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cited from those courts were brought in equity, — generally, to be sure, without objection. In Massachusetts and some other States there is no remedy in equity,1 unless the rights of more than two distinct parties are involved, or there is some other special reason for applying to that jurisdiction.2 An objection of this sort must be taken before final hearing.3

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§ 97. Form of Action; Damages. — In England until the statute of 1883 a preference was held not to be an act of bankruptcy, and therefore the title of the assignees did not accrue by relation; and the doctrine of relation does not obtain in this country. For these reasons, and because the transfer of chattels or other property to a creditor by way of preference is valid between the parties, it was held, in a case which was very thoroughly considered, that where a creditor had taken a transfer of goods by way of preference, and had sold them before the title of the assignees accrued, he was not liable in trover,4 for the disposition of the goods by him was not a conversion at the time it was made; and, of course, if the goods remained in the creditor's possession, he was not liable in trover until demand and refusal.5

The same reasoning might seem to apply in this country; but it has been held that though there is no relation of the title, yet a preference is an inchoate fraud, which becomes perfect by the happening of bankruptcy within the prescribed time, and that thereafter the assignees may maintain trover without a demand. Assignees have recovered the value of the property or the money, with interest from the time of the pref, erence, which involves nearly the same question. There is no doubt that a special action on the case will lie, with or without

1 Woodman v. Saltonstall, 7 Cush. 181; Clark v. Jones, 5 Allen, 379.

2 Hubbell v. Currier, 10 Allen, 333; Sherman v. Fitch, 98 Mass. 59.

Brook v. Mitchell, 6 Bing. N. C. 349;
Newnham v. Stevenson, 10 C. B. 713,
13 C. B. 285; Nicholson v. Gooch, 5
E. & B. 999; Jones v. Fort, 9 B. & C.

8 Dearth v. Hide & Leather Bank, 764. 100 Mass. 540.

Young v. Billiter, 8 H. of L. 682.
Nixon v. Jenkins, 2 H. Bl. 135;

Tapley v. Forbes, 2 Allen, 20; Foster v. Hackley, 2 N. B. R. 406, Fed. Cas. No. 4971.

a demand; and after demand for the money, if the goods were sold before bankruptcy, assumpsit can be maintained.1

On the question of damages, however, it is to be noted that our statutes usually provide that the assignees may recover the property or its value, and that the creditor may surrender his preference. Taking these provisions together, it would seem that the damages should not accrue until the assignees or the creditor had elected. If the creditor surrenders the very property, or cancels the mortgage, it will be very difficult to maintain that he is liable for something more.

§ 98. Evidence. Any statements or admissions of the debtor, his books of account, his dealings, or his schedules in bankruptcy, are evidence on the issue of his insolvency;2 but upon that of the creditor's knowledge, such admissions to be admissible must have been made before the time of the alleged preference, unless the fraud was so contrived between them as to amount to a conspiracy. So statements of the debtor, favorable to the creditor, made after the act, cannot be admitted.5

It has been often ruled that the denial by the debtor or the creditor upon the trial, that he had the requisite knowledge of the insolvency or the intent, is of very little value, not only by reason of bias, but also by the readiness with which one may deceive one's self upon matters of belief and intent. It was even held in Massachusetts that a question to the creditor when he is a witness, as to his knowledge or belief of the debtor's insolvency, is inadmissible, because the statute made "reasonable

1 Marks v. Feldman, L. R. 5 Q. B. 275; Farrow v. Mayes, 18 Q. B. 516; Biffin v. Yorke, 5 M. & G. 428.

2 Holbrook v. Jackson, 7 Cush. 136; Bartlett v. Decreet, 4 Gray, 111; Pettee v. Coggeshall, 5 Gray, 51; Marsh v. Hammond, 11 Allen, 483; Re Cowles, 1 N. B. R. 280; Bicknell v. Mellett, 160 Mass. 328.

