127 Wis. 208 | Wis. | 1906
In reaching tbe conclusions mentioned in tbe foregoing statement tbe trial judge, in a lengthy and carefully prepared opinion, reviewed'tbe evidence as to Dickinson’s dealings with tbe bank during tbe three years immediately preceding sucb payment, and all facts tending to show what knowledge tbe cashier of the defendant, and its other officers, bad acquired during those three years as to Dickinson’s financial circumstances. It does not appear that Dickinson did business with any other bank during tbe three years mentioned. It appears from sucb summary, among other things, tbat Dickinson’s business was selling musical instruments on long time, payable in instalments, secured by leases •on tbe instruments sold; and tbat sucb business required a 'considerable capital in proportion to tbe volume of business, :and so be obtained loans from tbe bank, giving sucb leases as 'collateral. As early as in 1899 tbe cashier of tbe bank was Induced by Dickinson to believe tbat bis father-in-law, who was a man of means and bad done considerable for bis two sons, bad also advanced,' as a gift to Dickinson’s wife, $1,700. January 1, 1900, Dickinson submitted to tbe bank a statement showing bis assets to be $8,003.86 and liabilities $2,791; and in January, 1901, be referred to tbe same statement as still showing bis financial condition. In May, 1901, Dickinson borrowed from tbe bank $1,200, giving notes therefor with bis fatber-in-law as joint maker; and be then told tbe cashier
Such is a general outline of tbe evidence upon wbicb the i ■court, among other things, found, in effect, that at tbe time of making such payment neither tbe defendant’s cashier nor any
“In order to invalidate, as a fraudulent preference within tbe meaning of tbe bankrupt act, a security taken for a debt, tbe creditor must bave bad sueb a knowledge of facts as to induce a reasonable belief of bis debtor’s insolvency.” Grant v. National Bank, 97 U. S. 80, 82.
Mr. Justice Beadxey, speaking for tbe whole court, there said:
“Hence tbe act, very wisely, as we think, instead of making a payment or a security void for a mere suspicion of tbe debt- or’s insolvency, requires, for that purpose, that bis creditor should bave some reasonable cause to believe him insolvent. He must bave a knowledge of some fact or facts calculated to produce such a belief in the mind of an ordinarily intelligent man.”
That case and that language were expressly sanctioned in Barbour v. Priest, 103 U. S. 293, 297. Tbe same is true of a still later case where it was beld:
“A creditor dealing witb a debtor whom be may suspect to be in failing circumstances, but of which be has no sufficient evidence, may receive payment or take security without necessarily violating tbe bankrupt law. "When such creditor is unwilling to trust tbe debtor further, or feels anxious about bis claim, tbe obtaining additional security or tbe receiving payment of tbe debt is not prohibited, if tbe belief which tbe act requires is wanting.” Stucky v. Masonic Sav. Bank, 108 U. S. 74, 2 Sup. Ct. 219.
In considering tbe adjudications under tbe bankrupt act of March 2, 1867 (cb. 176, 14 IT. S. Stats, at Large, 517), it should be observed that tbe words “insolvent” and “insolvency” contained in secs. 35 and 39 of that act (14 U. S. Stats, at Large, 534, 536) bad a very different meaning than they bave under tbe present bankrupt act. Thus it was beld early under tbe bankrupt act of 1867:
“By insolvency, as used in tbe bankrupt act when applied 'to traders and merchants, is meant inability of a party to pay*214 bis debts, as they become due, in the ordinary course of business.” Toof v. Martin, 13 Wall. 40, 47; Wager v. Hall, 16 Wall. 584, 601.
The present bankrupt act declares:
“(15) A person shall be deemed insolvent within the provisions of this act whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, with intent to defraud, hinder or delay his creditors, shall not, at a fair-valuation, be sufficient in amount to pay his debts.” Act July 1, 1898, ch. 541, 30 U. S. Stats, at Large, 544, § 1, (15), 2 Supp. B. S. U. S. 844 [U. S. Comp. St. .1901, p. 3419].
To have reasonable cause to believe that a trader or merchant is unable to pay his debts as they become due in the ordinary course of business is a very different thing than to have reasonable cause to believe that the aggregate amount of the debtor’s available property and assets is insufficient in amount, at a fair valuation, to pay his debts. This distinction is pointed out by Federal Judge Lowell of Massachusetts in a very recent case, where it was held:
“Grounds for reasonable belief in the present inability of a debtor to pay his debts in the course of business are not necessarily grounds for believing that he is insolvent within the definition of insolvency contained in” the present bankrupt act “so as to require the creditor to surrender payments received as preferences.” In re Pettingill & Co. 135 Fed. 218, 220.
It is there said by the court:
“Grounds for reasonable belief in a present inability to pay debts in the course of business are not necessarily grounds for believing that a man’s property at a fair valuation is not sufficient to pay his debts.”
In construing the clause of the bankrupt act here in question (sec. 60b, 30 U. S. Stats, at Large, 562 [U. S. Oomp. St. 1901, p. 3445]), it has been held by the circuit court of ap-' peals of this circuit, in an opinion by Judge JeNKINS :
*215 “In determining wbetber taking of security by a creditor constitutes an illegal preference . . . tbe creditor is not to be charged witb knowledge of bis debtor’s financial condition from mere nonpayment of bis debt, or from circumstances wbicb give rise to mere suspicion in bis mind of possible insolvency. On tbe other band, it is not essential that tbe creditor should have actual knowledge of, or belief in, bis debtor’s insolvency, but it is sufficient if be has reasonable cause to believe him insolvent. If facts and circumstances witb respect to tbe debtor’s financial Condition are brought borne to him such as would put an ordinarily prudent man upon inquiry, tbe creditor is chargeable witb knowledge of tbe facts wbicb such inquiry should reasonably be expected to disclose.” In re Eggert, 102 Fed. 735, 43 C. C. A. 1; S. C. 98 Fed. 843.
That case was cited witb approval by this court in tbe recent case of Jackman v. Eau Claire Nat. Bank, 125 Wis. 465, 485, 104 N. W. 98, 105. As held in that case and tbe Eggert Case, tbe question wbetber in receiving tbe payment tbe defendant’s cashier bad reasonable cause to believe that a preference was intended was a question of fact determinable by tbe jury or trial cotirt. Kaufman v. Tredway, 195 U. S. 271, 25 Sup. Ct. 33. We find no error in tbe record.
By the Oourt. — Tbe judgment of tbe circuit court is affirmed.