480 F.Supp. 1364 (1979)
CARL WEISSMAN & SONS, INC., a corporation, Plaintiff,
v.
Morton PEPPER and Milford Pepper, Defendants.
No. CV-77-43-GF.
United States District Court, D. Montana, Great Falls Division.
December 13, 1979.
*1365 Jack L. Lewis, Jardine, Stephenson, Blewett & Weaver, Great Falls, Mont., for plaintiff.
Gorham Swanberg, Swanberg, Koby, Swanberg & Matteucci, Great Falls, Mont., for defendants.

FINDINGS OF FACT

and

CONCLUSIONS OF LAW
HATFIELD, District Judge.
This matter came on for trial before the court, sitting without a jury on September 5, 1979, and was concluded on September 6, 1979. Gorham Swanberg of the firm Swanberg, Koby, Swanberg & Matteucci appeared as counsel for the defendants, and Jack L. Lewis of the firm Jardine, Stephenson, Blewett & Weaver appeared as counsel for plaintiff. Witnesses testified, exhibits were introduced and briefs were submitted by both sides on various subjects. The court being fully advised in the premises, makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

I.
The plaintiff is a Montana corporation with its principal place of business in Great Falls, Montana; the defendants are citizens and residents of the State of Colorado doing business as Century Enterprises; and the amount of controversy exceeds the sum of $10,000.00, exclusive of interest and costs.

II.
Prior to July 1, 1976, plaintiff had entered into a contract with the State of Montana by which plaintiff was to crush and flatten a number of automobile bodies at various sites in Eastern Montana and to remove them by mid-August, 1976.

III.
On or about July 1, 1976, plaintiff and the defendant entered into a written contract *1366 whereby the defendants agreed to buy approximately 45 semi-truckloads of crushed car bodies from the plaintiff. By said contract, defendants were responsible for hauling the crushed car bodies from the sites and paying the cost thereof, with delivery to begin the week of July 5, 1976, and to continue as promptly and expeditiously as possible until completed. The price stated in the contract at which defendants were to pay plaintiff was $25.00 a net ton.

IV.
Both the plaintiff, Maurice Weissman for Carl Weissman & Sons, Inc., and the defendants, Milford Pepper and his brother, Morton Pepper, for Century Enterprises, have extensive experience in a managerial capacity in the recycling of scrap metal, including the recycling of crushed car bodies.

V.
At the time plaintiff and defendants entered into their contract, the defendants were aware that the plaintiff was obligated to the State of Montana to have the car bodies crushed, flattened and removed from the sites by mid-August, 1976. Plaintiff completed all crushing and flattening of the car bodies on or about the last week in July, 1976.

VI.
The contract signed by Morton L. Pepper on July 1, 1976, and transmitted to Carl Weissman & Sons, who accepted and signed it on July 6, 1976, with some amendments, provided for the purchase by Century Enterprises from Carl Weissman & Sons of approximately 45 loads of flattened crushed car bodies as follows: 8 truck loads Forsyth; 6 truck loads Ashland; 7 truck loads Broadus; 8 truck loads Baker, and 15 to 20 truck loads Miles City, all in Montana.

VII.
The original proposal submitted by Morton L. Pepper on July 1, 1976, stated a "minimum of 44,000 pounds per each load", which Weissman had stricken before returning the contract, inserting in place thereof "full visible capacity." Defendants were able to haul an average of 45,008 pounds per load. Also stricken out by plaintiff was language allowing defendants to terminate the agreement without notice if plaintiff did not ship the material on time. (It should be noted, however, that defendant was obligated to transport the car bodies.)

VIII.
While there is some dispute about weights, the defendants took possession of 450.085 tons (900,170 lbs.) of car bodies in 20 truck loads from July to September, 1976. Apparently the last truck load by Century was delivered to the shredder on September 23, 1976.

IX.
Defendants took possession of 20 loads of car bodies for which the defendants paid plaintiff the sum of $10,941.56; the defendants should have paid plaintiff the sum of $11,252.13, that constituting a shortage in payment of $310.56.

X.
On or about September 17, 1976, the defendants refused to take possession of the remaining car bodies at the agreed $25 per net ton price and offered instead $20 per net ton for the remainder of September with the contract price renegotiated on October 1, 1976, and every 30 days thereafter; plaintiff refused to so agree, and defendants did not take possession of any more car bodies.

