                                                        [DO NOT PUBLISH]


            IN THE UNITED STATES COURT OF APPEALS
                                                                  FILED
                   FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                     ________________________ ELEVENTH CIRCUIT
                                                           NOV 3, 2008
                            No. 08-12091                 THOMAS K. KAHN
                        Non-Argument Calendar                CLERK
                      ________________________

                 D. C. Docket No. 07-00329-CV-1-MEF
                      BKCY No. 06-010664-DHW

IN RE:
                     GLADYS H. YELVERTON,
                     ELIJAH J. YELVERTON,

                                                              Debtors.
__________________________________________________

ARMY AVIATION CENTER FEDERAL CREDIT UNION,

                                                          Plaintiff-Appellant,

                                 versus

ELIJAH J. YELVERTON,
GLADYS H. YELVERTON,

                                                       Defendants-Appellees.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Alabama
                     _________________________

                          (November 3, 2008)
Before HULL, MARCUS and WILSON, Circuit Judges.

PER CURIAM:

      In this bankruptcy case, Army Aviation Center Federal Credit Union (“Army

Aviation”) claimed it had a secured interest in a 2000 Isuzu Rodeo (“the Rodeo”)

pledged by Gladys and Elijah J. Yelverton, the debtors. The bankruptcy court

sustained the Yelvertons’ objection to Army Aviation’s claim. The district court

affirmed, and Army Aviation appealed. After review, we vacate and remand.

                                 I. Background

A. The March and July Agreements

      This is a dispute about whether Army Aviation, a credit union, can apply the

sale proceeds from collateral (the Rodeo) pledged by the Yelvertons under a July

2000 agreement to a debt arising under an earlier, March 2000 agreement.

      Specifically, on March 31, 2000, Gladys Yelverton signed a Loan

Application and Permanent Loan Agreement (“the March agreement”) with Army

Aviation. The March agreement was opened in Gladys’s name only and was

assigned account number XX871. The March agreement allowed Gladys to open

one or more sub-accounts and created an “Open End Line of Credit” that permitted

Gladys to borrow money subject to a credit limit imposed by Army Aviation.

      On July 7, 2000, Gladys Yelverton signed another Loan Application and



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Permanent Loan Agreement (“the July agreement”) with Army Aviation. The July

agreement was assigned account number XXXX270 and was opened in the names

of Gladys Yelverton, Clifton D. Yelverton, and Elijah J. Yelverton as joint

borrowers. The July agreement allowed the joint borrowers to open one or more

sub-accounts.

      The July agreement contained two clauses particularly relevant to this

litigation. The future advance clause provided that Army Aviation’s security

interest extended to amounts the borrower owed now or in the future, stating:

             The Security Interest secures the advance and any
             extensions, renewals or refinancing of the advance. It
             also secures any other advances you may have now or
             may receive in the future under the Xpress Permanent
             Loan Agreement, as well as, any other amounts you owe
             the Credit Union for any reason now or in the future.

(Emphasis added.) The defeasance clause provided that Army Aviation’s security

interest was cancelled when any sub-account was repaid unless the borrower was

in default on another sub-account, stating:

             When you repay any sub-account for which a security
             interest has been given, the security interest will be
             cancelled; except that if you are then in default on any
             other sub-account, we will maintain all security under
             this Agreement until you are no longer in default.

(Emphasis added.)

      In addition, the July agreement explicitly incorporated provisions of other

                                          3
agreements and explicitly limited some of the penalties for debts owed exclusively

under the July agreement. The July agreement provided, “You also agree that all

existing balances for any obligation you owe to [Army Aviation] may be

incorporated within this Agreement . . . . [and] [t]hat collateral securing other loans

with [Army Aviation] may also secure this loan.” Elsewhere, the July agreement

provided that “[a]ll terms of all other agreements are incorporated by reference

herein.” Finally, the July agreement provided that Army Aviation could demand

finance charges when “you default on any sub-account under this Agreement.”

(Emphasis added.)

      The July agreement also defined the term “You” and the relationship among

the joint borrowers. The first page of the July agreement defined “You” as

“Clifton D. Yelverton and E.J. Yelverton and Gladys H. Yelverton,” and just

below this definition, the agreement provided that “[b]y signing this Agreement,

you, jointly and severally, agree to all terms and conditions hereunder.” (Emphasis

added.) This same page of the agreement later provided that “[y]ou agree to all of

the terms stated on the front and back of this form and that all terms apply to you

jointly and severally.” (Emphasis added.)

      Under the July agreement, Gladys Yelverton, along with the joint borrowers,

opened a sub-account for an automobile loan in the amount of $22,883.67. The



                                           4
joint borrowers agreed to pay $400.46 per month beginning on August 21, 2000,

until they paid off the full amount. Also on July 7, 2000, the joint borrowers

pledged the Rodeo as collateral for the $22,883.67. The joint borrowers made their

monthly payments through July 3, 2006. Their next payment was due on July 21,

2006.

