                       United States Court of Appeals,

                                Fifth Circuit.

                                No. 95-60786.

              In the Matter of Larson C. LOCKLIN, Debtor.

   Jacob C. PONGETTI, Trustee for the Estate of Larson Locklin,
Appellant,

                                           v.

           GENERAL MOTORS ACCEPTANCE CORPORATION, Appellee.

                                Dec. 16, 1996.

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

Before POLITZ, Chief Judge, and EMILIO M. GARZA and STEWART,
Circuit Judges.

     EMILIO M. GARZA, Circuit Judge:

     Plaintiff Jacob C. Pongetti, the trustee of the estate of

Larson C. Locklin, appeals the district court's order affirming the

bankruptcy court's dismissal of his complaint requesting the court

to avoid defendant General Motors Acceptance Corporation's purchase

money security interest in a vehicle purchased by Locklin and to

declare the vehicle the property of Locklin's estate.                 We reverse.

                                           I

     On May 4, 1990, Larson C. Locklin, apparently an Alabama

resident, bought a new 1990 GMC Safari Van from Mitchell Buick,

Pontiac,      GMC    Truck,   Inc.       ("Mitchell    Buick"),   a   dealer    in

Mississippi.        He agreed to pay $18,300 for the van, plus a finance

charge   of    $4,945.44,     for    a    total   of   $23,245.44,    payable   in


                                           1
forty-nine equal monthly installments.             Locklin and Mitchell Buick

executed a retail installment contract, granting the dealer a

purchase money security interest in the van.               Mitchell Buick then

assigned the contract and security interest to General Motors

Acceptance Corporation ("GMAC").

      The same day, Locklin took possession of the van from Mitchell

Buick, and also received a number of documents, including the

manufacturer's certificate of origin, which is necessary to obtain

a certificate of title in Alabama.           On May 9, Locklin applied for

an   Alabama     certificate    of   title   with    the   Tuscaloosa   license

commissioner ("the commissioner") in Tuscaloosa, Alabama.                On May

18, the commissioner prepared a titled remittance advance and

mailed it, along with various required documents, to the Alabama

Department of Revenue ("the department") in Montgomery, Alabama.

The department received these documents on May 21, seventeen days

after Locklin bought and received the van.                 More than two weeks

later, the department issued a certificate of title showing Locklin

as owner and GMAC as lienholder.

      On   May    23,   two   days   after   the    department   received   the

documents, Locklin, asserting that he was a Mississippi resident,

filed a Chapter 7 petition for bankruptcy in the United States

Bankruptcy Court for the Northern District of Mississippi.                Jacob

C. Pongetti, the trustee for Locklin's estate, filed a complaint

against GMAC in bankruptcy court requesting the court to avoid

GMAC's security interest in the van, and declare the van the

                                        2
property of Locklin's estate.           The trustee asserted that the court

must avoid the lien because it was not "perfected on or before 10

days after the debtor receives possession of such property...." 11

U.S.C.    §   547(c)(3)(B).       The    bankruptcy     court   rejected    this

argument, ruling that GMAC perfected its security interest under §

32-8-61 of the Alabama Code when Locklin delivered the required

documents to the local license commissioner five days after he

received possession of the van.           The district court affirmed.

     On appeal, the trustee contends that the district court erred

by refusing to apply the plain meaning of the phrase "delivery to

the department" in § 32-8-61.             In reply, GMAC asserts that the

district court was correct, but also suggests two alternative

grounds for upholding the court's judgment.              First, GMAC contends

that the twenty-day grace period set forth in § 32-8-61 preempts

the ten-day period provided by § 547(c)(3)(B), and that the trustee

cannot avoid the security interest because the required documents

were delivered to the department itself in seventeen days. Second,

GMAC maintains that the trustee cannot avoid the security interest

because it can shelter the property under the contemporaneous

exchange exception in § 547(c)(1).

                                         II

         We   review   findings   of     fact   for   clear   error   and   legal

conclusions de novo. McFarland v. Leyh (In re Texas Gen. Petroleum

Corp.), 52 F.3d 1330, 1334 (5th Cir.1995). When the district court



                                         3
has affirmed the bankruptcy court's findings of fact, our review

for clear error is strict.       Young v. National Union Fire Ins. Co.

