108 Mo. App. 275 | Mo. Ct. App. | 1904
(after stating the facts). — One declaration of law• requested by tlíé defendant ought.to have been given, as it stated the conditions on which the plaintiff was entitled to recover, practically in the language of the bankrupt act. It required findings from the evidence, first; that Esswein was insolvent on March 25,1902; second, that the defendant, through its agent, had reasonable ground to believe the giving of the Gebhart note in payment of Esswein’s debt was intended as a preference. The words “ground to believe” are used in the declaration instead of “cause to believe,” the language of the statute; but the two expressions. are practically synonymous and the use of the word “ground” has been judicially authorized. Benedict v. Deshel, 177 N. Y. 1; 11 Am. Bankrupt Rep. 20. The declaration could not properly be refused because that word was employed, nor do we detect any. other reason for its refusal. It required a finding that
' But the mere fact that the debtor, subsequent to the alleged preference, is declared a bankrupt, does not, we apprehend, relieve a court which is trying an issue between the trustee and a creditor as to the validity of a preference received by the latter, from the necessity of finding the debtor was insolvent when the preference was given. It is not sufficient for the court to find the creditor knew, or had cause to believe the debtor was insolvent, or was in possession of facts sufficient to put him on inquiry about the matter; but the insolvency itself must be found. If, in truth, the debtor was not insolvent, knowledge of facts to excite distrust and inquiry is no basis for avoiding the preference; for in such- an instance the inquiry would show solvency and the right to prefer instead of insolvency. The preferred creditor is entitled to have the issue of the debtor’s condition determined in an action to which he is a party and is not bound by an adjudication of bankruptcy. This proposition is scarcely gainsaid by plaintiff’s counsel. But it is insisted that the refusal of a declaration that it was necessary to find Esswein was insolvent, ought not to be taken as reversible error, because it must be presumed the trial judge understood the necessity of finding he was and so found, though he refused to declare it essential that he should. The argument is advanced, too, that when a trial is without a jury, declarations of law are to be less carefully
The error pointed out necessarily leads to a re
In the case at bar there is no indication of fraud or deceit on the part of the defendant, or its agent Massmann, or of collusion with Esswein. The transaction was simply the collection of a debt by an arrangement agreeable to both the debtor and the creditor. The opinion given on the appeal of the Eggert case deals with the distinction between insolvency under the present bankrupt act and under the previous act; pointing out that by the present law a person is insolvent when the aggregate of his property is not, at a fair valuation, sufficient to pay his debts; whereas, under the previous act, insolvency meant an inability to meet obligations as they matured in the ordinary course of business. Esswein was undoubtedly insolvent under the latter rule, as Eggert was; but that rule has no bearing on this case. The opinion of the Court of Appeals further says:
“The facts established are within narrow compass. They are that Eggert was insolvent; that he had failed to meet his obligations promptly as they matured; that, by the rules of the association of which the Rundel-Spence Manufacturing Company was a member, Eggert was not, while such debt remained unprovided for, entitled to purchase goods upon credit,
A leading case on the question of what facts would put a creditor on inquiry as to the solvency of a debtor from whom he is about to take a preference, is Grant v. National Bank, 97 U. S. 80. That case arose on the former statute, but, as was said in the Eggert case, the two statutes are to be construed by the same principles on the point of what is cause to believe a debtor
Guided by the light of the opinions in the Grant and Eggert cases, which are pertinent and instructive, and heeding the admonition therein given against making the bankrupt law an instrument of oppression by setting aside transactions between creditors and debtors on mere suspicion, we feel hound to hold there is no warrant in the record for making the Carondelet Milling Company refund to the trustee in bankruptcy the proceeds of the Gebhart note. The judgment is therefore reversed.