Court Opinion

ID: 6411344
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:52:56.008859+00
Date Added: 2024-06-11T15:51:23.166364
License: Public Domain

Dewey, J.
This case discloses a purchase of demands against an insolvent debtor under circumstances that should prevent the purchaser from availing himself of them in set-off against a debt due from him to the insolvent and sought to be *574recovered by the assignee of the insolvent for the purposes of general distribution among his creditors. The present case dif fers from that of Aldrich v. Campbell, 4 Gray, 284, where such purchase was made in good faith, and unaccompanied by circumstances tending to show a knowledge that the purchase would operate to defeat the purposes and provisions of the insolvent laws.' The whole arrangement made by this defendant in the transactions between him and the insolvent, preceding and connected with the purchase of these demands from creditors of the insolvent, indicates a purpose to interfere with the proper distribution of the estate of the insolvent, and is contrary to the spirit of the insolvent laws.
To allow this set-off would not be consonant with equity or justice to the parties interested; would directly tend to defeat an equitable distribution of the assets among the creditors generally ; and would enable a debtor of an insolvent—one notoriously so, and who was about to become the subject of proceedings in insolvency — to give a preference to such creditors of the insolvent as he might be disposed to favor, making their debts available to the whole amount due, if the purchaser pleased to take them at that rate, as he might well do if he was to be allowed their full amount as an available set-off against his own debt to the insolvent; or, what would be equally objectionable, to allow the debtors of the insolvent to discharge their liabilities by a set-off acquired by purchasing the depreciated debts of the insolvent at a large discount from their nominal amount.
The St. of 1856, c. 284, § 28, directly forbidding such a set-off as this, was enacted too late to affect this transaction. But independently of that provision, in our opinion this claim for set-off should be refused.
We do not say that the party holding such demands by purchase from some of the creditors may not properly file the same as debts due from the insolvent, and receive his pro rata distributive share of the assets. That would do no injustice to the other creditors. Set off denied