Executed in Good Faith.]-The words "good faith" in the PART VII. section, so far as executions are concerned, mean "really intended to be executed for a bonâ fide debt (n), and they refer to the conduct of the execution creditor, not that of the bankrupt" (o).

Notice of Act of Bankruptcy.]-In order to constitute notice of an act of bankruptcy there ought to be a notice of the happening of facts which amount to an act of bankruptcy, and which turn out to be so (p).

When between the seizure and sale the bankrupt's attorney wrote to the execution creditors' attorney "B. (the bankrupt) made an assignment of what goods he had, and it was arranged that his daughter should raise the money, but this we find was never finally arrived at,” it was held that this was not notice of an act of bankruptcy, although, in fact, the assignment referred to in the letter did amount to an act of bankruptcy (the assignment being for the benefit of creditors, and, consequently, an act of bankruptcy under sect. 6, sub-sect. 1); for the letter did not disclose the fact that it was for the benefit of creditors (q).

To whom Notice of Act of Bankruptcy may be given.]— Notice to the attorney of the execution creditor, acting in the execution, is the same as notice to the creditor himself (r).

But notice to the attorney's clerk, though at the office of the principal, is not sufficient, at least not unless he has full discretion

32 L. J. (N. S.) Ex. 260, that where the adjudication preceded the sale, the assignee was the party entitled under sect. 184. This section was, however, repealed, and has not been re-enacted; see judgment of Martin, B., Slater v. Pinder, 40 L. J. (N. S.) Ex. 150. Bacon, C. J., in bankruptcy, had held that although the section was not in terms re-enacted, the effect and spirit and meaning were preserved for the purpose of effecting that equal distribution of the bankrupt's estate which it has always been the policy of the bankrupt laws to effectuate; but although Bramwell, B., also appears to have formed a similar opinion (see Slater v. Pinder, supra), the law must now be taken as stated in the text. See judgment of Bacon, C. J., Ex parte Rayner, Re Johnson, 41 L. J. (N. S.)

Bankr. 26.

(n) Parke, B., Edwards v. Cooper, Nisi Prius, cited in 1 Smith's Leading

Cases, 5th edition, p. 438.

(0) Belcher v. Magnay, 12 M. & W. 102; see Stansfield v. Cubitt, 2 G. & J. 222; 27 L. J. (N. S.) Ch. 266. Although the dicta in these cases were expressed in reference to the words "bonâ fide" in a previous bankrupt act, they are clearly applicable to the present act.

A

(p) Blackburn, J., Evans v. Hallam, 40 L. J. (N. S.) Q. B. 232. general notice, however, that J. S. has committed an act of bankruptcy is sufficient. Udall v. Walton, 14 M. & W. 254.

(4) Evans v. Hallam, supra. See the various cases under former acts collected in 1 Smith's Leading Cases, 5th edition, pp. 440, 441; the notes to Cooper v. Chitty, 1 Burr. 417.

(r) Cockburn, C. J., Erans v. Hallam, supra; Rothwell v. Timbrell, 1 Dowl., N. S. 778; and see Brewin v. Briscoe, 28 L. J. (N. S.) Q. B. 329.

CHAP. XI.

PART VII. at to issuing or countermanding the execution (s). Nor is notice to the sheriff or his officer sufficient (t).

CHAP. XI.

In reference to the question as to the person who must have notice it has been laid down that "the knowledge or ignorance of the person who actually, not constructively, deals with the bankrupt, as to any prior act of bankruptcy is the material question" (u).

Sub-sects. 2 and 3 of sect. 95 are to be read subject to the following provision, which requires the retention for fourteen days of the proceeds of the sale of goods of a trader taken in execution on a judgment exceeding 50l., and, moreover, such an execution is itself an act of bankruptcy (x).

"The Bankruptcy Act, 1869," enacts that

Sect. 87. "Where the goods of any trader (y) have been taken in execution in respect of a judgment for a sum exceeding fifty pounds and sold, the sheriff, or in the case of a sale under the direction of the county court, the high bailiff, or other officer of the county court, shall retain the proceeds of such sale in his hands for a period of fourteen days, and upon notice being served on him within that period of a bankruptcy petition (2) having been presented against such trader, shall hold the proceeds of such sale, after deducting expenses, on trust to pay the same to the trustee; but if no notice of such petition having been presented be served on him within such period of fourteen days, or if, such notice having been served, the trader against whom the petition has been presented is not adjudged a bankrupt on such petition, or on any other petition of which the sheriff, high bailiff or other officer has notice, he may deal with the proceeds of such sale in the same manner as he would have done had no notice of the presentation of a bankruptcy petition been served on him."

