This section applies not only to things in possession but to things in action, as bonds, policies, and other debts.(r)

Where a creditor assigns a debt not assignable at law, and then becomes a bankrupt, the general rule is that the debt so assigned passes nevertheless to the assignees in bankruptcy, as being in the order and disposition of the bankrupt with the consent of the true owner, unless the debtor have had notice of the assignment. It is, however, sufficient if the assignee of the debt do all he can to give notice, or dispatch a notice, before the bankruptcy, though it be not received by the debtor till after the bankruptcy.(8) A debt in order to pass to the assignees within this section must have been unconscientiously allowed to remain in the hands of the bankrupt.(t)

Bills or notes may pass to the assignees under the doctrine of reputed ownership.(u) A person, having three bills of exchange, applied to a country banker, with whom he had had no previous dealings, to give for them a bill on London for the same account; and the bill given by the banker was afterwards dishonoured. Held, that this was a complete exchange of securities, and that trover would not lie for the three bills of exchange; and that, if the exchange had not been complete, still that, the banker, having become a bankrupt, and the three bills having come to the possession of his assignees, must be considered as goods and chattels in the order and disposition of the bankrupt, at the time of the bankruptcy, within the meaning of the Bankrupt Act. "These bills," says Abbott, C. J., "being negotiable securities, of which the bankrupts might dispose, and having remained in their possession till the time of the bankruptcy, and so come to their assignees, are, in my opinion, within the operation of the statute. It has been held, that debts are within the statute; if so, a fortiori, bills of exchange must be."(v)

But a bill or note in the hands of an agent for a specific purpose does not pass to his assignees by reputed ownership.(w)

*The debtor's knowledge of the assignment is not necessary [377] where a negotiable bill or note is indorsed or transferred, for the legal title to the debt is conveyed by the indorsement or delivery.

(r) Ryall v. Rolle, 1 Ves. 348; 1 Atk. 165, S. C.

(8) Belcher v. Bellamy, 17 L. J., Ex. 219; 2 Exch. Rep. 303, S. C.

(t) See Joy v. Campbell, 1 Sch. & Lef. 336, and Load v. Green, 15 M. & W. 216. (u) 6 Geo. 4, c. 16, s. 72.

(v) Hornblower v. Proud, 2 B. & Ald. 327; see Bryson v. Wylie, 1 B. &. P. 83, n. (w) Bruce v. Hurly, 1 Stark. 23; Belcher v. Campbell, 8 Q. B. Rep. 1; see Took v. Hollingworth, 5 T. Rep. 215.

But if a man who afterwards becomes bankrupt, indorses a bill or note not negotiable, unless the debtor have notice, the bill or note passes to the bankrupt's assignees by reputed ownership.(x)

The effect of bankruptcy of the husband on the choses in action of his wife has been discussed in a previous Chapter.(y)

If the holder of a bill become bankrupt, the property in the bill vests, from the time of the act of bankruptcy,(z) in his assignees, and they must indorse. (a)

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.(6) "There is no difference," says the Lord Chancellor, "between an actual payment in 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."(e) 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.(d)

The distinction between a payment in money and a payment or satisfaction by bills, is, however, now of little moment, since now not only payments, but all dealings without notice of an act of bankruptcy, are protected.(e)

Where a negotiable instrument is given to the bankrupt after his bankruptcy, the bankrupt has the property in it, unless the assignees choose to interfere.(ƒ)

(x) Belcher v. Campbell, 8 Q. B. Rep. 1.

(y) Chapter v.

(z) Subject of course to the new provisions as to notice of the act of bankruptcy. (a) Pinkerton v. Marshall, 2 H. Bla. 335; Thomason v. Frere, 10 East, 418; but see now 2 & 3 Vict. c. 29.

(b) 6 Geo. 4, c. 16, s. 82; and also under 2 & 3 Vict. c. 29.

(c) Hawkins v. Penfold, 2 Ves. sen. 550.

(d) 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.

(e) The form of pleading may still be affected.

(ƒ) Drayton v. Dale, 2 B. & C. 293; 3 Dowl. & R. 534.

