not such a possession as the statute requires, and consequently it is imputable to him as owner that he has let Harvest have possession in respect of that moiety, producing the same inconvenience by creating a false credit."

In Ryall vs. Rowles, therefore, where the mortgage was to a partner, the property was held not to be protected.

* * * *

It has been said, however, that Ryall vs. Rowles has been over-ruled, but in In re Bainbridge, BACON, C.J., says: "The case of Ryall vs. Rowles has been referred to at great length, and it has been said that that case has never been disputed; and no doubt there is a great deal to be found in that case that never was disputed when that case was decided. But the law has been wholly altered since then. No choses in action now pass under the order and disposition clause except debts due in the course of trade or business." Ryall vs. Rowles cannot, therefore, be said to be over-ruled, though the law as to choses in action may have altered. The principles laid down in Ryall vs. Rowles are untouched.

In the case of In re Hill, (1) on the 14th August 1874, one Lepage who was the original owner of a business sold

(1) In re Hill, Ex-parte Lepage

In this case one Lepage sold his business, which was carried on under the name of C. Lepage and Co., to three persons named Barham, Hill, and Seymour. The name of the firm was thereupon changed to Barham, Hill and Co." Part of the purchase money remained outstanding, and the good-will, stock-in-trade, shop fixtures, and book debts of the business were mortgaged to Lepage by his vendors subject to a proviso for redemption on payment within seven years of the principal sum secured, and interest. In 1870, Seymour, with the consent of Lepage, sold his share in the business to one Thomson, who agreed to become liable to Lepage for all claims which Lepage might have against Seymour. In 1871, the share of Barham (who was dead) was sold by his executor to Hill and Thomson, who agreed to become liable to Lepage in respect of such share. In 1871, Hill and Thomson executed a bond in favour of Lepage for the purpose of securing the sum of Rs. 24,936 then due to him on the mortgage, and to secure certain other sums due by them to him gave him their joint and several promissory note for Rs. 27,648. In December 1871, Thomson left India owing to ill-health, and shortly afterwards sold his share to one Hogan, remaining, however, liable to Lepage. Thomson, was never advertised out of the firm in consequence of a private arrangement between VOL. VII.

5

1880

In re MORGAN

AND

FORBES.

Argument.

1880

In re MORGAN

AND

it to three persons, taking from them a mortgage of the stockin-trade, etc., and leaving them in possession. Ultimately the partnership came to consist of Hill, the insolvent, and one FORBES. Hogan, who was a dormant partner and lived out of the Argument. jurisdiction. The whole of the property remained in the possession of the insolvent with the consent of Hogan. In re Dorman, L. R., 8 Ch., 51, and Reynolds vs. Bowley, L. R., 2 Q. B., 474, were cited, and it was argued that the principle of those cases prevented the property from being in the order and disposition of Hill. But PONTIFEX, J., held that the goods were in the order and disposition of Hill, and that Lepage had no preferential right.

himself and Hogan, who was admitted as a dormant partner. In 1873, Hill became insolvent and filed his petition. Lepage filed a petition claiming priority.

Phillips, for Lepage.

Kennedy, and Evans, for the Official Assignee.

Mr. Watson, for Hill.

PONTIFEX, J. :

Lepage claims to be not only a creditor of the estate but a secured creditor. He claims under a deed which provided that he was not to be paid for seven years. The property was left in the possession of Hill. Mr. Phillips says, that the property was not in his possession with the consent of the true owner. The proviso in the deed does not affect his possession,-Reynolds vs. Bowley, L. R., 2 Q. B., 41 and 474. The claimant has consented to Barham Hill and Co. being in possession of the property mortgaged to him, and if it remained so, he cannot take it. Mr. Phillips has cited In re Dorman, L. R., 8 Ch. App. 51, and Reynolds vs. Bowley, L. R, 2 Q. B., 41 and 474. In both those cases the possession of the property was the possession of both partners, and therefore was not such a sole possession, order or disposition as is required by section 23 of the Insolvent Act. This case is different. Hogan was out of the jurisdiction and was a dormant partner. Neither of the authorities cited would operate to enable the Official Assignee to succeed in any action against Hogan, and I do not see why Lepage is to be in a better position. The only person in whose possession, order or disposition the goods were, was Hill.

Proof allowed subject to adjustment of the amount with the Official Assignee; in case of difference to be referred to the Court. Preferential right disallowed, and the petitioning creditor to take rateably with the other creditors.

The cases of Reynolds vs. Bowley, L. R., 2 Q. B., 41 and 474, and ex-parte Dorman, L. R., 8 Ch. App. 51, are distinguishable from the present case. Reynolds vs. Bowley is a case of a dormant partner. But there it was held that the dormant partner was actually in possession. The bankrupt was the true owner, and the whole of the property was in the order and disposition of the bankrupt as well as of the solvent partner. Here Gubboy, the mortgagee, was the true owner, and the property was in the order and disposition of Morgan and Forbes, the insolvents.

