In the Matter of Bel Air Carpets, Inc., Dba Tiffany Carpets, Bankrupt. Joseph Potts, Trustee-Appellant v. Mand Carpet Mills

In this California bankruptcy case, Trustee in Bankruptcy Joseph S. Potts (the Trustee) appeals an order of the District Court affirming the denial by the Referee in Bankruptcy (the Referee) of the Trustee’s application to recover $3,871.92 in carpeting belonging to Bel Air Carpets, Inc., (the Bankrupt) received by Mand Carpet Mills (Mand) in an alleged transfer in violation of § 70(d)(1) of the Bankruptcy Act, 11 U. S.C. § 110(d) (l). We affirm.

In late June or early July, 1969, the Bankrupt applied for a line of credit with Mand, submitting a financial statement dated June 30, 1968. Worried by the statement’s age, Mand’s credit manager was assured by the Bankrupt’s president, Morteza T. Meskin, that a new statement dated June 30, 1969 was being prepared, would be forwarded shortly, and would reveal substantially the same financial situation as the 1968 document did. The 1969 statement was never delivered, if it was ever prepared. Mand’s credit manager obtained a rush report from Dun & Bradstreet on the Bankrupt, and made telephone inquiries to a factor who had extended credit to the Bankrupt. On the basis of the information on hand, including the 1968 statement, he authorized…