000. The claim did not indicate that Eastern
States had any ownership interest in the payments.

       However, the bankruptcy court did not make a finding on this issue finding it
“irrelevant . . . because [the debtor] intended to grant Colonial a security interest in
the stream of payments either way.”8 On appeal, the parties continue to argue this
issue. Even if this issue were properly before us, which it is not, we would be unable
to properly review the court’s findings because the parties have failed to include the
agreement in the record on appeal. See Wendover, 252 B.R. at 767 (noting that, as
a reviewing court, we cannot determine whether a bankruptcy court committed clear
error in its factual findings where the parties fail to provide the factual record). In
any event, it is not necessary to our review to examine this issue.



      7
         It is well-established law that courts will look beyond the words used to
determine the true nature of a security transaction. See Endico Potatoes, Inc., v. CIT
Group/Factoring, Inc., 67 F.3d 1063, 1068-69 (2d Cir. 1995) (noting that, regardless
of the labels used by the parties, courts will look to several factors to determine the
substance of a transaction, including, recourse and which party bears the risk of non-
performance); Major’s Furniture Mart, Inc., v. Castle Credit Corp., 602 F.2d 538,
543-46 (3d Cir. 1979) (stating that the “determination, as to whether a particular
assignment constitutes a sale or a transfer of security, is left to the courts for
decision”; and examining in detail the factors courts should consider); United States
v. Poling, 73 F. Supp. 882, 893-94 (S.D. Ohio 1999); In re Paul, 83 B.R. 709, 713-14
(Bankr. D.N.D. 1988).
      8
          App. at 63.
                                           6
                         Eastern’s Claim Against the Trustee
       The bankruptcy court ruled that Eastern States did not hold a properly perfected
security interest, and thus, Eastern States’ interest was subordinate to the trustee’s
interest pursuant to 11 U.S.C. § 544.

       “Property interests are created and defined by state law.” In re John Chezik
Imports, Inc., 195 B.R. 417, 420 (Bankr. E.D. Mo. 1996) (quoting Butner v. United
States, 440 U.S. 48, 55 (1979)). Article 9 of the Uniform Commercial Code, as
adopted by Missouri, applies to any transaction, regardless of form, which is intended
to create a security interest in personal property. See Mo. Stat. Ann. § 400.9-102
(1994); George W. Ultch Lumber Co. v. Hall Plastering, Inc., 477 F. Supp. 1060,
1064 (W.D. Mo. 1979); Bradley v. K & E Invs., Inc., 847 S.W.2d 915, 920 (Mo. Ct.
App. 1993). It applies to security interests created by contract, including
assignments. George W. Ultch Lumber, 477 F. Supp. at 1064; see also Artoc Bank
& Trust, Ltd., v. Apex Oil Co. (In re Apex Oil Co.), 975 F.2d 1365,1369 (8th Cir.
1992) (stating, “[w]e see no meaningful difference between a security interest and an
assignment for the purposes of security. In fact, they appear to be the same thing
under Article 9.”). As correctly noted by the bankruptcy court, under Missouri law
in effect at the time in question, in order to properly perfect a security interest in a
general intangible such as a contract right, Eastern States was required to file a
financing statement in the proper place. See Mo. Stat. Ann. §§ 400.9-106, 9-302(1),
9-401(1)(c) (1994). Here, the proper place was in two locations: with the Missouri
secretary of state and the recorder’s office of the county in which the debtor resided,
Taney County. See § 400.9-401(1). Without proper perfection, the unperfected
security interest is subordinate to the rights of a person who becomes a lien creditor.
See § 400.9-301(1)(b). A bankruptcy trustee has the rights and powers of a
hypothetical judicial lien creditor, including the power to avoid the unperfected
inferior interest. See 11 U.S.C. § 544(a)(1).




                                           7
       Eastern States complaint alleged that Eastern States held a properly perfected
interest securing its right to receive a portion of the Metropolitan annuity payments
which were allegedly assigned to it. Eastern States based its motion for summary
judgment on this same premise. Following the trial, Eastern States submitted a trial
brief in which it stated that: “Plaintiff has since determined that a financing statement
was not filed with the Taney County recorder of deeds. Therefore, Plaintiff’s security
interest is not effective as to the portion of the annuity funds that this Court has
previously adjudicated as not exempt.”9 Eastern States then went on to argue that the
trustee’s avoidance powers did not affect Eastern States’ security interest in the
debtor’s exempt portion of the payments. Finally, the brief included the following
statement:
              As the Plaintiff’s security interest is not perfected against
              the Trustee, Plaintiff concedes that judgment against [the
              trustee], to the extent of the Trustee’s 25% share in the
              annuity funds, would not be appropriate. For all these
              reasons, the Plaintiff requests that this Court enter
              judgment against Gaela Hedrick for its rightful share of the
              Metropolitan annuity payments that have been paid to date,
              and for a determination of Plaintiff’s right to receive future
              payments from the annuity . . . .10

