KENNEDY, Circuit Judge.
Eugene Albaugh appeals the District Court's approval of an amended Chapter 12 bankruptcy plan for William and Tammy Terrell. 93 B.R. 115. The plan proposed to reduce the outstanding amount owed to Albaugh on a land contract from its contract value to the property's current market value. Albaugh claims that the Bankruptcy Court erred in treating a land contract interest as a lien subject to 11 U.S.C. § 1225(a)(5)'s cramdown provision. Alternatively, Albaugh argues that 11 U.S.C. § 1225(a)(5) violates the fifth amendment's due process clause. Concluding that the land contract is an executory contract within the meaning of the Bankruptcy Act not subject to the cramdown provision, we REVERSE. Because we find that the contract is executory, we do not reach the fifth amendment question.
William and Tammy Terrell filed for Chapter 12 bankruptcy in 1987. Five years earlier, Eugene and Isabel May Albaugh entered into a land contract to sell the Terrells several tracts of farm land for $252,000 — $226,800 of which was to be paid in installments.
Albaugh argues that the land sale contract is executory within the meaning of 11 U.S.C. § 365. Section 365 provides that a trustee can elect to either assume or reject any executory contract, subject to the court's approval. If the trustee assumes the contract, he or she must perform the contract according to its terms, cure any defaults, and provide adequate assurance of future performance. The Terrells argue that the land sale contract is not executory, but merely creates a security interest analogous to a mortgage. As such, they argue, the Bankruptcy Court properly treated the land sale contract as a lien subject to the cramdown provisions of 11 U.S.C. § 1225.
The Bankruptcy Code does not explicitly define the term "executory contract." The legislative history, however, indicates that Congress intended the term to be defined as a contract "on which performance remains due to some extent on both sides." S.Rep. No. 95-989, 95th Cong., 2d Sess. 58, reprinted in 1978 U.S.Code Cong. & Admin. News 5787, 5844; H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 347, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5963, 6303. See also In re Jolly, 574 F.2d 349, 350-51 (6th Cir.), cert. denied, 439 U.S. 929, 99 S.Ct. 316, 58 L.Ed.2d 322 (1978).
The parties have spent a considerable amount of time discussing the extent to which state law governs the definition of executory contracts. We believe the Ninth Circuit has formulated a useful and workable answer to this question, holding that federal law defines the term executory contract but that
In re Cochise College Park, Inc., 703 F.2d 1339, 1348 n. 4 (9th Cir.1983). See also In re Streets and Beard Farm Partnership, 882 F.2d 233, 235 (7th Cir.1989) (holding that federal law determines definition of the executory contracts but that state law determines whether a material breach of the contract could occur).
Clearly there are material obligations left to be performed by both parties to this contract. The Terrells are obligated to make installment payments for several more years. While Albaugh has given the Terrells occupancy of the land, he has not surrendered legal title.
The Terrells argue that we should accept the position adopted by many of the bankruptcy courts of this Circuit. The most comprehensive of these decisions is In re Britton, 43 B.R. 605 (Bankr.E.D.Mich.1984), a case we overrule by our holding today. The Britton court, facing substantially similar facts, determined that land sale contracts are not executory in Michigan, at least where it is the vendee who has filed for bankruptcy. The court emphasized the similarities between land sale contracts and mortgages, citing cases such as Barker v. Klingler, 302 Mich. 282, 4 N.W.2d 596 (1942), for the proposition that a vendor holds legal title to the land only as security for the payment of the purchase price.
The Britton court and the Terrells also cite In re Booth, 19 B.R. 53 (Bankr.D.Utah 1982), a controversial decision holding that land contracts are not executory when the debtor is the vendee. The Booth court believed that "executory contracts are measured not by a mutuality of commitments but by the nature of the parties and the goals of reorganization." Booth, 19 B.R. at 56. In examining these goals, the court concluded that by treating a land contract as an executory contract, a vendor would "receive an advantage over other lienors, and the estate may be deprived of whatever equity exists in the property." Id. at 58. The court recognized that 11 U.S.C. § 365(i) and (j) compelled the court to treat some land contracts, those where the debtor is the vendor, as executory but believed that creating such an inconsistency comported with the "spirit" of section 365(i) and (j), and was preferable to treating non-debtor vendees more favorably than non-debtor vendors. Id. at 62.
While the Booth court's policy recommendation may well be one that Congress may choose to accept, we do not believe that it is appropriate for a court to make such a decision by judicial fiat. More importantly, the Booth result would require us to hold that the executory nature of a land sale contract turns not on the terms of the contract, but on the vendor or vendee status of the person who files for bankruptcy. The obligations yet to be performed under a land sale contract do not change when it is the vendee rather than the vendor who files for bankruptcy. In fact, the terms of the contract do not change when either party files for bankruptcy.
Applying the definition of executory contract intended by Congress, we conclude that this land sale contract is executory within the meaning of section 365, since under state law both parties have substantial obligations left to perform. Accordingly, we REVERSE the decision of the District Court and REMAND this case for further proceedings not inconsistent with the result herein.