Although this principle applies most frequently in the case of actual bankruptcy, yet it is not essential to its application that the insolvency should have been judicially ascertained by an adjudication in bankruptcy. It is enough if the parties are practically insolvent (g). Where the customer of a banker had lodged a sum of money with a bank to meet an acceptance, and the acceptor failed before its maturity, it was held that at law the drawer could not maintain an action against the banker, there having been no privity of contract between him and the banker (h). And a similar case (i), the Vice-Chancellor followed the law, and held there was no equity in favour of the drawer. The acceptor's right to the benefit of a guarantee given to him is not transferred to a holder of the bill (k) unless the guarantee be given for the purpose of being exhibited to other parties (1). If the holder of a bill of exchange, in which he has a beneficial interest, become bankrupt, the property in the bill vests, from the time of the act of bankruptcy (m), in his assignees, and they must indorse (n). But as, in general, property, in which a bankrupt has no beneficial interest, does not pass to his assignees: he may, after an act of bankruptcy, indorse a bill accepted for his accommodation, so as to convey to his indorsee a right of action against the accommodation acceptor (o). But, if the money were received by the creditor before the commission issued, then an indorsement by the bankrupt would, under the late General Bankrupt Act, have been protected as a payment by the bankrupt (p). "There is no Bank of Ireland & Perry (g) Powles v. Hargreaves, 3 De G., M. & G. 430. (h) Moore v. Bushell, 27 L. J., Exch. 3. See Farley v. Turner, 26 L. J., Chan. 710. (i) Hill v. Royds, 8 L. J., Eq. (k) Ex parte Stephens, 3 Cha. (1) In re Agra and Masterman's Bank, 3 Cha. App. 756. (m) Subject of course to the provisions as to notice of the act of bankruptcy. (n) Pinkerton v. Marshall, 2 H. Bl. 335; Thomason v. Frere, 10 East, 418; but see now 2 & 3 Vict. c. 29, and 12 & 13 Vict. c. 106, s. 133. (0) Arden v. Watkins, 3 East, 317; Wallace v. Hardacre, i Camp. 45; Ramsbottom v. Cator, 1 Stark. 228. (p) 6 Gco. 4, c. 16, s. 82; and also under 2 & 3 Vict. c. 29, and 12 & 13 Vict. c. 106, s. 133. difference," says the Lord Chancellor, "between an actual payment of money in satisfaction of a debt, and indorsing bills of exchange, provided the money was received on them before the commission of bankruptcy issued; for I should take that only as a medium of payment, and no more; otherwise it would be very hard" (q). And it has been held, that if a bill of exchange be indorsed in payment of goods sold, it will be a payment within the statute, though the bill be not paid till after the issuing of the commission, provided it be paid when due (r). The distinction between a payment in money and a payment or satisfaction by bills, is, however, at this day, of less moment, since now not only payments, but all contracts, dealings and transactions with a bankrupt, without notice of an act of bankruptcy available for adjudication, are protected (s). СПАРТЕР XXXVI, Where a negotiable instrument is given to the bankrupt Transfer to a after his bankruptcy, the bankrupt has the property in it, bankrupt. unless the assignees choose to interfere (t). If a man already bankrupt be payee of a negotiable bill or When his capanote, the acceptor or maker cannot dispute the payee's city admitted. capacity to indorse (u). The former certificate or present order of discharge of the bankrupt discharges him from all debts due when he became bankrupt, and from all claims and demands proveable under the bankruptcy (x). And an agreement to pay a debt from which the bankrupt has been so discharged, was formerly void, unless in writing and signed (y). But an absolute written and signed promise personally to pay, bound, whether given before or after certificate (z). But a subsequent contract to pay was afterwards by the 24 & 25 Vict. c. 134, (q) Hawkins v. Penfold, 2 Ves. sen. 550. (r) Wilkins v. Casey, 7 T. R. 711; Bayly v. Schofield, 