Dering v. Williams
| Decision Date | 11 May 1967 |
| Docket Number | No. 20567.,20567. |
| Citation | 378 F.2d 417 |
| Parties | Alonzo W. DERING, Appellant, v. Everette H. WILLIAMS, Trustee in Bankruptcy of Eldon P. Dering, Bankrupt, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
C. X. Bollenback, Portland, Or., for appellant.
Gilbert Sussman, Sussman, Shank & Wapnick, Portland, Or., for appellee.
Before CHAMBERS, MERRILL and KOELSCH, Circuit Judges.
Appellant objects to a district court determination voiding under § 67(d)(2) (a) of the Bankruptcy Act, 11 U.S.C. 107(d)(2)(a), certain transactions entered into between himself and bankrupt. This section prohibits transfers by debtors within one year prior to filing a bankruptcy petition when the transfer is not made for adequate consideration and the debtor is insolvent.
Appellant, Alonzo W. Dering, and bankrupt, Eldon P. Dering, are brothers. In 1951 they jointly formed a corporation, Dering Industries, Inc. The corporation engaged in the business of manufacturing and distributing aluminum gates, and had a franchise to distribute certain brands of gates in Oregon. The brothers, each with 100 shares, were the only stockholders, except for one odd share issued to a director. At the time of incorporation, or thereabouts, Eldon (the bankrupt) executed an agreement giving appellant (Alonzo) an option to purchase his shares, should he become insolvent or bankrupt.
We jump now to 1961. At this time Dering Industries was a moderately profitable enterprise under the management of appellant. Eldon helped with the business from time to time, but was mainly involved with his own rose growing business. However, Eldon was having financial trouble and needed cash. To get it, Eldon endorsed his 100 shares in Dering to Alonzo in exchange for $10,000.00. Eldon also received an option to buy the shares back within 180 days for $10,000.00 plus 6 per cent interest. On June 6, 1962, Eldon paid Alonzo $3,000.00 for the return of 30 shares and was given another 180 day option on the remaining 70 shares. Again on December 6, 1962, Eldon paid Alonzo $3,000.00. This time Eldon got the return of 22 shares and an option on 48 more. The difference between the 30 shares received for the first 3,000.00 and the 22 shares received for the second $3,000.00 represented an adjustment for the 6 per cent interest charge. During all these transactions, ownership of the shares on the corporation's books was not changed, each brother still being credited with ownership of 100 shares. Also during this time, as had been the corporate practice, all corporation profits continued to be paid to the two brothers equally in the form of salaries.
On February 20, 1963, Eldon again traded his shares to Alonzo for cash, this time $5,850.00. Bankrupt (Eldon) again received an option to purchase the 100 shares for $10,000.00, plus interest. At this time the 100 shares issued to Eldon were cancelled and a new certificate for 100 shares was issued to appellant.
During 1963, Eldon's financial position continued to disintegrate. By November 1, 1963, he was insolvent. At about this same time, Alonzo decided to sell or liquidate Dering Industries. Supposedly to speed the liquidation, Alonzo and Eldon entered into a new agreement on March 4, 1964. The agreement called for cancellation of Eldon's option to purchase the 100 shares and substitution of the right to purchase 100 shares from appellant prior to liquidation.
A little more than three weeks after this agreement was signed, Alonzo arranged for the sale of the corporation for...
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...based on a theory which had evidentiary support and was argued but which was not in the pleadings or the pretrial order, Dering v. Williams, 378 F.2d 417 (9th Cir. 1967). 10 Here the parties tried the issue of Quinault off-reservation fishing without objection. The trial court found that Qu......
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