In the Court below, LUSH, J., in the case of Reynolds vs. Bowley, says: "If I had to put a construction upon this clause for the first time, I should have thought that one of the necessary conditions in order to bring a case within it would be, that there should be a true owner of the goods as distinguished from the appare nt owner, and such an owner as had the power to dissent from the possession of the apparent owner and to resume the possession of the goods himself, and that the clause could not apply to the case of a person who held the goods in his own right, and who could not be deprived of the possession by the other non-apparent owner. The cases, however, I feel are too strong for us to over-rule in this Court, and have given a much wider interpretation to the clause." But in appeal, L. R., 2 Q. B., 474, KELLY, C. B., says: "I would express the opinion of this Court that a partnership in which there is a dormant partner is not within this section (S. 125 of 12 and 13 Vict., c. 106,) that the possession which one partner holds of the goods, the property of the partnership is not held by him, by the consent and permission of any other person as the true owner in the sense in which those words are used," and he continues, "the bankrupt was the true owner."

Now here Gubboy was the true owner, and might at any time have resumed his right to take the property out of the possession of Morgan and Forbes, whom he had allowed to hold the property as apparent or reputed owners.

In In re Dorman, L. R., 8 Ch. App., 51, the property was in the possession of the insolvent as well as of the solvent partner. Here, however, there is a marked difference, for the property was in the possession of Morgan and Forbes alone.

1880

In re MORGAN

AND FORBES.

Argument.

1880

In re MORGAN

AND

FORBES.

In Hornsby vs. Miller, 1 E. and E., 192, the bankrupt bought of the plaintiffs a portable steam engine, paid part of the price, and to secure the balance executed a deed, by which he assigned the engine to them by way of mortgage. The bankrupt took Argument. possession of the engine, and was in the habit of letting it out. to hire in the way of his trade, and at the time of his becoming bankrupt it was in the possession of a farmer to whom he had let it out to hire. An action was brought by the plaintiffs against the assignees under the bankruptcy for damages for conversion, and it was held that the possession was with the bankrupt, and that the engine passed to his assignees.

Here the horses and carriages which were mortgaged to Gubboy were kept for the purpose of being let out, and the fact that the insolvents did let them out, strengthened the belief of the creditors that the insolvents were the actual owners.

The next point is, as to the right of the mortgagee to the property subsequently substituted for the property in existence at the time of the mortgage. The mortgage deed provides that the mortgagors shall make over the live and dead stock, etc., to the mortgagee on demand in writing. That might include substituted stock, or stock that had been added after the time of the mortgage; but the right to such stock was not to arise until a demand in writing had been made, and there is no evidence of any such demand.

Until the time of Holroyd vs. Marshall, 10 H. L. C., 191, it was generally supposed that covenants by which after-acquired property should pass to the mortgagee were inoperative.

There, however, there was an express covenant that "all the machinery which during the continuance of the deed should be placed in the mill, in addition to, or in substitution for the original machinery, should be subject to the same trusts." There there was no necessity as here for a demand in writing.

The case of Holroyd vs. Marshall was decided on principles of Equity, which do not apply here. Lord WESTBURY says (p. 209): "A contract for valuable consideration, by which it is agreed to make a present transfer of property, passes at once the beneficial interest, provided the contract is one of which a Court of Equity will decree specific performance. * * * And this

is true not only of contracts relating to real states, but also of contracts relating to personal property, provided that the latter are such as Courts of Equity would direct to be specifically performed."

1880

In re MORGAN

AND

FORBES.

Here.if the mortgagee had applied for specific performance, Argument. it would have been in any case a condition precedent to have proved a demand in writing.

In this country, however, the Specific Relief Act (I of 1877), has made a serious alteration in the class of cases in which, specific relief will be granted. Section 21, cl. (a) of that Act provides that a contract, for the non-performance of which compensation in money is an adequate relief, cannot be specifically enforced.

Now it is clear that in the present case compen sation in money would have been an adequate relief.

The Specific Relief Act, therefore, has swept away the principle upon which Holroyd vs. Marshall was based so far as it might affect this case.

Allen.-The present case clearly comes within the mischief which section 23 of the Insolvent Act (11 and 12 Vict., c. 21) was intended to prevent.

The object of section 23 of the Act was to protect the general creditors of a trader against the consequences of that false credit which might be acquired by the trader being suffered to have the possession and power of disposition of property as his own which did not belong to him.

My clients dealt with the insolvents upon the faith of the credit which the insolvents had acquired from their having been permitted by Gubboy to retain and deal with the property as their own.

The true rule is laid down by PARKE, B., in Load vs. Green, 15 M. and W., 223. He says:-"In order to bring the case within the statute, there must be a real owner distinct from an apparent owner, and the real owner must consent to the apparent ownership as such." That rule was quoted and approved in Reynolds vs. Bowley, R. L., 2 Q. B., 479.

Here Gubboy is the true owner.

The insolvents were, with his