Opinion ID: 389546
Heading Depth: 1
Heading Rank: 2

Heading: transfer creating presumption

Text: 9 In order for an objection to discharge to be sustained, City National must satisfy several elements. The proof must show (1) that the act complained of was done within twelve months of the filing of the bankruptcy petition, (2) with intent to hinder, delay or defraud creditors, (3) that the act was done by the bankrupt, and (4) that the act consisted of transferring, removing, destroying or concealing any of bankrupt's property. 1A Collier on Bankruptcy P 14.45 (14th ed. 1978). If the proof is insufficient on any one of these essential elements, City National's objection cannot be sustained. 10 The evidence introduced clearly satisfies the first, third and fourth elements. The petition in bankruptcy was filed in March 1979. Although there is testimony that an oral transfer of William Bateman's interest in the Pike store was made to Evelyn in November 1977, William's testimony and brief disclose that the transfer was a continuing matter. The bankruptcy court found the transfer was completed at the time of the incorporation of Pike grocery in June 1978. Therefore, the transfer by bankrupt to his wife occurred within one year of the filing of the petition in bankruptcy. This one-half interest was clearly William's property and the act of transferring this property by William satisfies the third and fourth elements. 11 The second element can be supplied by a presumption arising out of William's act. This rule is stated in 1A Collier on Bankruptcy P 14.47 (14th ed. 1978), and was cited by both the bankruptcy judge and the district court: The fact    that valuable property has been gratuitously transferred raises a presumption that such transfer was accompanied by the actual fraudulent intent necessary to bar a discharge under clause (4). See Rothschild v. Lincoln Rochester Trust Co., 212 F.2d 584 (2d Cir. 1954). Further, upon a showing that the act alleged was in fact committed, the burden of rebutting the presumption shifts to the bankrupt. Shainman v. Shear's of Affton, Inc., 387 F.2d 33, 37 (8th Cir. 1967). 4 In Re Derrick, 228 F.Supp. 964, 965 (E.D.Ark.1964). 12 The evidence introduced at the hearing was sufficient to raise the presumption of fraudulent intent. William possessed a one-half interest in the Pike store and that store was valued at between $27,000 and $28,000 at the time William borrowed from the bank in order to purchase Payless. His interest was valuable property. There is no assertion that any consideration was paid for the one-half interest. The transfer was gratuitous. The presumption then arose that the transfer was accompanied by the actual fraudulent intent necessary to bar a discharge. All of the elements necessary to sustain the objection were satisfied and the burden shifted to Bateman to rebut the presumption.