Carnes v. White

Dewey, J.

1. The declarations of Smallwood, made before the institution of proceedings in insolvency, were competent evidence, and ought to have been admitted. They related to past transactions connected with the business of the firm, and, as admissions of facts then having occurred, might properly be introduced to show the contract under which the unfinished furniture was placed in the hands of the defendant for the purpose of being made ready for the market.

2. The contract, as set up by the defendant, was not illegal by reason of its being, in conflict with the provisions of the insolvent laws of the Commonwealth. A party in insolvent circumstances, but before any proceedings in insolvency are instituted, may make a contract for finishing articles partly manufactured in the course of his business, and may stipulate with a third party who is to make expenditures on the same that such party shall hold the articles upon which he has thus made expenditures, until the amount thus expended has been realized from the sales, returning the surplus to the debtor. Such contract, if made in good faith, and with the purpose to finish the articles for the market, is not invalid, either as against the policy of the insolvent laws, or by reason of its being made by only one of the partners.

The case having been submitted to the jury under rulings and instructions different from those above stated, the verdict must be set aside and a New trial had.