Trepp v. State Nat. Bank
| Citation | 289 S.W. 540 |
| Decision Date | 11 October 1926 |
| Docket Number | No. 25464.,25464. |
| Parties | TREPP v. STATE NAT. BANK. |
| Court | United States State Supreme Court of Missouri |
Appeal from St. Louis Circuit Court; A. B. Frey, Judge.
Suit by Alfred Trepp, as trustee in bankruptcy of the United Packing & Preserving Company, against the State National Bank. Judgment for plaintiff, and defendant appeals. Affirmed.
Jones, Hocker, Sullivan & Angert, of St. Louis, for appellant.
Smith & Pearcy, of St. Louis, for respondent.
This is a suit to recover the amount of a payment made to defendant, which, it was alleged, constituted a preference over the other creditors of the bankrupt company.
The trustee as plaintiff had a verdict returned by nine jurors for $8,718.33, the sum asked for. The primary assignment of error is founded on the contention that under the evidence plaintiff was not entitled to go to the jury. Errors are also assigned in the giving and refusal of certain instructions.
The payment in question was made on January 20, 1922. The petition in bankruptcy was filed on February 28, 1922, and the adjudication was made June 23, 1922. Prior to the spring of 1921, the United Packing & Preserving Company, a corporation, had been engaged in business under the name of A. M. Neville Manufacturing Company. As the Neville Manufacturing Company it had been in financial difficulties, and a petition in bankruptcy had been filed against it. Pending that, one A. F. Ruppenthal, who had not theretofore been a stockholder, became interested in the company and undertook to put it upon its feet and continue the business, which appears to have been the manufacture and sale of fruit products. In doing so there was no reorganization, but merely a change in the name of the company. Ruppenthal undertook to pay in whole, or in part, the creditors of the company. Some of them were paid 75 cents on the dollar, and an agreement was made with others whereby the company continued in business. At that time the company did its banking business with the Lafayette South Side Bank of St. Louis, and was indebted to that bank in a sum in excess of $10,000. Mr. Ruppenthal applied to Mr. Harold Bixby, vice president of the defendant State National Bank, for a loan, and with the purpose of transferring the account of the company to defendant bank. The arrangement was made, and defendant bank loaned the United Packing & Preserving Company $7,500. At that time, and by aid of the loan thus secured, the indebtedness due from the company to the South Side Bank was paid, except an indebtedness for $3,000, for which the South Side Bank held warehouse receipts for certain raspberries as collateral security. The United Packing & Preserving Company continued to do business until the 17th day of November, 1921, at which time a fire occurred, which destroyed its stock and in a large measure destroyed its equipment, fixtures, and the like. The company held insurance policies in the amount of $35,000. Adjustment of the loss was undertaken by Mangson & Mangson, insurance adjusters. An adjustment was reached with the various companies, whereby the total sum of $25,673.35, was paid by the insurance companies. The first payment from the insurance companies was deposited on January 20, 1922, in the sum of $12,836.67 in defendant bank. The conditions surrounding this deposit of insurance money are to be more particularly given hereafter. At the time there was due from the United Packing & Preserving Company to defendant bank the sum of $8,718.33.
As has been stated, that indebtedness was paid on the day of such deposit by checks of the United Packing & Preserving Company, drawn by Ruppenthal. All of the inquiries, arrangements, and conversations had concerning the business of the United Packing & Preserving Company, its indebtedness, and its relations with defendant bank, were bad with Mr. Bixby as vice president of the bank. The outstanding issue in this case was the question whether Mr. Bixby had reasonable cause for believing the United Packing & Preserving Company was insolvent at the time said payment was made, and that such payment would effect a preference.
On June 16, 1921, United Packing & Preserving Company made to defendant a statement of its financial condition. This was introduced in evidence. It showed cash on hand $3.85, cash in banks, $28.48, accounts receivable $3,471.22, and merchandise as by inventory $13,832.91. It further showed as the value of plant machinery and equipment, furniture and fixtures, cuts, dies, etc., $9,667.99. There was also listed as real estate, a lot in Maplewood at $945, and the leasehold on a building on South Broadway at $7,200. The total of the assets so represented was $31,867. Against this the statement showed as liabilities a note of $7,500 (due to defendant) and accounts payable, in the sum of $767.08, making a statement in excess of assets over liabilities of $23,599.92.
