### The HONORABLE H. FRANKLIN WATERS, Chief Judge of the United 1 

### States District Court for the Western District of Arkansas. ___________ No. 95-1268 No. 95-1383

___________ Jones Truck Lines, Inc., * * Plaintiff - Appellee/ * Cross-Appellant, * * Appeals from the United States v. * District Court for the * Western District of Arkansas. Full Service Leasing * Corporation, * * Defendant - Appellant/ * Cross-Appellee. *

___________ Submitted: November 16, 1995 Filed: May 9, 1996

___________ Before McMILLIAN, FLOYD R. GIBSON, and LOKEN, Circuit Judges.

___________ LOKEN, Circuit Judge.

Jones Truck Lines, Inc. ("Jones"), a bankrupt common carrier, sue s to re cover as preferences three payments made to its truck and traile r lessor, Full Service Leasing Corporation ("FSLC"), during the ninety-day perio d preceding Jones's bankruptcy. A jury found that only the thir d paymen t was preferential, and both parties appeal, raising issues o f insolv ency, "ordinary course of business," and "new value" under th e preferential transfer provision of the Bankruptcy Code, 11 U.S.C. § 547. Concludingthat the district court properly instructed the jury on these 1 issues, and that the jury's verdict is unassailable, we affirm.

### -2- I. Background.
On May 1, 1990, FSLC began renting trucks and trailers to Jones under
a f ive-year Master Lease Agreement. The Agreement provided for monthl y unsecured rental paym ents based upon the amount of equipment under lease. It also provided that, if Jones failed to make timely rental payments, FSL C could declare a default, terminate the Agreement, and repossess lease d equipment. Jon es encountered financial difficulties in late 1990 and bega n delaying payment of some invoices. Jones continued making monthly lease payments to FSLC within one week of the due dates, however, suspecting tha t FSLC would not tolerate late payments. By early 1991, Jones's financial woes had worsened, an d it began delaying rent payments to FSLC. On March 5, FSLC contacted Jones and demanded immediate delivery of all payment s due. Jones sought pe rmission to make lease payments sixty days late, but FSLC refused. Jones subsequently made three late payments to FSLC within ninety days of filing for bankruptcy on July 9, 1991:

AMOUNT PAID DATE DUE DATE PAID $162,498.00 3/ 1/91 4/15/91 $133,350.00 3/18/91 5/17/91 $147,420.72 4/ 1/91 6/ 4/91
In this lawsuit, Jones as debtor-in-possession seeks to recover those payments as avoidable preferences under § 547. "A preference is a transfe r that enables a credit or to receive payment of a greater percentage of his claimagainst the debtor than he would have received if the transfer had not been made and he had participated in the dis tribution of the assets of the bankrupt estate." H.R. No. 595, 95th Cong., 1st Sess. 177, 178 (1977) , reprinted in1978 U.S .C.C.A.N. 5787, 6138. Jones made the three payments within the ninety-day preference period defined in § 547(b)(4)(A)

. Howeve r, FSLC argues that the payments were not avoidable preference s because (i) Jones was not "insolvent" when

### Section 547 is a lengthy statute. The pr ovisions at issue on 2 

### this appeal are: § 547(a) (2): In this section -- "new value" means money o r money's worth in goods, servic es, or new credit . . . but does not include an obligation substituted for an existing obligation[.]

§ 547(b): Except as provided in subsection (c), the trustee may a void any transfer of an interest of the debtor in propert y . . . (3) made while the debto r was insolvent [and] (4) made on or within 90 days before the date of the filing of the petition . . .

