Clark v. Metcalf

Headnote

This action was brought upon a premium note given by defendants for a policy in the Commercial Marine Insurance Company, of Boston. The note was assigned by the company

to plaintiff, who was one of its directors, as collateral security for advances made. The defence was that the company was, at the time of the giving of the note and the issuing of the policy, insolvent to the knowledge of the plaintiff. Held, that if the company was insolvent and known to be so by its officers at the time of issuing the policy and receipt of the note it was a fraud, and if plaintiff, when he became the holder of the note, knew of its infirmity because of the fraud, he could not recover; but that the burden of proof was upon the defendants, and the evidence entirely failed'to show knowledge on the part of the officers or plaintiff, and that, therefore, the court below erred in refusing to direct a verdict for plaintiff.