Edwin C. Eberly and Elsie Eberly, Husband and Wife v. Frank A. Dudley, as Trustee of the Estate of Duvall's, Inc., Bankrupt

This is an action by a trustee in bankruptcy to recover the value of property alleged to have been received by defendants as a preferential transfer, voidable under section 60 of the Bankruptcy Act (Act), 11 U.S.C. § 96 . Judgment in the sum of $17,000 was entered for plaintiff and defendants appeal.

The district court found and concluded that there was a transfer by the bankrupt to appellants at a time when the bankrupt was insolvent, that the transfer was preferential, and that appellants had reasonable cause to believe that the bankrupt was insolvent at the time the transfer was made. Accordingly the transfer was adjudged voidable under section 60 of the Act. Appellants challenge each of these findings and conclusions.

The basic facts are not in dispute. On October 9, 1957, Edwin C. Eberly and his wife, Elsie Eberly, sold to DuVall’s Inc., the bankrupt, a variety store at Burns, Oregon. Included in the sale were the stock of merchandise and fixtures.

The purchase price was $43,700, of which DuVall’s paid $10,000 cash. The balance of $33,700 was covered by a purchase money note payable in seventy-two monthly installments. This note was secured by a chattel mortgage on the…