Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1904-12-08
Oxford County.

Milliken TomlinSOn Company JAMES
p Stevenson VS.. TWltchell-Ihaln-
Min Co. James b. Stevenson vs.. J.
u Fletcher ct ais. Rescript by
Whitehouse, j.
These three actions We're piouSii' oE
the plaintiff as trustee III bahkruptcs y,
m. firm of Voter & Wing OF Runforu
Falls to recover the amount OF certain
notes alleged To have been accepted pv
the defendants in payment OF their re-
u,ectiy. claims as creditors OF Voter q
wins. under. circumstances which rem
d.red the transactions voidable as pre-
ferences under the bankrupt act OF
1898.
Under the act Of 1867 the term insol-
vencv was construed to mean an ina
hi1itv to meet ones obligations in the
a. binary course of business. while in
the present act it is equivalent to the
word bankruptcy in the former statute.
but the principles of construction lald
down by the courts in determining the
rorce and effect to be given To IN"
phrase reasonable cause to believe.
found in the former act relating 10
preferences, are equally applicable i'll
considering the meaning of this phrase
in the act of 1898.
1t is not enough that creditor has
some cause To suspect the insolvency OF
his debtor. but he must have such
knowledge of facts as to induce rea-
sonable belief of his debtors inSolven-
CIV. in order TO invalidate security
taken for his debt. To make mere sus-
oiciOnS a ground of nullity in such a
case would render the business tram
sactionS of the community altogether
too insecure. 1t was never the inten-
ton of the trainers of the act to estab-
fish any such rule. A man may have
many grounds of suspicion that his
| debtor is in failing circumstances. ana
vet have NO cause for a we'll founded
belief of the fact. He may be unwill-
! ing to trust him further. he may feel
| anxious about his claim and have a
| strong desire 10 secure it, and yet SUCH
belief as the act requires may be want
| ing Obtaining additional security or
receiving payment of debt under
such circumstances is.not prohibited by
the law. Receiving payment is put In
| the same category. in the section re-
| ferred to, as receiving security. Hun
| dredS of men constantly continue to
make payments up to the very eve or
their failure, which it would be very
unjust and disastrous to set aside. And
yet this could be done in a large pro-
| portion of cases if mere grounds Of
suspicion of their solvency were suffi
cient for the purpose. The debtor is
often buoyed up by the hope of being
able to get through with his difficulties
! .,ft h iS in HaCrlprufa
and his creditors. if they know any
| thing of his embarraSSments. either
| participate in the same feeling. or at
least are willing to think that there is Il
possibility of his succeeding. To over
haul and set aside all his transactions
with his creditors. made under such
| circumstances. because there may exist
some grounds of suspicion of his ina
| bility to carry himself through, would
make the bankrupt law an engine Of
| oppression and injustice. 1t would in
fact have the effect of producing bank
ruptcy in many cases where it might
otherwise be avoided
In the case at bar the evidence fails
to disclose the existence of any desire
| or purpose on the part of Voter & Wing
| to give the defendants any advantage
over other creditors. The defendants
had shown no anxiety about their
claims. They had made no effort to
| enforce the collection of them or OBJ
tain security for them. Perfunctory
requests for further payments had
| been made by their agents, but the de-
PENDANTS continued to give further
| credit. The transfer to Lapham OF
September Is WAS made without the
suggestion or knowledge of any of the
defendants or their agents. Mr.. Wing
| went to Portland and proposed the ar
rangement which was made with the
defendants September 18th, not in pur-
suance of any request from them, but
by reason of a desire on his own part
| to effect a dissolution of the firm The
defendants had no knowledge respect
ing the financial standing of the firm
except that arising inferentially from a
failure to make prompt payment of all
obligations at maturity. and were not
in state Of mind to question the con-
hdent assurance of Mr.. Wing that the
firm was entirely solvent and that
there was enough on the book accounts
not included in the sale to Lapham to
take care of all the other creditors. n
appears from the testimony of Mr..
Lapham. called as a witness for the
plaintiff. that he purchased the stock in
good faith for the purpose of CARRYING
on the business. and that according to
the account taken at that time the
property transferred to him was suffi-
Gent to pay in full all of the liabilities
| which he proposed to assume. including
Morse's claim Of $103.15. and he was as
sured by the firm that the book ac-
| counts were ample to pay all other
bills. And in this connection it NAV
be observed that if Mr.. Laughlin had
been compelled to pay the full value of
| the Wing mortgage, as it was under
stood by all of the parties and as stat
ed in the schedule of secured claims.
the balance realized by him from the
sale of the property would have been
insufficient to pay the liabilities as
sumed by MIN. and there would have
been nothing whatever to apply to the
payment of the defendants notes.
Again. If the firms book accounts had
| possessed the value which Voter &
Wing and Mr.. Lapham evidently be.
lieved that they had. or the minimum
value stated in the schedule of assets
the defendants. with a balance in their
favor of s364.36, would have obtained a