Sedgwick v. Sheffield. that, if the bankrupts could not pay their debts in the ordinary course of business, that is, in money, as they fell due, they were insolvent." The term insolvent, when applied to traders and merchants, in the bankruptcy Act, is used to express inability to pay debts as they become due in the ordinary course of business. In such sense the term is used when merchants and traders are said to be insolvent, and that is the sense intended by the bankruptcy Act. In the present case it is not disputed that James K. Place & Co. were merchants and traders, within the sense of this rule. Upon the subject in respect to which I have already made some observations to you, the Supreme Court, in the same case, says: "It is a general principle, that every one must be presumed to intend the necessary consequences of his acts. The transfer in any case, by a debtor, of a large portion of his property, while he is insolvent, to one creditor, without making provision for an equal distribution of its proceeds to all his creditors, necessarily operates as a preference to him, and must be taken as conclusive evidence that a preference was intended, unless the debtor can show that he was at the time ignorant of his insolvency, and that his affairs were such that he could reasonably expect to pay all his debts. The burden of proof is upon him, in such case, and not upon the assignee or contestant in bankruptcy." That was a case where a suit was brought by the assignee in bankruptcy against the party who had received a preference, and it is in respect to a suit of that kind that this language is used. The observations I have cited apply to that part of the case which concerns the insolvent condition of James K. Place & Co., and the view with which this payment, if it operated as a preference, on the evidence, was made by them-a branch of the case in which the Court instructs you there is no question of fact for you to pass upon. Sedgwick v. Sheffield. We now come to the part of the case upon which a question of fact arises for your consideration-whether Mr. Sheffield, at the time he received this $4,500, had reasonable cause to believe that the bankrupts were insolvent, and that a fraud on the Act was intended. On that subject, the Supreme Court, in the same case, uses this language: "The statute, to defeat the conveyance, does not require that the creditors should have had absolute knowledge on the point" of insolvency of their debtors, "nor even that they should, in fact, have had any belief on the subject. It only requires that they should have had reasonable cause to believe that such was the fact." The minds of individuals are differently constituted. Some persons arrive at their belief on very slight grounds; others hesitate and doubt on every subject. The belief of individuals, under the weakness of human nature, is very apt to be influenced by their desires. The bankruptcy Act takes the question entirely out of any such domain. It does not say that the creditor must have believed that the debtor was insolvent. It says, "having reasonable cause to believe." It is for twelve independent jurymen to say, it is for an independent Court, in a suit in equity, to say, not whether the creditor believed, in point of fact, but whether he had reasonable cause to believe. Did he shut his eyes? Did he shut his ears? Did he persistently and wilfully refuse to believe, when he had reasonable cause to believe? Were there such things before him that an indifferent person, judging of the matter, would say: "You had reasonable cause to believe this thing; you ought to have believed it; you shut your eyes to it; you shut your ears to it." The matter is not referred to the actual belief of the creditor, depending upon his strength or weakness of mind, upon his actual capacity for judging, in view of his interest; but the test is, reasonable cause to believe, judged of by the ordinary operations of the human mind, as a jury or a Court shall, in view of the transac Sedgwick v. Sheffield. tion, determine whether the man had or had not reasonable cause to believe. On that subject the Supreme Court says, in the same case: "Reasonable cause they must be considered to have had, when such a state of facts was brought to their notice, in respect to the affairs and pecuniary condition of the bankrupts, as would have led prudent business men to the conclusion, that they could not meet their obligations, as they matured, in the ordinary course of business." The Supreme Court cites, with approbation, on this subject, the case of Scammon v. Cole (5 Nat. Bank. Reg. 257,) an equity suit, which came before one of the judges of the Supreme Court of the United States, Mr. Justice Clifford, in the Circuit Court in Maine, where he makes some very clear observations on this subject. The Supreme Court goes on to say, that the Act of Congress was