B. The Chapter 13 Petition

        On July 10, 2006, Gladys and Elijah Yelverton filed a petition for relief

under Chapter 13 of the United States Bankruptcy Code. On July 25, 2006, Army

Aviation filed claim number five in the amount of $1,744.74, which was secured

by the Rodeo. Claim number five arose under the July agreement. On December

1, 2006, the joint borrowers paid Army Aviation the $1,744.74 balance due on the

automobile loan arising under the July agreement sub-account, closing that sub-

account.

        Also on July 25, 2006, Army Aviation filed claim number six in the amount

of $4,528.94, which was due under the March agreement. Army Aviation claimed

that claim number six was secured under the July agreement by the excess equity

in the Rodeo, which it argued had been pledged towards the March debt through

the “any other advances” language in the July agreement’s future advance clause.

        On September 8, 2006, the Yelvertons filed an objection to claim number



                                           5
six, asserting that Army Aviation’s claim for $4,528.94 under the March agreement

was unsecured by the excess equity in the Rodeo because the Rodeo was pledged

as part of the July agreement. After the Yelvertons filed for bankruptcy, Army

Aviation received no payments on the debt of $4,528.94 due under the March

agreement.

C. Bankruptcy and District Court Proceedings

      After an evidentiary hearing, the bankruptcy court determined that the

undisputed value of the Rodeo was $8,600 and sustained the Yelvertons’ objection

to claim number six. Army Aviation argued that the future advance clause’s

language—that any security interest also secures “any other advances you may

have now” and “any other amounts you owe”— expressed an intent to pledge the

Rodeo as security for the debt owed under the March agreement. However,

Alabama law recognizes future advance clauses only if the agreements at issue are

“between the same parties.”

      The bankruptcy court determined that the March agreement and the July

agreement were not between the same parties because the March agreement was

signed only by Gladys Yelverton and the July agreement was signed by Gladys,

Clifton, and E.J. Yelverton. After noting the July agreement provided that the

Rodeo would secure “‘any other amount you owe the Credit Union for any reason



                                         6
now or in the future,’” the bankruptcy court emphasized that “[t]he pronoun ‘you’

in this contract refers to the three co-makers.” The bankruptcy court determined

that “there is no indication that the parties to the July [agreement] intended that the

vehicle also secure the individual and separate obligations of any one of the co-

makers.” The bankruptcy court therefore characterized Army Aviation’s $4,528.94

claim under the March agreement as a general, unsecured claim.

      Army Aviation appealed the bankruptcy court’s order, and the district court

affirmed, but on different grounds. Reading the July agreement’s future advance

clause and defeasance clause together, the district court determined that the July

agreement lacked “a clear and unambiguous intent” to include the loan under the

March agreement. The district court found that the meaning of “sub-account” in

the defeasance clause was not clear and unambiguous as to whether it was referring

(1) to any sub-account under the July agreement, or (2) to any sub-account under

any agreement between “you” and Army Aviation. The latter reading would

include the March agreement debt but the former would not. The district court did

not address the issue of whether the two agreements were “between the same

parties.” Army Aviation timely appealed.

                               II. Standard of Review

      In bankruptcy proceedings, we sit “as a second court of review and thus



                                           7
examine[] independently the factual and legal determinations of the bankruptcy

court.” In re Optical Techs., Inc., 425 F.3d 1294, 1299-1300 (11th Cir. 2005)

(quotation marks omitted). Neither the district court nor this Court is authorized to

make independent factual findings. In re Sublett, 895 F.2d 1381, 1384 (11th Cir.

1990). We thus employ the same standard of review as the district court. In re

Optical Techs., Inc., 425 F.3d at 1299-1300. We review legal conclusions by

either the bankruptcy court or the district court de novo and the bankruptcy court’s

findings of fact for clear error. In re New Power Co., 438 F.3d 1113, 1117 (11th

Cir. 2006).

      The interpretation of a loan instrument is “a legal determination subject to de

novo review if the contractual language is unambiguous.” In re Sublett, 895 F.2d

at 1384. Additionally, “the initial question whether the contractual language is

ambiguous or not is itself a question of law.” Id.

                                  III. Discussion

      In a bankruptcy proceeding, state law governs the scope of the debtor’s right

to property, including ownership and security interests. Butner v. United States,

440 U.S. 48, 54, 99 S. Ct. 914, 918 (1979). The July agreement provided that

Alabama law governs the contract. Accordingly, we look to Alabama law to

determine the enforceability of the July agreement’s future advance clause.



                                          8
      In Alabama, a future advance clause is enforceable if the clause is clear and

unambiguous and extends security to cover a debt that is “between the same

parties.” See Ex parte Chandler, 477 So. 2d 360, 362 (Ala. 1985); see also

Malkove v. First Nat’l Bank of Mobile, 326 So. 2d 108, 111 (Ala. 1976) (“‘If a

debtor owes several notes, and gives a mortgage expressly securing one, any

intention to cover other existing notes should be quite clear and explicit.’” (quoting

First Nat’l Bank v. Bain, 188 So. 64, 67 (Ala. 1939))). “Whether other debts

between the same parties are secured under a future advance clause depends on the

intention of the parties.” Chandler, 477 So. 2d at 363. Future advance clauses and

defeasance clauses are construed together as part of one instrument in determining

whether an agreement intended to secure other indebtedness. See Underwood v.

