Court Opinion

ID: 8775067
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:58:07.224928+00
Date Added: 2024-06-11T17:02:29.333967
License: Public Domain

ADAMS, Circuit Judge
(dissenting). I am unable to agree with the majority with respect to the claim against the Gate City Bank. To my mind the proof was clear and convincing that' it had reasonable cause to believe- on June 24th, when the Humes Company paid its notes, that the latter company was then insolvent, and that a preference was intended in its favor. Certain facts are incontrovertible. ,The Humes Company was then actually insolvent, and a preference was actually given to the bank. The only other fact requisite to constitute this a voidable preference within the meaning of section 60b of the bankruptcy act and to entitle the trustee to recover the amount thereof is that the bank must have had at the time reasonable cause to believe that the Humes Company intended to give a preference to it. I shall not attempt an analysis of the proof. It manifestly' created grave suspicion in the minds of the majority touching the good faith of the bank, but I think it went further. It is not very material whether the notes held by the bank were on their face payable in 90 days as claimed by the trustee, or whether they were on their face payable on demand as claimed by the hank. The fact is unquestionable that they were discounted for 90 days. The bank collected the interest on them in advance for that period of time. It entered them in its books as payable at the expiration of 90 days only. I cannot avoid the conclusion that whatever, the wilting said, the parties, both the Humes Company and the bank, actually understood that the notes were not to be paid until the expiration of 90 days after their several dates. That time had not expired as to any of the notes on June 24th. The sudden call for their payment contrary to the understanding indicates something to my mind. Intelligent people generally act with a motive and for a purpose, and this is particularly true I think with respect to bank officials. They are anxious to loan their money at profitable rates' of interest to responsible parties; and to keep it loaned, up to the full permissible legal limit. They are also especially keen and quick to follow up suspicion which points to probable loss. This, it is conceded, had been aroused in this case. With this condition of things as a background it is difficult to conceive why- the Gate City Bank should have required the Humes Company to pay off a loan in advance of its actual maturity, especially so when it necessitated the refunding of money already collected by way of discount, unless it believed it would be dangerous to leave its money with the company longer.
*619It will avail nothing to discuss the testimony further. Suffice it to say that in my opinion all the facts and circumstances surrounding the payment of the money to the bank pointed strongly one way, and were entirely sufficient to lead an ordinarily prudent business man to conclude that a preference was intended. Such being the case, the bank under all the authorities had reasonable cause to believe the Humes Company intended to give it a preference by such payment.