Gering v. Leyda

• Decision Date: 31 March 1911
• Docket Number: 3,418.
• Citation: 186 F. 110
• Parties: GERING et al. v. LEYDA.
• Court: U.S. Court of Appeals — Eighth Circuit

186 F. 110

GERING et al. v. LEYDA.

No. 3,418.

United States Court of Appeals, Eighth Circuit.

March 31, 1911

Matthew Gering (Edmund C. Strode, on the brief), for plaintiffs in error.

Henry H. Wilson (Elmer J. Burkett and Elmer W. Brown, on the brief), for defendant in error.

Before SANBORN and HOOK, Circuit Judges, and DYER, District Judge.

DYER District Judge.

This is a suit brought in the District Court of the United States for the District of Nebraska, by defendant in error as trustee of the estate of Henry Herold, bankrupt, against plaintiffs in error and the First National Bank of Plattsmouth, Neb seeking to recover an alleged preference under the bankrupt law. This case was tried before a jury. The trial court directed a verdict in favor of the defendant First National Bank of Plattsmouth, Neb., and the jury returned a verdict in favor of the defendant in error and against plaintiffs in error in the sum of $3,202.24, upon which judgment was rendered. Plaintiffs in error thereupon brought the case to this court by writ of error. The evidence adduced at the trial tended to show the following facts: For some years prior to October, 1906, the bankrupt, Henry Herold, had been conducting a general store at Plattsmouth, Neb., and on December 4, 1906, he was adjudged a bankrupt upon a petition in bankruptcy filed against him by creditors on October 16 1906, and defendant in error was appointed his trustee in bankruptcy. The plaintiffs in error, Henry R. Gering and Matthew Gering, are brothers, and brothers-in-law of the bankrupt. Prior to 1906, Henry Gering became surety for the bankrupt upon three notes aggregating $3,100, which were discounted by the bankrupt at the First National Bank of Plattsmouth, Neb.; and in February, 1906, Henry Gering became bankrupt's guarantor in the sum of $1,200 to Smith McCord, Townsend Company, of Kansas City, Mo. In August 1904, Matthew Gering became surety for bankrupt upon a note for $1,500, which was discounted by bankrupt at the First National Bank of Plattsmouth, Neb. On October 5, 1906, a representative of the Smith, McCord, Townsend Company of Kansas City called upon bankrupt and demanded payment of an indebtedness of about $870 due his employer, and, failing to obtain payment from bankrupt, requested Henry Gering to pay the indebtedness as guarantor. On October 6, 1906, a conference was held between the bankrupt, Henry Gering, and Matthew Gering, at which bankrupt's business affairs were discussed. At this interview each of the Gerings learned for the first time that the other had become surety for bankrupt's indebtedness. The Gerings testified that at this interview they questioned bankrupt as to his financial condition, and that he told them that in addition to the indebtedness owing to the First National Bank of Plattsmouth, and to the Smith, McCord, Townsend Company, he owed only about $1,000 to $1,200; that he owned his stock of goods worth 'around $5,000,' and his residence in Plattsmouth, worth from $5,500 to $6,000, and incumbered for $2,500. The bankrupt testified that he told the Gerings that he only owed from $1,000 to $1,200 in addition to the notes held by the bank, and that he had been offered $5,500 for his residence, and that he proposed to accept the offer, and with the proceeds he thought he 'could either make a settlement or clean up the balance of the indebtedness. ' It was thereupon agreed that the bankrupt would give Henry and Matthew Gering a bill of sale for his stock of goods and outstanding accounts, and that the Gerings would pay the indebtedness due the bank upon the notes upon which they were sureties, then amounting to $4,842.03. In accordance with this arrangement, the key to the store was turned over to Henry Gering on Saturday, October 6, 1906, and a written bill of sale was executed and delivered on the following Monday, October 8, 1906. By this bill of sale the bankrupt conveyed to the Gerings his entire stock of goods and all his outstanding book accounts. The bankrupt had taken no inventory of his stock of goods for several years, and no inventory was taken at the time of the transfer to the Gerings; but the Gerings requested three merchants of Plattsmouth to look at the stock and give their opinion of its value, and these men, after spending about half an hour in making a general inspection of the stock, reported that in their opinion it was worth from $3,500 to $4,500. The stock of goods was afterwards sold by the Gerings and the notes held by the bank paid by them. It appeared from the evidence that on October 6, 1906, the bankrupt was insolvent and owed debts greatly in excess of the amount stated by him to the Gerings; that various creditors were then pressing the bankrupt for payment of their claims; that the bankrupt's account at the First National Bank of Plattsmouth had been overdrawn some $400 for more than a month; that the notes held by the bank and upon which the Gerings were sureties were past due; and that the bank had been urging that the notes be paid. The evidence tended to show that the Gerings made no inquiry into the financial condition of the bankrupt except to ask him what his condition was, and the evidence further tended to show that the bankrupt had in his store at Plattsmouth bills for invoices which showed the amount of his indebtedness to his various creditors.

It is contended in behalf of plaintiffs in error that the trustee's petition failed to state a cause of action entitling him to recover a preference because it is not averred therein that at the time of the commencement of the action the claims of any creditors had...