Getman v. . Second National Bank of Oswego

Finch, J. The plaintiff, as assignee in bankruptcy of George Ames, sued upon sixty-four causes of action, each of which alleged that the defendant had charged and received usurious rates of interest on loans and discounts to Ames, and the firm of Ames & Tanner, whereby the bank became liable to refund double the amount under the act of Congress. These causes of action were met and answered by proof that they had been fully paid and satisfied, and the liability of the bank therefor released and discharged by the assignor before the commencement of the proceedings in bankruptcy. That proof was made by the production of a release under seal executed by said Ames, acknowledging full payment and satisfaction of all claims for excessive interest and releasing the bank therefrom. The contest thereafter turned upon the validity and effect of this release. The plaintiff attempted to render it ineffectual, by bringing it within the condemnation of the Bankrupt Act. The only evidence he gave was the record of a previous judgment between the same' parties in which the plaintiff sued as assignee to recover certain payments made to the defendant, on the 31st day of March, 1877, being about a month earlier than the date of the release, as having been made when the debtor was in fact insolvent, and when the creditor had reasonable cause to believe in the existence of such insolvency, and knew that such payment was made in fraud of the provisions of the Bankrupt Act. These facts were decided in plaintiff’s favor in that action, but they do not prove the plaintiff’s case in this. To annul the release he was bound to show not only that at its date the defendant had reasonable cause to believe Ames insolvent, but that it knew that he executed it *139 in fraud of the provisions of the Bankrupt Act (U. S. R. S., §§ 5128, 5129, as amended by Laws 1874, chap. 390, § 11; Guernsey v. Miller, 80 N. Y. 181.) Proof that a payment made by the debtor to the creditor in March, 1877, was a fraudulent preference, known to be such, does not at all establish that payment by the bank to Ames in April, 1877, of a debt due the latter was either fraudulent or known to be such. The exception, therefore, to the refusal of the referee to find that at the date of the release the defendant had reasonable cause to believe Ames insolvent was not well taken. The fact was immaterial, unless further proof was given showing knowledge of a fraud upon the Bankrupt Act. Ho such proof was given. The plaintiff seeks to supply it by calling it a tfansaction not in the usual and ordinary course of business of the debtor, and invoking the presumption arising from that fact. (U. S. R. S., § 5130.) But Ames simply collected a debt due him and settled an obligation which he held against the bank. That did not become a matter outside of his usual and ordinary business because the character of the debt was unusual and peculiar. It was collecting back an over-payment. His loans and discounts, his payments of interest, were usual and ordinary, and his settlement of a demand for payment in excess cannot be deemed outside of the usual and ordinary course of business. The further argument that the release was against public policy does not need discussion. We think the defense was complete and properly allowed to prevail. The judgment should be affirmed, with costs. All concur. Judgment affirmed.