Trepp v. Monongah Glass Company, a Corp.

• Citation: 297 S.W. 108,220 Mo.App. 1099
• Parties: ALFRED TREPP, TRUSTEE IN BANKRUPTCY OF UNITED PACKING & PRESERVING COMPANY, A CORPORATION, RESPONDENT, v. MONONGAH GLASS COMPANY, A CORPORATION, APPELLANT
• Decision Date: 03 May 1927
• Court: Court of Appeal of Missouri (US)

297 S.W. 108

220 Mo.App. 1099

ALFRED TREPP, TRUSTEE IN BANKRUPTCY OF UNITED PACKING & PRESERVING COMPANY, A CORPORATION, RESPONDENT, v. MONONGAH GLASS COMPANY, A CORPORATION, APPELLANT

Court of Appeals of Missouri, St. Louis

May 3, 1927

Appeal from the Circuit Court of the City of St. Louis.--Hon. Erwin G. Ossing, Judge.

REVERSED AND REMANDED.

Judgment reversed and cause remanded.

H. A. & Harry S. Gleick for appellant.

(1) The burden of proof is upon the plaintiff suing for payments made by the bankrupt, to prove all of the essential elements of a voidable preference. 2 Collier on Bankruptcy (13 Ed.), pp 1327-1330. There is a presumption of law that the defendant did not have reasonable cause to believe that a preference was intended. Getts v. Janesville Wholesale Grocery Co., 163 F. 420; Tumlin v. Bryan, 165 F. 168; Newman v. Dry Goods Co., 174 Mo.App. 534; American Surety Co. v. Citizens National Bank, 294 F. 616; Glover v. Insurance & Security Co., 130 Mo 186-187; 7 Corpus Juris 269. (a) The fact of insolvency at the very time of the alleged payment must be shown. Edwards v. Carondelet Milling Co., 108 Mo.App. 275; Wrenn v. Citizens National Bank, 96 Conn. 374; In re Gaylord, 225 F. 234; In re Chappell, 113 F. 545; 4 Remington on Bankruptcy (3 Ed.), p. 523, sec 1766; In re Hines, 144 F. 142; Liberty National Bank v. Bear, 265 U.S. 365. (b) At the time of the payment, it must be shown that the debtor was insolvent, that is, that the liabilities exceeded the assets, taken at a fair valuation. Newman v. Dry Goods Co., 174 Mo.App. 528, 532. (c and d) That at the time of the payment, the payment operated as a preference, and that the creditor at that time had reasonable cause to believe that the payment would effect a preference. Kennard v. Behrer, 270 F. 661; Newman v. Dry Goods Co., 174 Mo.App. 528, 534; Edwards v. Milling Co., 108 Mo.App. 275, 286. Mere suspicion that a preference would result is not sufficient. Sumner v. Parr, 270 F. 676; Alter v. Clark, 193 F. 153; Grant v. National Bank, 97 U.S. 81; Paper v. Stern, 198 F. 642; Tumlin v. Bryan, 165 F. 166. The creditor is chargeable only with such facts as were actually known to him, and those which upon reasonable inquiry would have been disclosed. Peck & Co. v. Whitmer, 231 F. 896; Farmer's State Bank v. Freeman, 249 F. 579; Nichols v. Elken, 225 F. 689; Edwards v. Milling Co., 108 Mo.App. 286; Tilt v. Citizens Trust Co., 191 F. 441; In re W. W. Mills Co., 162 F. 42. (2) The petition in bankruptcy was a self-serving document; its admission in evidence was erroneous. Liberty National Bank v. Bear, 265 U.S. 365, 44 S.Ct. 499, 68 L.Ed. 1057; Blair v. Caldwell, 3 Mo. 353; Wesner v. Railroad, 177 Mo.App. 117; McMenamy v. Cohick, 1 Mo.App. 529; Wrigley v. Pryor, 290 Mo. 10, 24, 233 S.W. 828; 7 Corpus Juris 271, "Bankruptcy," sec. 437; Halbert v. Pranke, 97 N.W. 976; Clifton Mercantile Co. v. Conway, 264 S.W. 192; Rosenman v. Coppard, 228 F. 114; Cullinane v. Bank, 123 Iowa 340; Brechen v. Snyder, 211 Pa. 176, 182; Gratiot County State Bank v. Johnson, 249 U.S. 246. (3) The actual fact of insolvency at the very time of the alleged preference must be proved, and the admission in evidence of the bank statements showing the condition of the bank account of the United Packing and Preserving Company at other times was erroneous. Edwards v. Carondelet Milling Company, 108 Mo.App. 275; Wrenn v. Citizens National Bank, 96 Conn. 374; Cases cited under 1 (a). (4) Cross-examination of a witness by reading portions of a deposition is improper. Littig v. Urbauer-Atwood Htg. Co., 292 Mo. 226; Charles H. Fuller Co. v. St. Louis Wholesale Drug Co., 282 S.W. 535; Troxell v. De Shon, 279 S.W. 438. (5) Plaintiff's instruction 1 is erroneous and prejudicial. (a) An instruction is prejudicial which gives particular prominence to certain evidence. In re Condemnation v. Boruff, 295 Mo. 28, 48, 243 S.W. 167; Wiegmann v. Wiegmann, 261 S.W. 758; Curtis v. Bales, 211 Mo.App. 219, 241 S.W. 83; Martin v. Travelers' Ins. Co., 247 S.W. 1024; Simpson v. Burnett, 299 Mo. 232, 248, 252 S.W. 949; Zumwalt v. C. & A. R. R. Co., 266 S.W. 717. (b) Instructions must keep within the pleadings. Stumpf v. United Railways Co., 227 S.W. 852; Dickes v. Bookman, 285 S.W. 546; State ex rel. v. Allen, 282 S.W. 46, 52. (c) An instruction is erroneous which assumes a fact in issue. Hunt v. City of St. Louis, 278 Mo. 213, 211 S.W. 673; Gunn v. Hemphill Lbr. Co. (Mo. App.) 218 S.W. 978; Moyes v. St. Louis, I. M. & S. Ry. Co. (Mo.), 186 S.W. 1027; Shull & Chipps Abst. Co. v. Schneider, 215 Mo.App. 595. An instruction should not be drawn so that it is difficult to say whether or not an issuable fact has been assumed. Weddle v. Tarkio Electric & Water Co. (Mo. App.), 230 S.W. 386. (d) An instruction should not be long and involved, but should be as plain and simple as possible. Weddle v. Tarkio Electric & Water Co. (Mo. App.), 230 S.W. 386. (e) Where an instruction purports to cover the entire case and is fatally deficient, the omission cannot be supplied nor the error cured by other instructions given. Rouse v. St. Paul Fire, etc., Ins. Co., 203 Mo.App. 603; Mitchell v. Glassman, 241 S.W. 962; Heigold v. United Railways Co., 271 S.W. 773; Stafford v. Ryan, 276 S.W. 636; Harvey v. Blue Oak Handle Co., 279 S.W. 155; Huffman v. City of Hannibal, 287 S.W. 848; O'Brien Boiler Works v. Siebert, 256 S.W. 555. An instruction erroneous as assuming a disputed fact is not cured by other instructions requiring the jury to find such fact to be true. Laughlin v. Gorman, 209 Mo.App. 692.

