In Re Wadsworth Building Components, Inc., Debtor, Gary L. McClendon Trustee v. Cal-Wood Door

711 F.2d 122 8 Collier Bankr.Cas.2d 1166 , 10 Bankr.Ct.Dec. 975 In re WADSWORTH BUILDING COMPONENTS, INC., Debtor, Gary L. McCLENDON, Trustee, Plaintiff-Appellant, v. CAL-WOOD DOOR, Defendant-Appellee. No. 82-3189. United States Court of Appeals, Ninth Circuit. Argued and Submitted Jan. 5, 1983. Decided July 1, 1983. James S. Underwood, Jr., Underwood & Petersen, Boise, Idaho, for plaintiff-appellant. Robert J. Ennis, Boise, Idaho, for defendant-appellee. Appeal from the United States District Court for the District of Idaho. Before FERGUSON, BOOCHEVER, and NORRIS, Circuit Judges. NORRIS, Circuit Judge: 1 The question presented by this appeal is whether McClendon, the trustee in Bankruptcy of Wadsworth Building Components (Wadsworth), may under § 547 of the Bankruptcy Code avoid a payment made by Wadsworth to one of its creditors, Cal-Wood Door (Cal-Wood). We hold that the payment made by Wadsworth to Cal-Wood does not fit within any of the exceptions to § 547 and is therefore voidable as a preferential payment. 2 * In October, 1979 Cal-Wood sold Wadsworth goods and materials worth $21,691.45. Wadsworth paid for the goods by check in December. When Cal-Wood deposited…

The question presented by this appeal is whether McClendon, the trustee in Bankruptcy of Wadsworth Building Components (Wadsworth), may under § 547 of the Bankruptcy Code avoid a payment made by Wadsworth to one of its creditors, Cal-Wood Door (Cal-Wood). We hold that the payment made by Wadsworth to Cal-Wood does not fit within any of the exceptions to *123 § 547 and is therefore voidable as a preferential payment.

I

In October, 1979 Cal-Wood sold Wads-worth goods and materials worth $21,-691.45. Wadsworth paid for the goods by check in December. When Cal-Wood deposited the check, it was dishonored because of insufficient funds in Wadsworth’s account. Cal-Wood then refused to fill additional Wadsworth orders until the check was paid. Upon assurances from Wadsworth that the check would be paid, Cal-Wood shipped goods and materials worth $21,484.05 to Wadsworth on January 22 and 23, 1980. The check was redeposited and honored by Wadsworth’s bank on February 14, 1980. The goods delivered in January were never paid for, and Wadsworth filed for bankruptcy on April 14, 1980.

McClendon, Wadsworth’s trustee in bankruptcy, filed a complaint in the bankruptcy court seeking to recover…

Dissenting:

I believe that the honoring of the check was consideration for the shipments of Jan *125 uary 22 and 23, 1980. To the extent of the value of those shipments, $21,484.05, there was a “contemporaneous exchange for new value” within the meaning of section 547(c)(1). The testimony was undisputed that Cal-Wood refused to fill additional Wadsworth orders until the check was paid. The assurance of payment was thus consideration for the new shipment. While the check also constituted payment for the past shipment, the honoring of the check was the quid pro quod for the shipments of January 22 and 23. The trial court clearly erred in holding that it was only payment of the prior obligation, and by not holding that it also constituted new consideration for the “contemporaneous exchange” of the additional shipments.

This conclusion is bolstered by the fact that the bankrupt estate was enhanced by the value of the new shipment. It already had received the prior lumber. If no new shipment had been made in consideration of honoring the prior check I would agree that payment of the check would constitute a preference. Here, however, the bankrupt estate was enhanced by the value of…