Court Opinion

ID: 6414084
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:54:49.257782+00
Date Added: 2024-06-11T15:51:28.535404
License: Public Domain

Hoar, J.
When a mortgage is made by a person actually insolvent or in contemplation of insolvency, to secure a preexisting debt, within six months previous to the commencement of proceedings in insolvency by or against him, it may be avoided by his assignee in insolvency, if the mortgagee had reasonable cause to believe him insolvent at the time he took the mortgage, and that the conveyance was made to impede the operation of the insolvent laws ; and it is made prima facie evidence of such cause of belief, if the conveyance “is not made in the usual and ordinary course of business of the debtor.” Gen. Sts. c. 118, § 91.
The question at the trial upon which the point presented by the bill of exceptions arises was, whether the mortgage under which the plaintiff claims was made “ in the usual and ordinary course of business of the debtor.” It appeared that the insolvent debtor was a millwright, and had no other occupation or business, and for many years had been the owner of the mortgaged premises as a homestead. The defendant asked the court to instruct the jury as matter of law that upon these facts the conveyance would not be in the usual and ordinary course of business of - the debtor; but the presiding judge refused to give the instruction asked, and instructed them, simply in the language of the statute.
There can be no doubt that the instruction given was correct, so far as it went. And it is not certain that the instruction asked, considered as a general and abstract proposition, can be maintained. We cannot say as an absolute rule of law that a millwright may not so carry on his business, that making mortgages of his real estate shall be “ in the usual and ordinary course ” of it. He might,, in the usual course of business, make contracts for the erection of mills, which would require the use of more capital than he had, and which would oblige him to obtain materials on credit, or to borrow money to purchase them. He might often find that the returns from his business were not received so soon as to enable him to meet his payments; and . that an extension of his credits would involve the necessity" of *453giving security. This very mortgage might have been given as security for an ordinary business obligation, and he might have made a similar one for a similar purpose a dozen times before. If such were the facts, the making of this mortgage could not have been regarded as furnishing any reasonable cause of belief of his insolvency to the mortgage creditor.
But, on the contrary, if no such state of facts was shown to exist; indeed, if no other facts appeared in evidence than those which the bill of exceptions discloses, it is obvious that a mortgage of his homestead to secure a preexistent debt would not be in the usual and ordinary course of business of the debtor; and the jury should have been so instructed. The question is not whether such transactions are usual in the general conduct of business throughout the community, but whether they are according to the usual course of business of the particular person whose conveyance is the subject of investigation. If it is a departure from his usual and ordinary course of business, the statute intends that the party taking the conveyance from him shall be put upon inquiry. The difficulty which presents itself arises from the meagre report of the evidence at the trial which is given in the bill of exceptions. If it is fairly to be inferred from that report that these were all the facts appearing, and that upon these facts the presiding judge refused to give the instructions asked, and left the whole matter to the jury, without any explanation as to what would be meant by the language of the statute, we should think that a new trial ought to be granted ; not because the instructions were erroneous, but because they were insufficient, and not such as the posture of the case required. The instructions asked, if not in terms a perfect and complete enunciation of the rule of law, would have been practically the result of the case presented to the jury. If they had been given in the very terms of the defendant’s prayer, and he had obtained a verdict, they would not,' as applied to the facts disclosed, have been so substantially incorrect as to make it necessary to set it aside.
And we are inclined to think that such is the just inference to be drawn from the statements in the bill of exceptions. *454Nothing else appears ; and although the defendant did not incorporate in his prayer for instructions the negative statement that there was no other evidence before the jury, it might be fairly implied. Exceptions sustained.