(In re Young), 995 F.2d 547, 548 (5th Cir.1993).          Moreover, we

review determinations of state law de novo.          See Salve Regina

College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113

L.Ed.2d 190 (1991) (holding that a court of appeals should review

a district court's determination of state law de novo);      Lindsay v.

Beneficial Reins. Co. (In re Lindsay), 59 F.3d 942, 949 (9th

Cir.1995) (holding the same with regard to determinations of state

law by both district court and bankruptcy court), cert. denied, ---

U.S. ----, 116 S.Ct. 778, 133 L.Ed.2d 730 (1996).

                                    III

           The trustee argues that the district court misconstrued the

phrase "delivery to the department" in § 32-8-61 as meaning either

delivery to the department itself or delivery to a designated agent

of the department, rather than just delivery to the department

itself.

           A trustee can avoid a purchase money security interest (also

called an enabling loan) if it can show that this security interest

does not meet one of the requirements of § 547(c)(3).      The parties

do not dispute that the security interest here meets the four

requirements of § 547(c)(3)(A).1 Rather, they disagree whether the

       1
       This provision states that a purchase money security interest
must


                                     4
security interest satisfies the demand in § 547(c)(3)(B) that it

"[be] perfected on or before 10 days after the debtor receives

possession of such property."

        To determine if the security interest is perfected, we turn

to state law.2    Palmer v. Radio Corp. of Am., 453 F.2d 1133, 1138

(5th Cir.1971).    Section 32-8-61 of the Alabama Code provides:

     (a) Unless excepted by this section, a security interest in a
     vehicle for which a certificate of title is required by the
     terms of this chapter is not valid against creditors of the
     owner or subsequent transferees or lienholders of the vehicle
     unless perfected as provided in this article.

     (b) A security interest is perfected by the delivery to the
     department of the existing certificate of title, if any, an
     application for a certificate of title containing the name and
     address of the lienholder and the date of his security
     agreement and the required fee. It is perfected as of the
     time of its creation if the delivery is completed within 20
     days thereafter, otherwise, as of the time of the delivery.

The district court first determined that the ten-day grace period

mandated by 11 U.S.C. § 547(c)(3)(B) preempts the twenty-day grace



            secure[ ] new value that was—

                  (i) given at or after the signing of a security
                  agreement that contains a description of such
                  property as collateral;

                  (ii) given by or on behalf of the secured party
                  under such agreement;

                  (iii) given to enable the debtor to acquire such
                  property; and

                  (iv) in fact used by the debtor to acquire such
                  property....
    2
     Both of the parties assume Alabama, rather than Mississippi,
law applies here.

                                  5
period set forth in § 32-8-61.       However, it then decided that the

security interest was perfected five days after Locklin took

possession of the van when he delivered the required documents to

the commissioner, and that thus the trustee could not avoid it.

The court reasoned that the commissioner had "apparent authority to

accept the documents for the ultimate purpose of perfecting a

security interest" because § 32-8-34 made county commissioners of

licenses "designated agents" of the department and because the

commissioner "held himself out as an official involved in both

licensing and perfection."        The court also noted that it did not

think that the Alabama legislature intended to "punish a party

acting in good faith for the transgressions of a negligent public

officer."

      As an initial matter, we determine that the district court's

finding that the commissioner "held himself out as an official

involved in ... perfection" is clearly erroneous.           The bankruptcy

court never made such a finding, and there is nothing in the record

that supports it.

     Next, we determine whether the district court erred in its

legal analysis.     While several cases applying Alabama law touch on

§ 32-8-66, none applies it in the specific context presented by

this case.    The Alabama Supreme Court, though, has implied that it

believes that courts should be especially careful not to "tinker"

with the statute that contains this provision, the Alabama Uniform

Certificate    of   Title   and   Antitheft   Act   ("the   act"   or   "the

                                     6
statute"), ALA.CODE § 32-8-1 et seq.   In Hill v. McGee, 562 So.2d

238 (Ala.1990), the plaintiff argued that his security interest in

certain trucks was perfected by the filing of a UCC-1 financing

statement with the Alabama secretary of state. The Alabama Supreme

Court rejected this contention, and held that the statute provides

the "exclusive method of perfecting a security interest in a motor

vehicle covered by the Act...."   Id. at 240.   The court approvingly

quoted the state circuit court as stating

      [a]n attempt to do "justice at the palace gate" by carving out
      one or more exceptions to the exclusive procedures set forth
      in the certificate of title act will have some appeal in a
      given case; however, the proliferation of such exceptions by
      the courts of this state could lead to chaos in the
      marketplace which existed prior to 1973. Such tinkering would
      be harmful and confusing to consumers, lenders and dealers
      alike.