1 M. & Sel. 338; see Bishop v. Crawshay, 3 B. & C. 415; 5 Dowl. & R. 279. (s) 12 & 13 Vict. c. 106, s. 133. This act is now repealed, but the new statute 32 & 33 Vict. c. 71, * s. 94, contains the provision in the text. (t) Drayton v. Dale, 2 B. & B. C. 293; 3 Dowl. & R. 534. (u) Drayton v. Dale, 2 B. & C. 293; Pitt v. Chappelow, 8 M. & W. 616; Braithwaite v. Gardiner, 8 Q. B. 473. See the Chapter on ACCEPTANCE. (a) 12 & 13 Vict. c. 106, s. (y) 6 Geo. 4, c. 16, s. 131. HH Bill or note for debt barred by certificate or order of discharge. CHAPTER FRAUDULENT s. 164, avoided (a). That act, however, is now repealed in toto by 32 & 33 Vict. c. 83. Until the 6 Geo. 4, c. 16, s. 3, fraudulent preference PREFERENCE. (except by deed) was not prohibited by any statute, but was void as a fraud on the Bankrupt Laws (b). If by deed, it was an act of bankruptcy (c). Afterwards by the 6 Geo. 4, c. 16, s. 3, repealed and reenacted by the 12 & 13 Vict. c. 106, s. 67, every fraudulent conveyance or transfer, whether of real property or chattels, (though not by deed) was erected into an act of bankruptcy. And a bill of exchange has been decided to be a chattel within this, as well as within other sections of the former Bankrupt Acts (d). The recent act 32 & 33 Vict. c. 71, ss. 1 and 6, erects any fraudulent conveyance of property of any kind into an act of bankruptcy. To have been invalid as a fraudulent preference, a transfer or payment must have been spontaneous, and not at the instance or importunity of the creditor (e); it must have been with the intention of giving the creditor an unfair advantage, and not in the usual course of business (ƒ); it must have been in contemplation of bankruptcy as a probable event (g). But money was not, perhaps, a chattel within the former statutes, and therefore the payment of money, by way of fraudulent preference to a creditor, may have been only a void payment (h). (a) 24 & 25 Vict. c. 134, s. 164. (b) Martin v. Pewtress, 4 Burr. 2477. (c) 1 Jac. 1, c. 15, s. 2; Bevan (d) Cumming v. Baily, 6 Bing. See (e) Mogg v. Baker, 4 M. & W. 348; Brown v. Kempton, 19 L. J., C. P. 169; Strachan v. Barton, 25 L. J., Exch. 182. (f) Rust v. Cooper, Cowp. 629. (g) Poland v. Glynn, 4 Bing. 22, n.; 12 Moo. 109, n., S. C. In Morgan v. Brundrett, 5 B. & Ad. 289; 2 Nev. & M. 280, S. C., Mr. Justice Parke said that the cases on this subject had gone too far, and that actual bankruptcy and not mere insolvency must have been contemplated to make the preference fraudulent. And see Atkinson v. Brindall, 2 Bing. N. C. 225; 2 Scott, 369, S. C. But see Aldred v. Constable, 4 Q. B. 674. (h) Bevan v. Nunn, 9 Bing. 107; 2 Moore & S. 132, S. C.; Abell v. Daniell, M. & M. 370; but see Ex parte Simpson, 1 De Gex, 9; also Cannan v. Wood, 2 M. & W. 467. If A. & B. are both creditors for the same debt, a payment to A., with the intention of serving B., is not a fraudulent preference of A. Abbott v. Pomfret, 1 Bing. N. C. 462; 1 Scott, 470; 1 Hodges, 24, S. C.; see Reg. v. Radley, 18 L. J., M. C. 184. Betty & Cook CHAPTER XXXVI. A voluntary transfer, without consideration, by a bankrupt, being at the time insolvent, of land, chattels, bills, bonds or notes or debts, was avoided by the 12 & 13 Vict. c. 106, s. VOLUNTARY 126, now repealed. A gift of money was not, it seems, TRANSFER. within this section (i); but if the money were given with a fraudulent intent, the payment was void and the money recoverable. note du Macksv Feldman 116&e 275 But now by the existing act, 32 & 33 Vict. c. 71, s. 92, every transfer of property, or charge thereon, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by a person unable to pay his debts as they become due, out of his own monies, in favour of any creditor with a view of giving preference, is, if the party so dealing become a bankrupt within three months afterwards, which deciso. void as against his trustee in bankruptcy whack Cam: So howern was under the The existing law relating to the discharge from their DISCHARGE former debts and engagements of insolvent debtors, whether their DFCHARGE or not, now depends on the enactments of the statute 32 & 33 Vict. c. 71. But as that Act of Parliament does not affect rights which have arisen under the repealed acts, and as some decisions on the repealed acts may guide in the construction of existing enactments, it will still be useful to consider the former acts very briefly. DEBTORS. The principal acts recently in force for the relief of in- Acts recently solvent debtors were the 1 & 2 Vict. c. 110, amended by the in force. 