In re Turner
| Decision Date | 01 October 1943 |
| Docket Number | No. 14719.,14719. |
| Court | U.S. District Court — Western District of Kentucky |
| Parties | In re TURNER. |
David R. Castleman, of Louisville, Ky., for petitioning creditors.
Ewing L. Hardy, of Louisville, Ky., for respondent.
A. M. Marret, of Louisville, Ky., for First Nat. Bank.
Several creditors of George V. Turner, trading as Home Insulation Company, filed these proceedings against him to have him adjudicated an involuntary bankrupt. The acts of bankruptcy relied upon are set out in paragraph 4 of the petition which reads as follows: "Within four months next preceding the filing of this petition the said George V. Turner committed an act of bankruptcy in that he did heretofore, to wit, on or about the 20th day of July, while insolvent, transfer certain valuable real and personal property to one or more of his creditors with intent to prefer such creditors over other creditors; while insolvent and unable to pay his debts as they matured, procured, permitted and suffered the appointment of a Trustee to take charge of his property; and admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt."
The respondent has filed an answer denying the allegations of paragraph 4 of the petition. Evidence was heard by the Court on the issues thus presented.
Findings of Fact.
The respondent, George V. Turner, has been trading and doing business in Louisville, Jefferson County, Kentucky, for about a year last past under the trade name of Home Insulation Company. He is the sole owner of the business. He did not own the real estate used in the operation of the business but he did own equipment which had a value of about $3,500. During the spring and summer of 1943 he encountered financial difficulties. It is admitted by the respondent that at the time of the filing of the petition herein against him on August 19, 1943, he was insolvent. During July 1943 he conferred with his attorney, Ewing L. Hardy, Louisville, Kentucky, with respect to the claims of creditors and a meeting was called which was attended by a majority of his creditors. At this meeting there was a general discussion about the advisability of liquidating the business with the resulting loss, or continuing to operate the business with the hope of realizing more for the creditors in that way. Hardy had prepared for Turner a voluntary petition in bankruptcy which Turner signed and swore to before Hardy as a Notary Public on July 27, 1943. This petition with the accompanying schedules was placed by Turner in Hardy's possession, but was not to be filed by Hardy until a later time when and if it was decided that that course would be followed. The petition was not filed. At the creditors' meeting it was decided that for the time being at least Turner would continue to operate the business, and that Turner and his wife would convey to the Kentucky Title Trust Company real estate owned by them jointly with remainder to the survivor and occupied by Turner and his wife as their home. This property had been previously purchased for $8,250. The Kentucky Title Trust Company was to hold the property for the benefit of all the creditors of Turner and when possible to make an advantageous sale of same to sell it and divide the proceeds therefrom among all the creditors pro rata in accordance with their respective claims. This was understood by the creditors present at the meeting, but the creditors who did not attend the meeting did not participate in this arrangement. The property was conveyed to the Kentucky Title Trust Company by deed dated July 29, 1943, which deed however did not state the terms of the arrangement hereinabove set out. Neither the furniture, equipment or automobile of the company was transferred to the Kentucky Title Trust Company which acquired no control over these articles in any way.
Turner arranged for the financing of his construction contracts by borrowing money from the First National Bank and by assigning to the bank as security for the loan the payments to which he would be entitled under the particular contracts in question. The money was advanced by the bank as needed to pay for labor and materials and the bank was repaid by receiving payments as made under the construction contracts. On or about June 1, 1943 Turner's indebtedness to the First National Bank under this arrangement was $9,392.60. Subsequent to that time payments were received by the First National Bank under the assigned contracts which reduced the indebtedness to $7,916.
Conclusions of Law.
The claim of the petitioning creditors that Turner while insolvent transferred certain valuable real and personal property to one or more of his creditors...
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Dunn V, Com.
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