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, sues

to recover as preferences three payments made to its truck and trailer

lessor, Full Service Leasing Corporation ("FSLC"), during the ninety-day

period preceding Jones's bankruptcy. A jury found that only the third

payment was preferential, and both parties appeal, raising issues of

insolvency, "ordinary course of business," and "new value" under the

preferential transfer provision of the Bankruptcy Code, 11 U.S.C. § 547.

Concluding that the district court properly instructed the jury on these 1

issues, and that the jury's verdict is unassailable, we affirm.
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I. Background.

On May 1, 1990, FSLC began renting trucks and trailers to Jones under

a five-year Master Lease Agreement. The Agreement provided for monthly

unsecured rental payments based upon the amount of equipment under lease.

It also provided that, if Jones failed to make timely rental payments, FSLC

could declare a default, terminate the Agreement, and repossess leased

equipment. 

Jones encountered financial difficulties in late 1990 and began

delaying payment of some invoices. Jones continued making monthly lease

payments to FSLC within one week of the due dates, however, suspecting that

FSLC would not tolerate late payments. By early 1991, Jones's financial

woes had worsened, and it began delaying rent payments to FSLC. On March

5, FSLC contacted Jones and demanded immediate delivery of all payments

due. Jones sought permission 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 transfer

that enables a creditor to receive payment of a greater percentage of his

claim against the debtor than he would have received if the transfer had

not been made and he had participated in the distribution of the assets of

the bankrupt estate." H.R. No. 595, 95th Cong., 1st Sess. 177, 178 (1977),

reprinted in 1978 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).

However, FSLC argues that the payments were not avoidable preferences

because (i) Jones was not "insolvent" when
 Section 547 is a lengthy statute. The provisions at issue on 2

this appeal are:

§ 547(a)(2): In this section -- "new value" means money or

money's worth in goods, services, 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 avoid any transfer of an interest of the debtor in property

. . . (3) made while the debtor 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 or for the benefit of a creditor, to the extent

that, after such transfer, such creditor gave new value

to or for the benefit of the debtor . . . 

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each transfer was made, § 547(b)(3); (ii) the transfers were made in the

ordinary course 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 of

fact, denied each party's pre-verdict motions for judgment as a matter of

law (JMAL), and instructed the jury on insolvency, ordinary course of

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 "ordinary course of business"
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but the third payment was not; and (iii) that FSLC did not give new value

for the three
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payments. Consistent with this verdict, the district court entered

judgment for Jones in the amount of the third payment, $147,420.72, plus

prejudgment interest. Both parties appeal. FSLC argues that the third

payment was not preferential because it was made in the "ordinary course

of business" or for "new value." Jones argues that it made the first

payment while insolvent.

II. Jury Instruction Issues.

FSLC argues that the district court erred in giving an "ordinary

course of business" instruction that directed the jury to consider, to the

exclusion of other factors, the course of dealing between FSLC and Jones.

FSLC further argues that the district court erred in instructing the jury

on "new value" because the instruction (i) did not state that a lessee's

continued use of leased equipment can be "new value" for late rental

payments, and (ii) placed too much emphasis on the policy underlying

preference avoidance -- equal treatment of a bankrupt's creditors. 

A. Failure to Object. The first problem is that these issues were

not properly preserved. Before closing arguments, the district court

distributed its proposed jury instructions and reminded counsel to state

any objections before the jury retired to deliberate, as Fed. R. Civ. P.

51 requires. Though the court repeated that reminder after instructing the

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 avoiding the need for a new

trial. See Barton v. Columbia Mut. Casualty Ins. Co., 930 F.2d 1337, 1341

(8th Cir. 1991). Objections must "bring into focus the precise nature of

the alleged error." Palmer v. Hoffman, 318 U.S. 109, 119 (1943). "The

mere tender of an alternative instruction without objecting to some

specific error in
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the trial court's charge or explaining why the proffered instruction better

states the law does not preserve the error for appeal." Johnson v. Houser,

704 F.2d 1049, 1051 (8th Cir. 1983). 

FSLC explains that it did not make specific objections because the

district court was aware of FSLC's position and did not want counsel

arguing the instructions. "In this circuit, however, concern that the

trial judge would prefer no objection or the view that the objection would

be futile does not relieve parties from making an objection to preserve

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 record, and it failed to do so. Consequently, we review the

instructions only for plain error, that is, whether an error "has seriously

affected the fairness, integrity, or public reputation of the judicial

proceedings." Rolscreen Co. v. Pella Prods., Inc., 64 F.3d 1202, 1211 (8th

Cir. 1995) (quotation omitted).

B. No Plain Error. The district court's "ordinary course of

business" instruction was not error, let alone plain error. The

instruction separately explained the three subparts of § 547(c)(2). In

explaining § 547(c)(2)(B), the court focused on the relationship between

FSLC and Jones, consistent with both the statutory language and our

decision in Lovett v. St. Johnsbury Trucking, 931 F.2d 494 (8th Cir. 1991).

