The Monitor and Hill. or fished mast, and throw it away as a total loss, and replace it with a new one, he must do so at his own cost. There was no malice, or such gross carelessness shown in the case as entitles the libellant to exemplary or punitive damages. He is only entitled to be made good, and was substantially so by the fishing of the old mast. This view of the case is fully sustained by the Supreme Court, in Smith vs. Condry, 1 Howard, 35; Williamson vs. Barrett 13 Howard, 111; The Granite State, 3 Wallace, 314. A decree will therefore be entered finding both the tug and brig at fault, and jointly and severally liable for the damages, and fixing the damages at one hundred and fifty-eight dollars, being the cost of repairing the injured mast and one day's demurrage. No interest is allowed, as the proof shows respondents to have been at all times willing to pay the actual damage. But as no tender was made, the libellant will have his decree for costs. Hall, Assignee, &c., vs. Wager. HALL, ASSIGNEE, &c., VS. WAGER. CIRCUIT COURT-WESTERN DISTRICT OF WISCONSIN-JUNE TERM, 1871. 1. INSOLVENCY-A CONDITION OF FACT, NOT OF BELIEF.-To render a mortgage void under the thirty-fifth section of the Bankrupt Act it is not necessary that the debtor knew or believed himself insolvent. The section treats of insolvency as a condition of fact, not of belief, and with knowledge of which and its consequences he is chargeable in law. 2. It follows, as a logical sequence, that when a man insolvent in fact gives a mortgage to one existing creditor he does so with a view to give him a preference. 3. The bankrupt law of 1841, and the Massachusetts insolvent law and decisions commented upon. 4. THE ACT OF 1841 declares void preferences made by a party contemplating bankruptcy; the act of 1867 includes those made by a party being insolvent, and the decisions under the former act are not always applicable to the present statute. 5. CONSTRUCTION OF ACTS OF INSOLVENT.-The purpose of the act being to enforce the equal distribution of the estate, every act of an insolvent that tends to defeat that purpose should be construed strictly as against him, and courts should indulge every presumption permissible by the well settled rules of law to secure the full benefit of this cardinal principle of the law. 6. INSOLVENCY CONSTRUED ACCORDING TO PLACE.-The strict definition of insolvency usually given in commercial centers should not be applied in country places. A party should be held insolvent only when he fails to meet his debts according to the usages and customs of the place of his business-the rule should be in harmony with the general custom of the place. 7. If an insolvent give a mortgage to a creditor who has reasonable cause to believe him insolvent, the fraud upon the Bankrupt Act is complete as to both. 8. ACTUAL BELIEF, BY CREDITOR, OF INSOLVENCY NOT NECESSARY.-The question as to the creditor is whether he "had reasonable cause to believe" the debtor insolvent-not what he did believe; the latter is immaterial. The creditor is not constituted the sole judge of the sufficiency of the evidence of his debtor's insolvency-that is for the court to determine, the security being attacked. Hall, Assignee, &c., vs. Wager. 9. WHAT CONSTITUTES INSOLVENCY.-Where a debtor had, during two years paid off only a small portion of an overdue debt, had sold out the stock of goods for which the account was made, and transferred a part of the paper received therefor, had applied for extensions and been refused, had previously declined to execute a mortgage on the ground that it would injure his credit, and had been pressed by his different creditors-these facts constitute reasonable cause for belief of insolvency, and the creditor cannot escape from the consequences of knowledge of them. This was a suit in equity brought by Augustus O. Hall, assignee of Leonard Lakin, bankrupt, to set aside a mortgage given by the bankrupt to the defendants Wager & Fales, on the ground that it was void under the bankrupt act. The mortgage was for $3,000, dated December 15th, 1869, and was given to secure a debt of that amount owing by Lakin to the firm of Wager & Fales for balance due for stoves sold by them in 1867. The stoves were originally sold on four months time, and the debt had been for some time past due before the giving of this mortgage. Five notes for $600 each were then executed, made payable in six, twelve, sixteen, twenty, and twenty-four months respectively, with interest at 10 per cent. The account against the bankrupt was in 1867 about $4,000, and he paid in 1868 about $500, and in July, 1869, $200 more. In February, 1868, he asked for an extension, agreeing to make small payments, but no extension was formally given. In March, 1869, he asked for another extension, but none was given. In July, 1869, the