Court Opinion

ID: 6423787
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:02:10.506461+00
Date Added: 2024-06-11T15:51:53.505440
License: Public Domain

Holmes, J.
1. The main question before us is whether the payment to the defendant by Flanders appears, as matter of law, to have been made in the usual and ordinary course of business. The plaintiff does not seek to avoid Flanders’s sale of his stock in trade, as in Walbrun v. Babbitt, 16 Wall. 577. On the contrary, his claim to the proceeds is based upon an affirmance of the sale. The only way in which the sale, or knowledge of it and of the manner in which it was made, could be considered to the defendants’ disadvantage would be as bearing on their actual good faith when they took the notes, if the *505case were left to a jury. Starting with a valid sale by the insolvent, which puts him out of business, we cannot say, as matter of law, that a transfer by him of the purchaser’s notes to a creditor for their face value in cash and in payment of debts is not in the usual course of business. All that remains for him to do is to pay his debts, and that is all that he does in the case supposed. See Thacher v. Pray, 113 Mass. 291.
But when we take into account all the circumstances of the payment in question, we are unable to say that a jury, or in this case the judge, would not have been warranted in finding that it was not made in the usual and ordinary course of business, as matter of fact. It was made late at night, following close upon the sale, and almost as a part of it. Although the plaintiff affirmed the sale, he had a right to argue that the defendants knew it to be a sale which could not stand against an assignee in insolvency if he elected to avoid it, that the defendants took the proceeds with that knowledge, and that they were not in the position of receiving payment from a debtor who had gone out of business at a previous time. Although the greater part of Flanders’s account with the defendants was overdue, the credit allowed on the later items had not expired. Flanders never before had paid his bills until they became due, or otherwise than by check or cash, and he at least must have known that he was giving the defendants a preference. We express no opinion upon the weight of the argument, but we are of opinion that the case falls midway between the extremes marked by such cases as Nary v. Merrill, 8 Allen, 451, and Pearson v. Goodwin, 9 Allen, 482, where the court can rule one way or the other, and that the question should have been passed upon as a question of fact, even if doing so would have had the same result, which we cannot assume. Alden v. Marsh, 97 Mass. 160, 163. Buffum v. Jones, 144 Mass. 29, 30. Stevens v. Pierce, 147 Mass. 510. Pearson v. Goodwin, 9 Allen, 482, 483.
2. It was proved that when Flanders went into business he borrowed about eighteen hundred dollars of his brother for the purpose of carrying it on, and that at the time of the sale he still owed his brother the same amount, and also owed a large amount for merchandise, the total value of his assets being fifteen hundred dollars. The defendants’ agent testified that he *506did not know that Flanders was doing business on borrowed money. The plaintiff offered to prove that at the time of the sale Flanders was commonly reputed to be doing business on borrowed money. The judge excluded the evidence, but ruled that it was competent to show that Flanders was in bad repute financially. There is no doubt that the general reputation of a'man as to solvency is admissible, not to prove the fact, but as bearing on what the party dealing with him has reasonable cause to believe. Whitcher v. Shattuck, 3 Allen, 319, 321. Simpson v. Carleton, 1 Allen, 109, 118. Bartlett v. Decreet, 4 Gray, 111. Lee v. Kilburn, 3 Gray, 594, 598. General reputation of doing business on borrowed capital is somewhat more specific, but is hardly less likely to come to the ears of those dealing with the person concerned. We are of opinion that it is admissible for the same purpose and on the same ground as reputation for solvency, or of being the owner of valuable real and personal estate; Metcalf v. Munson, 10 Allen, 491,492,493; or of neglecting and mismanaging his business; Bartholomew v. McKinstry, 6 Allen, 567; or that the printing of mousseline de laine was a ruinous business to those engaged in it; Denny v. Dana, 2 Cush. 160, 169; or that a tree was in a decayed and dangerous condition. Chase v. Lowell, 151 Mass. 422, 427.

New trial granted.