Smith v. American Linen Co.

Holmes, J. This is a bill in equity, brought under Pub. Sts. c. 157, § 15, by the assignee in insolvency of one Barlow, to revise the refusal of the Court of Insolvency to expunge the proof of the defendant’s claim, the ground of the bill being that the defendant has accepted a preference. Pub. Sts. c. 157, § 33. The material facts are these. In November, 1893, Barlow was insolvent, and his creditors gave him an extension of time that he might continue in business, it being hoped that by doing so he would be able to pay them in full. The creditors accepted notes for the amount of their claims. In November of the following year,-the defendant sold Barlow waste from its mills by what are called cash transactions, that is, upon the understanding that it was to be paid for the goods in ten days, and it was paid for the same at the end of ten days in November, while Barlow still was going on. The last of these transactions was after notice that Barlow would not be able to pay his debts at the end of the extension. In December, 1894, Barlow went into insolvency. The payments just mentioned constitute the alleged preference. [229] The claim which the defendant was allowed to prove was for the old extended debt alone. It is unnecessary to consider whether as against later creditors, if not as against those who agreed to give time, the credit given upon what merchants call a cash sale stands differently from any longer or other credit in respect of the right of the creditor to accept payment without accepting a preference. Upton v. Sturbridge Cotton Mills, 111 Mass. 446. For we are of opinion that the debt on account of which the preference, if any, was given, was distinct from the claim upon the note which was proved. The prohibition of § 33 is only that the person who has accepted the preference, etc., “ shall not prove the debt or claim on account of which the preference was made or given.” This language plainly implies that there may be another debt or claim, as of course there may be, and that the prohibition does not extend to such other debt or claim. We see nothing in the creditor’s oath to change the construction, and the meaning of the words cannot be shaken by putting cases where the difference between one claim and two becomes nice. Any distinction, no matter how sensible and how plain, leads at last to a line which is worked out by the contact of decisions clustering around the opposite poles, and which may seem arbitrary if we attend to it alone and not to the nature of the groups which it divides. As no preference was given on account of the note, the section does not apply. Similar words in the last bankrupt act before the present were .construed as we construe the Massachusetts statute. In re Lee, 14 Bankr. Reg. 89, 92. In re Solland, 8 Bankr. Reg. 190. In re Richter's estate, 4 Bankr. Reg. 221, 232. Bill dismissed.