138 Mass. 18 | Mass. | 1884
This was an action brought by the assignee of Nathan Pike and Company, insolvent debtors, to recover back from the defendant certain amounts received by him under the circumstances hereinafter stated, on the ground that the same were a preference, or were payments of money or transfers of property made in fraud of the insolvent laws. Pub. Sts. e. 157, §§ 96, 98. The verdict was for the plaintiff, for the full amount claimed, and the defendant now contends that the case was tried upon an immaterial issue, namely, whether the defendant had reasonable cause to believe that Nathan Pike and Company were insolvent; whereas the defendant in the argument before us contends that the plaintiff is not entitled to maintain his action in any view of the facts which appeared at the trial, even conceding that the defendant had such reasonable cause of belief. From the bill of exceptions there does not appear to have been any controversy as to the existence of the facts now relied on by the defendant, though their competency in evidence' was in part disputed. Those facts are as follows:
On May 28, 1881, the defendant gave his negotiable promissory note for 11640.75 to one Ambler, in exchange for 152 shares of stock in a corporation, receiving at the same time
The above agreement was renewed with a new note for $1673.56, given August 13, 1881, in payment of the original note and interest thereon. The new note came into the possession of Nathan Pike and Company, a firm of which Ambler was a member, and of which Pike was the principal financial and business manager. The note was indorsed and delivered by Ambler to Pike, they intending it as a loan to the firm; and was by the firm transferred to note brokers, to be by them held, with certain other notes transferred at the same time, as collateral security for a note of $2500 given by Pike and Company to the note brokers, on which, by reason of a partial payment, a somewhat less sum was due on Febuary 16, 1882. There was nothing to show, and it was not suggested in argument before us, that this transaction with the note brokers was otherwise
The agreement of Ambler with the defendant would not so attach to the note as to destroy its negotiability, or affect the rights of one who before its maturity should become a Iona fide holder thereof for value, without notice. But as against Ambler himself, or Pike and Company, the defendant would have a right to avail himself of his agreement, in some appropriate form. It was éxecuted at the same time with the note, and expresssly provided that the payee of the note should accept the shares as payment. It is not material to determine precisely in what manner the defendant could best avail himself of his rights under the agreement; whether by way of direct defence to an action upon the note, either under the rules of the common law or under the St. of 1883, e. 223, § 4, which enables defendants to make equitable defences in actions at law; or whether he could set up in defence damages sustained by him, by reason of a breach of the agreement, by way of recoupment; or whether he would have to bring a cross action. It is sufficient
The plaintiff, as assignee in insolvency, would have no greater rights than Pike and Company themselves had, and would take it subject to all equities to which it would be subject in their hands, unless specially provided otherwise by statute. Holmes v. Winchester, 133 Mass. 140, 142, and cases there cited. Even while the note was in the hands of the pledgees, Nichols would be entitled to equitable relief, by compelling them to exhaust their other securities first, before resorting to his note, or by being subrogated to their rights in respect to the other securities, upon paying the debt due to them for the purpose of releasing his own note from the pledge. It is in principle like the ordinary case where a creditor holds security upon two funds, and some one else has a subsequent equitable interest in one of them. It was the right of the defendant that the other securities held by the note brokers should first be applied to the payment of the debt, so that, if these should prove sufficient
The general creditors of Pike and Company, and their assignee in insolvency, had no equitable right to prevent this from being done. On the contrary, the original agreement between Ambler and the defendant being valid, and the pledge by Pike and Company to the note brokers being also valid, the assignee lost nothing by the result of the transaction of February 16, to which he was entitled. The form of that transaction is immaterial. It is doubtful whether the defendant could have compelled the note brokers to execute to him an assignment of the collateral securities in their hands, if they were unwilling to do so; his rights being fully protected by the equitable principle of subrogation in case of his paying their debt. Lamb v. Montague, 112 Mass. 352. Furnishing Pike and Company with the money, under the circumstances stated, was equivalent to paying it directly to the note brokers. The money went from the defendant for the sole purpose of extricating his note from the pledge to which it was subject, and was immediately applied to that purpose, and he thereupon received the whole of the collaterals. The circumstance that his money went through the hands of Pike and Company does not impair his equity, nor increase that of the plaintiff. No new property was transferred by Pike and Company in the transaction. They merely took the defendant’s money from his hands, and applied it according to the obvious understanding between them. The case is by no means the same as it would have been if, in the course of the transaction, Pike and Company parted with any of their own funds or property, or in any respect changed their position for the worse. If, for example, they had raised money on any new pledge of securities, with the view and for the purpose of enabling themselves to regain possession of the defendant’s note, in order that the defendant’s equity might thus become available, the question presented would be quite different. But in the transaction of February 16 they parted with no property- or rights of which their assignee could have availed himself if that transaction had not taken place; and the defendant gained nothing to which he was not entitled under the rules of equity.
It is further contended by the plaintiff, that the questions now presented were not properly raised by the bill of exceptions. The defendant presented requests for instructions, which in terms are broad enough to include the grounds of the present decision;
The defendant requested the judge to instruct the jury as follows: “ 1. There was not sufficient evidence to warrant a verdict for the plaintiff. 2. The evidence showed that the transaction complained of, and claimed by the plaintiff to amount to a preference, was simply an exchange of securities, and was not of such a nature as to warrant the jury in finding for the plaintiff in regard to the $1640 note.”