Smith & Pearcy for respondent.

(1) On a demurrer to the evidence there is a stiff general rule that the defendant's evidence, where contradicted, is false and that plaintiff's is true. The court must allow to plaintiff's case the benefit of every reasonable inference of fact that may reasonably be deduced from the evidence. In other words, if there is any evidence or any reasonable inference deducible therefrom, supporting the verdict, the court will not interfere with the finding of the jury and the judgment thereon. On demurrer the evidence most favorable to plaintiff must be taken into consideration. Montague v. Railroad, 305 Mo. 269; Williams v Railroad, 257 Mo. 87; Strauchon v. Metropolitan Street Railway Co., 232 Mo. 587; Meily v. Railroad, 215 Mo. 567; Trepp v. State National Bank, 289 S.W. 540. (2) The court below having overruled defendant's motion for new trial, the weight of the evidence is not for review by the Appellate Court. National Bank v. Loughlin, 264 S.W. 706, 305 Mo. 8; State ex inf. Thompson v. Bright, 298 Mo. 335; Morrow v. Franklin, 289 Mo. 549. (3) A preference is effected according to the United States Bankruptcy Act by a person while insolvent and within four months of the filing of the petition in bankruptcy transferring any of his property to a creditor, which enables the creditor to obtain a greater percentage of his debt than any other creditor of the same class. Such a preference is voidable by the trustee if at the time of the receipt of such payment the creditor "shall then have reasonable cause to believe that the transfer would effect a preference" (Sec. 60, Bankruptcy Act, as amended by Act of 1910). 1 Fed. Stat. Ann. (2 Ed.), 1004 et seq.; 1 Fed. Stat. Ann. 1026 et seq.; 2 Collier on Bankruptcy (13 Ed.), p. 1239; 4 Remington on Bankruptcy (3 Ed.), pp. 395-6; Trepp v. State National Bank, 289 S.W. 540. (4) In order that a preferential transfer should be deemed voidable under the provision of Section 60 (b) of the Bankruptcy Act, it is not necessary that the person to be benefited thereby should know positively that the result of the transfer would be the effecting of a preference, but it will be sufficient if the person preferred, or his agent therein, have knowledge or notice of such facts and circumstances as would incite a person of reasonable prudence under similar circumstances to make inquiry, where such inquiry would have developed the facts essential to a knowledge of the situation. The defendant is charged with all knowledge which a reasonable inquiry would have disclosed. Farmers State Bank v. Freeman, 249 F. 579; Trepp v. State National Bank, 289 S.W. 540. (5) The evidence was sufficient to establish that the United Packing and Preserving Company was insolvent on February 14, 1922. Trepp v. State National Bank, 289 S.W. 540. The Missouri Supreme Court held in the State National Bank case that the United Packing and Preserving Company was insolvent on January 20, 1922. The United States District Court in St. Louis, Missouri, held that it was insolvent on February 28, 1922, and had committed an act of bankruptcy on January 20, 1922. (6) The defendant's agent, Mr. Kelly, knew all the facts to which Mr. Rich testified relating to the insolvency of the United Packing and Preserving Company. Kelly's own testimony shows that he knew sufficient facts to charge the Monongah Glass Company with actual knowledge of the insolvency of the United Company. Trepp v. State National Bank, 289 S.W. 540. (7) The evidence shows without contradiction that the United Packing and Preserving Company was insolvent on January 20, 1922. The evidence shows that the company was not transacting any business and that all of its physical assets had been burned up and destroyed. This evidence is sufficient to show that the United Company was insolvent on February 14, 1922. Insolvency being shown on January 20, 1922, there is a presumption in law that insolvency continues as long as the company continues under similar circumstances. Cleage v. Laidley, 149 F. 346; Jones' Commentaries on Evidence (2 Ed.), sec. 273, pp. 449-50; Mullen v. Pryor, 12 Mo. 307; King v. Mo. P. R. R., 263 S.W. 828; Lewis v. Michigan Stove Co., 54 Ind.App. 1; Aycock v. Ft. Branch Milling...