Robinson v. Bowe

• Citation: 73 F.2d 238
• Decision Date: 12 October 1934
• Docket Number: No. 9958.,9958.
• Parties: ROBINSON v. BOWE.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

73 F.2d 238 (1934)

ROBINSON v. BOWE.

No. 9958.

Circuit Court of Appeals, Eighth Circuit.

October 12, 1934.

A. B. Fairbank, of Sioux Falls, S. D. (Chamberlain & Hall, of Huron, S. D., and Boyce, Warren & Fairbank, of Sioux Falls, S. D., on the brief), for appellant.

Irwin A. Churchill, of Huron, S. D. (B. B. McClaskey and Churchill & Benson, all of Huron, S. D., on the brief), for appellee.

Before SANBORN and WOODROUGH, Circuit Judges, and DEWEY, District Judge.

DEWEY, District Judge.

The suit was instituted at law by appellee to recover the value of a stock of goods alleged to be a preferential transfer under the provisions of the Bankruptcy Act.

For some time prior to the year 1929, the appellant, Albert Robinson, had successfully conducted a retail shoe business in the city of Huron, S. D., known as Robinson Shoe Company. In that year he sold the business and stock of goods to his nephew, Albert E. Robinson, under a conditional sale contract signed by Albert E. Robinson and his wife Mabel Glenn Robinson, and the conditional sale contract was duly filed for record.

The business was conducted by the nephew for a period of about three years at a loss, and on February 27, 1932, Albert Robinson took possession of the store and stock of goods, furniture, etc., under the provisions of the conditional sale contract and in such taking followed the statutes with reference to retaking property under the uniform conditional sales law of South Dakota, but did not follow or attempt to follow the provisions of the statute with reference to the foreclosure of chattel mortgages.

On June 10, 1932, an involuntary petition in bankruptcy was filed against Albert E. Robinson, and he was adjudged a bankrupt on November 25, 1932. His trustee in bankruptcy brings this suit to recover the value of the property taken by Albert Robinson.

Prior to the trial the parties agreed that the case be tried to the judge without the intervention of a jury.

The trial court found, among other things:

That there was nothing in the conditional sales contract or other evidence in the case that would support a finding that the contract extended to or covered after-acquired property.

That during the period of time Albert E. Robinson operated the store he sold, at retail, merchandise of a retail value in excess of $200,000, and purchased merchandise to replenish said stock at a cost of approximately $155,000, none of which was purchased from defendant, and on the 27th day of February, 1932, if there remained in said stock of merchandise any of the original merchandise transferred by defendant to Albert E. Robinson under the terms of said conditional sale contract, the same was insignificant in amount and had become indistinguishably mixed and mingled with the new merchandise, with the knowledge and consent of the defendant, and the same could not be segregated from the new or after-acquired merchandise.

That the value of the merchandise taken over by Albert Robinson on February 27, 1932, was $19,052.84, and there had been furniture and fixtures added of the value of $223.

That, at the time Albert Robinson took over the stock of goods under the conditional sale contract, said Albert E. Robinson was indebted to him for more than $22,000 and to other creditors for merchandise purchased principally at wholesale for the use and conduct of the business in excess of $14,000.

That said Albert E. Robinson had no substantial property other than the stock of goods, and, at the time the property was taken over by Albert Robinson, Albert E. Robinson was insolvent and this was known to Albert Robinson, and that his receipt of the goods was a transfer that enabled him to obtain a greater percentage of his debt than other creditors of the same class.

That the property taken over by Albert Robinson in February, 1932, has been converted by him to his own use.

That the transfer of the future acquired property to Albert Robinson was within four months prior to filing of the petition in bankruptcy and constituted a preferential transfer under section 60 of the Bankruptcy Act (11 USCA § 96).

The court allowed a credit of $744.92 to Albert Robinson for taxes paid and rendered judgment in favor of the trustee and against Albert Robinson for the sum of $18,530.92 and interest.

The suit being at law, the findings of fact by the trial judge have the same force and effect as a verdict by a jury, section 773, title 28 U. S. C. (28 USCA § 773), and the appellate courts will not review findings of fact by the trial judge where there is substantial evidence to support his findings. Bayless v. Eager, 69 F.(2d) 269 (8 C. C. A.); 1st Nat. Bank of Ortonville v. Andresen, 57 F.(2d) 17 (8 C. C. A.); United States v. Great No. Ry. Co., 57 F.(2d) 385 (8 C. C. A.); Federal Intermediate Credit Bank v. L'Herrison, 33 F.(2d) 841 (8 C. C. A.); Pan-American Petroleum & Trans. Co. v. United States, 273 U. S. 456, 47 S. Ct. 416, 71 L. Ed. 734.