§ 547(c): The trustee may not avoid under this section a transfer -- (2) to the extent that such transfer was -- (A) in payment of a debt incurred by the debtor in the ordinary course of business . . . (B) made in the ordinary course of business . . . of the debtor and the transferee, and (C) made according to ordinary business terms;
* * * * * (4) to o r for the benefit of a creditor, to the exten t that, after such transfer, such creditor gave new value to or for the benefit of the debtor . . . -3- eachtransfer was made, § 547(b)(3); (ii) the transfers were made in the ordinarycourse of business, § 547(c)(2); and (iii) FSLC gave Jones "new value" following each transfer, § 547(c)(4). 2

At trial, the district court determined that these are issues o f fact, denied each par ty's pre-verdict motions for judgment as a matter of law (JM AL), and instructed the jury on insolvency, ordinary course o f business, and new value. The jury found (i) that Jones was solvent when it made the first payment but insolvent when it made the second and third; (ii) that the second payment was made in the "or dinary course of business"

### -4-

but the third payment was not; and (iii) that FSLC did not give new value for the three

### -5-

paymen ts. Consistent with this verdict, the district court entere d judgment for Jones in the amount of the third payment, $147,420.72, plus prejudgment interest. Both parties appeal. FSLC argues that the thir d payment was not preferential because it was made in the "ordinary course of busine ss" or for "new value." Jones argues that it made the firs t payment while insolvent.
II. Jury Instruction Issues.

FS LC argues that the district court erred in giving an "ordinar y course of business" instruction that directed th e jury to consider, to the exclusion of other fa ctors, the course of dealing between FSLC and Jones. FSLC further argues t hat the district court erred in instructing the jury
on "new value" because the instruction (i) did not state that a lessee's cont inued use of leased equipment can be "new value" for late renta l paym ents, and (ii) placed too much emphasis on the policy underlyin g preference avoidance -- equal treatment of a bankrupt's creditors.

A. Fai lure to Object. The first problem is that these issues wer e not pr operly preserved. Before closing arguments, the district cour t distributed its proposed jury instructions and reminded counsel to state anyobjections before the jury retired to deliberate, as Fed. R. Civ. P. 51 requires. Though the court repeated that reminder after instructing th e jury, FSLC made no specific objections; instead, FSLC objected "[t]o the extent that these instructions vary from" FSLC's proposed instructions.
Rule 51 requires specific objections before the jury retires so that the district court may correct errors, thereby a voiding the need for a new trial. See Barton v. Columbia Mut. Casualty Ins . Co. , 930 F.2d 1337, 1341 (8th Cir. 1991). Obj ections must "bring into focus the precise nature of the all eged error." Palmer v. Hoffman , 318 U.S. 109, 119 (1943). "Th e mere t ender of an alternative instruction without objecting to som e specific error in

### -6-

the trial court's charge or explaining why the proffered instruction bette r states the law does not preserve the error for appeal." Johnson v. Houser , 704 F.2d 1049, 1051 (8th Cir. 1983). FSLC exp lains that it did not make specific objections because th e dist rict court was aware of FSLC's position and did not want counse l arguing the instructions. "In this circuit, however, concern that th e trial judge would prefer no objection or the vie w that the objection would be futile does not relieve parties from making an objection to preserv e errors for review." Starks v. Rent-A-Center , 58 F.3d 358, 362 (8th Cir. 1995)
. Moreover, the district court repeatedly invited FSLC to make a proper re cord, and it failed to do so. Consequently, we review th e instructions only for plain error, that is, whether an error "has seriousl y affect ed the fairness, integrity, or public reputation of the judicia l proceedings." Rolscreen Co. v. Pella Prods., Inc. , 64 F.3d 1202, 1211 (8t h Cir. 1995) (quotation omitted).