XI.
On or about September 17, 1976, Century Enterprises advised Weissman that the shredder had reduced its price by $5.00 per ton. Defendant then sought to reduce the price he paid to plaintiff stating that under a trade usage in the crushed car body industry, the broker passed on any increases or decreases in the price quoted by the shredder *1367 to the supplier. Century offered to renegotiate the agreement.

XII.
The Court finds that the written agreement was for approximately 45 loads. This is reinforced by the memorandum by Maurice Weissman dated July 6, 1976, to Morton Pepper in which he returns the signed agreement as follows: "Also you have 45 truckloads listed and you may want to amend the agreement to read `all vehicles crushed at locations but estimated. We really think there will be about 1600 vehicles and the State lists them at 1¼ tons each. And lastlyvehicles may contain motors, etc.'"

XIII.
Plaintiff, Weissman, hauled the remaining 25 loads which defendants were obligated to haul.[1] Accordingly, defendants should have hauled an additional 1,125,200 pounds, or 562.60 tons.[2] Thus defendants owe plaintiff the sum equal to 562.60 times $25, or $14,065.

XIV.
After the breach of contract by defendants on or about September 17, 1976, Weissman on or about September 20, 1976, notified defendants of Weissman's intention to resell the remaining crushed car bodies. There were 908.23 tons of crushed car bodies remaining at the time defendants sought to have the contract price reduced. Weissman shipped and resold 908.23 tons and received $36,798.90 for the remaining car bodies. Plaintiff also incurred freight expense of $22,141.67, for a net of $14,657.23, or an average net per ton of $16.14.

XV.
Plaintiff received on resale to other shredders $9,080.36 for the remaining 25 truckloads of tonnage (562.6 × $16.14). The Court finds that $9,080.36 is the amount of plaintiff's set-off in mitigation of damages for defendants' breach of contract. Thus the amount plaintiff is entitled to recover on the contract is equal to $14,065 (the amount defendants would have paid plaintiff had they not breached), minus $9,080.36 (the amount received on resale), or $4,984.64.

XVI.
The Court finds that Weissman incurred $600 in expenses in his attempts to resell the remaining car bodies.

XVII.
The Court finds that Weissman suffered vandalism on equipment used to load the crushed cars. The vandalism amounted to the sum of $2200.

CONCLUSIONS OF LAW

I.
This Court has jurisdiction over the subject matter of this litigation and over the parties thereto. Plaintiff and defendants are citizens of different states and the matter in controversy exceeds the sum of $10,000. 28 U.S.C. § 1331.

II.
The contract in dispute here is governed by the provisions of the Uniform Commercial Code as codified in Title 30, Chapters 1 through 9 of the Montana Code Annotated 1978.

III.
Defendants contend that there exists a trade usage or custom in the crushed car body industry which allows a broker such as the Peppers to pass on increases or decreases in price quoted by the shredder to their suppliers, e. g., Weissman. Perhaps if the express agreement was silent as to price, usage of trade might have filled the gap. *1368 Otherwise, custom or usage must be reasonably consistent with the contract terms. Section 30-1-205(4) MCA states:
The express terms of an agreement . . or usage of trade shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable express terms control . . both course of dealing and usage of trade (30-1-205).
Additionally, section 30-1-205(2) MCA states usage of trade must have "such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question."
Here, the provision in the written contract setting the price at $25 per net ton is inconsistent with the trade usage or custom defendants insist govern the sale of crushed car bodies. It would seem entirely reasonable that if the custom or usage was as widespread or universal as defendants claim then the contract would have reflected such. Moreover, it is significant that both parties are well-seasoned scrap metal traders and that if the above stated practice was followed with such regularity of the trade so as to justify an expectation that it would be observed, then there would not have been a need to insert the specific price of $25 per ton in the contract in the first place. Finally, it follows from basic contract principles that specifications of quantity and price are intended to be observed by the contracting parties. To negate the express terms of this contract by rewriting the specifications would be unreasonable. See Southern Concrete Services, Inc. v. Mableton Contractors, Inc., 407 F.Supp. 581 (N.D.Ga.1975). Thus, the Court concludes that it would be unreasonable to construe the contract as written by the parties to include the price adjustment practice claimed by defendants and denied by plaintiff. Defendants, in good conscience, are bound by the terms as written in the contract.

