Fletcher , 136 Mass. 340 ( 1884 )

Morton, C. J.

The insolvent law provides that a discharge shall not be granted or valid if the debtor, being insolvent, and having reasonable and sufficient cause to believe himself so, has, within one year next before the filing of a petition by or against him, paid or secured, either directly or indirectly, in whole or in part, any borrowed money, or preexisting debt. Gen. Sts. c. 118, § 87. Pub. Sts. c. 157, § 93.

The appellant contends that the words “ preexisting debt ” mean only a debt which is overdue; and that, if an insolvent pays debts as they mature, in the usual course of business, there is no preference which would avoid a discharge. This construction is against the plain meaning of the statute, and would open a wide door to fraud upon the insolvent law. It would enable any debtor, who knew himself to be hopelessly insolvent, to prefer favored creditors by paying them in full as their debts mature, to the exclusion of his other creditors, and would thus violate the clear policy of the insolvent law, which intends that, when a man discovers that he is insolvent, he shall put his property in the hands of the law, to be equally divided among his creditors, except so far as the law allows preferences.

The words “preexisting debt,” in their natural meaning, include all debts previously contracted, whether they have become payable or not.

In the recent case of Phillips, appellant, 132 Mass. 233, a discharge was refused an insolvent debtor because he, being insolvent and having reasonable and sufficient cause to believe himself so, paid a note at a bank at its maturity, in the usual course of business. The question here raised was not discussed in that case, but it was necessarily involved in the judgment then rendered.

Exceptions overruled.