Thus, FSLC's contention that the court should have focused the jury's

attention on Jones's late payments to other creditors and on FSLC's

acceptance of late payments from other debtors is wrong. Moreover, in

instructing the jury on the phrase "ordinary business terms" in

§ 547(c)(2)(C), the court broadened the jury's focus to include "standards

prevailing in the industry," 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 preferential

3

transfers, Congress intended to discourage creditors "from racing

to the courthouse to dismember the debtor during his slide into

bankruptcy," and, more importantly, to further "the prime

bankruptcy policy of equality of distribution among creditors."

H.R. No. 595, 1978 U.S.C.C.A.N. at 6138.

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not told to consider the benefit conferred by Jones's continued use of the

leased equipment, and because the instruction overemphasized the purpose

of the preference statute and did not explain that this preference defense

is intended to encourage creditors to work with troubled businesses.

However, the unchallenged instruction included the statutory definition of

"new value" in § 547(a)(2), and it accurately paraphrased § 547(c)(4).

This left FSLC free to argue its theory that Jones's continued use of the

leased equipment after making late rental payments constituted "new value."

The instruction went on to accurately summarize the policies underlying

§ 547 preferences. While the court might also have explained that

3

§ 547(c)(4) is intended to encourage creditors to work with troubled

companies, as we said in In re Kroh Bros. Dev. Co., 930 F.2d 648, 651 (8th

Cir. 1991), that omission is not plain error. Finally, the instruction

directed the jury's attention to the central inquiry in the "new value"

analysis by concluding, "[i]f a creditor advances new value to the debtor,

the debtor's assets have not been depleted to the disadvantage of other

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 third

payment was not made in the "ordinary course of business" under §

547(c)(2). We review the evidence in the light most favorable to the

jury's verdict, Nicks v. Missouri, 67 F.3d 699, 704 (8th Cir. 1995), and

affirm unless "all of the evidence points one way" and is susceptible of

no reasonable inference sustaining
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the jury's determination. McKnight v. Johnson Controls, Inc., 36 F.3d

1396, 1400 (8th Cir. 1994).

FSLC had the burden of proving that the third payment was made (i)

in the ordinary course of the parties' business and (ii) according to

ordinary business terms. U.S.A. Inns, 9 F.3d at 682. From May to December

1990, Jones consistently paid rent to FSLC in the week payment was due

under the Master Lease Agreement. As its financial situation worsened,

Jones began to delay those rental payments; the third payment was sixty

days late. Thus, unlike 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 extended new

value." It supports this argument with a lengthy discourse on whether

allowing Jones to continue using the leased equipment in exchange for the

three late payments was a form of forbearance, and if so, whether such

forbearance may constitute "new value" under § 547(c)(4). The difficulty

with FSLC's argument is that these interesting issues are not properly

before us.

At the close of Jones's evidence, and again at the close of all the

evidence, FSLC moved for JMAL on the issue of "ordinary course of

business," but not on the issue of "new value." In denying FSLC's postverdict motion, the district court carefully described that motion as

seeking, with respect to the third payment, JMAL on the ordinary course

issue, but only a new trial on the new value issue. A party that does not

seek JMAL on an issue before the jury retires may not raise the JMAL issue

following 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 not
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consider whether FSLC's evidence established as a matter of law that FSLC

provided Jones "new value." 

The district court properly treated "new value" as a question of

fact. See In re Lewellyn & Co., 929 F.2d 424, 427 (8th Cir. 1991). FSLC

timely filed a motion for new trial to set aside the jury's adverse verdict

on that issue. However, the district court's denial of a motion for new

trial on the ground that a jury verdict is against the great weight of the

evidence is "virtually unassailable on appeal." Barnes v. Parker, 972 F.2d

978, 979 (8th Cir. 1992) (quotation omitted); see White v. Pence, 961 F.2d

776, 780-82 (8th Cir. 1992). Regarding this factual issue, "[t]he

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 the

burden of proof. Therefore, 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 Jones

was solvent when it made the first payment on April 15, 1991. The district

court properly instructed the jury (i) that a debtor is insolvent if the

sum of 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 alleged

preferential transfer, see In re Taxman Clothing Co., 905 F.2d 166, 170

(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, its

officers were optimistic, and its managers and lenders continued to invest

in the business. A balance sheet prepared for the fiscal year ending March

30, 1991, reported that Jones's assets exceeded its liabilities by

$14,341,859 on a going concern basis. 
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This balance sheet was distributed to Jones's management, lenders, and

auditors. Though a debtor is presumed insolvent during the preference

period, see 11 U.S.C. § 547(f), if the creditor produces evidence of

solvency, the debtor has the ultimate burden of proof. Clay v. Traders

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., Inc., 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 this

burden. Rather than present evidence of a negative going concern value on

April 15, Jones relied on post-bankruptcy liquidation values of assets

later sold by a broker. Jones also attacked its own financial statement,

challenging the reported $13,709,653 in equity because a planned conversion

of debt to preferred stock never occurred, and arguing that liabilities

were understated because a substantial liability contingent on Jones's

withdrawal from the Teamsters Union Central States Pension Fund was not

included. We are inclined to agree with FSLC that Jones's evidence on this

issue was contrary to the principles of going concern valuation. But more

to the point, the evidence 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.