1843. Lincoln's Inn, A lessor is en- to an Order on the assignees to elect, whether they will accept or decline a lease, notwithstanding the lease is in the bands of a third person, with whom it was deposited by the bankrupt by way of equit able mortgage. Ex parte VARDY.-In the matter of BUTT. THIS was the petition of the lessor of a lease granted to the bankrupt, praying that the assignees might be ordered to elect, whether they would accept or reject it. It appeared that the lease was not in the possession of the assignees, but in the hands of a Mr. Crewe, with whom the bankrupt had deposited it by way of equitable mortgage. Mr. Lush, in support of the petition, cited Ex parte Fletcher (a), where an Order was made for the sale of leasehold property, on the petition of an equitable mortgagee with whom the lease was deposited, notwithstanding the assignees declined to make their election whether they would accept or reject the lease. Mr. Dixon, for the assignees, said that they were not prepared to elect, as the lease was not in their possession, but in that of a third party, namely, the equitable mortgagee. Mr. Swanston appeared on behalf of the equitable mortgagee. VICE-CHANCELLOR KNIGHT BRUCE, C. J.-I was at first doubtful, whether the 75th section of the 6 Geo. 4. c. 16. applied to a case, where the lease was in the possession of an equitable mortgagee. But I find, that in a more apposite and prior case to the one cited, which occurred on the parallel enactment of the 49 Geo. 3 (a) 1 Deac. & C. 356. c. 121. s. 19., and was decided by Sir Thomas Plumer,— I mean the case of Ex parte Clunes (a),—it was held, on a petition by the landlord to compel the assignees to deliver up a lease, which had been deposited by the bankrupt with a third person as a security for a debt, that such an Order could properly be made upon the assignees; for that, though the statute did not, in words, extend to cases where the lease was in the hands of a third person, yet by an equitable construction of the enactment, which was intended for the benefit of landlords, the Lord Chancellor had jurisdiction to make the Order. There is so much good sense in that decision, that I shall entirely follow it on the present occasion. I think the landlord cannot proceed against the equitable mortgagee. Let the assignees, therefore, on or before Thursday next, elect whether they will accept or decline the lease, and give notice to the solicitor for the petitioner, if they elect to accept it; but in case they omit to give such notice, then let the Order be, that they shall be taken to have declined the lease. And let the equitable mortgagee have his costs of his appearance on this petition. (a) 1 Madd. 76. 1843. Ex parte Ex parte ABEL SMITH and others.-In the matter of Lincoln's Inn, July 27 and 29. creditor had THIS was the petition of the assignees and certain A petitioning creditors, praying that the debt of Smith & Co. might sold the bankrupt goods, in payment for which he took three bills of exchange accepted by the bankrupt, which the creditor negotiated, and which were not in his hands, nor due, at the time he issued the fiat. The Commissioner expunged the proof of his debt, on the ground that the bills were not in his possession at the time of the bankruptcy. Held, that an Order might be made, under the 18th section of the 6 Geo. 4. c. 16., for the substitution of the debt of another creditor. 1843. Ex parte SMITH and others. be substituted, in the room of the petitioning creditors' debt, which had been declared insufficient to support the fiat. The fiat issued on the 16th November 1841, upon the petition of Adam Brierley; and the adjudication was grounded upon a deposition, that the sum of 1007. was due to him from the bankrupts for goods sold and delivered on the 1st September 1841. On the 4th January 1842, Brierley proved a debt under the fiat for 1997. 10s. for goods sold and delivered, exhibiting, as securities for the same, two bills of exchange, accepted by the bankrupts, for 501. each, and one for 997. 10s. On the 12th April 1843, an application was made to the Commissioner to expunge Brierley's proof; and the Commissioner made an order to that effect, on the ground, that the goods, which had been so sold and delivered, had been paid for by bills of exchange, and that these bills, which were not due at the time of issuing the fiat, had been negotiated by Brierley, and were consequently not then in his possession. The petitioners, Smith & Co., had proved a debt to the amount of 70681. 