Yutterman v. Sternberg

• Citation: 111 ALR 736,86 F.2d 321
• Decision Date: 03 December 1936
• Docket Number: 10676.,No. 10675,10675
• Parties: YUTTERMAN v. STERNBERG (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

111 ALR 736, 86 F.2d 321 (1936)

YUTTERMAN v. STERNBERG (two cases).

Nos. 10675, 10676.

Circuit Court of Appeals, Eighth Circuit.

November 19, 1936.

Rehearing Denied December 3, 1936.

Fadjo Cravens, of Fort Smith, Ark., for appellant.

Harry P. Daily, John P. Woods, and J. S. Daily, all of Fort Smith, Ark., for appellee.

Before GARDNER, SANBORN, and FARIS, Circuit Judges.

FARIS, Circuit Judge.

On the 16th day of October, 1934, one John D. Yutterman was adjudicated a bankrupt. During the years 1933, and up to his bankruptcy in 1934, he had been engaged in the retail grocery business and in the sale of meats and produce. After adjudication and on February 11, 1935, one John L. Yutterman, who is the father of the bankrupt and the appellant herein, filed a claim against the bankrupt estate on a demand, promissory note, dated December 30, 1933, and for the sum of $1,532. (In numerals in the margin the amount is written, $1,532.99.) Later, and on March 18, 1935, appellant filed a second claim against the estate for the sum of $3,571.14, bottomed, as it is alleged upon a contract, dated January 3, 1934, pursuant to which the bankrupt agreed to pay appellant, for the year 1934, for his services in addition to his salary, as assistant manager of the store, the sum of 2 per cent. of the sales made by the store. This contract was attached to the claim. Because it casts by clearest inference much light upon what may fitly be denominated the entire set up, we copy it verbatim et literatim thus: "Fort Smith, Ark. 1/3/34. I here the undersign agree to pay the said party my father John L. Yutterman for the said year over the said date and over salary 2% of sales for this coming year 1934 as an employee an Ast. Manager.

"Signed Rogers Ave. Cash Store "By John D. Yutterman."

Objections were filed by appellee, as trustee of the bankrupt's estate to the allowance of each of the claims, and the referee, after hearing the evidence, disallowed both of them. Appellant sued out petitions for review; but the District Court after a consideration of the evidence sent up, affirmed the orders of disallowance made by the referee and dismissed the petitions for review.

Thereupon, in due course and form, separate appeals were taken to this court. The claims were heard together, are here briefed together, were consolidated here, and so they will be considered and disposed of by this court in a single opinion.

The claims were presented in the usual forms. The hearing was summary, but the objections filed by the trustee set up that each of the claims was without consideration and bottomed upon fraud and collusion between the son, the bankrupt, and his father the claimant and appellant here, with the intent and purpose of making a gift to the claimant.

It is contended by appellant that the negotiable, promissory note imported a consideration, and so there was a consideration as a matter of law, and moreover that the verified claims made as to each of the demands constituted prima facie evidence of their validity. So that the burden was thrown upon the trustee, appellee herein, to show a want of consideration, which burden he failed to carry. We may assume the correctness of the rules of law thus urged. But the rules are based on the weight of the evidence and not on the source thereof. True, in the case at bar, the trustee was compelled, for lack of other witnesses, to call the bankrupt and the so-called bookkeeper, both of whom, obviously, were most hostile witnesses. But if so it be that their testimony showed a wholly unreasonable and incredible consideration, for the two claims, neither the referee, the trial court, nor this court was, or is bound to believe it. And here neither the referee nor the trial court did believe in the existence of the consideration to which the witnesses testified. If then, there are facts and circumstances of substance found in the evidence to uphold the view taken by the referee and the trial court, we ought not to disturb their finding.

The situation here is in entire principle, and in many facts strikingly similar to that under discussion by this court in the case of Maners v. Ahlfeldt, 59 F.(2d) 938, at page 939, wherein we said: "Whether the demand of appellant constituted a just claim against the bankrupt estate involved the consideration of the testimony, not without conflict, and the credibility of the witnesses, in view of the relationship existing between the bankrupt and appellant, their interest in the case, and the more or less improbable accounts that were given concerning the loan, and the manner and circumstances under which it was said to have been made. It was peculiarly a case in which the opportunity to see and hear the witnesses was of importance in determining their credibility. The evidence was heard by both the referee in bankruptcy and the District Court, and in each instance the ruling was adverse to the claim. The finding made ought not to be disturbed unless it can be clearly ascertained that some error of law or mistake of fact had led to an erroneous conclusion. Page v. Rogers, Trustee, 211 U.S. 575, 29 S.Ct. 159, 53 L.Ed. 332; First National Bank v. Abbott (C.C.A.8) 165 F. 852; Doyle Dry Goods Co. v. Lewis (C.C.A.8) 5 F.(2d) 918; Houchin Sales Co. v. Angert (C.C.A.8) 11 F.(2d) 115; In re Trimble (C.C.A.8) 55 F.(2d) 165; Manson v. Mesirov (C.C.A.) 254 F. 799, certiorari denied 249 U.S. 615, 39 S.Ct. 389, 63 L.Ed. 803; Schmid v. Rosenthal (C.C.A.) 230 F. 818; Ohio Valley Bank Co. v. Mack et al. (C. C.A.) 163 F. 155, 24 L.R.A.(N.S.) 184."

The record is so replete with loose and obscure statements and contradictions, that we have found it well-nigh impossible to get an accurate understanding of the actual facts. But it seems that appellant had been a farmer with no experience in the mercantile business, but some experience as a fruit inspector. In January, 1933, he began work for his son, the bankrupt. For his services as assistant manager and in charge of the produce department, he was to get 45 per cent. of the profits. Whether the drawing account variously stated at $30, $35, $42, and $52 per week was to be deducted, does not clearly appear. We assume that it was; for the bankrupt uniformly spoke of it as a bonus, and clearly the alleged contract for 1934 was a bonus. For the major part of the years 1933 and 1934, to the day of adjudication, he was paid weekly a salary at the rate of $52 per week. The manager of the meat department was paid $35 per week.

No books were kept, till some four or five weeks prior to bankruptcy. And on these books, or any other there is no showing of either the contract, the note, the profits, if any, or the amount of sales for 1934....