Closson v. Newberry's Hardware Co.

Eighth Circuit

Closson v. Newberry's Hardware Co.

283 F. 33, 1922 U.S. App. LEXIS 2231

CourtCourt of Appeals for the Eighth Circuit

DecidedJuly 11, 1922

DocketNo. 5835

StatusPublished

This text of 283 F. 33 (Closson v. Newberry's Hardware Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Closson v. Newberry's Hardware Co., 283 F. 33, 1922 U.S. App. LEXIS 2231 (8th Cir. 1922).

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Opinion

STONE, Circuit Judge.

This is a plenary suit by the trustee in bankruptcy of the National Potash Corporation to have a payment of money and a transfer of wooden pipe to appellee declared preferences. The payment and transfer were within four months prior to the filing of the petition in bankruptcy. The trial court found against the trustee on the ground that appellee did not know or have reason to believe, at the time of the payment and of the transfer, that the bankrupt was insolvent or that a preference was being secured.

The sole point urged here by the appellant is that the evidence does not sustain the above finding. The essential facts, as shown by the evidence, are as follows: The bankrupt was engaged in the business of extracting potash from the waters of lakes in Nebraska. It had a large plant with pipe lines to the lakes for this purpose. During the war, when the prices of potash were high and the demand large, such businesses were very profitable. When the war ended, the demand, for the time being, largely disappeared. This plant was newly constructed and of considerable value. In fact, it was sold a year later, by the trustee for $78,000. Appellant had on hand over 1,200 tons of potash valued at over $100,000. What debts it owed were not known to appellee. It had been told, by the manager of the bankrupt, that there was no bonded, mortgage, or other lien indebtedness, and that appellee was the only large creditor. Appellee’s account was about [34]*34$23,000. Appellee knew the entire potash business had been seriously crippled by the ending of the war. It knew/ also, that the bankrupt was experiencing difficulty in continuing its business because of lack of market for its potash. It knew the bankrupt was having difficulty, also, in securing ready money. Knowledge of the above facts was not knowledge of insolvency nor would it naturally suggest such. The burden of proving such knowledge, or such facts as would put a reasonable man upon inquiry, rested upon the trustee. That burden was not here sustained.

Therefore, the decree below was correct, and is affirmed.

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STONE, Circuit Judge.

This is a plenary suit by the trustee in bankruptcy of the National Potash Corporation to have a payment of money and a transfer of wooden pipe to appellee declared preferences. The payment and transfer were within four months prior to the filing of the petition in bankruptcy. The trial court found against the trustee on the ground that appellee did not know or have reason to believe, at the time of the payment and of the transfer, that the bankrupt was insolvent or that a preference was being secured.

The sole point urged here by the appellant is that the evidence does not sustain the above finding. The essential facts, as shown by the evidence, are as follows: The bankrupt was engaged in the business of extracting potash from the waters of lakes in Nebraska. It had a large plant with pipe lines to the lakes for this purpose. During the war, when the prices of potash were high and the demand large, such businesses were very profitable. When the war ended, the demand, for the time being, largely disappeared. This plant was newly constructed and of considerable value. In fact, it was sold a year later, by the trustee for $78,000. Appellant had on hand over 1,200 tons of potash valued at over $100,000. What debts it owed were not known to appellee. It had been told, by the manager of the bankrupt, that there was no bonded, mortgage, or other lien indebtedness, and that appellee was the only large creditor. Appellee’s account was about [34]*34$23,000. Appellee knew the entire potash business had been seriously crippled by the ending of the war. It knew/ also, that the bankrupt was experiencing difficulty in continuing its business because of lack of market for its potash. It knew the bankrupt was having difficulty, also, in securing ready money. Knowledge of the above facts was not knowledge of insolvency nor would it naturally suggest such. The burden of proving such knowledge, or such facts as would put a reasonable man upon inquiry, rested upon the trustee. That burden was not here sustained.

Therefore, the decree below was correct, and is affirmed.

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Bluebook (online)

283 F. 33, 1922 U.S. App. LEXIS 2231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/closson-v-newberrys-hardware-co-ca8-1922.