Here imposed by the twenty-sixth section. The Court, in Judgment for the Plaintiffs. 1838. FERGUSSON บ. NORMAN. WRIGHT and Others, Assignees of Ross, a то Nov. 16. having, within two of an advance of money, Held, that the transaction, though bona fide, trover for goods, the Defendant pleaded, that A bankrupt after Ross became bankrupt, and before the date and issuing of the fiat against him, to wit, on &c., he de- months before livered to, and deposited with the Defendant the goods the fiat, depoand chattels in the declaration mentioned, in consider- sited chattels by way of ation of and upon certain large advances of money, pledge, in amounting to 2000l., then made and advanced by the consideration Defendant to the said Ross at his request, upon the delivery and deposit of the said goods and chattels with the Defendant, to secure payment to the Defendant of such advances thereon; that the goods and chattels were delivered to and deposited with the Defendant, and the advances were made by him thereon bonâ fide, act of bankand without any notice to the Defendant so dealing ruptcy, was with Ross of any prior act of bankruptcy, or any act of not protected by sect. 82. of bankruptcy committed by Ross at the time of the De- 6 G. 4. c.16.; fendant so dealing with him: and because the advances but that his so made by the Defendant had always since been, and might recover assignees still were, unpaid and owing to the Defendant, he, at the value in 6. Bing N.C. N.C.446. 2. Och 107. and without notice of an trover. 1838. WRIGHT the said time when, &c., detained the said goods and chattels to secure the repayment of such sums of money by him advanced on the deposit, with him, of the said FEARNLEY. goods and chattels, as he lawfully might for the cause aforesaid; which was the said supposed conversion V. in the declaration mentioned; and that, the Defendant was ready to verify, &c. Replication, that the advances in the plea mentioned were made by the Defendant to Ross, and the goods and chattels were delivered to and deposited with the Defendant by Ross, after he became bankrupt, and within two calendar months before the issuing of the fiat against him, under which the Plaintiffs were assignees; and that, the Plaintiffs were ready to verify. Rejoinder, that Ross did not, nor did the Plaintiffs, at any time tender or offer to pay to the Defendant the said advances of money in the plea mentioned, or any part thereof, and the same remained and were wholly unsatisfied and unpaid to the Defendant; and that, the Defendant was ready to verify. Demurrer and Joinder. Tomlinson, for the Plaintiffs. The Defendant, by pleading over, has admitted that the goods were deposited within two months before the fiat: his case, therefore, cannot fall within the eighty-first section of 6 G. 4. c. 16., which protects contracts, dealings, and transactions with any bankrupt made and entered into more than two months before the fiat: the eighty-second section enacts, that all payments bonâ fide made to any bankrupt before the issuing of the fiat shall be valid: but an advance of money by way of loan, upon a deposit of goods as a security, cannot be considered as a payment within that section. In Cannan v. Denew (a), one (a) 10 Bingh. 292. 1838. WRIGHT V. Russell, having committed a secret act of bankruptcy, assigned chattels to the Defendant as a security for money lent him by the Defendant, in trust, to permit Russell to use them till March 1833; and then to sell FEARNLEY. them in discharge of the debt, if unpaid. In October 1832, within two months of that assignment, a commission of bankruptcy was issued against Russell: it was held, that the assignment was not protected by the eightysecond section of 6 G. 4. c. 16.; and Tindal C. J. said, "Here there was no payment for goods sold by the bankrupt, but a loan of money on a pledge; and, if that be within the protection of section 82., the bankrupt might effectually mortgage all his estate after an act of bankruptcy." Gaselee J.-"As to the objection that this was a payment protected by the eighty-second section of the statute, I understand the word payment, in that clause, to apply to payment of a debt, and not to a loan of money upon the security of a transfer of goods." And the case is rendered clearer by reference to former statutes, from which the 6 G. 4. has been taken. Alderson J. says, in Cannan v. Denew, "The act of 19 G. 2. c. 32. explains what is meant by payment; after reciting the injury to trade and credit by defeating payments made after secret acts of bankruptcy, it enacts, that no person who is or shall be really and bonâ fide a creditor of any bankrupt, for or in respect of goods really and bonâ fide sold to such bankrupt, or for or in respect of any bill or bills of exchange really and bona fide drawn, negotiated, or accepted by such bankrupt, in the usual and ordinary course of trade and dealing, shall be liable to refund or repay to the assignee or assignees of such bankrupt's estate any money which, before the suing forth of such commission, was really and bonâ fide, and in the usual and ordinary course of trade and dealing, received by such person of any such bankrupt, before such time as the person receiving 1838. WRIGHT v. FEARNLEY. the same shall know, understand, or have notice that he is become a bankrupt, or that he is in insolvent circumstances.' That explains what is meant by payments made to the bankrupt." Cash v. Young (a) and Hill v. Farnell (b), which may be cited for the Defendant, were not cases of deposit by way of security upon the advance of a loan, but absolute sales, accompanied with bond fide payments. Hoggins, for the Defendant. Within the spirit of the statute, which should receive a liberal construction in favour of bona fide transactions, this was a payment in the ordinary course of dealing, and protected by the eightysecond section. Upon the principles of commercial exchange, the bankrupt purchased the Defendant's money by the deposit of goods; and in such exchange every advance is a payment. Thus, in Willis v. The Bank of England (c), the giving cash for a bank post-bill was held a payment under the eighty-second section, although some days must elapse, after sight of the bill, before payment of it can be demanded. [Tindal C. J. Here, the absolute property in the goods does not pass upon the deposit, as in case of a sale: if the bailee were to sell the goods, he would be a wrongdoer. Unless words are to lose their ordinary meaning, a loan is not a payment.] In Cannan v. Denew the goods were not deposited, as here, upon the advance of the money, but were allowed to remain in the possession of the bankrupt, so that there was not a bona fide transfer. But Woodbridge v. Swann (d) shews that the protection of the statute is not confined to payments on sales: there, after the bankruptcy of one of two partners, the solvent partner, thinking the firm capable of paying its debts, continued the (a) 2 B. & C. 413. (c) 4 Adol. & Ell. 21. 1838. WRIGHT v. business, and paid partnership money into a banker's, to be applied in discharge of running bills of the firm, payable at the bank; and it was so applied: it was held that that payment, having been made bona fide, FEARNLEY. and without any contemplation of bankruptcy by the solvent partner, was valid at law. And in Shaw v. Batley (a) a similar transaction was held protected by the eighty-second section. If it were otherwise, the assignees of a bankrupt, upon a recent transaction, might possess themselves of the money the bankrupt had received upon the deposit of the goods, and then recover the value of the goods also. But Dixon v. Purse (b) shews that the doctrine of relation to the act of bankruptcy is not so severe for there, a party having a lien on goods of a bankrupt in his hands, and another, without knowledge of any act of bankruptcy, having paid him the sum for which he had a lien, and having advanced a further sum to the bankrupt upon those goods which were delivered to him, it was held that trover would not lie by the assignees. It is in the same spirit that, under the forty-seventh section, a bona fide creditor is admitted to proof, notwithstanding a previous secret act of bankruptcy. And, under the equity of the fiftieth section, Defendant may set off the advance against the deposit. Thus, in Ex parte Prescott (c), it was held, that where the petitioner was a creditor of the bankrupt for 110%., and a debtor to him upon bond for 340., payable at a future time with lawful interest, he might set off his demand of 1107. against the principal and interest due on the bond, as far as it would go, and not be obliged to prove his debt under the commission, and take a dividend upon it only. And in Olive v. Smith (d) (a) 4 B. & Adol. 801. (c) 1 Atk. 230. |