      Therefore, Eastern States conceded that judgment against the trustee was not
appropriate and further requested that the court enter judgment only against the
debtor. Statements contained in a party’s pleadings are binding on that party, and are
considered judicial admissions, unless the statements are withdrawn or amended. See
Knudsen v. United States, 254 F.3d 747, 752 (8th Cir. 2001); Mo. Hous. Dev.
Comm’n v. Brice, 919 F.2d 1306, 1314 (8th Cir. 1990). “[J]udicial efficiency


      9
         App. at 42-43. Eastern States and the defendants also submitted a written
stipulation regarding the lack of a financing statement on file with the proper county.
      10
           App. at 44 (emphasis added).
                                           8
demands that a party not be allowed to controvert what it has already unequivocally
told a court by the most formal and considered means possible.” Knudsen, 254 F.3d
at 752 (quoting Soo Line R. Co. v. St. Louis Southwestern Ry. Co., 125 F.3d 481, 483
(7th Cir. 1997)).

       Thus, where the debtors’ attorney stated unambiguously in a motion to alter or
amend judgment that there was no tenancy at will, and a prior determination by the
court that there was a tenancy at will was critical to the earlier judgment in favor of
the debtors, the court held that this was a judicial admission by the debtors’ attorney.
Based upon this admission, the court found that it had no alternative but to strike the
prior findings and vacate its prior judgment in favor of the debtors in its entirety.
Brewer v. Tip Top Credit Union (In the Matter of Brewer), 65 B.R. 75 (Bankr. W.D.
Mo. 1986). Subsequently, the debtors hired new counsel and brought a motion for
reconsideration, but this motion was denied. See Brewer v. Tip Top Credit Union (In
the Matter of Brewer),76 B.R. 707 (Bankr. W.D. Mo. 1987); see also Postscript
Enters. v. City of Bridgeton, 905 F.2d 223, 227-28 (8th Cir. 1990) (finding statements
made by counsel in a brief and orally, as to the effect of a permit ordinance, to be
judicial admissions negating the need to consider due process arguments concerning
the permit process); Carson v. Pierce, 726 F.2d 411 (8th Cir. 1984) (ruling, in a
housing discrimination case, that counsel’s statement at oral argument that the
plaintiffs had voluntarily vacated their apartment was a judicial admission mooting
their claim, notwithstanding that counsel subsequently tried to present evidence that
the move was involuntary).

       Here, in plaintiff’s trial brief, counsel for Eastern States clearly and
unambiguously stated that: a financing statement was not filed with the proper
county; its security interest was not perfected against the non-exempt portion of the
annuity payments; and, judgment against the trustee was not proper. In addition, the
brief then requests that the court enter judgment in favor of Eastern States only
against the debtor. These statements by counsel for Eastern States are judicial

                                           9
admissions. Eastern States has conceded that the judgment against the trustee, as to
the estate’s non-exempt 25 percent portion of the annuity payments, is not
appropriate. The bankruptcy court did not err in granting judgment in favor of the
trustee.

       During oral argument, and in its reply brief, Eastern States made an attempt to
argue that it acquired an absolute ownership interest in the Metropolitan payments
through the assignment, and thus, its failure to perfect is somehow not relevant as to
the trustee.11 However, based upon Eastern States’ judicial admission, this is not a
door that Eastern States may reopen. Indeed, following its concession, and despite
its belated attempts on appeal, Eastern States has focused its argument, including its
opening brief, on the premise that nothing in the bankruptcy court’s analysis of the
perfection issue supports the court’s judgment in favor of the debtor. Eastern States
is right.