B. No Plain Error. The district court's "ordinary course o f bu siness" instruction was not error, let alone plain error. Th e ins truction separately explained the three subparts of § 547(c)(2). I n explaining § 547(c)(2)(B), the court focused on the relationship between FSLC and Jones, consistent with both the statutory language and ou r decision in Lovett v. St. Johnsbury Trucking , 931 F.2d 494 (8th Cir. 1991)

. Thus, F SLC's contention that the court should have focused the jury' s attention on Jones's late payments to other creditors and on FSLC' s accep tance of late payments from other debtors is wrong. Moreover, i n instru cting the jury on the phrase "ordinary business terms" i n § 547(c)(2)(C), the court broadened the jury's f ocus to include "standards prevailing in the ind ustry," consistent with our decision in In re U.S.A. Inns of Eureka Springs, Ark., Inc. , 9 F.3d 680, 684 (8th Cir. 1993).
Likewise, the district court's "new value" instruction was not error, let alone plain error. FSLC complains because the jury was

### In permitting the bankruptcy estate to recover preferentia l 3 

### transfers, Congress intended to discourage creditors "from racing to the courthouse to dismember the debtor during his slide int o ba nkruptcy," and, more importantly, to further "the prim e bank ruptcypolicy of equality of distribution among creditors. " H.R. No. 595, 1978 U.S.C.C.A.N. at 6138. -7- not told to consider the benefit conferred by Jo nes's continued use of the leased equipment, and because the instruction overemphasized the purpose of the preference statute and did not explain th at this preference defense is int ended to encourage creditors to work with troubled businesses

. However, the unchallenged instruction included t he statutory definition of "newvalue" in § 547(a)(2), and it accurately paraphrased § 547(c)(4)

. This left FSLC free t o argue its theory that Jones's continued use of the leased equipment after making late rental payments constituted "new value. " The in struction went on to accurately summarize the policies underlyin g § 547 pre ferences. While the court might also have explained tha t 3 § 54 7(c)(4) is intended to encourage creditors to work with trouble d companies, as we said in In re Kroh Bros. Dev. C o. , 930 F.2d 648, 651 (8th Cir. 1991), that omission is not plain error. Finally, the instructio n directed the jury's attention to the central inquiry in the "new value " analysis by concluding, "[i]f a creditor advance s new value to the debtor, the debtor's assets have not been depleted to the disadvantage of othe r creditors." See Kroh Bros. , 930 F.2d at 652.

III. Sufficiency of the "Ordinary Course" Evidence.

FSLC argues that there was insufficient evidence that the thir d payment was not made in the "ordinary course of business" under § 547 (c)(2). We review the evidence in the light most favorable to th e jury's verdict, Nicks v. Missouri , 67 F.3d 699, 704 (8th Cir. 1995), and affirmunless "all of the evidence points one way" and is susceptible of no reasonable inference sustaining

### -8-

the jury's determination. McKnight v. Johnson Controls, Inc. , 36 F.3 d 1396, 1400 (8th Cir. 1994).

FSLC h ad the burden of proving that the third payment was made (i ) in the ord inary course of the parties' business and (ii) according t o ordinary business terms. U.S.A. Inns , 9 F.3d at 682. From May to Decembe r 1990, Jones consistently paid rent to FSLC in the week payment was du e und er the Master Lease Agreement. As its financial situation worsened , Jones began to delay those rental payments; the third payment was sixt y days late. Thus, unl ike the creditor in Lovett , 931 F.2d at 498-99, FSLC could not show that consistently late payments were part of the parties' usual course of dealing. There was ample evidence supporting the jury's contrary finding.

IV. A Second "New Value" Issue.
FSLC also argues that "the record demonstrates that FSLC extend ed new value ." It supports this argument with a lengthy discourse on whethe r allowing Jones to con tinue using the leased equipment in exchange for the three late payments was a form of forbearance, and if so, whether suc h forbearance may const itute "new value" under § 547(c)(4). The difficulty withFSLC's argument is that these interesting issues are not properl y before us.