3 Simpson v. Carleton, 1 Allen, 109 (overruling on this point Heywood v. Reed, 4 Gray, 574).

4 O'Niel v. Glover, 5 Gray, 144; Nudd v. Burrows, 91 U. S. 426.

5 Bicknell v. Mellett, 160 Mass. 328; but see English cases cited by Holmes, J.

6 Graham v. Stark, 3 Ben. 520, Fed. Cas. No. 5676; Oxford Iron Co. v. Slafter, 13 Blatch. 455, Fed. Cas. No. 10,637; Scammon v. Cole, 3 N. B. R. 393, Fed. Cas. No. 12,433; Warren v. Tenth Nat. Bank, 10 Blatch. 493, Fed. Cas. No. 17,202.

cause to believe" the material thing. This is too refined. The question is whether the debtor was insolvent and the creditor knew it; and though the statute made means of knowledge the equivalent of knowledge, in order to prevent a wilful ignorance, yet the knowledge itself would be conclusive; and as the creditor could undoubtedly be asked in cross-examination whether he knew the state of the debtor's affairs, he may be asked it in chief. Otherwise the creditor against whom certain causes of belief are shown is confined to a refutation of these particulars, when an explanation of the whole state of the case would clearly show his innocence. And so it was often ruled in the courts of the United States.

§ 99. Evidence of Reasonable Cause of Belief. All facts which tend to show that the creditor, as a reasonable man, should have suspected the debtor's insolvency are evidence of reasonable cause to believe it; and cause to believe insolvency proves cause to believe the intent to prefer.2 Thus, as we have already seen, the unusual character of the transaction is such evidence; so the debtor's habits; the general character of the business, as profitable or otherwise, at the time, in the experience of others in the same trade; 5 any statements made by him at or before the act, for or against his insolvency; his general reputation in the community for solvency or insolvency; and the apparent paradox is true that while the necessity for pressure has a tendency to prove cause of belief, so the voluntary character of the transaction may have the same effect, if the debt is not due; 8 so, the act being a statutory fraud, any circumstances of contrivance, or collusion, or secrecy. This is

5

1 Coburn v. Proctor, 15 Gray, 38; Lee v. Kilburn, 3 Gray, 594; Heywood Forbes v. Howe, 102 Mass. 427. v. Reed, 4 Gray, 574; Metcalf v. Munson, 10 Allen, 491; Foster v. Hackley, 2 N. B. R. 406, Fed. Cas. No. 4971; Re Cowles, 1 N. B. R. 280, Fed. Cas. No. 3297; Post v. Corbin, 5 N. B. R. 11,

2 Grant v. Nat. Bank, 17 N. B. R. 498; Barbour et al. v. Priest, 19 N. B. R. 518; Small v. Robinson, 5 Fed. Rep. 287.

8 Ante, § 74, and Matthews v. Cha- Fed. Cas. No. 11,299; Brooks v. boya, 111 Cal. 435.

4 Simpson v. Carleton, 1 Allen, 109. 5 Marsh v. Hammond, 11 Allen, 483. 6 Bartlett v. Decreet, 4 Gray, 111. See Killam v. Peirce, 153 Mass. 502;

Thomas, 8 Md. 367.

7 See Re Forsyth & Murtha, 7 N. B. R. 174, Fed. Cas. No. 4948.

342.

8 Merchants' Bank v. Cook, 95 U. S.

true, even in England, on the question of the voluntary character of the act. So preferences by the debtor at or near the same time are evidence of intent, as in other cases of fraud.2

§ 100. Knowledge of Creditor's Attorney; Hoover v. Wise. Knowledge or reasonable cause of belief on the part of the creditor's attorney may, of course, in most cases, be imputed to the creditor; and intent to prefer on the part of the debtor's attorney may be imputed to him.3 In one exceptional case the Supreme Court held that the knowledge of a sub-agent did not bind the principal. The vigorous dissenting opinion in this case and its peculiar circumstances make it of little value as a precedent. If, however, the transaction is not the mere payment of a debt, but a borrowing by the debtor upon security, for the purpose of preferring a third person, the knowledge of the agent of the lender will not always be the knowledge of the principal; as where the agent is himself the preferred creditor, and is, therefore, interested to conceal the facts from his principal, the lender.5

