Coombs v. MERCHANTS BANK OF NEW YORK, 220

• Decision Date: 03 June 1947
• Docket Number: Docket 20527.,No. 220,220
• Parties: COOMBS v. MERCHANTS BANK OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

161 F.2d 858 (1947)

COOMBS v. MERCHANTS BANK OF NEW YORK.

No. 220, Docket 20527.

Circuit Court of Appeals, Second Circuit.

June 3, 1947.

Weisman, Celler, Quinn, Allan & Spett, of New York City (Milton C. Weisman and Lester Samuels, both of New York City, of counsel), for appellee.

Israel H. Zinovoy, of New York City (David Haar, of New York City, of counsel), for appellant.

Before SWAN, AUGUSTUS N. HAND and FRANK, Circuit Judges.

This is a suit by the trustee in bankruptcy of Spier Aircraft Corporation against the defendant to recover alleged preferential payments. The trial judge made the following Findings of Fact:

"1. The bankrupt was a New York corporation engaged in the manufacture of aeronautical parts and equipment. 2. On October 2, 1942, the defendant loaned the bankrupt $25,000, for which the bankrupt gave the defendant its collateral promissory note, payable 90 days thereafter, secured by accounts receivable of Hayes Manufacturing Company and Ford Motor Company, aggregating $27,362.03. 3. The defendant made the loan on the security of the receivables, and it was the intention of the parties that the loan would be repaid out of collections from the receivables. 4. At the time of making the loan nothing was due or owing on the invoices representing the receivables, but the defendant had no knowledge of these facts. 5. On December 2, 1942, the bankrupt paid the defendant $5,000 on account of the loan. 6. On December 7, 1942, the bankrupt made a second payment of $10,000 to the defendant on the loan. 7. On December 14 and December 26, 1942, the bankrupt made payments to the defendant on the loan of $5,605.81 and $4,394.19, respectively, completing payment of the loan in full. 8. The involuntary petition was filed on or about January 22, 1943, and adjudication followed on or about that date. 9. The bankrupt was insolvent on December 1, 1942, and at all times thereafter to the filing of the petition, at least to the extent of $30,337.45. 10. The defendant did not have reasonable cause to believe that the bankrupt was insolvent on December 2, 1942, at the time the first payment of $5,000 on the loan was made. 11. The defendant had reasonable cause to believe that the bankrupt was insolvent on December 7, 1942, December 14, 1942, and December 26, 1942, at the times when the payments of $10,000, $5,605.81 and $4,394.19 were made on the loan, respectively."

The judge reached the following Conclusions of Law: "1. The plaintiff is not entitled to...