122 Iowa 443 | Iowa | 1904
It is provided in section 60b of the national bankruptcy law (Acts July 1, 1898, Chapter 541, 30 statute 562 .[IT. S. Comp. St. 1901, p. 3445]) that: “If a bankrupt shall have given a preference within four months before the filing of a petition, * * * and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover' the property or its value from such person.” The preference alleged in this case consisted of a conveyance by the bankrupt, within a short time before the filing of the petition in bankruptcy, of a stock of goods at Alcester, S. D., to defendant Charles R. Allen, the proceeds of which were immediately delivered to P. E. Watkins, president of the two banks which are defendants in this action, and in payment of promissory notes held by said banks against said bankrupt. It seems to be conceded in argument that, if the intention in making the sale was to give a preference to the two banks over other creditors in the disposal of the bankrupt’s property, then the conveyance to Allen was void, and should be set aside, and the property conveyed should be
That the facts thus briefly stated tend of themselves to show that Watkins and Allen, as ordinary business men, had reasonable cause to believe that Walker intended by this transaction to give a preference to the two banks represented by Watkins, can hardly be questioned. Ifi¿s contended, however, that the testimony as to the dealings between Walker and Watkins negatives the inference which would otherwise be drawn from the facts detailed, and negatives any reasonable ground of belief on the part of Watkins that Walker was then insolvent, or had any intention to hinder or delay the collection of the claims of other creditors. Watkins, testified that in January, 1898, Walker made a statement to him of his property and resources, showing that he was reasonably worth about $16,000, his property consisting principally of his stock of goods at Hawarden, valued at $6,000, and a farm in Nebraska, valued at $4,600, and other real estate, valued at $2,500, and that he owed at that time about $2,000, including the indebtedness of $1,500 clue the two banks of which Watkins was president. Watkins further testifies that he had no knowledge of any indebtedness of Walker, and no reason to believe that he was insolvent, until after the transaction in question. It is argued that the mere fact that Walker failed to pay drafts of $1,000 which were presented to him in December and the first part of January, and was also unable to pay the notes for $1,500 to the banks of which Watkins was president, would not indicate insolvency if Walker was in
We reach the conclusion, therefore, with confidence that Watkins and Allen had reasonable cause to believe that this conveyance of property by Walker was made while he was insolvent, and the conveyance, must therefore be set aside, and judgment of the lower court is reversed.