The sixth section of the act having made an execution against a debtor, a trader, to obtain payment of not less than fifty pounds, levied by seizure and sale, an act of bankruptcy (a), the sheriff, except for the 87th section, would have been bound to pay the execution creditor the amount of the levy immediately upon its realization, and at the same time, upon the adjudication of the execution debtor to be bankrupt, would have been liable to pay the

(s) Pike v. Stephens, 12 Q. B. Rep. 465; Pennell v. Stephens, 7 C. B., Rep. 987.

(t) Ramsey v. Eaton, 10 M. & W. 22.

(u) Green v. Steer, 1 Q. B. Rep. 710; see 1 Smith's Leading Cases, 5th edition, p. 439 (where Fawcett v. Fearne, 6 Q. B. Rep. 20, so far as it does not accord with the proposition in the text, is impugned). Although Green v. Steer was decided under a former act, it seems equally applicable to the present act.

(x) Ex parte Keys, 39 L. J. (N. S.) Bankr. 28; and see Ex parte Rayner, In re Johnson, 41 L. J. (N. S.) Bankr. 26, noticed ante, p. 323.

(y) That is to say, a trader at the time of the proceedings in bankruptcy, and not merely when the debt was contracted. Ex parte Bailey, In re Jecks, 41 L. J. (N. S.) Bankr. 1.

(z) "Or petition for liquidation," as the case may be. See Ex parte Keys, 39 L. J. (N. S.) Bankr. 28. (a) See ante, p. 231.

CHAP. XI.

value of the goods seized, to the trustee, by the operation of the PART VII. doctrine of relation back as provided for by sect. 11 (b). This section (87) is enacted for the avoidance of this injustice, and also, it may be, to put such a creditor in the same position as the general creditors (c). Its immediate object is plainly to prevent the execution creditor, even after the sheriff has sold, from receiving the proceeds of such sale (d); and, although the act of bankruptcy is not complete under sect. 6, until sale as well as seizure, yet where goods of a trader are seized in execution on a judgment debt exceeding 501., before bankruptcy, and bankruptcy supervenes, the trustee may obtain an order restraining the sale; for as a sheriff who has sold, having notice of bankruptcy, is under sect. 87 to hold the proceeds upon trust to pay to the bankruptcy trustee, the latter is entitled in equity (and the bankruptcy court is a court of law and equity) to restrain the sale. It would be strange if the bankruptcy trustee could not exercise an option whether he will or will not incur the expense of a sale which might not only be burthensome to the estate, but which might be positively disadvantageous. A sale by auction of the fixtures in the shop or manufactory of a bankrupt trader might be mere waste or destruction, and a multiplicity of cases might be suggested in which it would be obviously to the interests of the creditors that a sale should be prevented. As an order, therefore, restraining the sale may be obtained, so, also, an order may be made that possession of the goods be given up (e).

Although sect. 87 refers, in terms, to the case of a bankruptcy petition against a trader, it clearly includes the case of a petition by the trader for liquidation by arrangement (f).

As to interpleader by sheriff on claims made in cases of bankruptcy see the Interpleader Act, 1 & 2 Will. 4, c. 58 (g), and as to staying proceedings, see sect. 13 of "The Bankruptcy Act, 1869," ante, p. 249.

§ 11.-DISCLAIMER OF ONEROUS PROPERTY.

"The Bankruptcy Act, 1869," enacts that

Sect. 23. "When any property of the bankrupt acquired by the Disclaimer as trustee under this act consists of land of any tenure burdened with to onerous

(b) See ante, p. 308.

(c) Martin, B., Slater v. Pinder, 40 L. J. (N. S.) Ex. 151.

(d) Bacon, C. J., Ex parte Rayner, In re Johnson, 41 L. J. (N. S.) Bankr. 29.

(e) Ex parte Rayner, In re Johnson, 41 L. J. (N. S.) Bankr. 26. (f) See post, Chap. XVI.

The

case of Ex parte Rayner, In re
Johnson, supra, was the case of a
petition for liquidation by arrange-

ment.

(g) See the cases on this statute, 1 Smith's Leading Cases, 5th edition, p. 449, notes to Cooper v. Chitty. As to interpleader in the county court, see ante, Vol. I. p. 356.

property.

PART VII.
CHAP. XI.

Limitation

of time for disclaimer.

onerous covenants, of unmarketable shares in companies, of unprofitable contracts, or of any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor thereof to the performance of any onerous act, or to the payment of any sum of money, the trustee, notwithstanding he has endeavoured to sell, or has taken possession of such property or exercised any act of ownership in relation thereto, may, by writing under his hand, disclaim such property, and upon the execution of such disclaimer the property disclaimed shall, if the same is a contract, be deemed to be determined from the date of the order of adjudication, and if the same is a lease be deemed to have been surrendered on the same date, and if the same be shares in any company be deemed to be forfeited from that date, and if any other species of property it shall revert to the person entitled on the determination of the estate or interest of the bankrupt, but if there shall be no person in existence so entitled, then in no case shall any estate or interest therein remain in the bankrupt. Any person interested in any disclaimed property may apply to the court, and the court may, upon such application, order possession of the disclaimed property to be delivered up to him, or make such other order as to the possession thereof as may be just.