Id.   Thus, we must turn to the interpretation of words of § 32-8-66

themselves.

       "The starting point in every case involving a construction of

a statute is the language itself."     Greyhound Corp. v. Mt. Hood

Stages, Inc., 437 U.S. 322, 330, 98 S.Ct. 2370, 2375, 57 L.Ed.2d

239 (1978). However, statutory language must always be read in its

proper context.    King v. St. Vincent's Hosp., 502 U.S. 215, 221,

112 S.Ct. 570, 574, 116 L.Ed.2d 578 (1991).       In determining the

plain meaning of a statute, the court must "look not only to the

particular statutory language, but to the design of the statute as

a whole and to its object and policy."    Crandon v. United States,

494 U.S. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990).

                                  7
     Section 32-8-61(b) refers to "delivery to the department."

Section 32-8-2—entitled "[d]efinitions"—defines "department" as

"[t]he department of revenue of this state."

     In terms of design, the act has four articles, two of which

pertain here.       Article    3    deals    with    security      interests,    and

contains the language at issue here in § 32-8-61.                        Article 2

pertains to certificates of title, and includes the language to

which the district court referred in interpreting § 32-8-61.                      In

Article 2, for instance, § 32-8-34(a) provides that "[e]ach judge

of probate, commissioner of licenses, director of revenue or other

county official in this state authorized and required by law to

issue motor vehicle license tags shall by virtue of his office be

a designated agent of the department."                Section 32-8-34(b) also

adds certain dealers as designated agents. Section 32-8-35(a) then

requires a vehicle's owner to apply for the first certificate of

title   to   a   "designated       agent,    on     the     form   the   department

prescribes...."     If the application is for a vehicle bought from a

dealer, it must include the "name and address of any lienholder

holding a security interest created or reserved at the time of the

sale and the date of his security agreement" and "the designated

agent shall      promptly   mail    or   deliver      the    application    to   the

department."      ALA.CODE § 32-8-35(b).          Section 32-8-35(g) provides

that "[e]very designated agent within this state shall, no later

than the next business day after an application is received by him,

forward the same to the department by mail, postage prepaid, with

                                         8
such other evidence of title as may have been delivered to him by

the applicant, along with the required fee...."

         Our examination of the statutory plan makes clear that the

district      court   erred    in     defining       "department"    as   including

"designated      agents."        First,        the    statutory     definition   of

"department"     only   refers      to    the    department    itself,     not   the

department's agents.          We note that the model act upon which the

statute is based includes an optional definition for department

which includes local officials authorized by the department to

receive documents       on    their      behalf.3      The   Alabama   legislature

rejected this optional definition.               In addition, in the general

title governing motor vehicles and traffic, "department" is defined

as "[t]he department of public safety of this state acting directly

or through its duly authorized officers and agents." ALA.CODE § 32-

1-1.1.     If the legislature intended "department" in chapter 8 of

title 32 to include designated agents, then one would expect that

it would have said so, just as it did in chapter 1 of that title.

          3
        See Unif. Motor Veh. Cert. of Title & Anti-Theft Act
("Uniform Act") Refs. & Annos. (noting that Alabama adopted a
version of the act in 1973); Unif. Motor Veh. Cert. of Title &
Anti-Theft Act § 1 ("[Definitions] ... "Department' means the
[Department of Motor Vehicles] of this state. [The term includes
a [County Clerk] when authorized by the Department to receive a
document [or article] on its behalf.].") (the bracketed terms are
the optional ones).

          Moreover,   §  32-8-61(b)   is   a  virtually   verbatim
     restatement of § 20(b) of the Uniform Act. Both provisions
     contain this sentence: "A security interest is perfected by
     the delivery to the department of the existing certificate of
     title...."

