Batchelder v. Home National Bank

105 N.E. 1052, 218 Mass. 420, 1914 Mass. LEXIS 1419

• Court: Massachusetts Supreme Judicial Court
• Decided: June 17, 1914
• Status: Published

Opinion

Sheldon, J.

The defendant’s main contention is that there was no evidence to warrant a finding that O’Neil intended to give a preference to the defendant, or that the defendant had reasonable cause to believe that O’Neil was insolvent and intended to give to it a preference by paying the notes which it held.

There was evidence that O’Neil was insolvent. It could be found that his- indebtedness greatly exceeded his assets, and that he knew this fact. He paid the defendant the full amount of his notes which it held, none of which had yet become payable, and two of which were not payable until more than two months later. He made the payment, the jury could find, from a desire to stand well with the defendant, so that he could borrow from it afterwards, if he again should go into business. The jury could find that the necessary effect of what he did was to prefer the bank, and could infer that this was his intention. Hewitt v. Boston Straw Board Co. 214 Mass. 260. Wilson v. Mitchell-Woodbury Co. 214 Mass. 514, and cases there cited.

It was a closer question whether the defendant had reasonable cause to believe that he then was insolvent and intended to prefer it to his other creditors. To hold the defendant there must have been a reasonable cause of belief, not a mere ground of suspicion. Stuart v. Farmers Bank, 137 Wis. 66. Grant v. National Bank, 97 U. S. 80. Barbour v. Priest, 103 U. S. 293. Stucky v. Masonic Savings Bank, 108 U. S. 74. On the other hand, it is equally true that this is a question of fact; that the inference of the fact may be drawn from circumstances; and that the same circumstances which to some minds would merely give ground for suspicion may afford also evidence which to other minds would carry conviction that they not only showed reasonable cause of belief, but actually had created a real belief. Hewitt v. Boston Straw Board Co. 214 Mass, 260. Brown v. Pelonsky, 210 Mass. 502. Carroll v. Hayward, 124 Mass. 120, 122. For these reasons, many of the decisions relied on by the defendant, in which the fact was determined by judges sitting without a jury, have no real bearing here.

There was evidence of the following facts: The defendant’s cashier had known O’Neil for about twenty years and was quite friendly with him. O’Neil had kept an account with the defendant for that time, with an average daily balance of about $100, but without much balance on some days. He had owed the bank the amount of these notes (excepting the note for $100) for nearly two years, they having been renewed as fast as they came due. He carried on a retail grocery business. On May 5, 1908, his store was burned out, causing a total loss, and he ceased to make deposits with the defendant. That afternoon he borrowed the further sum of $100 on his thirty-day note with a responsible indorser. On May 16, he received about $2,500 from the insurance on his store. Two years before this, according to his statement then given to the defendant, he owed $4,300 in current bills, and $1,050 on borrowed money. At this time he owed to the defendant, as the jury have found, $1,100 in notes for borrowed money and was liable to it as indorser on another note for $1000. When the defendant’s cashier knew that O’Neil was about to receive the insurance money, he had a talk with O’Neil as to the payment of these notes for $1,100 with a rebate of the interest not yet accrued. On Saturday afternoon, May 16, 1908, after the closing hour of the defendant, O’Neil brought in to it the check which he had just received from the insurance companies; the defendant deducted from this the amount of its notes with a rebate of interest, and gave him the balance in cash. The defendant entered this payment on its books as made on Monday, May 18.

The defendant offered explanations of some of these circumstances, and as to some there was a conflict of evidence. But this of course was for the jury.

The payment of the notes before they were due, the fact that the whole transaction was an unusual one, the desperate condition in which O’Neil’s finances then were, the intimacy of the defendant’s cashier and its directors with O’Neil as testified to by the cashier, the haste with which the transaction was carried through after the usual business hours of the defendant, the fact that it was entered upon the defendant’s books only on the next secular day, and that the money paid to the defendant came from the only means that then practically was available to O’Neil, as the jury could find that the defendant knew,— all these circumstances warranted the jury in drawing the inference contended for by the plaintiff. Killam v. Peirce, 153 Mass. 502. Jaquith v. Winnisimmet National Bank, 182 Mass. 53. Brown v. Pelonsky, 210 Mass. 502. In re The Leader, 190 Fed. Rep. 624, 629.

We have examined all the decisions to which we have been referred by the defendant’s counsel, and have found nothing which leads us to doubt the soundness of our conclusion. The jury were warranted in finding that the defendant had reasonable cause to believe that O’Neil was insolvent and that he intended to prefer the defendant to his other creditors.

There was evidence that the $100 note was held by the defendant and not by its cashier individually. O’Neil testified that he did not know that this loan was not made to him by the bank. Both the cashier and O’Neil testified that this note was included in the payment made by O’Neil to the bank on May 16.

It follows that the defendant’s first request for instructions properly was refused. Its tenth request was refused in the terms asked for, because the judge said that he had covered it in substance. We are not informed what instructions were given upon the point, and must presume that they were correct and sufficient. Townsend v. Niles, 210 Mass. 524, 530. Hubbard v. Allyn, 200 Mass. 166, 172. As the matter of this request was covered, it must have been found that O’Neil intended to prefer the bank, and that the hypothesis stated in the request was not in fact true.

The schedules of O’Neil’s assets and liabilities filed by him in the bankruptcy proceedings were not properly admissible. Simpson v. Carleton, 1 Allen, 109. Hosmer v. Oldham, 122 Mass. 551. But O’Neil testified that his condition had not materially changed from the time that he paid these notes to the time when he filed the schedules. They doubtless were admitted, as in Atherton v. Emerson, 199 Mass. 199, 210, as substantially embodying the testimony of the witness as .to his financial condition when he paid the notes. That was material to be shown. Under such circumstances, justice does not require a new trial of the case for the correction of this formal error. It cannot have affected injuriously the rights of the defendant. St. 1913, c. 716, § 1. The case was tried in October, 1913, and the provisions of § 6 of the statute apply.

The other exceptions alleged in the bill have not been argued, and we treat them as waived.

Exceptions overruled.