Page images

usually is, not whether there has been fraud, but whether the bankrupt actually had, or had not, the control and disposition of the property, within the meaning of the statute.

fore bank

SECTION I.--Of Transfer of Goods by a Trader im

mediately before an act of Bankruptcy. The Bankruptcy Act (b) enacts that, if any trader Transfer be. shall make a fraudulent grant or conveyance, or a ruptcy. fraudulent gift, delivery, or transfer of his goods or chattels, he shall be deemed to have committed an act of bankruptcy (c). Such transfer, therefore, though under colour of a sale, will be void, as being a fraud upon the bankrupt laws. In the former statutes of bankruptcy, “ fraudulent grant or conveyance” only were mentioned, and it was accordingly held, that no transfer of property, though made fraudulently, and to give preference to a particular creditor, would amount to an act of bankruptcy, unless the transfer was by deed (d). The fraud, however, would have avoided the transaction (e); and now by the words of the new Act,

(6) 6 Geo. IV. c. 16, (which repeals all former statutes of bankruptcy).

(c) section 3.
(d) Cooke, B. L. p. 102.
(e) Martin v. Pewtress, 4 Burr. 2478.

such fraudulent alienation is itself an act of bankruptcy, whether by deed or otherwise (f).

of whole

The assignment of the whole of his property by a trader is, in general, fraudulent and void (g), whether it be a voluntary preference or not (h); and a colourable exception of some inconsiderable portion does not alter the rule(i). But it has been recently determined that a sale, even of the whole effects of a trader, is not in itself an act of bankruptcy (k); and if the vendee acts bona fide, and gives an adequate valuable consideration for the goods, the transaction as regards him is valid, although the intention of the vendor were to abscond immediately (1)

The assignment even of part only of a trader's effects is void, when made in contemplation of bankruptcy, and in order to give a fraudulent pre

Assignment of part, void in what


(f) See Eden, B. L. p. 32; Evans's Statutes, p. 455, (3d ed.)

(g) Butcher v. Easto, 1 Dougl. 295; Worsley v. Demattos, 1 Burr. 467; see Botcherby v. Lancaster, 1 Ad. & Ell. 77; Stewart v. Moody, 1 Cr. M. & Rosc. 777.

(k) Thornton v. Hargreaves, 7 East, 544.

(1) Wilson v. Day, 2 Burr. 827, 832; Compton v. Bedford, 1 Bl. Rep. 362 ; Law v. Skinner, 2 Bl. Rep. 996.

(k) Baxter v. Pritchard,'1 Ad. & Ell. 456 ; S. C. 3 Nev. & M. 638. It is remarkable, that none of the old cases turn on a sale accompanied with payment of the full price. See 1 Ad. & Ell. 463.

(1) Baxter v. Pritchard, 1 Ad. & Ell. 456; Rose v. Haycock, 1 Ad. & Ell. 460, n.; S. C. 3 Nev. & Man. 644, n. Ld. Kenyon, C, J., Whitwell v. Thompson, 1 Esp. 72.

See per

ference to a particular creditor (m), even where there has been a colourable sale (n). But if it be not made in contemplation of bankruptcy, the transfer will be good (o). When the transfer is not in itself an act of bankruptcy, it is the province of the jury to determine, whether the intention was fraudulent or not (p), and in contemplation of bankruptcy (9); and whether insolvency would be the probable consequence of the assignment (r). If his circumstances might reasonably lead the debtor to believe that his bankruptcy was probable, though not inevitable, the transfer will be void (s).

When the transfer by a trader to a creditor is When not not voluntarily made, it will not be considered a fraudulent preference within the statute; as, where


(m) Bevan v. Nunn, 9 Bingh. 107; Pulling v. Tucker, 4 B. & A. 382; Morgan v. Horseman, 3 Taunt. 241 ; Linton v. Bartlett, 3 Wils. 47; Harman v. Fisher, Cowp. 117; Alderson v. Temple, 4 Burr. 2235; S. C. 1 Bl. Rep. 660; Hassell v. Simpson, 1 Dougl. 89, n. ; Singleton v. Butler, 2 B. & P. 283; S. C. 3 Esp. 215.

(n) Rust v. Cooper, Cowp. 629.