IV.
The Court concludes that the contract is further governed by 30-2-207(3) MCA, which states:
. . . Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
Here, in spite of the fact that plaintiff lined out certain language in defendants' proposed contract and which may or may not have amounted to a counteroffer, both parties by their conduct, recognized the contract with its terms of price, quantity and delivery. These terms were recognized until the breach by defendants on or about September 17, 1976.

V.
The Court concludes that the contract's duration was for a limited period of time. Delivery was to begin the week of July 5, 1976, and be completed as promptly and expeditiously as possible. At most the contract was to terminate whenever defendants hauled approximately 45 truckloads of crushed car bodies. More in line with the contemplation of the parties was that the contract was to be completed by August 15, 1976, the date which defendants knew plaintiff's contract with the State of Montana was to be completed. Even the time period between July through September would have been reasonable within which to complete the contract had defendants decided to do so. Thus, when defendants informed plaintiff on September 17, 1976, that they refused to remove the remaining car bodies for the agreed price of $25 per ton the contract was breached. Plaintiff is entitled to damages as a result of the breach.

VI.
The Court concludes that damages for the breach of contract is governed by §§ 30-2-703 *1369 and 30-2-706 MCA. The remedial policy of the UCC is that the aggrieved party should be "put in as good a position as if the other party had fully performed." See 30-1-106(1) MCA. Section 30-2-703 MCA basically provides that if the buyer breaches the contract, the aggrieved seller may resell and recover damages as provided by § 30-2-706 MCA. The latter section states in part:
. . . [w]here the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages . . ..
The section also calls for the seller to give the buyer reasonable notification of his intent to resell. Here, plaintiff testified that he notified defendants on or about September 20, 1976, that he would resell the car bodies to other scrap shredders. Over the course of the next several months plaintiff resold the remaining car bodies to other shredders at the prevailing market price. The Court concludes that plaintiff was not required to resell to defendants and that the resale was accomplished in a commercially reasonable manner and in good faith. Thus, plaintiff is entitled to recover the difference between the resale price and the contract price. This sum was shown to be $4,984.64.

VII.
Plaintiff is entitled to recover any expenses reasonably incurred as a result of defendants' breach. See § 30-2-710 MCA. Thus, plaintiff is entitled to recover the $600 expense in arranging for the resale to other crushed car body purchasers.

VIII.
Plaintiff is entitled to recover $310.56 as and for the shortage of payment made by defendants for car bodies actually hauled.

IX.
The Court concludes that the vandalism damage incurred by plaintiff is not recoverable from the defendants. The vandalism was unforeseeable by either party and did not proximately result from the breach of the contract. The vandalism to plaintiff's equipment cannot be labeled either incidental or consequential damage. The damage did not stem from circumstances which were reasonably contemplated by the breaching party at the time the agreement was made.

X.
Plaintiff is entitled to judgment against the defendants in the total amount of $5,895.20 together with interest thereon at ten percent (10%) per annum from the date hereof until paid. Plaintiff is also entitled to recover costs.
LET judgment be entered accordingly in favor of the plaintiff and against defendants.
NOTES
[1]  Weissman actually hauled 43 more loads for a gross weight of 1,816,460 since there were more car bodies than the contract estimated.
[2]  The court used defendants' average poundage per load for purposes of computing damages.


7 B.R. 580 (1980)
In re Harry George WEBBER, Susan Marie Webber, Debtors.
Harry George WEBBER, Susan Marie Webber, Plaintiffs,
v.
CREDITHRIFT OF AMERICA, INC., NO. 6, Defendant.
Bankruptcy No. 380-00919, Adversary Proceeding No. 80-0080.
United States Bankruptcy Court, D. Oregon.
November 17, 1980.
*581 John H. Durkheimer, Portland, Or., for plaintiffs.
Stanley Fields, Salem, Or., for defendant.
Jonathan M. Hoffman, Asst. U.S. Atty., Portland, Or., for United States, plaintiff intervenor.