designed to secure an equal distribution of the property of an insolvent debtor among his creditors; and that any transfer by an insolvent debtor, made with a view to secure his property, or any part of it, to one creditor, and thus prevent an equal distribution thereof among all his creditors, is a transfer in fraud of the bankruptcy Act. It is for you to say, upon the principles stated to you, whether Mr. Sheffield, at the time he received this $4,500, on the 19th of November, 1867, in view of what, according to the evidence in this case (because you are to be confined to that strictly), had been communicated to him in reference to the condition of the firm of James K. Place & Co., had reasonable cause to believe that it was then insolvent, that it was in such a condition that it was about to stop payment of its debts for want of money with which to pay them as they matured in the ordinary course of business. If he had reasonable cause to believe that, then he had reasonable cause to believe that it was insolvent in the sense of the bankruptcy Act. Even though it had not actually stopped the payment of its maturing obligations, he had reasonable cause to be In the Matter of the Stuyvesant Bank, a Rankrupt. lieve that it was insolvent if he had reasonable cause to believe that it was in such a condition that the gate must be shut down for want of means to pay, as they matured, its accruing obligations that were coming due. It is necessary, however, that he should not only have had reasonable cause to believe that the firm was insolvent, but that he should have had reasonable cause to believe that this payment to him of the $4,500 was going to operate, in respect to the $4,500, to give to him that $4,500, dollar for dollar, as a preference, while other creditors would not get dollar for dollar for their debts. That is the question of fact, on which you are to pass. If you shall believe that the plaintiff, upon whom is the burden of proof in this case, has made out this reasonable cause to believe on the part of the defendant, the plaintiff is entitled to recover the sum of $4,500, with interest from the commencement of the suit, which is agreed to be the sum of $5,369 75. If the plaintiff has made that out, by a fair preponderance of evidence, he is entitled to your verdict. If he has not made it out, by a fair preponderance of evidence, to your satisfaction, the defendant is entitled to your verdict. The jury failed to agree on a verdict. APRIL, 1872. IN THE MATTER OF THE STUYVESANT BANK, EVIDENCE.-EXAMINING WITNESS AS TO ESTATE OF BANKRUPT.- In an examination of a witness respecting the estate of a bankrupt, on the application of a creditor, other creditors have not the right to intervene and to interpose objections to questions put. BT. VOL. VI.-3 In the Matter of the Stuyvesant Bank, a Bankrupt. In such an examination a witness is not entitled to counsel, even though his examination may establish a liability on his part to the bankrupt's estate, and must be compelled to answer questions respecting his transactions with the bankrupt. IN this case, a witness, who had been president and afterwards receiver of the bank, was under examination, at the instance of John Mack, a creditor. Questions were put to the witness touching advances made to the bank by him during his presidency thereof. In the course of this examination, the witness was asked to state specifically when and in what way a loan of $50,000 to the bank, to which he had testified, had been paid by him, or if he had any book or memoranda by which he could determine. Counsel appearing on behalf of W. R. Barr, another creditor, objected to the question. The register disallowed the objection, and the witness declined, by advice of counsel, to answer. The same counsel, appearing also as counsel for the witness, claimed to be recognized as such, and insisted that, inasmuch as the whole line of the examination pointed towards an assumed liability of the witness himself to the bankrupt, and his answers might tend to establish that liability, the witness was entitled to counsel. The register having decided that, under the ruling of the Court in Fredenburg's Case (2 Benedict, 133), the witness was not entitled to counsel, certified the above questions to the Court, with his opinion, that, in an examination of a witness respecting the estate of a bankrupt, on the application of a creditor, other creditors have not the right to intervene and to interpose objections to questions put; that the claim of counsel to appear for the witness was untenable, and could not be considered stronger because his examination might establish a liability on his part to the bankrupt's estate; and that the question put to the witness, being in the regular line of investigation concerning an important and large transaction with the bankrupt, was one which the creditor was |