Putnam patriot., 1911-06-02
$22,642.89

This paper Andem sur
 rendered and re-
 ceived mortgage note paya-
 ble in months for $22,-
 10000 and note for $34289
 payable Jany 1, 1912, s22,642.89 l IT. On June 1st 1910 Arnold called upon him and represented that cer- ] tain of his investments in which An ] dems money was invested had not matured and desired that the obliga- tions then due or about to become due should not be collected but con i tinued for a short time. and Arnold proposed that he should give Andem security by mortgage
 1S Andems investments with Ar hold had been transacted largely by continued reinvestment and had grown large and involved the great CT part of his means, and Andem felt that he should have security if he continued to leave so large q sum in vested and accepted Arnolds propos- al
 19 Audem went with Arnold 10 1 Putnam and arranged to meet Mir. Russell, Arnolds attorney, at Rus sells office in the evening. They met and in the absence of certain papers estimated the amount of the l indebtedness as about $22,30000; and | Mr Russell agreed to draw a mort i gage deed giving Andem second mortgage on a sufficient number of | pieces to secure him.
 20 Mir Russell drew the mort gage deed on the following day, and it was executed on June Sd and An dem being out of town, MT. Russell left it for record at the town clerks as he had agreed to do as a favor to Andem.
 21. Andem knew on June 1, 1910 that Arnold had purchased consider able real estate in Putnam and he knew that it was all mortgaged from information at hand from Arnold and from his own prior examinations of the records He did not know and did not investigate the value of the equity otherwise than to assure him self from talk with Mr Russell that it was good security for his debt
 22. During the time that Andem dealt with Arnold he never required or received an accounting on any transaction on either account. Each transaction was closed with a prof it which was satisfactory to Andem, and he made no record of it. When transaction was closed Andem ire quently entered upon new trans action and accepted new note or post-dated check which settled and continued the prior transaction or be- gan a new transaction.
 23. Andem did not know the ex- i tent of Arnold's transactions or whether or not his transactions for other customers had been equally successful. and he did not inquire.
 24. The disastrous nature of Ar holds transactions as disclosed by his bankruptcy schedules was not known or conceived by Andem.
 The plaintiffs chief claim is in sub stance. that Andem tested by the standard of a business man or ordl- nary prudence ought to have inferred during his business relations with Arnold that Arnold was not paying 6 per cent and profits which carried the interest of 9 per cent or F per cent per year. from profits gained on stock transactions, and that he should have inferred that Arnold was running more or less endless chain of borrowing from one to pay another, and inducing creditors to continue creditors by exchanging notes and ] checks as they became due for new notes and checks in assumed new deals
 In the light Of what we now know this claim has an apparent force that did not at all exist before the crash. Men have shown at various times an apparent peculiar aptitude Tn stock dealinss and a very real aptitude ln making men of ordinary prudence in- vest with them Arnold appeared to have such aptitude; and it appears from the bankruptcy schedules that 60o or 7ao people believed in his aptt- nde and trusted him with their mon ev without security to the extent ot several hundred thousand dollars.
 Andem. as his business with Arnold increased. inquired of Russell an at tornev at Putnam who had dealings with Arnold. as to his opinion of Ar lnold's business. and he found that Russell believed that Arnold was do- ing profitable business and wat gaining wealth.
 Was the transaction on or about Inne lst 1910 of such a character that a man of ordinary prudence in An. dems situation would have believed hat a preference was intended?
 From such information as the eVi aence presented furnishes as to this transaction the Court cannot find that fl was of nature so unusual or sas' picious as to convey to the mind ef a man of ordinary prudence that Arnold was insolvent and that it was intend cd bv it to give Andem a preference Arnold was then apparently in the full tide of prosperity in business and the schedules show that large sums continued to come into his hands from customers after this date f Andem had not yielded to his re quest to consolidate his loans. few Of which were not quite due, l have no doubt Arnold would have met them in some way and staggered along for even a longer time after than he did, for 1t appears that the Andem mortgage started the other creditors to mistrust Arnolds pros perity. If mistrust and suspicion had not then sprung into life. Arnold s ability to secure money from connd- ing customers would undoubtedly