Court Opinion

ID: 6582217
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:12.412288+00
Date Added: 2024-06-11T15:57:19.683413
License: Public Domain

Loomis, J.
This case turns upon the question whether the transfer of goods by Wheeler, the insolvent debtor, to the defendants was made in such circumstances that it was void as against Wheeler’s creditors. The court below has found the facts in detail with regard to the whole transaction, and upon the facts so found held the transfer to be void under the insolvent law. The conclusion of the court upon the subject is thus stated in the finding:—“ Upon the facts set forth it is found that said transfer was not made in good faith in the regular course of business, and was made in view of insolvency, and with intent to prefer a creditor, the defendant company.” Upon this conclusion the court held the transfer void and rendered judgment for the plaintiff, the trustee in insolvency, to recover the value of the property.
If this had been a conclusion of fact from the evidence before the court it could not be reviewed; but it is very clearly an inference of law from the facts specifically found. The evidence had exhausted itself in producing the facts thus found. Nothing remained but for the court in the exercise of its legal judgment to draw its inference from the facts. This the judge himself distinctly states in saying that this conclusion is “ upon the facts set forth.”
In such a case the conclusion of the court can always be reviewed by the appellate court. An erroneous conclusion is an error of law and not an error in an inference of fact.
The question therefore is—whether the facts presented show clearly that the transfer was in violation of the provisions of the insolvent law and therefore void as against creditors. Clearly the burden of proof on this point rests upon the plaintiff. Aside from the ordinary rule that a plaintiff must make out his case, there is a presumption that a transaction is legal unless brought clearly within some prohibitory or invalidating statute or rule of law. At com*290mon law such a transfer would be valid, and it is rendered invalid if at all only by the provisions of our insolvent law. (Gen. Statutes, p. 878, sec. 1).
The provisions of that section are clearly and authoritatively summarized in Utley v. Smith, 24 Conn., 290, where the court says:—“ Three things are necessary to make the deed of an insolvent debtor fraudulent and void under the statute of 1853. First, the grantor must be in failing circumstances; second, the deed must be made with a view to insolvency; and third, the deed must be made with an intent to prefer one creditor over another.”
In this case the facts show that the debtor was in fact in failing circumstances, and, if what he did was in view of insolvency, the transfer of this property must be regarded as having been made to give the defendants a preference over his other creditors. The whole question therefore is whether the transfer was made “ with a view to insolvency.”
Upon this point it is not enough that a debtor was actually insolvent and that he knew that he was so. This is consistent with the intention and hope on his part to work out of his embarrassment and continue his business. In this case it is expressly found that the debtor “at the time of the transfer of the goods did not intend to go into insolvency.” It is also found that at the time of the negotiation resulting in the transfer of the goods, “ Wheeler asked the defendants to take back the stock of groceries which he had bought of them, stating that if they would do so he could close out his grocery business, thereby reducing his expenses by surrendering the lease of one store and discharging his clerk; and that he thought that in that way he could go on with his meat business.” And on the day when the transfer was made it is found that Wheeler stated to the defendants “that he thought if he could fix up their account he could go on in business, as 1ns other creditors were not pressing him.” It is also to be noticed that this was not a payment to a particular creditor out of money representing goods which he had sold, which goods had been purchased of his various .creditors, but was simply a return to the defendants *291of goods which he had bought of them and which he had found himself unable to retain and pay for. This last fact is not of itself decisive and perhaps not very important, but it tends to show that the debtor’s object was not to rob his other creditors for the sake of paying the defendants.
We think the mere fact that the debtor “did not intend to go into insolvency” is not of itself decisive of the matter. He might have seen that insolvency was inevitable, but have intended to wait for his creditors to move against him. It is enough if he knew that he could not escape insolvency and was acting in its presence and in expectation of it. But we think that it appears from the finding that he entertained a hope of so arranging his business after the return of the groceries to the defendants as to go on with his meat market, and that his object in making the transfer was rather to escape insolvency than to go into or be overtaken by it. When we consider that it must affirmatively appear that the defendant acted “with a view to insolvency,” it is clear that the finding does not warrant the conclusion that the transfer was void under the statute.
The term “insolvency” as used in the statute, of course means insolvency in its technical sense, that is, proceedings in insolvency. It is very clear that a debtor may be in actual insolvency, that is, his assets may not be sufficient to pay his debts, and yet he may be very far from legal insolvency or serious danger of it.
The facts found in the case with regard to the exchange of checks between Seyms & Co., Woodward'& Co., and the defendants, are in themselves suspicious and seem to indicate an impression on the part of all parties that the transaction might not bear the light; but we cannot, looking at the matter as a question of law, consider this sufficient to neutralize the other facts found to which we have alluded, while it would not be sufficient for them merely to neutralize those facts; they must predominate and determine the character of the transaction.
The view of the matter which we have taken is sustained by repeated decisions of this court giving construction to the *292section of the insolvent law in question. Utley v. Smith, 24 Conn., 290; Quinebaug Bank v. Brewster, 30 id., 559; Bloodgood v. Beecher, 35 id., 469; Hall v. Gaylor, 37 id., 550.
There is error in the judgment appealed from, and a new trial is granted.
In this opinion the other judges concurred; except Carpenter, J., who dissented.