Any person injured by the operation of this section shall be deemed a creditor of the bankrupt to the extent of such injury, and may accordingly prove the same as a debt under the bankruptcy" (h).

Sect. 24. "The trustee shall not be entitled to disclaim any property in pursuance of this act in cases where an application in writing has been made to him by any person interested in such property, requiring such trustee to decide whether he will disclaim or not, and the trustee has for a period of not less than twenty-eight days after the receipt of such application or such further time as may be allowed by the court declined or neglected to give notice whether he disclaims the same

or not."

The above provisions, coupled with sect. 15 (ante, p. 308) and the interpretation clause as to property (s. 4, ante, p. 201), render obsolete a previously important branch of the law of bankruptcy, relating to the title of the assignees to land under leases (i).

"The Bankruptcy Rules, 1871," provide with respect to disclaimer of leasehold interest, that-

Rule 28. "Where any property of a bankrupt acquired by a trustee under The Bankruptcy Act, 1869,' shall consist of a leasehold interest, the trustee shall not execute a disclaimer of the same without the leave of the court being first obtained for that purpose; and upon any application to the court for such leave, notice of the desire of the trustee to disclaim such interest shall be given to such person or persons as the court shall direct, and such order shall be made thereon as the court shall think fit."

Section 23, however, is not free from difficulty in its construc

(h) As to the amount of proof under this section, see post, Chap. XIII., § 5.

(i) See the notes to Mills v. Auriol, and Auriol v. Mills, 1

Smith's Leading Cases, 5th edition, pp. 769-775; and Smith's Landlord and Tenant, by Maude, pp. 302–306.

CHAP. XI.

tion. It has been held by the Court of Exchequer, that, although PART VII. upon the execution of a disclaimer, a lease is to be deemed to have been surrendered on the date of the order of adjudication, nevertheless the liability for rent accruing due before the disclaimer, but after the adjudication, is not taken away. The court differed in opinion without giving any formal decision as to whether the section is confined to cases (so far as regards leases) between lessor and lessee, or whether the lease is to be deemed to be surrendered as respects all persons, so that on the bankruptcy of an assignee the assignor would be released from liability to the original lessor (k)

§ 12.-PROPERTY DEFEASIBLE ON BANKRUPTCY.

An interest in property may be limited so as to cease or be forfeited on bankruptcy. Unless, however, the gift over or the cesser of the interest is either expressly or by necessary inference made to take effect on bankruptcy, the right of the bankruptcy trustee will not be excluded. Thus, if the instrument creating the interest appears to contemplate alienation as the sole ground of forfeiture, this will be construed to mean a voluntary act of alienation, and not a proceeding which operates in invitum, like bankruptcy (1), but otherwise in the case of liquidation by arrangement (m). Interests defeasible upon bankruptcy can only be limited in property belonging to some person other than the party to whom the interest is given. It is contrary to the policy of the law to allow a man to settle his own estate so as to give himself an interest to cease on his bankruptcy; and it is immaterial in a case of this sort that the provision for the cesser of the interest is followed by a limitation over in favour of the settlor's wife and children, or of any other person (n).

Still a limitation over is valid, even where the settlor is himself the person to whom such defeasible interest is limited, provided the settlement is founded on a valuable consideration, such as marriage (o). And if a man receives a portion with his wife, a settlement of his own property, or a contract by him to pay a sum of money to trustees, to take effect on his bankruptcy, will be good to the extent of the fortune received from the wife (p). And there is nothing to prevent the property of a woman on her marriage

(k) Smyth v. North, 41 L. J. (N. S.) Ex. 103. See as to the former bankruptcy law, bearing on this point, Manning v. Flight, 3 B. & Ad. 211; Taylor v. Young, 3 B. & A. 521.

(1) Doe v. Beran, 3 M. & S. 353; Shee v. Hale, 13 Ves. 404; Lear v. Leggett, 2 Sim. 479; Whitfield v. Prickett, 2 Keen, 608.

(m) Lady Amherst's Trusts, 41 L. J. (N. S.) Ch. 222.

(n) Robson's Bankruptcy Law, p. 320, citing Higinbotham v. Holme, 19 Ves. 88; Phipps v. Ennismore, 4 Russ. 131; Whitmore v. Mason, 2 J. & H. 204; Ex parte Boddam, 2 D. F. & J. 427.

(0) Brooke v. Pearson, 27 Beav. 181.

(p) Ex parte Cooke, 8 Ves. 353; Ex parte Hodgson, 19 Ves. 206.