Charles E. Hoppe, Trustee of the Estate of Los Gatos Lumber Products, Inc., Bankrupt v. Emmet L. Rittenhouse

The Trustee in Bankruptcy challenges as a voidable preference within the meaning of Section 60 of the Bankruptcy Act ( 11 U.S.C.A. § 96 ), a secured creditor’s claim filed by the appellee, E. L. Rittenhouse, contending that the evidence as a matter of law establishes first, that the bankrupt was insolvent when it gave the security in question, a note and mortgage executed by the bankrupt on December 14, 1956 to appellee’s assignors, Paul Gammill and Paul Gammill, Jr., and second, that the mortgagee-assignors had knowledge of such insolvency when they received the mortgage. The referee in bankruptcy found against the trustee on both issues, and the District Court, on review of the matter, affirmed; the trustee now appeals to this Court. Jurisdiction of the court below was obtained under 11 U.S.C.A. § 67 , sub. c; our jurisdiction is conferred by 11 U.S. C.A. § 47.

The question thus presented on appeal is whether the evidence supports these two ultimate findings by the referee. We believe it does.

The bankrupt, Los Gatos Lumber Products, Inc., a corporation organized under the laws of California, was engaged in sawing and selling lumber at Fulton, California, where it owned a…