defendants sent their agents to him for settlement, and asked for a mortgage to secure the balance due. He declined then to give it, and wrote defendants, July 9th, 1869, that if he gave a mortgage it would injure his credit. He agreed then to make small remittances, but did not do so, and they, in October, 1869, sent their claim to Richardson, their agent at Janesville, to get it secured by mortgage, and on the 15th of December, through him, they obtained the mortgage in question. In 1868 Lakin built a new store, at a cost of from $6,000 to $8,000, and in the same year sold out his stock of stoves, and gave up the stove business, continuing, however, to do business as a retail hardware merchant with a Hall, Assignee, &c., vs. Wager. reasonably fair credit at home, and with his creditors; but he had not met his payments, and owed on the 15th of December about $14,000 or $15,000 past due, a portion of which had been due for some time, but part of which he had secured by a note given by the purchasers of the stoves. He had been harassed for over a year by his creditors, had been borrowing money, obtaining renewals, and had used in his business funds held by him as treasurer and in trust. In August, 1869, he gave a mortgage to secure his father'n-law $3,200 borrowed money. Finches, Lynde & Miller, for complainant. Cassoday & Merrill, for defendants, cited In re Hunt, 2 Bankrupt Register, 166; Potter, Denison & Co. vs. Coggeshall, 4 do., 19; Babbitt, assignee, etc., vs. Walbrun et al., Id. 30; Bean, assignee, etc., vs. Brookmire, et al., Id. 57; Maurer, assignee, etc., vs. Frantz, Id., 142; Sedgwick, assignee, vs. Place, 1 do., 204; Langley vs. Perry, 2 do., 180; In re Gay, Id., 115; In re Locke, Id., 123; Armstrong, assignee, vs. Rickey, Id., 150; Wright vs. Filley, 4 do., 197; Jones vs. Howland, 8 Metcalf, 377; Morgan et al. vs. Mastick, 2 Bankrupt Register, 163; Doan vs. Compton, et al., Id., 183; In re Gregg, 4 do., 150; Wadsworth vs. Tyler, 2 do., 101; Lee, assignee, etc. vs. Franklin Avenue German Savings Institution, 3 do., 53. HOPKINS, J.: Mr. Lakin was, beyond all question, I think, insolvent, and had been so for over two years when he gave the mortgage to defendants, although he swears he did not suppose he was, but, on the contrary, he thought he was worth $10,000 over and above all his debts. Soon after giving the mortgage, his other creditors instituted an investigation into his affairs, and it was made apparent that he was insolvent. He then attempted to compromise, but failed to accomplish it; and on the 8th of January, 1870, twenty-four days after giving this mortgage, he filed his petition in bankruptcy. Hall, Assignee, &c., vs. Wager. Mr. Mack, of Sandusky, Ohio, swears that Wager told him in November, 1867, that he thought Lakin insolvent, and that he intended to send out and get a mortgage to secure his claim. Wager denies that he said so, but says that Mack told him at that time that he (Mack) thought he would not stand it long; but that he told him he knew better, and that he was good, and Mr. Wager is partially sustained in his version by a Mr. Spencer, who was present. The defendants swear that they considered him worth $10,000 or $15,000 over his debts when they took the mortgage. The defendants' counsel claim that the facts, as proved, fail entirely to make out a case under the bankrupt act, and contend that to avoid the mortgage it must be shown that Lakin was insolvent when he gave the mortgage, and that he knew it; for if he did not know that he was insolvent he could not be said to have given the mortgage with a view to give the mortgagees a preference, which it would be necessary for the court to find as a question of fact under the thirty-fifth section of the bankrupt act, in order to avoid the mortgage. The meaning of that part of the section is not entirely clear, and has been construed differently by the courts and judges who have been called upon to pass upon it. But I cannot concur with the defendants' counsel in their interpretation of it. The section does not require the debtor to know his insolvency, or to believe it. It treats of insolvency as a condition of fact, not of belief. He cannot set up his ignorance of that condition to defeat the operation of that section. He is presumed to know, and is chargeable with knowledge of it, and neither ignorance nor willful blindness will exonerate him from the operation of its provisions, so that, being insolvent in fact, and chargeable by law with knowledge of such condition, it would follow, it seems to me, as a logical sequence that he gave the mortgage with a view to give the defendants a preference. For not having property to pay all his creditors, the giving the defendants security to pay them in full necessarily operated as a preference, and he should be held as having intended the |