James A. Davis, Trustee in the Matter of Midwest Livestock Commission Company, a Nevada Corporation, Bankrupt v. Security National Bank of Nevada

This is an appeal from a judgment of the district court dismissing appellant’s action against appellee for the recovery of a substantial amount of money claimed to be a preferential transfer within the meaning of Section 60 of the Bankruptcy Act. [ 11 U.S.C. § 96 ].

FACTUAL BACKGROUND

Appellant is trustee in bankruptcy for Midwest Livestock Commission Company [Midwest], former operator of a livestock auction yard at Fallon, Nevada. Midwest received cattle upon consignment from various sellers and upon the consummation of a sale would accept a draft or check from the purchaser. Midwest would then deposit the draft or check in its checking account with appel-lee. In turn, a check would be drawn by Midwest upon this account to the consignor-seller for the sales price less commission. In December, 1962, appellee opened a branch in Fallon, and Midwest opened an account in that branch and closed its general account, payroll account and trust account in appellee’s Reno office. Subsequent to December, 1962, Midwest deposited all funds it received in its business in the one checking account, including all payments received from the sale of consigned livestock.

In June, 1963, Midwest…