In re Iron Clad Mfg. Co.

197 F. 280, 116 C.C.A. 642, 1912 U.S. App. LEXIS 1288

• Court: Court of Appeals for the Second Circuit
• Decided: May 6, 1912
• Docket: No. 210
• Status: Published

Opinions

LACOMBE, Circuit Judge

(after stating the facts as above). [1,2] W'e find nothing in the various motions made at the close of the case to preclude the bankrupt from asking that the issues be sent to the jury. The fact that each party asks for a peremptory instruction to find in his favor does not submit the issues of fact to the court, so as to deprive either party of the right to ask other instructions, and to except to the refusal to give them, or to deprive him of the right to have questions of fact submitted to the jury, where the evidence on the issues joined is conflicting, or divergent inferences can be drawn therefrom. Buetell v. Magone, 157 U. S. 154, 15 Sup. Ct. 566, 39 L. Ed. 654. But if the evidence is of such a conclusive character that upon it as a whole the court would feel constrained to .set aside a verdict, if one were rendered in favor of one party, it may direct a verdict in favor of the other party, although there be conflicting evidence as to details not essential to a conclusion. Empire State Cattle Company v. Atchison, Topeka & Santa Fé Railroad, 210 U. S. 1, 28 Sup. Ct. 607, 52 L. Ed. 931, 15 Ann. Cas. 70.

[3] In the case at bar there was some testimony introduced by the creditors as to alleged errors in the books and as to alleged excessive valuations of property. The- witnesses who gave this testimony were cross-examined, and if that were all there was in the case, it might be that the bankrupt was entitled to have it sent to the jury to determine as to its evidentiary weight. But there is other testimony coming from the bankrupt itself of such a character that, in our opinion, a verdict in favor of the bankrupt, had one been rendered, should not be allowed to stand.

The bankrupt’s books were produced. It is contended that they were incomplete, and that, therefore, under Bankrupt Act, § 3, subd. “d,” the burden of proof of solvency rested on the alleged bankrupt. This point need not be considered.

The books produced showed on their face an excess of assets over liabilities of about $350,000. The creditors called an accountant, who testified to very many instances of error in the books, from a bookkeeper’s standpoint. They also called a witness who, professing to be an expert, testified to many instances where assets were, as he said, greatly overvalued on the books. Apparently this testimony is highly persuasive; but the bankrupt was entitled to have it submitted to the jury to pass upon, if it were all there was to impeach the accuracy of the books and to sustain the allegation of insolvency. For the purposes of this appeal, therefore, it may be wholly disregarded — treated as if it had never been introduced in the case. Without it, was the trial judge warranted in' directing a verdict of insolvency? We think he was, because of the testimony of Mrs. Seaman as to two errors in the books. Upon the bankrupt’s own books and her testimony insolvency was clearly shown.

Mrs. Seaman was the president and treasurer of the bankrupt, and its sole stockholder. There are no minority stockholders, and she is practically herself the bankrupt. Her own testimony it does not lie .within her own mouth to impeach. She testified that the bankrupt, at the time in question, owed her $200,000, and also owed the American Steel Barrel Company $300,000. Of these amounts the books showed only an indebtedness to Mrs. Seaman of $15,235.98, so that there was an excess of liabilities over those stated in the books of $474,764.02, much more than sufficient to wipe out the excess of assets oyer liabilities which the books showed.

The substance and effect of Mrs. Seaman’s testimony was the correction of errors in the bankrupt’s books by the bankrupt itself. The result was that, when both sides rested, the books thus corrected showed an excess of liabilities oyer assets of about $125,000, with no testimony to show that its financial condition was any better than the books, corrected by its own officer, indicated. To send the.case to the jury under such circumstances, when a verdict of solvency, if rendered, would have to be set aside as against the evidence, would have been an improper proceeding. The trial judge rightly directed a verdict as he did.

If any confirmation of the conclusion that the corporation was insolvent were required, it might be found in the schedules in bankruptcy filed by its attorney about a month after the decision of the District Court now under review. They show the liabilities to be very largely in excess of the assets. These schedules are no part of the record brought here by the writ of error, but were submitted at the argument by counsel for the creditors in support of a motion to dismiss the appeal upon the ground that the questions raised here had' become academic, since, in the event of a reversal for any error of practice, a new trial would follow, upon which creditors could submit the schedules as sufficient proof of insolvency. It is not necessary to decide this preliminary motion, as we are satisfied that the allegation that there was error in instructing the jury to find a verdict of insolvency is unsound.

The decree is affirmed.