Jarvis, 358 So. 2d 731, 734 (Ala. 1978) (holding that a consideration clause and a

defeasance clause should be construed together to determine the parties’ intent to

secure other indebtedness); Bain, 188 So. at 66 (same).

A. Intent to secure other indebtedness

      Here, the parties expressed a clear and unambiguous intent to secure other

indebtedness through the plain language of the July agreement. For example, the

language of the defeasance clause in the July agreement plainly covered “any other

sub-account” without the use of limiting language. In addition, the July agreement

plainly incorporated debts under “all existing balances for any obligation” owed to



                                           9
Army Aviation. In contrast, the July agreement provided in other places that it was

referring to “any sub-account under this Agreement.” (Emphasis added.) On its

face, the phrase “any other sub-account” in the defeasance clause embraced any

other sub-account between the parties.

      Moreover, the July agreement incorporated by reference the existing debt

owed under other agreements, which included the March agreement. The July

agreement provided that “all existing balances for any obligation that you owe to

us may be incorporated within this Agreement” and that “[a]ll terms of all other

agreements are incorporated by reference herein.” Similarly, the July agreement’s

reference to the parties’ default on “any other sub-account” in the defeasance

clause also implicitly incorporated the balance owed under the March agreement.

For the foregoing reasons, we conclude that the district court erred in finding that

the parties did not intend for the July agreement to secure the debt owed under the

March agreement.

B. “Between the same parties”

      As mentioned, intent alone does not make the agreement enforceable.

Alabama law also requires that the March agreement and the July agreement be

“between the same parties.” We conclude that these two agreements were

“between the same parties” based on the Alabama law in First Nat’l Bank v. Bain,

188 So. 64 (Ala. 1939).



                                          10
      Specifically, in Bain, the Alabama Supreme Court determined that multiple

agreements can be “between the same parties” when only one of the parties signs

all of the agreements. Id. at 67. W.N. Bain and his wife Bessie A. Bain mortgaged

their house to First National Bank “to secure the payment of the same, and any

other indebtedness owing by the said W.N. Bain to the grantee before the full

payment of this mortgage.” Id. at 65. At the time the mortgage was executed,

W.N. Bain already owed First National Bank under several agreements, including

notes signed only by W.N. Bain, notes signed by Ewing Grizzell and indorsed by

W.N. Bain, and notes signed by Bessie A. Bain and indorsed by W.N. Bain. The

court found that because W.N. Bain was a party to each note, either as a maker or

indorser, the “between the same parties” requirement had been met and the loan

documents clearly and unambiguously expressed the nature and extent of the

security taken. Id. at 67.

      Much like W.N. Bain, Gladys Yelverton signed both agreements here as a

debtor. Moreover, in the July agreement, Gladys agreed to be jointly and severally

liable for all loans. The fact that two others also signed the July agreement does

not change the fact that Gladys was a party to both agreements. To require

complete identity of the parties to enforce a future advance clause to which the

parties agreed would apply severally to each party would wrongfully rewrite the

agreement that Gladys Yelverton willingly signed along with her joint borrowers.



                                          11
       We recognize that the bankruptcy court relied on Ex parte Chandler, 477 So.

2d 360 (Ala. 1985), but that case is entirely different and of limited value here.

Chandler involved an unsecured creditor who purchased a loan and accompanying

security interest from another creditor in the hope of securing its unsecured loan.1

Because this case has nothing to do with a creditor buying a security interest to

strengthen its claim on another loan and Bain is more on point, we rely on Bain.

       Accordingly, we VACATE AND REMAND with instructions for the

district court to vacate the judgment of and remand to the bankruptcy court to enter

judgment in favor of Army Aviation on claim number six.

       VACATED AND REMANDED.




       1
         In Chandler, the Alabama Supreme Court determined that a third party cannot buy a
security agreement for the purpose of securing an otherwise unsecured interest. 477 So. 2d at
363. In 1981, First Southern Development loaned Chandler’s partnership $2.1 million,
represented by a mortgage note and secured only by Chandler’s personal guarantee. Id. at 361.
In 1984, First Southern Federal Savings & Loan Association made a $50,000 loan to Chandler
individually that was secured by an interest in Chandler’s partnership’s condominiums. Id. The
$50,000 secured note contained a future advance clause providing that “the collateral and other
security described herein is given to secure payment of this Note . . . and any and all other
indebtedness or liabilities of Debtor . . . now existing or hereafter arising.” Id. When both loans
went unpaid, First Southern Development purchased the $50,000 secured note from First
Southern Federal and was assigned all rights in the note. Id. at 362. Relying on the future
advance clause, First Southern Development hoped its purchase of the note would secure its
previously unsecured interest. Id. The Alabama Supreme Court recognized that “future advance
clauses have not been interpreted to allow a third party to obtain security for an otherwise
unsecured loan in this manner.” Id. Noting that “in this contractual setting . . . the
contemplation and intent of the debtor must be considered,” the court found that a third party
cannot secure an otherwise unsecured interest by buying another security agreement. Id. at 363.

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