                                           9
Cf. West Virginia Univ. Hosps. v. Casey, 499 U.S. 83, 91, 111 S.Ct.

1138, 1143, 113 L.Ed.2d 68 (1991) (stating that if petitioner's

argument   that   reference   to   "attorney's      fee"   in   statute   also

included "expert fees," then "dozens of statutes referring to the

two separately become an inexplicable exercise in redundancy").

     Second, there is no reference to designated agents in this

provision nor anywhere else in Article 3.             Had the legislature

intended designated agents to pay a role in the perfection of

security   interests—as   they     do    in   forwarding   applications   for

certificates of title—we would assume that the legislature at least

would have mentioned such agents in Article 3.              See Russello v.

United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17

(1983) ("Where Congress includes particular language in one section

of a statute but omits it in another section of the same Act, it is

generally presumed that Congress acts intentionally and purposely

in the disparate inclusion or exclusion.") (quoting United States

v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972)).

     Third, we do not think that the fact that Article 2 alludes to

designated agents means that they can be imported into Article 3.

The designated agents discussed in Article 2 merely issue motor

vehicle license tags and pass on first certificates of title to the

department after collecting the required fee and verifying certain

information about the vehicle and the applicant.            Section 32-8-34

refers to designated agents as those "authorized and required by


                                        10
law to issue motor vehicle license tags...."               It says nothing about

perfection.      Moreover,      §    32-8-35      lists   the   few    ministerial

responsibilities      of    designated         agents     pertaining    to    first

certificates of title;      none of these duties refers to perfection.4

        Other courts have held similarly under comparable statutes.

In Waldschmidt v. Miracle Motors (In re Haynes), 28 B.R. 136

(Bankr.M.D.Tenn.1983), for instance, Miracle Motors alleged that,

under a Tennessee statute analogous to the Alabama one here, the

county clerk was an "agent" for the Motor Vehicle Division, and

thus Miracle Motors' security interest was perfected when the

county clerk     received     the    title     application.      Pointing      to   a

provision which listed the county clerks' duties as including

"receiving and forwarding to the division each application for

certificates     of   title,"       the   court    rejected     Miracle      Motors'

argument.     It noted that

        [a]lthough the clerks are empowered to receive applications,
        they are merely conduits to the Motor Vehicle Division.
        Perfection dates only from the date of receipt and filing by
        the Motor Vehicle Division. The county clerk's responsibility
        is statutorily limited to that of registrar.              The
        responsibility of filing and indexing liens is the exclusive
        province of the Motor Vehicle Division.


    4
     Designated agents receive applications for first certificates
of title from vehicle owners. ALA.CODE § 32-8-35(a), (g). They
certify that they have physically inspected the applicant's
vehicle, that the vehicle identification number and descriptive
data shown on the application are correct, and that they have
identified the person signing the application and witnessed the
signature. Id. § 32-8-35(d). They collect the required fee from
the owner, and send the completed application and fee to the
department. Id. § 32-8-35(g).

                                          11
Id. at 138 n. 8.       In Exchange Bank of Polk County v. Christian (In

re   Christian),   8    B.R.    816,   818    (Bankr.M.D.Fla.1981),    a   bank

delivered to a tag agency an application for a title certificate

together with the required lien documents.           It then argued that the

tag agency was the agent of the Department of Motor Vehicles, and

thus filing with the tag agency was tantamount to filing with the

department itself.       The court rejected this argument, noting that

the tag agency had "limited responsibilities such as processing

applications for title certificates for motor vehicles, but these

responsibilities did not include the power to record liens or issue

title certificates."       Id.

      Fourth, if we read "department" in Article 3 as including

designated agents, then presumably we would have to read the

various provisions in Article 2 the same way (because both share

the same statutory definition of "department"). This would lead to

absurd results in Article 2;           for instance, under § 32-8-35(g), a

designated agent would be required to forward a certificate of

title application to himself.           We must, therefore, reject such a

reading.   See American Tobacco Co. v. Patterson, 456 U.S. 63, 71,

102 S.Ct. 1534, 1538, 71 L.Ed.2d 748 (1982) ("Statutes should be

interpreted   to   avoid       untenable     distinctions   and   unreasonable

results whenever possible.").

       At the same time, the objects and policies behind the statute

show that, with regard to perfecting security interests, the


                                        12
legislature did not intend "department" to mean "the department

itself or its designated agents."               The overall plan of the act

shows exclusive attention to maintaining records of the identity

and ownership of vehicles.               Johnny Spradlin Auto Parts, Inc. v.