Another statement made to defendant on August 1, 1921, was introduced. This statement showed some increase in the amount shown by inventory and accounts receivable, some increase in machinery and equipment, and also an increase in indebtedness, but left an excess of assets over liabilities of $25,408.01. This statement, however, showed that at the time the company had on hand in cash and in bank only $105.72. About this time, it appears that Mr. Bixby undertook to assist the company, through getting interested some one else, with money, whereby its ability to carry on the business might be increased. He took up the matter with Mr. Ford, who was interested in another company, the Evans-Rich Manufacturing Company. As a result, Mr. Rich of the Evans-Rich Manufacturing Company took up the matter with Ruppenthal, and a written agreement was entered into by the Evans-Rich Company and the United Company, under which the Evans-Rich Company was to pay for the raw materials which were needed to fill the orders which the United Company had or might receive. Under that contract, goods so manufactured, when sold by the United Company, where billed by the Evans-Rich Company to the purchaser at the price fixed, and when the purchaser remitted to the Evans-Rich Company the amount, the United Packing & Preserving Company was to be given credit on the loan or advancement made by the Evans Company. Under the contract, also, Mr. Rich, or the Evans-Rich Company, had an option to buy the plant of the United Company; and, pending operation under this contract, and prior to the fire that has been mentioned, an inventory of the property of the United Company was made by Mr. Rich and Mr. Ruppenthal and prices agreed upon as to the value of merchandise, machinery, and fixtures. Under this the machinery and fixtures were valued by them at $6,900 and the merchandise at $8,617.
After the fire, the creditors of the United Packing & Preserving Company were uneasy as to the payment of their bills against the company. Pending adjustment and payment of loss by the insurance companies, an agreement in writing was entered into by the defendant bank and the United Packing & Preserving Company, under the terms of which the insurance money was to be deposited in defendant hank as a special fund from which to pay to itself the note and overdraft due to it, and also to pay numerous creditors included in a list delivered to defendant bank along with said contract. The contract stated the amount of the indebtedness due defendant, and, also that the total due to the creditors upon the list was $6,784.25. It also contained the condition that until the sums paid in and deposited on the insurance should amount to or exceed the total of the indebtedness due to the bank and the indebtedness due to the creditors listed, the bank should not make any of the payments aforesaid, but should retain said deposit for the equal protection of all the creditors of said company. In the list about 75 creditors were named, nearly all being for small amounts. The aggregate of the indebtedness referred to in said contract, that due defendant, and the total of the list, was $15,372.66, plus the interest due on the note held by defendant.
The evidence tends to show that the United Packing & Preserving Company was insolvent on January 20, 1922. The trustee, who testified in this suit, said that nothing whatever belonging to the bankrupt estate had come into his hands. The total amount of the claims allowed by the referee was $7,435.33. This included the claim for taxes of $596.17 for the year 1922. This list does not include the McCandless claim referred to hereafter. It appears that prior to his appointment and qualification the insurance money had been paid out. The salvage, or junk, remaining from the fire had been sold to Ruppenthal and others. These two items, with the accounts receivable, constituted, after the fire, all the assets except a shipment of apple chops, which arrived a day or two after the fire, not paid for, to which reference will hereafter be made. Practically all of the accounts receivable of the United Packing & Preserving Company were held by Evans-Rich Manufacturing Company under the contract between the two companies, and Evans-Rich Company collected the accounts receivable which were against solvent persons, the amount of $3,101.50, which, applied upon the indebtedness of $9,118.55 due from the United Company to the Evans Company, left a net indebtedness due the Evans Company of $6,017.05, which was the sum allowed by the referee. The small amount of accounts receivable other than those held by Evans-Rich Company is more fully shown by the fact that according to the evidence, between the time of the fire, on November 17, 1921, and January 20, 1922, the sum of $143.22 was the whole amount collected, or at least deposited in defendant bank to the credit of the United Packing & Preserving Company. This was deposited to its general account, and not to the special account mentioned.
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