Cherry v. Union Nat'l Bank

• Citation: 87 Pa.Super. 114
• Decision Date: 14 December 1925
• Docket Number: 142-1925
• Parties: Cherry etc. v. Union National Bank, Appellant
• Court: Superior Court of Pennsylvania

87 Pa.Super. 114

Cherry etc. v. Union National Bank, Appellant

No. 142-1925

Superior Court of Pennsylvania

December 14, 1925

Argued October 15, 1925

Appeal by defendant from judgment of the Court of Common Pleas No 3, Philadelphia County-1924, No. 9553, on verdict for plaintiff in the case of Nathan Cherry, Trustee of the estate of Louis Mandel, individually, and trading as B. Mandel's Sons, Bankrupt, v. Union National Bank.

Assumpsit by trustee in bankruptcy to recover amount of a preference. Before Ferguson, J.

The facts are stated in the opinion of the Superior Court.

Verdict for plaintiff in the sum of $ 2152.22, and judgment thereon. Defendant appealed.

Errors assigned were the refusal of defendant's motion for judgment non obstante veredicto, and for a new trial.

Reversed.

John Arthur Brown, and with him, Henry P. Brown, for appellant.

Bertran K. Wolfe, and with him Aarons, Weinstein, & Goldman, for appellee.

Before Porter, Henderson, Trexler, Keller, Linn and Gawthrop, JJ.

OPINION

GAWTHROP J.

Defendant appeals from a judgment on a verdict for plaintiff in a suit in assumpsit brought against it by a trustee in bankruptcy to set aside a preference under the Bankrupt Act, as amended in 1910, Section 60-B.

It was conceded at the trial that on April 29, 1924, Louis Mandel was insolvent and that on that day three of his notes, aggregating $ 6500, fell due at the Union National Bank, defendant; and that on April 30, 1924, a petition in bankruptcy was filed against him. To prove the other facts necessary to make out its case plaintiff depended wholly upon the testimony of O. Stuart White, Vice-President of defendant, who testified to the following facts: On April 29, 1924, Mandel called at the bank of his own accord and requested the renewal of the notes, which represented loans secured by Mandel for business purposes. Mr. White told him that the bank would not renew the notes and stated that they had to be paid. The reason for the refusal of an extension of time for payment was that Mandel had transferred his active account to the Sixth National Bank about three months before, had ceased to deposit in the Union National Bank, and had practically closed his account, his balance then being $ 100.03. A balance of about that size had been maintained by Mandel since January 30, 1924. Mandel said that he could not make any payment at that time, but offered to assign to the bank some of his accounts receivable, if time for payment of the loans was extended, and promised to pay the balance of the loan in a few days. Whereupon, Mr. White agreed to grant him a temporary extension of time and accepted a demand collateral note for $ 6500 and took as collateral security accounts receivable of a face value of $ 2438.28. The understanding was that Mandel would make payments on account from time to time. The court below submitted to the jury the question whether or not, under that evidence, Mr. White had reasonable cause to believe that Mandel was insolvent, and that it was receiving a preference when it took the collateral. The only proposition urged here is that the learned trial judge erred in refusing to hold that there was no evidence from which the jury could be permitted to find that the bank has a reasonable cause to believe that the enforcement of the rights secured by taking the accounts receivable would give it a preference over other creditors.

It is well settled that when plaintiff called Mr. White on cross examination and his testimony was not controverted, it must be accepted as true: Walkinshaw Estate, 275 Pa. 121, 125, 118 A. 766; Krewson v. Sawyer, 266 Pa. 284, 109 A. 798; Dunmore v. Padden, 262 Pa. 436, 105 A. 559.

The burden was on plaintiff to establish the fact that the bank had reasonable cause to believe that a preference was intended: Pyle v. Texas Transport and Terminal Co., 230 U.S. 90, 98; Rudisill's Trustee v. Wildasin, 275 Pa. 255, 119 A. 137. This burden could only be met by establishing facts which are sufficient to put an ordinarily...