OPINION
FOLGER JOHNSON, Bankruptcy Judge.
This proceeding has been brought by the debtors to avoid the lien of the defendant, Credithrift of America, on household furnishings, household goods and appliances of the debtors pursuant to § 522(f)(2) of the Bankruptcy Code. The bankruptcy petition was filed under Chapter 7 after October 1, 1979, and the case in which this adversary proceeding arises is therefore governed by such Code.
It has been stipulated that the defendant's lien is a nonpossessory, nonpurchase-money security interest that arose after November 6, 1978, and before October 1, 1979, that debtors-plaintiffs claimed exempt the property covered by the security agreement and that said property was held for the personal, family or household use of the debtors and would be exempt except for the defendant's lien.
11 U.S.C. § 522(f)(2) purportedly gives the Bankruptcy Court the right to avoid such lien and permit the debtors to retain such goods as exempt property without paying Credithrift. The sole question for the Court to decide is whether the avoiding of such lien violates the Fifth Amendment to the United States Constitution by taking property without due process of law if the security interest was created after November 6, 1978, the enactment date of the Bankruptcy Reform Act, and before October 1, 1979. While some portions of the Bankruptcy Reform Act of 1978 took effect upon enactment, the substantive part of the law comprising Title I of such Act and now commonly referred to as the Bankruptcy Code was only to take effect and apply to cases filed in the Bankruptcy Court on and after October 1, 1979.
Both parties filed briefs on the legal question and have waived oral argument. The United States Attorney was duly advised of the constitutional question and has intervened, filing a brief in support of the constitutionality of the law.

Legislative Intent
To determine if Congress intended § 522(f)(2) to apply to security agreements created between the enactment date and effective date of the Bankruptcy Code, it is helpful to begin with the legislative history of the statute. When drafting § 522(f)(2), Congress was addressing a long-practiced evil of consumer financing  where a loan company would take a blanket security interest in all of a debtor's household goods in exchange for a small loan of money. The loan company would have no real intention of seizing the debtor's used furniture and other furnishings in the event of a default by the debtor, but if the debtor tried to discharge the debt in bankruptcy, the loan company would threaten a seizure of the debtor's goods in order to extract a reaffirmation promise. The debtor, unaware that the creditor was not seriously considering a levy on the goods and usually without the assistance of counsel, would give the reaffirmation promise and thereby place himself in the same unfortunate position he was in before the filing of bankruptcy.
The above-described evil was no less common and no less repugnant before October 1, 1979, than after that date, and there *582 is no indication in legislative history or in the Code itself that Congress felt security agreements entered into between the enactment date of November 6, 1978, and the effective date of October 1, 1979, should be immune from the effects of its remedial legislation. To the contrary, Congress clearly indicated that all debtors filing bankruptcy petitions after October 1, 1979, should receive equal rights and benefits. In its legislative history to § 402 of the Transition Title (Title IV) of the Bankruptcy Reform Act of 1978, Pub.L. 95-598, Congress explained that the new Bankruptcy Code which went into effect on that date would apply to all cases filed on or after that date and to all substantive and procedural matters pertaining to those cases. (H.Rep.No. 95-595, p. 459, U.S.Code Cong. & Admin. News 1978, p. 5787.) See In re Head, 4 B.R.[*] 521, 524, 6 BCD 489 (Bkrtcy.D.Tenn. 1980). No exceptions were mentioned for debtors who may have had security agreements pre-dating the effective date.
What Congress was hoping to achieve generally with the passage of the federal exemption statute was a vehicle to provide consumer debtors with a meaningful rehabilitation from their financial failings. The statute was intended to relieve debtors from their oppressive debts while at the same time retain enough necessities of life for a "fresh start" which would keep them off public welfare.
Consequently, subsection (d)(3) of § 522 permits a debtor to exempt the first $200.00 of his interest in any item of household furnishings or goods. Any excess value will usually be exempt through the use of subsection (d)(5) which gives the debtor another $400.00 general exemption and the right to apply the "spill over" from the unused portion of the homestead exemption under subsection (d)(1). What subsection (f) does is give the debtor the complementary right of enforcing those exemptions in the face of nonpossessory, nonpurchase-money security interests. By being able to avoid the liens from security interests, a debtor is assured that his exemption will not be nullified by such tactics as the enforcement, or threat of enforcement, of a blanket security interest in all his household goods. If a debtor would not be permitted to avoid the security interest simply because it was created by an agreement made before the effective date of the Code, his exemption right itself would become meaningless, and even though he were a debtor filing after October 1, 1979, he would wind up in the same predicament as was abhored by the Code's drafters. Such a consequence could not have been intended by Congress.