Cochran, 568 So.2d 738, 743 (Ala.1990).               Also, the statute enables

interested parties to find out information about vehicles,5 id.,

and ensures that the department notes the lien on the certificate

of title.       Lightfoot v. Harris Trust & Savs. Bank, 357 So.2d 654,

657 (Ala.1978).        Filing the documents required for perfection at

the department itself rather than with a designated agent better

realizes these objects and policies.             Such filing encourages more

rapid centralized recordkeeping.

     Lastly, we note that at least two courts have interpreted a

Georgia statute very similar to the Alabama one at issue here (the

Georgia law required "delivery to the commissioner" rather than

"the department") and reached the same conclusion we do.                   In Harris

v. General Motors Acceptance Corp. (In re Messer), 1991 WL 629467

(Bankr.M.D.Ga.1991),         the    required     perfection       documents    were

delivered to the county tax commissioner within the twenty-day

grace       period   but   were    not    delivered    to   the    state    revenue


        5
      One court has noted that "[i]t is commercially absurd for a
purchaser or creditor to direct inquiries to all county clerks in
the state to elicit information concerning a possible outstanding
lien.   If a prospective purchaser or potential creditor is to
determine whether or not a particular motor vehicle is encumbered,
the only source of reliable information is the Motor Vehicle
Division in Nashville." Haynes, 28 B.R. at 139.

                                           13
commissioner within that period.                 GMAC argued that, because the

county     tax    commissioner       was   an    agent   of    the   state   revenue

commissioner, delivery to the former was the equivalent of delivery

to the latter.        The court rejected this contention.               It observed

that the Georgia legislature had only drafted the statute to

require        delivery   to   the    commissioner       and    that,   while   the

legislature could have mandated delivery to the commissioner or his

agents, it had chosen not to do so.

     Likewise, in Perkins v. Gilbert (In re Perkins), 169 B.R. 455

(Bankr.M.D.Ga.1994), the secured party delivered the documents

necessary to perfect his security interest to the county tag agent

rather than the commissioner.                   The delivery to the tag agent

occurred within the twenty-day grace period and actual delivery to

the commissioner outside that period.               Accordingly, the court held

that the security interest was not perfected during the grace

period.6


           6
         The Perkins court noted that, in 1994, the Georgia
legislature amended the statute in question to state that the
legislature originally intended to provide that delivery of the
required documents to either the commissioner or a county tag agent
was sufficient to perfect the security interest. In other words,
the legislature did not change the language of the statute, but
rather "amended" its legislative history.

          While the 1994 amendment did not apply to the instant
     case, the court suggested that some future court interpreting
     the statute would need to determine whether the legislative
     history of a statute must be contemporaneous with its
     enactment, and opined that the Supreme Court has given
     "somewhat contradictory guidance" on this question. Perkins,
     169 B.R. at 461 n. 7.

                                           14
       Therefore, we find that the district court erred in finding

that "delivery to the department" under § 32-8-61 included delivery

to the commissioner.

                                      IV

       We now consider GMAC's first alternative ground for upholding

the district court.      See J.E. Riley Inv. Co. v. Commissioner of

Internal Revenue, 311 U.S. 55, 59, 61 S.Ct. 95, 97, 85 L.Ed. 36

(1940) ("Where the decision below is correct it must be affirmed by

the appellate court though the lower tribunal gave a wrong reason

for its action.");     Bickford v. International Speedway Corp., 654

F.2d    1028,   1031   (5th    Cir.   Unit   B   1981)   ("[R]eversal   is

inappropriate if the ruling of the district court can be affirmed

on any grounds, regardless of whether those grounds were used by

the district court.").        GMAC maintains that the twenty-day grace

period set forth in § 32-8-61 preempts the ten-day period provided

by § 547(c)(3)(B), and that the trustee cannot avoid the security

interest because the required documents were delivered to the

department itself after seventeen days.

       We squarely addressed this issue in Howard Thornton Ford, Inc.

v. Fitzpatrick (In re Hamilton), 892 F.2d 1230 (5th Cir.1990), and

held that the ten-day grace period of § 547(c)(3)(B) prevailed over


            GMAC suggests that this 1994 amendment bolsters its
       interpretation of the Alabama statute at issue here. However,
       in the absence of any similar action by the Alabama
       legislature amending § 32-8-61 (or its legislative history),
       we find this contention without merit.

