PEOPLES MARKETING CORPORATION v. Hackman, 14843.

• Decision Date: 16 July 1965
• Docket Number: No. 14843.,14843.
• Citation: 347 F.2d 398
• Parties: In the Matter of PEOPLES MARKETING CORPORATION, Bankrupt, Genesco, Inc., Petitioner-Appellant, v. Marvin L. HACKMAN, Trustee, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

347 F.2d 398 (1965)

In the Matter of PEOPLES MARKETING CORPORATION, Bankrupt, Genesco, Inc., Petitioner-Appellant, v. Marvin L. HACKMAN, Trustee, Respondent-Appellee.

No. 14843.

United States Court of Appeals Seventh Circuit.

June 1, 1965.

Rehearing Denied July 16, 1965.

Sigmund J. Beck, John Wood, Indianapolis, Ind., for petitioner-appellant.

Patrick J. Smith, Peter Nicholas, Marvin L. Hackman, Jack I. Kahn, Indianapolis, Ind., for appellee.

Before HASTINGS, Chief Judge, and SCHNACKENBERG and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

This appeal arises from a bankruptcy proceeding following the filing of an involuntary petition in bankruptcy against Peoples Marketing Corporation. Marvin L. Hackman was appointed receiver and subsequently was elected trustee in bankruptcy. Specifically, the appeal concerns (1) a reclamation petition filed by petitioner Genesco, Inc., which sells and distributes shoes and has its principal office in Nashville, Tennessee, and (2) the trustee's petition to avoid a preferential transfer of the bankrupt's property to Genesco.

Peoples Marketing Corporation was organized in January, 1962 by a group of businessmen as a retail merchandising enterprise at Alexandria, Indiana. On February 26, 1962, Genesco received a letter from Peoples ordering about $15,000 worth of shoes from the W. L. Douglas and Bellwood Divisions of Genesco. Negotiations by letter and telephone followed. Although Genesco ordinarily required a fifty per cent cash payment before shipment, it agreed to waive this provision for the shipment to Peoples. Genesco had already secured a corporate financial statement from Peoples and personal guaranties from two of Peoples' corporate officers. Upon accepting a cash payment of $200 and a post-dated check for $800, Genesco made its first shipment of shoes to Peoples on April 3, 1962, and continued making shipments until May 28, 1962. The shipments were made on open account. Subsequent to its last shipment, Genesco received an additional payment of $200 from Peoples. The $800 post-dated check failed to clear the bank.

In the first week of June, 1962, T. D. Oxford, general credit manager and assistant treasurer of Genesco, went to Alexandria to investigate Peoples. He requested and received a second corporate financial statement from Peoples, this one differing in certain respects from the earlier one. After discussing the situation with James A. Braun, then president of Peoples and one of the men who had made a personal guarantee, Oxford agreed to accept a return of some of the merchandise sent to Peoples. On June 8 and 9, 1962, approximately 2,500 pairs of shores, valued at $7,049.25, were removed in trucks from Peoples' store and taken to the home of one of its employees. Subsequently, they were returned to Genesco for credit.

Less than one month later, on July 5, 1962, the involuntary petition in bankruptcy was filed against Peoples. Genesco filed a reclamation petition against the trustee in bankruptcy and sought thereby to recover the $7,903.45 worth of shoes still unpaid for and unreturned by Peoples. The trustee countered by petitioning to avoid a preferential transfer, claiming that the return of the shoes to Genesco in early June constituted such a preference. The referee found against Genesco on its petition to reclaim property and in favor of the trustee on his petition to avoid a preferential transfer. Upon review, the district court adopted the referee's findings and conclusions, denying the reclamation petition and granting the petition to avoid preferential transfer. This appeal followed.

In support of its reclamation petition and in defense of the trustee's petition to avoid a preferential transfer, Genesco contends that despite the referee's finding to the contrary, the...