No Unreasonable Impairment of Contracts
Apart from Congress's intent in passing § 522(f)(2) is the question of whether Congress had the power to affect security agreements entered into before the effective date of the statute. One argument which has been advanced in cases cited by attorneys for the creditors is that a statute cannot constitutionally destroy the obligations of private contracts. However, this argument is invalid for two reasons as applied to the facts of the present case. First, it can be said that every exercise of Congress's bankruptcy power has the effect of impairing contracts to one degree or another. Hanover National Bank v. Moyses, 186 U.S. 181, 188, 22 S.Ct. 857, 860, 46 L.Ed. 1113 (1902). Secondly, the constitutional restriction against impairing contracts found in Article I, section 10, clause 1, is made applicable only to the States, not to Congress. For a court to find that a Congressional act is an unconstitutional impairment of contract it must do so through an application of the due process clause of the Fifth Amendment, not through an application of the contract-impairment clause. This means that the court must not only find that the statute impairs contracts, but that it also is so grossly arbitrary and unreasonable as to be incompatible with fundamental law.
*583 In the case of Continental Bank v. Rock Island Ry., 294 U.S. 648, 680, 55 S.Ct. 595, 608, 79 L.Ed. 1110 (1934), creditor-banks challenged a law permitting an injunction against the sale of collateral upon a debtor's default, even though the express terms of their contracts provided for such sale. In concluding that the legislation was a valid exercise of Congress's bankruptcy power, the Supreme Court held that the law was drafted with the direct aim and effect of relieving insolvent persons in whole or in part from the payment of their debts and that the effect on creditors was only collateral or incidental. The court stated at page 680, 55 S.Ct. at page 608:
"The Constitution, as it many times has been pointed out, does not in terms prohibit Congress from impairing the obligation of contracts as it does the states. . . . Speaking generally, it may be said that Congress, while without power to impair the obligation of contracts by laws acting directly and independently to that end, undeniably, has authority to pass legislation pertinent to any of the powers conferred by the Constitution, however it may operate collaterally or incidentally to impair or destroy the obligation of private contracts. . . . And under the express power to pass uniform laws on the subject of bankruptcies, the legislation is valid though drawn with the direct aim and effect of relieving insolvent persons in whole or in part from the payment of their debts. See Hanover National Bank v. Moyses, supra, [186 U.S.] at p. 188 [22 S.Ct. at 860]. So much necessarily results from the nature of the power, and this must have been within the contemplation of the framers of the Constitution when the power was granted."
By analogy, the legislation which is the cause of controversy in the present case was enacted by Congress for the primary purpose of making a debtor's exemptions meaningful and effective, not for the purpose of destroying creditors' rights from security agreements. The effect which the statute has on creditors is purely collateral and incidental to the real thrust of the statute. As Judge Coutrakon of the U.S. Bankruptcy Court for the Central District of Illinois stated in In re Beck: "I believe that Congress was acting reasonably in its desire to rehabilitate the debtor and did not enact legislation affecting rights of secured creditors to the extent that they were denied due process of law." 4 B.R. 661 at 664, 6 BCD 491 (1980).
To bolster the conclusion that Congress was acting only collaterally and incidentally with respect to creditors' rights is the recognition that Congress possessed the complementary power to its bankruptcy power "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers." Article I, section 8, clause 18 of the Constitution. Congress having acknowledged that it was a general goal of the Bankruptcy Reform Act to provide an effective modern bankruptcy mechanism for consumer debtors and to enable them to emerge from bankruptcy with adequate possessions, it is only a small logical step to realize that a debtor's avoidance of the types of liens subjecting all of his household goods and furnishings to a prebankruptcy security agreement was a necessary and proper measure for achieving the Congressional goal. See U.S. Life Credit Corporation v. Steinart, 4 B.R. 354, 2 CBC 2d 166; CCH Bankr.Law Reports, par. 67,457 (Bkrtcy.W.D.La.1980).