                                      15
a twenty-day grace period under state law.7                 We believe that

Congress intended the ten-day grace period for perfection in §

547(c)(3)(B) to provide uniformity, and that it did not mean for

state grace periods to be relevant under the statute.8             Long v. Joe

Romania      Chevrolet,   Inc.   (In   re   Loken),   156   B.R.    660,   663

(Bankr.D.Ore.1993); Jahn v. First Tenn. Bank of Chattanooga (In re

Burnette), 14 B.R. 795, 797-02 (Bankr.E.D.Tenn.1981);                see also

U.S. CONST. art. I, § 8, cl. 4 (granting Congress the power to

establish "uniform Laws on the subject of Bankruptcies throughout

the United States").       Thus, we reaffirm our holding in Hamilton,

and determine that the ten-day federal grace period trumps the

twenty-day Alabama grace period.

                                       V



         7
       The federal circuit courts are split on this issue. The
Ninth Circuit has recently agreed with us. Fitzgerald v. First
Security Bank of Idaho, N.A. (In re Walker), 77 F.3d 322, 322 (9th
Cir.1996). The Tenth and Eleventh Circuits have disagreed. Webb
v. GMAC (In re Hesser), 984 F.2d 345, 348 (10th Cir.1993); GMAC v.
Busenlehner (In re Busenlehner), 918 F.2d 928, 929 (11th Cir.1990),
cert. denied, 500 U.S. 949, 111 S.Ct. 2251, 114 L.Ed.2d 492 (1991).

     8
      We also note that, in 1994, Congress amended § 547(c)(3)(B)
to provide a grace period of 20 days rather than 10 (this amendment
is effective in cases commenced on or after October 22, 1994).
Congress intended this amendment to conform bankruptcy practice to
the practice in most states of allowing purchase-money security
lenders 20 days to perfect their security interest. 4 LAWRENCE P.
KING, COLLIER ON BANKRUPTCY ¶ 547.11 (citing Section by Section
Description of H.R. 5116, 140 Cong.Rec. H10767 (daily ed. Oct. 4,
1994)). It is difficult to see why Congress would have passed this
amendment if it did not believe that the federal grace period in §
547(c)(3)(B) prevails over conflicting state-law grace periods.

                                       16
     Next, GMAC claims that the trustee cannot avoid the security

interest    because    the    contemporaneous   exchange     exception    in    §

547(c)(1) applies.      Section 547(c)(1) provides:

     (c) The trustee may not avoid under this section a transfer—

            (1) to the extent that such transfer was—

                 (A) intended by the debtor and the creditor to or
                 for whose benefit such transfer was made to be a
                 contemporaneous exchange for new value given to the
                 debtor; and

                 (B) in fact          a    substantially     contemporaneous
                 exchange....

GMAC claims that the Locklin and GMAC intended their exchange to be

contemporaneous.         It    also   asserts   that   the     exchange    was

substantially contemporaneous even if it occurred outside of the

ten-day grace period because this delay can be attributed to the

commissioner, not any party.

      While § 547(c)(1) deals generally with security interests, §

547(c)(3)    applies     specifically      to   purchase     money   security

interests.    The question arises, then, whether a purchase money

security lender, such as GMAC, which meets all the requirements of

the § 547(c)(3) exception save the ten-day perfection mandate, can

alternatively shelter under the § 547(c)(1) exception.

     This is an issue of first impression in this circuit.                     We

note, however, that all the circuit courts that have considered

this matter have held that a purchase money security lender may

only shelter under § 547(c)(3), not (c)(1).         Wachovia Bank & Trust



                                      17
Co. v. Bringle (In re Holder), 892 F.2d 29, 31 (4th Cir.1989);

Erie v. Baker (In re Tressler), 771 F.2d 791, 794 (3d Cir.1985);

Gower v. Ford Motor Credit Co. (In re Davis), 734 F.2d 604, 607

(11th Cir.1984);   Valley Bank v. Vance (In re Vance), 721 F.2d 259,

262 (9th Cir.1983).9    We join these circuits, and hold that a

purchase money security lender may not shelter under § 547(c)(1).

