K. King & G. Shuler Corporation v. Petitioning Creditors
| Decision Date | 05 June 1970 |
| Docket Number | No. 23491.,23491. |
| Citation | 427 F.2d 689 |
| Parties | The K. KING & The G. SHULER CORPORATION, Appellant, v. PETITIONING CREDITORS, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John P. Hanrahan, Los Angeles, Cal., for appellant.
Norman D. Rose (argued), of Rose & Ehrmann, Los Angeles, Cal., for appellees.
Before HAMLEY and ELY, Circuit Judges, and POWELL, District Judge*.
This involuntary bankruptcy proceeding was commenced on December 27, 1963, by the unsecured creditors of the K. King & G. Shuler Corporation. They alleged in their petition that within four months of the filing of the petition, namely on October 30, 1963, the corporation, while insolvent, transferred cash in the sum of $4,138.95 to John P. Hanrahan on account of an antecedent debt. They further alleged that, as to all or part of this sum, Hanrahan was a general unsecured creditor. Therefore, these creditors contended, the transfer was preferential as to them and other unsecured creditors within the meaning of the Bankruptcy Act (Act), and constituted an act of bankruptcy. See sections 3(a) and 60(a) of the Act, 11 U. S.C. §§ 21(a) and 96(a).
The corporation conceded that it was insolvent at the time of the transfer and that the payment was made on account of an antecedent debt. It alleged, however, that Hanrahan was a secured creditor as to the entire $4,138.95 paid, under a chattel mortgage and a lien upon, or pledge of, a leasehold interest. A trial was had on this issue resulting in findings and conclusions to the effect that the transfer in question was preferential. The trial court thus adjudicated the corporation a bankrupt. This appeal followed.
The trial court determined that the transfer was preferential on the following alternative grounds: (1) Hanrahan had no security interest in the lease because any attempted pledge of the lease was never perfected; (2) the $4,138.95 payment to Hanrahan exceeded the value of any and all security which he claimed against the assets of the corporation by at least $1,144.79; (3) Hanrahan was the alter ego of the corporation and equitable considerations required that any security interest held by Hanrahan be disregarded; (4) by his conduct, Hanrahan intentionally relinquished and waived any security interest he otherwise may have had in and to any assets of the bankrupt; and (5) the corporation had been suspended from doing business in the State of California and therefore had no standing to resist the involuntary petition in bankruptcy.
The corporation argues that the judgment must be reversed because the creditors failed to make out a prima facie case in their case-in-chief at the trial. The parties stipulated the existence of the creditors' claims and that payment of $4,138.95 was made to Hanrahan. The only issue on the merits to be determined at trial was whether or not that payment constituted a preferential transfer and was an act of bankruptcy within the meaning of the Act.
The petitioning creditors rested their case after introducing into evidence two exhibits which showed that the corporate powers of the corporation had been suspended. The corporation then moved for judgment on the ground that the creditors had failed to establish a prima facie case. The motion was denied, whereupon the corporation proceeded with its case in an effort to establish that, at the time of the transfer, Hanrahan was a secured creditor with regard to the entire $4,138.95 payment.
Under Fed.R.Civ.P. 41(b), the trial court is not required to rule upon such a motion made at the close of the plaintiff's case, but may elect to render judgment after the close of all the evidence. This, in effect, is the course chosen by the trial court in this case. It follows that when such a motion is not granted, the merits of the case are to be determined in the light of all of the evidence received at the trial. See, ...
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S.E.C. v. Murphy
...have done. A denial, however, means nothing more than a refusal to enter judgment at that time. 31 K. King & G. Shuler Corp. v. Petitioning Creditors, 427 F.2d 689, 690 (9th Cir. 1970). It makes no difference whether the court expressly reserves decision on the merits or denies it. Id.; 9 C......
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