Section 522(f)(2) Not Retroactive
The principal argument advanced by attorneys for the creditors in the present case is that an application of § 522(f)(2) to security agreements made prior to its effective date violates due process because of its retroactive operation. If we were dealing with security agreements made prior to the enactment date of the statute rather than its effective date, this court would agree with the creditors' position, and in fact, this court previously has rendered an opinion to that effect in In re Hawley, 4 B.R. 147, 6 BCD 365 (Judge Henry L. Hess, April 25, 1980). However, as to security agreements created during the "gap" period  between the November 6, 1978 enactment date and the October 1, 1979 effective date  this *584 court cannot accept the creditors' challenge based on retroactivity.
Congress clearly had the power to make laws affecting bankruptcies by virtue of Article I, section 8, clause 4 of the Constitution, and Congress exercised that power by enacting the Bankruptcy Reform Act on November 6, 1978, including § 522(f)(2). Any effect on security interests created after that time was a pro spective not a retrospective, effect. Application of 11 U.S.C. § 522(f) in this case does not violate the taking of property clause of the Fifth Amendment because the parties entered into the furniture loan agreement after Congress enacted the law. Defendant cannot successfully claim that Congress at the time of enactment lacked the power to affect later-created property. Consequently, a one-year delay in making the law effective logically could not diminish Congress's constitutional authority to subject such property to the avoidance powers of the new Code. Although it is not clear from the legislative history why Congress decided to have an eleven-month hiatus, it is more logical to assume that Congress wished to provide an adjustment period for the business community to familiarize itself and prepare itself for the sweeping changes which the new Code was to make in the law rather than to assume Congress felt it could not duly exercise its bankruptcy power for eleven months after the Code's enactment.

