Case Name: David B. Fletcher, appellant
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1884-01-08
Citations: 136 Mass. 340
Docket Number: 
Parties: David B. Fletcher, appellant.
Judges: 
Reporter: Massachusetts Reports
Volume: 136
Pages: 340–342

Head Matter:
David B. Fletcher, appellant.
Suffolk.
Nov. 20, 1883.
Jan. 8, 1884.
C. Allen & Holmes, JJ., absent.
If a person, being insolvent, and knowing himself to be so, pays, within one year next preceding the filing of his petition in insolvency, a debt at its maturity, in the usual course of business, this is a payment of a “ preexisting debt,” within the Gen. Sts. c. 118, § 87, which forfeits his right to a discharge in insolvency.
Appeal from a decree of the Court of Insolvency, refusing the discharge of the appellant. Trial in the Superior Court, before Colburn, J., who allowed a bill of exceptions, in substance as follows:
The debtor filed his petition in insolvency on January 6,1880. It was admitted that he was insolvent, and knew himself to be so, during the year next preceding the filing of his petition.
It was in evidence, and not controverted, that John Carter and Company sold and delivered goods to the debtor upon an agreement that they should be paid for at a certain future time, and that they were paid for at the specified time; that, on December 1, 1878, the debtor gave Crane Brothers his note, payable in two months, in settlement of an account for goods bought of them during the previous month, which note the debtor paid at maturity. These payments were all made within the year next preceding the filing of the debtor’s petition.
The appellant requested the judge to instruct the jury as follows: “If you find that the accounts or debts alleged to have been paid John Carter and Company were paid in the usual course of business, or were current transactions between the insolvent and said Carter and Company, then such payments are not payments of preexisting debts, as contemplated by the statute. 2. If you find that the accounts or debts alleged to have been paid said Carter and Company were not overdue at the time of said payments, but were paid under and in accordance with an agreement or understanding made between the ■ debtor and the creditors at the time of the purchase of the goods, then such payments are not payments of preexisting debts, as contemplated by the statute. 3. If you find that the debts or accounts alleged to have been paid Crane Brothers were paid in the usual course of business, or in accordance with any agreement or understanding made between the debtor and the creditors at the time the bills were contracted, then such payments are not payments of preexisting debts, as contemplated by the statute. 4. A debt to be preexisting must be overdue, and in order to constitute a payment of a preexisting debt, as contemplated by the insolvent laws, it must appear that the debt was paid out of the usual course of business, or after it became due.” The judge refused to give these instructions.
The second and seventh issues to the jury were as follows': “ 2. Did said Fletcher, within one year next before the filing of the petition by him, directly or indirectly, in whole or in part, pay any borrowed money or any preexisting debt to John Carter and Company, said Fletcher being insolvent at the time of said payment or payments, and having reasonable and sufficient cause to believe himself insolvent ? 7. Did said Fletcher, within one
year next before the filing of the petition by him, directly or indirectly, in whole or in part, pay any borrowed money or preexisting debt to .Crane Brothers, said Fletcher being insolvent at the time of such payment or payments, and having reasonable and sufficient-cause to believe himself insolvent? ”
The jury answered these issues in the affirmative, and the discharge was refused; and the appellant alleged exceptions.
S. L. Powers, for the appellant.
D. O. Linscott, (A. 0. Southard with him,) for the creditors.

Opinion:
Morton, C. J.
The insolvent law provides that a discharge shall not be granted or valid if the debtor, being insolvent, and having reasonable and sufficient cause to believe himself so, has, within one year next before the filing of a petition by or against him, paid or secured, either directly or indirectly, in whole or in part, any borrowed money, or preexisting debt. Gen. Sts. c. 118, § 87. Pub. Sts. c. 157, § 93.
The appellant contends that the words " preexisting debt " mean only a debt which is overdue; and that, if an insolvent pays debts as they mature, in the usual course of business, there is no preference which would avoid a discharge. This construction is against the plain meaning of the statute, and would open a wide door to fraud upon the insolvent law. It would enable any debtor, who knew himself to be hopelessly insolvent, to prefer favored creditors by paying them in full as their debts mature, to the exclusion of his other creditors, and would thus violate the clear policy of the insolvent law, which intends that, when a man discovers that he is insolvent, he shall put his property in the hands of the law, to be equally divided among his creditors, except so far as the law allows preferences.
The words "preexisting debt," in their natural meaning, include all debts previously contracted, whether they have become payable or not.
In the recent case of Phillips, appellant, 132 Mass. 233, a discharge was refused an insolvent debtor because he, being insolvent and having reasonable and sufficient cause to believe himself so, paid a note at a bank at its maturity, in the usual course of business. The question here raised was not discussed in that case, but it was necessarily involved in the judgment then rendered.
Exceptions overruled.