There is substantial evidence to support the facts found by the trial court, and they cannot be disturbed on this appeal. We may, however, review conclusions of law.

If the conditional sale contract included a lien on future acquired property, then, as the sale contract was executed, filed, and recorded more than three years prior to the taking of the property by Albert Robinson, the lien could not be challenged as a preference by the trustee in bankruptcy. Humphrey v. Tatman, 198 U. S. 91, 25 S. Ct. 567, 49 L. Ed. 956; Finance & Guaranty Co. v. Oppenhimer, 276 U. S. 10, 48 S. Ct. 209, 72 L. Ed. 443; Dunlop v. Mercer, 156 F. 545 (8 C. C. A.). But, if the future acquired goods were not included in the conditional contract of sale, then the transfer to the vendor on February 27, 1932, of the after-acquired property, would, under the facts as above established, constitute a preferential transfer and be voidable under the express provisions of section 60b of the Bankruptcy Act (11 USCA § 96 (b). Williams v. German-American Trust Co., 219 F. 507 (8 C. C. A.); Fischer v. Liberty Nat. Bank & Trust Co. (C. C. A.) 61 F.(2d) 757, 759.

The conditional sales contract is as follows:

"This Memorandum of an Agreement, Made and entered into this 10th day of January, A. D. 1929, Witnesseth:

"That A. Robinson of Huron, South Dakota, party of the first part, owner, hereby sells to A. E. Robinson and Mabel Glenn Robinson of Huron, South Dakota, parties of the second part, and said second parties hereby purchase, subject to all the terms and conditions hereinafter set forth, the following personal property, delivery and acceptance of which are hereby acknowledged by said purchaser, to-wit:

"The stock of goods, wares and merchandise, otherwise designated and known as shoe stock, located in that certain brick building on Lots Thirty-one (31) and Thirty-two (32) in Block Five (5), Original Town (now City) of Huron, South Dakota, at #20 Third St., S. W., and more particularly described in the inventory hereto attached and made a part hereof, as Exhibit `A,' together with the goodwill of the business carried on at said place by the party of the first part under the trade name of Robinson Shoe Company, for the total time price of Twenty-five Thousand Dollars, evidenced by a certain non-negotiable promissory note for said sum, executed by said parties of the second part at the time of the execution of this contract, and payable to the order of the party of the first part, drawing interest from date at the rate of six per cent per annum, payable pursuant to the following terms and conditions:

"(1) Two Hundred Dollars ($200.00) on the first day of each and every month following the execution of the agreement and continuing for the period of sixty consecutive months, said payment to be applied as follows: To the payment of interest due to the date of said payment, and the balance to be applied on the principal debt. It is agreed and understood, however, that all available net profits, after replenishing the stock as hereinafter provided, above expenses, earned by the company in the course of the conduct of said business, shall be applied on said purchase price at any interest paying date, and that at the expiration of three years, at least Five Thousand Dollars must have been paid on the principal.

"(2) Fully Twelve Thousand Five Hundred Dollars shall be paid on the entire principal of the obligation, at the expiration of the period of sixty months aforesaid, and the balance of the principal shall be paid in cash, or secured in such manner as the party of the first part shall determine.

"(3) The title to said property shall not pass from the party of the first part to the parties of the second part until the said purchase price shall be fully paid.

"(4) The purchasers shall give to the seller their non-negotiable promissory note, as above described, not as payment for said property but as evidence of the amount they agreed to pay therefor.

"(5) The purchasers shall pay the taxes aforesaid on said above property, and keep the same free and clear of any and all taxes, assessments, liens and encumbrances.

"(6) The purchasers shall not transfer any interest in this contract or the property described therein or conveyed thereby, without the written consent of the seller, but sales of said merchandise in due course of business may be made by the purchasers, provided that the stock shall be from time to time replenished by the purchasers, and maintained at a value of not less than Twenty Thousand Dollars.

"(7) The purchaser, A. E. Robinson, shall take out business insurance on his life, in a reputable life insurance company, for Twenty Thousand Dollars, payable to a trustee, to-wit: The National Bank Investment Company, of Huron, South Dakota, which shall be held in escrow by said trustee as security for the performance of this contract, and in the event of the death of the purchaser, A. E. Robinson, said trustee is hereby authorized and directed to pay the...