Retroactive Effect Not Unfair
Even if this court were to accept the premise that § 522(f)(2) operates retroactively on security agreements created during the "gap" period, we would not be prepared to conclude that such retroactivity in itself makes the statute unconstitutional. As when making out a case for an impairment of contractual obligations by Congress, it is necessary to show that the retroactive effects of a statute are so unreasonable and arbitrary as to deny due process under the Fifth Amendment. Usery v. Turner, 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976); Matter of U.S. Financial, Inc., 594 F.2d 1275, 1281 (9th Cir. 1979); In re Head, 4 B.R. 521, 523, 6 BCD 489 (Bkrtcy.D. Tenn.1980); and In re Beck, 4 B.R. 661, 6 BCD 491 (Bkrtcy.C.D.Ill.1980). In Beck, a case almost identical in fact and law to the case at hand, the bankruptcy judge stated at page 664 of 4 B.R.: "[T]he fact that the Code applies retroactively presents no concern unless the retroactivity is unreasonable." Just as the judge in that case found § 522(f)(2) of the Bankruptcy Code not unreasonable as applied to "gap"created security agreements, neither does this court find that the retroactive effect of the statute, if there is any, is unreasonable, arbitrary, capricious, or unfair.
It is not unreasonable to impute to credit companies and their attorneys the knowledge and understanding of a new law after that law has been enacted. Such persons hardly can claim "unfair surprise" by an enacted statute of Congress having such a serious impact on their industry. That they continued after November 6, 1978, to make and approve nonpurchase-money loan agreements containing "blanket security" interests in household goods shows either an inexcusable ignorance of the law or a willingness on their part to accept the risks inherent in the law. As stated by Bankruptcy Judge Clive W. Bare for the District of Tennessee in In re Head, 4 B.R. 521, 524 (Bkrtcy.1980), in cases nearly identical to ours:
"The delay of over eleven months between the enactment of the Bankruptcy Code and its effective date gave creditors adequate time to familiarize themselves with the provisions of the Code and the effects it would have on their relationships with debtors. In the instant cases, both loans were negotiated after the enactment of the statute. Home Credit cannot say that the effect of the Code on its purported lien rights was a total surprise."
In a situation involving federal tax laws, the Court of Appeals for the Eighth Circuit recently held that a retroactive application of a tax increase was not unconstitutional even though the law approving the increase was enacted in 1976 and was made to apply to transactions in 1975. The court said that *585 taxpayers should have anticipated the imposition of an increase in the minimum tax because such a tax was in existence at the time they allegedly contracted to sell the real estate. Thus, the retroactive increase was not so harsh or discriminatory as to violate the Constitution. Buttke v. Commissioner of Internal Revenue, 625 F.2d 202, 203 (8 Cir. 1980).
It should be noted that § 522(f)(2) is not so sweeping as to deprive loan companies and other such creditors of all their rights in security agreements made after November 6, 1978. First, the statute does not apply to purchase-money security agreements, but rather to nonpurchase-money agreements where debtors already own the goods made subject to security interests. Secondly, the statute does not necessarily permit a debtor to avoid an entire security interest, but rather just a debtor's own exemptable equity in the secured household goods, tools of trade or health aids. Such exemptable interest for household goods is limited to $200.00 per item, unless the debtor claims any excess over $200.00 under (d)(5) of § 522. A debtor who exhausts his entire $7,500.00 of his (d)(1) exemption plus his additional $400.00 of his (d)(5) exemption all on a homestead claim cannot avoid a security interest from a nonpurchase-money security agreement to an extent of over $200.00 in any one household item. Thus, if the particular secured item is worth more than that amount, the debtor would have to choose among three courses of action: giving up possession of the item to the secured creditor, paying the creditor the amount of the creditor's alleged claim minus $200.00, or paying the creditor the fair market value of the item minus $200.00 if the value is less than the creditor's claim. See U.S. Life Credit Corporation v. Steinart, 4 B.R. 354, 2 CBC 2d 166; CCH Bankr.Law Reports par. 67,457 (Bkrtcy.W. D.La.1980), and Matter of Meyers, 2 B.R. 603, 5 BCD 1306 (Bkrtcy.E.D.Mich.1980).
Thirdly, the statute does not apply to security interests in collateral consisting of anything other than household items listed in § 522(d)(3), tools of trade in § 522(d)(6), and professionally prescribed health aids listed in § 522(d)(9). For other types of collateral where the value at the time of the loan may have been equal to or greater than the security interest (notably in the case of vehicles) creditors are able to continue full enforcement of their nonpurchase-money security agreement rights regardless of when those agreements were created. In re Meyers, supra. As explained by Bankruptcy Judge Rodney Bernard, Jr. in U.S. Life Credit Corporation v. Steinart, supra, 4 B.R. 354, 2 CBC at page 171:
". . . Sec. 522(f) was adopted specifically in recognition of the fact that some creditors lending money to a consumer debtor will take a security interest in all of the debtor's household goods, and then have the debtor waive his exemption rights. The creditor then may use threats of repossession as a means of leverage in obtaining payment. Although the household goods themselves may be of little resale value, the replacement cost is high, so the debtor is coerced into making payments he simply cannot afford to make. . . .
"Since the purpose of Sec. 522(f) is to remedy the effect of an overreaching creditor on an uninformed debtor, it would seem that in all fairness the results should differ where the property in question is truly valuable and was given as security due to its value. . . . [The statute's] application should not be extended beyond the evil it attempts to reach."
Finally, even in those situations where all the conditions for lien avoidance under § 522(f)(2) are met by the debtor, the creditors are not left totally without recourse. They still have the right to file proofs of claim as unsecured creditors and share in any possible distribution of assets in the estate. It is true that this right may not be worth much since in most cases there is an unlikelihood of any assets remaining for distribution. However, the chances of assets may in fact be no lower than the chances of a creditor's actually conducting a seizure of a debtor's used household furniture and furnishings under a "blanket security interest" in the goods permitted under *586 the old law. In other words, the creditor's expectations of converting its blanket security interest into any meaningful monetary recovery is not much different than his expectations of recovery of a share of assets from the debtor's estate. What really has been of value to the creditors under their blanket security interests has been the ability to extract reaffirmation promises from debtors through threats of foreclosures rather than actual foreclosures. It is this threat which is removed by § 522(f)(2), and this court does not feel it unfair to remove such threat with respect to "gap" security agreements made any time after the enactment of the statute.
In reviewing the numerous opinions on § 522(f)(2) from other courts, we find that to date six have fact patterns from which it can be ascertained that security agreements were made during the "gap" period, and in five of those opinions, courts have reached the same result as we reach today. See In re Head, 4 B.R. 521, 6 BCD 489 (Bkrtcy.D. Tenn.1980); In re Beck, 4 B.R. 661, 6 BCD 491 (Bkrtcy.C.D.Ill.1980); U.S. Life Credit Corporation v. Steinart, 4 B.R. 354, 2 CBC 2d 166, CCH Bankr.Law Reports, par. 67457 (Bkrtcy.W.D.La.1980); Matter of Cox, 4 B.R. 240, 2 CBC 2d 255 (Bkrtcy.S.D.Ohio 1980), and In re Beard, 5 B.R. 429, 2 CBC 2d 895 (Bkrtcy.S.D.Iowa 1980). In re Panesky, 5 B.R. 201, 2 CBC 2d 835 (Bkrtcy.N.D.Ohio 1980), refused to avoid the security agreement, but on a different basis not affecting our reasoning in the present case. Only in the first three cases did the court consider the question of constitutionality or retroactivity. Beard rested on a definition of household goods or appliances and Cox and Panesky dealt with Ohio law, which state had voted to prevent use of the federal exemptions by Ohio residents.
Even in the cases involving security agreements made prior to the enactment date of the statute, some courts have allowed debtors to avoid security interests: Matter of Rutherford, 4 B.R. 510, CCH Bankr.Law Reports, par. 67,534 (Bkrtcy.S. D.Ohio 1980); In re Ambrose, 4 B.R. 395, 6 BCD 454 (Bkrtcy.N.D.Ohio 1980); In re Curry, 5 B.R. 282, 2 CBC 2d 710 (Bkrtcy.N. D.Ohio 1980); In re Baker, 5 B.R. 397, 6 BCD 747 (Bkrtcy.W.D.Miss.1980). The reasoning in Rutherford, Ambrose and Curry in particular applies equally well to support the avoidance of liens created during the "gap" period. Five others have reached a contrary result: In re Hawley, 4 B.R. 147, 6 BCD 365 (Bkrtcy.D.Or.1980); In re Rodrock, 3 B.R. 629, 1 CBC 2d 1022 (D.Col. 1980); In re Hoops, 3 B.R. 635, 1 CBC 2d 983 (Bkrtcy.D.Colo.1980); In re Jackson, 4 B.R. 293, 6 BCD 612 (Bkrtcy.D.Colo.1980); and In re Pierce, 4 B.R. 671 (Bkrtcy.W.D. Okl.1980).
There are other cases dealing with § 522(f)(2) where it is not shown when the security interest on household goods was first perfected, but none of them has held the law invalid.
Recognizing that there should be a distinction between cases where the lien arose before November 6, 1978, and those where it arose between the enactment and effective dates of the Bankruptcy Code, the court concludes that § 522(f)(2) is constitutional in so far as it applies to liens arising between November 6, 1978, and October 1, 1979, and the plaintiffs are entitled to the voiding of the defendant's lien on their household furnishings, household goods and appliances.
NOTES
[*]  Citations to B.R. refer to West's Bankruptcy Reports, which is a new bankruptcy reporting service of West Publishing Co.