2 & 3 Vict. c. 39 (k). The last general act for this purpose, before the 1 & 2 Vict. c. 110, was the 7 Geo. 4, c. 57, most of the provisions in which act were re-enacted by the 1 & 2 Vict. c. 110, without alteration, so that the decisions on the earlier statutes are, for the most part, applicable to the latter one (1). (i) Kensington v. Chantler, 2 M. & S. 36; Ex parte Shortland, 7 Ves. 88; Ex parte Sharratt, 2 Rose, 384; Abell v. Daniell, M. & M. 370. County Court judges. (1) The 5 & 6 Vict. c. 116, effected a most important alteration in the law, enacting that any person, not being a trader, and any trader owing less than 3007., might petition the Court of Bankruptcy, for protection from process, although he had not been to prison. The act was amended by the 7 & 8 Vict. c. 96, and the 12 & 13 Vict. c. 106, which enabled an insolvent trader to petition for protection, ss. 211 to 223. See as to (k) By the 10 & 11 Vict. c. 102, jurisdiction in matters of insolvency was transferred from the Court of Bankrupcy to the Court for the Relief of Insolvent Debtors; and the jurisdiction of both Courts was in cases of insolvency, more than twenty miles from London, vested in the CHAPTER XXXVI. Their general object in regard to bills and notes. Their effect on the liability of the insolvent to holders of a negotiable instrument. The object of the act 1 & 2 Vict. c. 110, was to discharge the insolvent's person from all his debts on bills or notes mentioned in his schedule, whether the persons to whom those debts may have become due be named in the schedule or not, provided there were no fraudulent or intentional misdescription or concealment. The act (m), therefore, expressly discharged the insolvent from the claims of all persons not known to him at the time of the adjudication, who might be indorsees or holders of any negotiable security set forth in the schedule. Under the Lords' Act, 32 Geo. 2, c. 28, repealed by 1 & 2 Vict. c. 110, s. 119 (n), it was held that, where the indorsee of a bill sued the acceptor, and charged him in execution, and the acceptor obtained his discharge under the Lords' Act, and the indorsee then sued the drawer, who, after paying the bill, sued the acceptor and charged him in execution again, that the acceptor was not discharged, because the first execution was not a satisfaction as between the drawer and acceptor (o). This decision, however, proceeded on the limited scope of the Lords' Act, which only proposed to discharge a prisoner from gaol as to a particular pressing creditor, and not, like the acts for the relief of the insolvent debtor, to discharge him from all his debts and liabilities. Therefore, a discharge by the Court for the Relief of Insolvent Debtors had a much more extensive effect. An insolvent acceptor inserted in his schedule the name of the indorsee, but not of the drawer of the bill, and was discharged; afterwards the drawer took up the bill and sued the insolvent, who pleaded his discharge. It was held that the defendant was discharged (p). It is conceived that a debtor discharged by the Court for the Relief of Insolvent Debtors, from a bill which is at maturity, is discharged, not only as against the holder at the time of his schedule, but as against all subsequent transferees, and all parties who may take up the bill (p). the 7 & 8 Vict. c. 96, the case of (m) 1 & 2 Vict. c. 110, s. 75. (n) The repeal of a repealing statute does not now revive the statute first repealed, 13 & 14 Vict. c. 21. s. 6. (0) M'Donald v. Bovington, 4 T. R. 825; and see the decisions on 49 Geo. 3, c. 115; Lucas v. Winton, 2 Camp. 443; Simpson v. Pogson, 3 Dow. & R. 567. (p) Boydell v. Champneys, 2 M. & W. 433. |