                        Eastern’s Claim Against the Debtor
       The entire basis of the bankruptcy court’s decision, and the only analysis
contained in its opinion accompanying the judgment, is the failure to perfect.
However, Eastern States’ failure to properly perfect its interest does not affect its
position regarding the debtor’s 75 percent interest in the payments. Further, the fact
that a court previously ruled that this portion is exempt and does not belong to the



      11
          To the extent that Eastern States is attempting to argue a position that is
inconsistent with its prior concession regarding the effect of its failure to perfect, the
doctrine of judicial estoppel may also apply. See Hossaini v. W. Mo. Med. Ctr., 140
F.3d 1140, 1142-43 (8th Cir. 1998) (stating that this doctrine prohibits a party from
taking a position inconsistent with an earlier position in the same or related
litigation); see also United States v. Transport Admin. Servs., 260 F.3d 909, 917-18
(8th Cir. 2001) (upholding the district court’s application of the doctrine to prevent
debtors from prosecuting a claim which they had previously failed to list on their
bankruptcy schedule of assets).
                                           10
bankruptcy estate does not mean that this interest cannot be subject to Eastern States’
lien or interest.

        First, the trustee’s ability to subordinate and avoid Eastern States’ security
interest is only applicable as to the bankruptcy estate’s 25 percent interest in the
annuity payments. The perfection and filing requirements are for the benefit of third
parties, not the debtor. See Mo. Stat. Ann. §§ 400.9-301 (1994); Vintero Corp. v.
Corp. Venezolana de Fomento (In the Matter of Vintero Corp.), 735 F.2d 740, 742
(2d Cir. 1984). The courts have universally limited the trustee’s avoidance powers
to situations in which there will be a benefit for the estate’s creditors. If the action
will only benefit the debtor, courts will not allow the avoidance power to be used.
See Official Comm. Of Unsecured Creditors of Cybergenics Corp. v. Chinery (In re
Cybergenics Corp.), 226 F.3d 237, 244 (3d Cir. 2000); Harstad v. First Am. Bank (In
re Harstad), 155 B.R. 500, 511 (Bankr. D. Minn. 1993), aff’d, No. BKY 4-90-869,
CIV 3-93-512, 1994 WL 526013 (D. Minn. Jan.20, 1994), aff’d, 39 F.3d 898 (8th Cir.
1994). There was no showing in this case that would support a finding that avoiding
Eastern States’ interest in the exempt portion of the payments would benefit the
estate.

       Moreover, as between Eastern States and the debtor, Eastern States secured
interest remains valid. See Mo. Stat. Ann. § 400.9-301; Bremen Bank & Trust Co. of
St. Louis v. Muskopf, 817 S.W.2d 602, 608 (Mo. Ct. App. 1991); see also Vintero,
735 F.3d at 742 (maintaining that a security interest does need to be perfected in order
to be valid against the debtor; perfection only allows enforcement of the interest
against third parties). The debtor has never taken any steps to avoid Eastern States’
interest. She merely asserted, as a defense, that the assignment to Eastern States was
not valid because of the non-assignment clause contained in the structured settlement
agreement. The bankruptcy court never reached the issue of the effect of the non-
assignment clause.



                                          11
       Second, the bankruptcy court’s prior order exempting 75 percent of the annuity
payments did not avoid or otherwise negate Eastern States’ interest. Property that is
exempted under 11 U.S.C. § 522 remains liable for debts secured by a lien that has
not been avoided under any of the applicable Bankruptcy Code provisions. See 11
U.S.C. § 522(c)(2); Matter of Lassiter, 104 B.R. 119, 121-22 (Bankr. S.D. Iowa
1989). As noted above, the debtor has never attempted to avoid Eastern States’ lien,
and the trustee’s ability to subordinate and avoid the lien as to the estate’s 25 percent
interest in the annuity payments does not affect Eastern States’ interest in the portion
belonging to the debtor.

      Because the record does not support judgment in favor of the debtor, the
bankruptcy court erred in granting judgment for the debtor. We note, though, that the
court did not reach the non-assignment clause issue, and there may be other
unexamined issues concerning Eastern States’ ability to prevail on its complaint as
against the debtor. Therefore, we will remand this matter to the bankruptcy court.

                                    CONCLUSION
       The judgment of the bankruptcy court is affirmed to the extent that it
granted judgment in favor of the trustee as to the bankruptcy estate’s 25 percent
interest in the annuity payments. To the extent that the court ruled that Eastern
States’ interest is subordinate to the debtor’s, or otherwise avoided Eastern States’
interest in favor of the debtor, we reverse and remand to the bankruptcy court for
further proceedings consistent with this opinion.

      A true copy.

             Attest:

                     CLERK, U.S. BANKRUPTCY APPELLATE
                     PANEL, EIGHTH CIRCUIT.

                                           12