(o) Carr v. Burdiss, 1 Cr. Mees. & Rosc. 443; Morgan v. Brundrett, 5 B. & Ad. 289; Belcher v. Prittie, 10 Bingh. 408; Gibbins v. Phillips, 7 B. & C. 529; Wheelwright v. Jackson, 5 Taunt. 109; Fidgeon v. Sharp, 1 Marsh. 196; Yeats v. Groves, 1 Ves. Jun. 280.

(p) Balme v. Hutton, 2 Y. & J. 101; Flook v. Jones, 4 Bingh. 20 ; S. C. 12 B. Moore, 96.

(9) Gibbins v. Phillips, 7 B. & C. 529.
(r) Wedge v. Newlyn, 4 B. & Ad. 831.

(3) Poland v. Glyn, 2 D. & R. 310; S. C. 12 B. Moore, 109, n. ; 4 Bingh, 22 n. ; Cook v. Caldecott, 1 M. & Malk. 522.

[ocr errors]

it is under apprehension of prosecution for for-
gery (t); or under apprehension of legal process (u),
though such apprehension prove to be ground-
less (r); or, through ignorance of his own legal
rights (y); or through the threats, or even the im-
portunity, of the creditor (z), although the debt
have not actually fallen due at the time (a). And
a payment, made in pursuance of a prior special
contract, cannot be considered as a fraudulent
preference (b).

A genuine sale is good, though made immedi-
ately before bankruptcy (c). Where a valuable con-
sideration has been given for the goods, though they
may have been sold considerably below prime cost,
the sale cannot be impeached, if the purchaser has
acted bona fide, and if he could not reasonably have
known that it was made with the view of defraud-
ing creditors (d). However, purchasing goods from

A bona fide sale, valid.

(t) De Tastet v. Carroll, 1 Stark. N. P. C. 88.
(u) Corbould v. Broadhurst, 1 M. & Rob. 189.
(x) Thompson v. Freeman, 1 T. R. 155.
(y) Dixon v. Baldwin, 5 East, 175.

(z) Crosby v. Crouch, 11 East, 256 ; Smith v. Paynė, 6 T. R.
152; Bayley v. Ballard, i Campb. 416; Davies v. Chippendale

, 2 B. & P. 282 ; Reed v. Ayton, Holt, N.P. C. 503. (Where evidence is given of a threat, it is still for the consideration of the jury whether the threat operated, Cook v. Rogers, 7 Bingh. 438.]

(a) Hartshorn v. Slodden, 2 B. & P. 582.

(6) Hunt v. Mortimer, 10 B. & C. 44. See Cowp. 125, per
Ld. Mansfield, C. J.

(c) Baxter v. Pritchard, 1 Ad. & Ell. 456.
(d) Cook v. Caldecott, 4 C. & P. 315. And see Hogg v. Mit-



the bankrupt at unduly low prices, affords some evidence of unfair dealing (e).

A transfer by the trader (although at the time Transfer of in an insolvent state), of goods, which in point of rescinded fact were the bona fide property of the transferree, is valid (f); thus, where a party, who has contracted for the purchase of goods, becomes embarrassed in his circumstances before their arrival, and, without any fraudulent intention, rescinds the contract of sale, and declines accepting the goods, it will be held that, notwithstanding his subsequent bankruptcy, his act was valid, and that the goods revested in the vendor (g). But if the contract had been perfected, and the vendee, on becoming subsequently insolvent, had attempted to rescind the contract, and return the goods, it would amount to a voluntary preference, and the transaction would

chell, 1 Stark. N. P. C. 241 ; Robinson v. Carrington, 1 Mont. & Ayr. 1.

(e) See Yates v. Carnsew, 3 C. & P. 102 ; 1 M. & Malk. 497, 522.-- Post.

(f) If the goods do not belong to the trader at the time, although he might by his own act make them his own, it is not a fraudulent preference that he declines to make them his own, and transfers them to the real owner; but, if the property in the goods has already vested in the trader independently of his own volition, he cannot divest the property and retransfer the goods, without being guilty of a voluntary preference.

(8) Salte v. Field, 5 T. R. 211; Atkin v. Barwick, 1 Str. 165; Lorat v. Parsons, Cowp. 61. See Graf v. Greffulhe, 1 Campb.

« PreviousContinue »