At the cl ose of Jones's evidence, and again at the close of all the evidence , FSLC moved for JMAL on the issue of "ordinary course o f business," but not on the issue of "new value." In denying FSLC's postverdic t motion, the district court carefully described that motion a s seeking, with respect to the third payment, JMAL on the ordinary cours e issue, but only a new trial on the new value iss ue. A party that does not seek JMAL on an issue before the jury retires ma y not raise the JMAL issue followin g the jury's verdict or on appeal
. See Fed. R. Civ. P. 50(b) ; Pulla v. Amoco Oil Co. , 72 F.3d 648, 655 (8th Cir. 1995). Thus, we may no t

### -9-

consider whether FSLC 's evidence established as a matter of law that FSLC provided Jones "new value."

Th e district court properly treated "new value" as a question o f fact. See In re Lewe llyn & Co. , 929 F.2d 424, 427 (8th Cir. 1991). FSLC timely filed a motion for new trial to set aside the jury's adverse verdic t
on that issue. However, the district court's denial of a motion for new trial on the ground that a jury verdict is again st the great weight of the evidence is "virtually unassailable on appeal." Barnes v. Parker , 972 F.2 d 978, 979 (8th Cir. 1992) (quotation omitted); se e White v. Pence , 961 F.2d 776, 780 -82 (8th Cir. 1992). Regarding this factual issue, "[t]h e availability of the [ new value] defense depends on the ultimate effect on the [bankruptcy] estate" of the alleged new value. Kroh Bros. , 930 F.2d at 654. There was conflicting evidence on this issue, and FSLC had th e burden of proof. The refore, the district court's denial of FSLC's motion for new trial must be affirmed.

V. Sufficiency of the Solvency Evidence.

On its cross appeal, Jones argues insufficient evidence that Jone s was solvent when it made the first payment on April 15, 1991. The distric t court properly instructed the jury (i) that a debtor is in solvent if the
sumof its debts is greater than all of its property, fairly valued, see 11 U.S.C. § 101(32), and (ii) that Jones's assets "should be valued as an active unit " if Jones was a going concern at the time of an allege d preferential transfer, see In re Taxman Clothing Co. , 905 F.2d 166, 17 0 (7th Cir. 1990).
There was ample evidence that Jones was a going concern on April 15, 1991, despite its financial troubles. Jones continued to operate, it s officers were optimistic, and its managers and l enders continued to invest in the business. A balance sheet prepared for the fiscal year ending Marc h 30, 19 91, reported that Jones's assets exceeded its liabilities b y $14,341,859 on a going concern basis.

### -10-

This b alance sheet was distributed to Jones's management, lenders, an d auditors. Though a debtor is presumed insolvent during the preferenc e peri od, see 11 U.S.C. § 547(f), if the creditor produces evidence o f solvency, the debtor has the ultimate burden of proof. Clay v. Trader s Bank , 708 F.2d 1347, 1351 (8th Cir. 1983). A financial statement showing positive net worth is sufficient to rebut the presumption of insolvency. In re Almarc Mfg., In c. , 60 B.R. 584, 586 (Bankr. N.D. Ill. 1986). Thus, Jones's March 30 balance sheet shifted the burden to Jones to prove that it was insolvent two weeks later.

The jury could rationally conclude that Jones did not meet thi s burden. Rather than present evidence of a negat ive going concern value on April 15, Jones relied on post-bankruptcy liquidation values of asset s later sold by a broke r. Jones also attacked its own financial statement, challenging the reported $13,709,653 in equity because a planned conversio n of debt to preferred stock never occurred, and arguing that liabilitie s were understated because a substantial liability contingent on Jones' s wit hdrawal from the Teamsters Union Central States Pension Fund was no t included. We are inclined to agree with FSLC that Jones's evidence on thi s issue was contrary to the principles of going co ncern valuation. But more to the point, the evi dence on the question of insolvency was conflicting, and the jury was not required to credit Jones's evidence, or to find that Jones had met its burden of proof. See Braunstein v. Massachusetts Bank & Trust Co. , 443 F.2d 1281, 1284 (1st Cir. 1971).
The judgment of the district court is affirmed.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.