§ 101. Fox v. Gardner. It was held by the Supreme Court, in Fox v. Gardner, that where a debtor of the insolvent had accepted an order, not negotiable, in favor of a creditor of the insolvent, and the jury found that all three parties knew that a preference was intended to the creditor, the assignees might recover the debt from the original debtor in an action at law, notwithstanding his acceptance of the order. If the defendant had objected that the remedy was in equity, he must have prevailed, because the judgment in this case would not bind the creditor, who was not a party, and the defendant might have been obliged to pay the acceptance by the verdict of another jury.7

1 Robson, 7th ed., p. 163.

2 Lynde v. McGregor, 13 Allen, 172. 8 Brown v. Jefferson County Bank, 9 Fed. Rep. 258; Rogers v. Palmer, 102 U. S. 263; Bush v. Moore, 133 Mass. 198; Sartwell v. North, 144 Mass. 188. See infra, § 523.

Hoover v. Wise, 91 U. S. 308, affirming Hoover v. Greenbaum, 61 N. Y. 305. Compare Rogers v. Palmer,

102 U. S. 263; Sartwell v. North, 144 Mass. 188.

5 Dillaway v. Butler, 135 Mass. 479, citing Wilde v. Gibson, 1 H. L. Cas. 605; Cave v. Cave, 15 Ch. D. 639.

621 Wall. 475. See McGregor v. Hume, 28 U. C. Q. B. 380.

7 See Holmes v. Woodworth, 6 Gray, 324; Potter v. Belcher, 105 Mass. 11, 15, per Wells, J.

§ 102. Sale by Assignees with or without giving Right to set aside Preference. -The assignees may not only set aside a mortgage or other similar security which is voidable as a preference, but if they give notice of their election to avoid it, they may sell the equity of redemption, together with a right in the purchaser to contest the incumbrancer's title. If, however, they fail to give such notice, and simply sell the estate, subject to the incumbrance, the purchaser will not succeed to their rights, but is estopped; 2 for the assignees may, after the sale, recover the value of the mortgage from the preferred creditor, which would, of course, affirm his title to the mortgage itself.

§ 103. Preference to Petitioning Creditor. - In some statutes it is provided that a payment to a petitioning creditor whereby he may obtain more than other creditors shall be void. There is, however, no necessity for such a clause, because the petitioning creditor admits by his petition knowledge of the insolvency, and is acting as a sort of trustee for the benefit of creditors generally. It is for this last reason that other cred

itors are admitted to intervene in support of the petition.1

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§ 104. Province of the Jury. All questions of insolvency, contemplation, intent, reasonable cause to believe, are questions of fact, which are for the jury if the case is tried at law. It is error to rule them as matter of law, unless the case is so clear that a verdict contrary to the ruling could not be supported.5

1 Gibbs v. Thayer, 6 Cush. 30; Dwinel v. Perley, 32 Maine, 197; Freeland v. Freeland, 102 Mass. 475.

2 Tuite v. Stevens, 98 Mass. 305; Brewer v. Hyndman, 18 N. H. 9; Bean r. Brackett, 34 N. H. 102.

3 Carter v. McLaren, L. R. 2 Scotch App. 120; Ex parte Thompson, 1 Ves. Jr. 157; Davis v. Holding, 1 M. & W. 159; Ex parte Boss, L. R. 18 Eq. 375; Ex parte Jay, L. R. 9 Ch. 133; Rose v. Main, 1 Bing. N. C. 357; Ex parte Furber, 6 Ch. D. 181; Re Williams, 1 Lowell, 406, Fed. Cas. No. 17,703;

Claflin v. Torlina, 11 N. B. R. 521;
Ledbetter v. Salt, 4 Bing. 623; Ex parte
Paxton, 15 Ves. 461; Ex parte Browne,
ib. 472; Muskett v. Drummond, 10
B. & C. 153; Ellis v. Russel, 10 Q. B.
952; Foster v. Goulding, 9 Gray, 50.
4 Supra, § 49.

5 Fidgeon v. Sharpe, 5 Taunt. 539; Gibson v. Muskett, 4 M. & G. 160; Aldred v. Constable, 4 Q. B. 674; Cook v. Rogers, 7 Bing. 438; Belcher v. Prittie, 10 Bing. 408; Shrubsole v. Sussams, 16 C. B. N. s. 452; Smith v. Merrill, 9 Gray, 144; Kingman v. Tir

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