Stranahan v. Gregory

| D. Vt. | Jul 1, 1871

SMAELEY, District Judge.

The evidence in this case shows clearly that Bannister, the bankrupt, was largely insolvent when he made the payment to Gregory & Co. That is not denied by the defendants, but they maintain that they had no knowledge of such insolvency, nor “reasonable cause to believe him to be insolvent.” Miner, one of the defendants, testified that he did not know him to be insolvent, and did not suppose him to be so; and Gregory, the other defendant, does not seem to have known much about Bannister or his business in any way.

The question then is, did Miner, from this evidence, have reasonable cause to believe Bannister to be insolvent when he forced the payment of this money? What is the meaning of the word “insolvent,” as used in the bankrupt law? It has often been defined by judges in different sections of the Union. I have never known or heard of more than one definition upon that question. The courts seem to have been much more unanimous upon that, than some other clauses of the bankrupt law. A person is held to be insolvent, when he is unable to discharge his debts in the usual course of business of persons engaged in the same trade or occupation. This rule has been repeatedly laid down by this court, and I see no reason to change it. Apply that rule to this case. Bannister had been trading with Gregory & Co. some two or three years, and finally run behindhand between two and three hundred dollars, which had been overdue some seven or eight months. They had repeatedly, called upon Bannister for payment, but unsuccessfully. They finally procured a writ of attachment, and went to Richford to get pay or security; went to an attorney there; consulted with him; were told that the attorney had been over a year collecting a debt of about twelve hundred dollars against Bannister; that he had received it in small sums at different times, partly in money and partly in demands turned out to him (Bannister) against his customers. The attorney advised Miner not to attach. The reason is obvious. It might put Bannister into bankruptcy. Miner then went to Bannister, who gave him fifty dollars in money, and an order for fifty dollars more. Miner came home, leaving the writ with the attorney; presents the order; payment is refused; he then writes to the attorney to have the attachment served. The attorney thereupon goes to Bannister, who pays him Gregory & Co.’s debt, partly in money and partly in demands, and after collecting the demands he pays the proceeds of them over to- defendants. It should be borne in mind, that Miner was before this fully informed of the government prosecutions against Bannister and his property. These facts in relation to Miner’s knowledge are not disputed. Did they not, therefore, furnish Miner, in the language of the law, reasonable cause to believe him (Bannister) to be insolvent, within the meaning of the bankrupt law? Without multiplying words, I think it very clear that they did. I cannot doubt it.

It is therefore ordered and adjudged that Gregory & Co. pay to the assignee the sum paid them by Bannister on the 15th day of November, 1809, with interest, and the cost of this proceeding.