People v Rodriguez (2015 NY Slip Op 02740)

People v Rodriguez

2015 NY Slip Op 02740

Decided on April 1, 2015

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on April 1, 2015
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department

PETER B. SKELOS, J.P.
SHERI S. ROMAN
SYLVIA O. HINDS-RADIX
HECTOR D. LASALLE, JJ.

2014-02872

[*1]People of State of New York, respondent,
vDaniel Rodriguez, appellant.

Richard L. Herzfeld, New York, N.Y., for appellant.
Thomas J. Spota, District Attorney, Riverhead, N.Y. (Edward A. Bannan of counsel), for respondent.

DECISION & ORDER
Appeal by the defendant from an order of the County Court, Suffolk County (Kahn, J.), dated February 28, 2014, which, after a hearing, designated him a level three sex offender pursuant to Correction Law article 6-C.
ORDERED that the order is affirmed, without costs or disbursements.
Once a presumptive risk level has been determined under the Sex Offender Registration Act (see Correction Law art 6-C; hereinafter SORA), a defendant who requests a downward departure from that level has the initial burden of "(1) identifying, as a matter of law, an appropriate mitigating factor, namely, a factor which tends to establish a lower likelihood of reoffense or danger to the community and is of a kind, or to a degree, that is otherwise not adequately taken into account by the [SORA] Guidelines; and (2) establishing the facts in support of its existence by a preponderance of the evidence" (People v Wyatt, 89 AD3d 112, 128; see People v Gillotti, 23 NY3d 841, 860-861; People v Woods, 125 AD3d 622).
Here, the defendant, whose presumptive risk level was three pursuant to an automatic override set forth in the SORA Guidelines, failed to identify any appropriate mitigating factor that would warrant a downward departure from that level. Accordingly, the County Court properly denied the defendant's request for a downward departure to risk level two and adjudicated him a level three sex offender.
SKELOS, J.P., ROMAN, HINDS-RADIX and LASALLE, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court