Ralph E. Williams, As Trustee of the Estate of Future Mfg.cooperative, Inc., Bankrupt, Appellant, v. Leamon T. Mcdonald, Appellee, 244 F.2d 798 (9th Cir. 1957)

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US Court of Appeals for the Ninth Circuit - 244 F.2d 798 (9th Cir. 1957) June 4, 1957

Shapro & Rothschild, Daniel Aronson, Jr., James M. Collins, San Francisco, Cal., for appellant.

L. T. McDonald, Visalia, Cal., in pro. per.

Before HEALY, FEE, and CHAMBERS, Circuit Judges.


This is a suit by appellant, Trustee of the bankrupt estate named in the caption, to recover from appellee an allegedly voidable preference.

The bankrupt was a cooperative grocery concern of which appellee was president and manager. On January 2, 1956, a serious fire occurred in the establishment, forcing a closedown. Two days later appellee, who had not recently been collecting his salary, paid himself out of the assets of the cooperative the sum of approximately $1700, representative of the amount owing him. Within four months thereafter the petition in bankruptcy was filed and the cooperative adjudicated a bankrupt.

On consideration of the evidence the trial court found that the payment by the bankrupt within the statutory four months' period was not a voidable preference under § 60, sub. b, of the Bankruptcy Act, 11 U.S.C.A. § 96, sub. b, in that at the time of the payment appellee did not have knowledge or reasonable cause to believe that the cooperative was insolvent. Judgment was entered accordingly, and this appeal followed.

The Trustee's contention here is that the finding on the issue of reasonable cause to believe is erroneous. We are not disposed to so hold. The evidence bearing on the knowledge available to appellee concerning the financial situation of the cooperative as of the time of the payment is slender and inconclusive. Accordingly the judgment is affirmed.