Such a determination best accords with the legislative intent and

the policies underlying the enactment of § 547(c);       it is also

required by the principles of statutory interpretation.

     9
       We must distinguish carefully here between cases involving
purchase money security interests and nonpurchase money security
interests. In the former, circuit courts have uniformly ruled that
lenders who failed to perfect within 10 days may not take advantage
of the § 547(c)(1) exception. In the latter, circuit courts have
split.   One court has suggested that, where a lender does not
perfect within 10 days, the lender cannot shelter under §
547(c)(1). See Ray v. Security Mut. Fin. Corp. (In re Arnett), 731
F.2d 358, 364 (6th Cir.1984) ("The applicability of section
547(c)(1) to delayed perfection of security interests is ...
limited to 10 days.").      Another has adopted a more flexible
standard. See Pine Top Ins. Co. v. Bank of America Nat'l Trust and
Savs. Ass'n, 969 F.2d 321, 328 (7th Cir.1992) (noting that "the
modifier "substantial' makes clear that contemporaneity is a
flexible concept which requires a case-by-case inquiry into all
relevant circumstances (e.g., length of delay, reason for delay,
nature of the transaction, intentions of the parties, possible risk
of fraud) surrounding the allegedly preferential transfer"); see
also Dye v. Rivera (In re Marino), 193 B.R. 907, 915 (9th Cir. BAP
1996) (same).

          Unfortunately, some courts have blurred the distinction
     between the nature of the security interests in Holder,
     Tressler, Davis, and Vance and those in Arnett and Pine Top.
     See, e.g., Kepler v. Security Pac. Housing Servs. (In re
     McLaughlin), 183 B.R. 171 (Bankr.W.D.Wis.1995) (contrasting
     Pine Top with Tressler, Davis, Vance, and Arnett, and, on this
     basis, suggesting a split between the Seventh Circuit and the
     Third, Sixth, Ninth, and Eleventh Circuits).

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     First, while § 547(c)(3) makes clear that it applies to credit

transactions   involving   purchase   money   security   interests,   §

547(c)(1) does not state whether it pertains to such interests.

The legislative history of § 547(c)(1), though, suggests that it

does not apply to enabling loans.        This history reveals that

Congress enacted the provision to ensure that purchases by check

would not be avoided as preferential.10 S.Rep. No. 989, 95th Cong.,

2d Sess. 88, reprinted in 1978 U.S.C.C.A.N. 5787, 5874; H.Rep. No.

595, 95th Cong., 2d Sess. 373, reprinted in 1978 U.S.C.C.A.N. 5963,

6329.   Second, the main policy behind the ten-day grace period was

to create a uniform perfection period for enabling loans.       Davis,

734 F.2d at 607.   Permitting a purchase money security lender to

prevent avoidance after failing to perfect its interest within this

period would defeat this policy.      Third, reading § 547(c)(1) as

sheltering enabling loans would render § 547(c)(3)(B) virtually

meaningless.    Such an interpretation would require a court to

examine under § 547(c)(1) every enabling loan that did not qualify

for protection under § 547(c)(3).      As a practical matter, this

would turn the ten-day grace period into "little more than an



         10
          Congress was concerned that a transfer involving a
straightforward payment by check might be avoided under § 547(b)(2)
as being "for or on account of an antecedent debt." Technically
speaking, a payment by check is a credit transaction; the seller
does not receive payment until the check is cleared through the
debtor's bank. Under § 547(c)(1), though, a transfer involving a
check—assuming the check is promptly deposited and cleared—will be
substantially contemporaneous, and thus may not be avoided.

                                 19
evidentiary presumption." Id. Such a strained construction of the

statute is untenable.    See Jarecki v. G.D. Searle & Co., 367 U.S.

303, 307-08, 81 S.Ct. 1579, 1582, 6 L.Ed.2d 859 (1961) (noting that

we may not adopt a forced reading of a statute that renders one

part a mere redundancy).     Fourth, given the fact that Congress

provided a specific exception in § 547 governing enabling loans, we

do not think—at least in the absence of any evidence to the

contrary—that it intended another exception in the section to also

apply to such loans.    Expressio unius est exclusio alterius.

                                 VI

     For the foregoing reasons, we REVERSE the judgment of the

district court.




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