Court Opinion

ID: 6410005
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:51:58.073199+00
Date Added: 2024-06-11T15:51:20.461857
License: Public Domain

Bigelow, J.
The instructions given to the jury as to what would constitute an unlawful preference, so as to invalidate a discharge under the insolvent acts, were sufficiently favorable to the defendants. The language of St. 1838, c. 163, § 10, is clear and unambiguous. It provides that “ any security given for the performance of any contract, when the agreement for such security is part of the original contract and the security is given at the time of making such contract,” shall not be deemed a preference. This plainly excludes any executory agreement for the giving of security between debtor and creditor. The agreement must not only be made, but it must be executed contemporaneously with the original contract. Any other construction would leave a wide door open for the very evil and mischief which the statute intended to prevent.
The agreement of the creditor to surrender the property which he had received by way of unlawful preference cannot enure to the benefit of the debtor. It does not purge his wrongful act He has made a transfer forbidden by law and put it out of his own power to restore his creditors to their legal rights. It does not make it any the less a preference by the debtor, that the creditor sees fit voluntarily to surrender the property to the assignees. It might have been otherwise, if the parties had cancelled their agreement and the property had been restored to the defendants before their application for the benefit of the insolvent acts. But it was a contract still subsisting at the time of the commencement of the insolvent proceedings, upon which the creditor might have insisted and claimed to hold the goods as against the assignee. It was, therefore, within the express terms of the statute.
It was clearly competent for the plaintiffs to impeach the defendant’s discharge. Although granted by the commissioner, it was still open to be invalidated for any of the causes which by the statute rendered it of no effect. Morse v. Reed, 13 Met. 62.

Exceptions overruled.