17s. 3d.; and it was alleged in the petition, that a sufficient part of such debt to support a fiat was incurred not anterior to the alleged debt of Brierley. The assignees had brought actions against two persons for large sums of money due from them to the estate of the bankrupts, in which actions the defendants had pleaded, disputing the sufficiency of the petitioning creditors' debt; and it was in consequence of these pleas, that the above investigation took place before the Commissioner as to the sufficiency of the debt. The assignees alleged, that they were desirous of proceeding with the two pending actions, and were advised that, upon an Order being made for the substitution of a good and valid petitioning creditors' debt, they would be enabled to do so with effect. Mr. L. Wigram, and Mr. Bacon, in support of the petition. There is some question, whether the 18th section of the 6 Geo. 4. c. 16. applies to a case of this kind, so far as rendering it obligatory that the debt proposed to be substituted shall have been incurred not anterior to the debt of the petitioning creditor; for here the Commissioner has decided that the petitioning creditor had no debt (a). (a) There is some doubt, whether the decision of the learned Commissioner in this case, in holding that there was no debt, can be supported, within the enactment of the 6 Geo. 4. c. 16. s. 15., which provides, that 'every person, who has given credit to any trader upon valuable consideration, for any sum payable at a certain time, which time shall not have arrived when such trader committed an act of bankruptcy, may so petition [for a commission], or join in petitioning as aforesaid, whether he shall have any security in writing, or otherwise, for such sum, or not." It is true, that in Ex parte Botten, Mont. & B. 412, Sir George Rose held, that the vendor of goods who had taken the acceptance of the vendee for the amount of the price, and had negotiated the bill, which was in the hands of a third person, and not due, at the time the fiat issued, had no good petitioning creditor's debt. But in the subsequent case of Ex parte Magnus, 2 Mont. Deac. & D. 604, where the petitioning creditor's debt arose under the same circumstances, Sir John Cross said, that, if it had not been for the authority of Ex parte Botten, he should have been inclined to think, that the contingency which existed of the bill being dishonoured, and of the creditor being thereby remitted to his original debt, would have been enough to constitute that debt a sufficient foundation for a fiat, within the meaning of the act; and that, for this purpose, it was not to be considered as extinguished, but that its extinction would depend upon the ultimate payment of the bill of exchange. Now what are the facts of the above case? The petitioning creditor had given credit to the bankrupts upon valuable consideration for a sum payable at a certain time, viz. the time when the bill of exchange would fall due, which time had not arrived at the time of issuing the fiat; and he had a security in writing given to him by the bankrupt for the payment of the debt. But the act expressly declares, that a party may, under these circumstances, be a petitioning creditor, whether he shall have any such security, or not. It is true, that the creditor had in this case parted with his security; but it was sure to be returned upon his hands, if it was not discharged by the bankrupt. E. E. D. 1843. Ex parte SMITH and others. 1843. Ex parte SMITH and others. Mr. Wright appeared, on the part of the petitioning creditor, to oppose the application. VICE-CHANCELLOR KNIGHT BRUCE, C. J.-Unless you mean to appeal from the decision of the Commissioner, you have no right to be here to oppose the substitution of another debt. Mr. Wright submitted, that, as the petitioning creditor had been served with the petition, he was at any rate entitled to ask for the costs of his appearance against the petitioner. Mr. James Russell appeared for the bankrupt. Mr. Wigram. The bankrupt has nothing to do with this application. Under the 1 & 2 Will. 4. c. 56. s. 17., the adjudication of the Commissioner is conclusive evidence against the bankrupt, as he has not presented a petition for its reversal, within two calendar months from the date of the adjudication. VICE-CHANCELLOR KNIGHT BRUCE, C. J.-I do not see that the bankrupt is estopped by the act from appearing before the Court of Review, in order to oppose this petition. But has it ever been decided, that, where there is no debt, the 18th section of the 6 Geo. 4. c. 16. applies, in any way, to a proceeding for the substitution of the debt. If there is any authority on the subject, I should be induced to follow it; but if none can be found, I am inclined to think that the section does not apply to a case of this description. |