Pauley Oil Co. v. Lynch

The appellant, a creditor of a bankrupt partnership, presented a claim against the estate of the bankrupt for the sum of $25,635.47. This claim was disallowed by the referee upon the ground that the appellant had received a voidable preference in the sum of $9,100, which it refused to surrender. On a petition for review the District Court approved the action of the referee disallowing appellant’s claim, and this appeal is from the order of disallowance.

The sole question presented upon appeal is whether or not appellant had actual knowledge or a reasonable cause to believe that a preference would be effected by the payments made to it by the bankrupt.

The indebtedness of the bankrupt to the appellant arose under a written contract of April 13, 1925, wherein the appellant, which was engaged in the business of refining oil and producing gasoline, agreed to sell the bankrupt a minimum of 5,000 gallons and a maximum of 10,000 gallons of gasoline per day for a period of one year. The bankrupt agreed to pay on the 1st of each month for all deliveries up to and including the 15th of the preceding month, and on the 15th of each month to pay for all deliveries up to and including the…