*If a bankrupt be payee of a negotiable bill or note, the acceptor or maker cannot dispute his capacity to indorse.(g)

[*378]

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.(h)

The certificate of the bankrupt discharges him from all debts due when he became bankrupt, and from all claims and demands proveable under the bankruptcy.() And an agreement to pay a debt from which the bankrupt has been so discharged, was formerly void, unless in writing and signed. (k) But an absolute written and signed promise personally to pay, bound, whether given before or after certificate.(?) But now a subsequent contract to pay is avoided.(m)

If a trader, by way of fraudulent preference, transfer a bill to his creditor, that is an act of bankruptcy; but if he by way of fraudulent preference, pay his creditor in money, that is not, it should seem, an act of bankruptcy, but the payment is void as a fraud on the Bankrupt Laws.(n)

Until the 6 Geo. 4, c. 16, s. 3, fraudulent preference (except by deed) was not prohibited by any statute, but was void as a fraud on the Bankrupt Laws.(0) Ifby deed, it was an act of bankruptcy.(p) But now, by the 6 Geo. 4, c. 16, s..3, repealed and re-enacted by the 12 & 13 Vict. c. 106, s. 67, every fraudulent conveyance or tranfer, whether of real property or chattels, (though not by deed) is 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 Bankrupt Act.(g)

(9) Drayton v. Dale, 2 B. & C. 293; Pitt v. Chappelow, 8 M. & W. 616; Braithwaite v. Gardiner, 8 Q. B. Rep. 473. See the Chapter on Acceptance.

(7) Arden v. Watkins, 3 East, 317; Wallace v. Hardacre, 1 Camp. 45; Rams. bottom v. Cator, 1 Stark. 228.

(i) 12 & 13 Vict. c. 106, s. 200.

(k) 6 Geo. 4, c. 16, s. 131.

(7) Kirkpatrick v. Tattersall, 13 M. & W. 766; Lobb v. Stanley, 5 Q. B. Rep. 574. (m) 12 & 13 Vict. c. 106, s. 204.

(n) See post.

(0) Martin v. Pewtress, 4 Bur. 2477.

(p) 1 Jac. 1, c. 15, s. 2; Bevan v. Nunn, 9 Bing. 107; 2 Moo. & Sc. 132. (q) Cumming v. Bailey, 6 Bing. 363; 4 Moore & P. 36, S. C. Quære as to a

To be invalid as a fraudulent preference, a transfer or payment *must have been spontaneous, and not at the instance or im. [*379] portunity of the creditor; it must have been with the intention of giving the creditor an unfair advantage, and not in the usual course of business;(r) it must have been in contemplation of bankruptcy as a probable event.(s)

But money is not, perhaps, a chattel within this section, and therefore the payment of money by way of fraudulent preference to a creditor, is only a void payment.(t)

A voluntary transfer, without consideration, by a bankrupt, being at the time insolvent, of land, chattels, bills, bonds or notes, or debts, is avoided by the 12 & 13 Vict. c. 106, s. 126. A gift of money is not, it seems, within this section, (u) but if the money were given with a fradulent intent, the payment is void and the money recoverable.(r)

[*380]

*CHAPTER XXXVI.

OF THE EFFECT OF A DISCHARGE UNDER THE ACTS FOR THE RELIEF OF INSOLVENT DEBTORS.

country bank note. Carr. v. Burdiss, 1 C., M. & R. 782; 5 Tyrw, 309, S. C. See post.

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

(s) 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 E. R. Rep. 685.

(t) Bevan v. Nunn, 9 Bing. 107; 2 Moore & S. 132, S. C.; and see Abell v. Daniell, M. & M. 370; Ex parte Simpson, 3 De Gex, 9; see also Cannan v. Wood, 2 M. & W. 467. If A. and 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. 184, Mag. Ca.

(u) Abell v. Daniell, M. & M. 370.

(v) Ibid.

THE principal acts now in force for the relief of Insolvent Debtors are the 1 & 2 Vict. c. 110, amended by the 2 & 3 Vict. c. 39.

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 are reenacted 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 and existing one.(a)

The object of the act 1 & 2 Vict. c. 110, is 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 be no fraudulent or intentional misdescription or concealment. *The act,(b) therefore, expressly discharges the insolvent from the claims [*381] of all persons not known to him at the time of the adjudication, who may be indorsees or holders of any negotiable security set forth in the schedule.

Under the Lords' Act, 32 Geo. 2 c. 28, now repealed by 1 & 2 Vict. c. 110, s. 119, 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.(c) This decision, however, proceeded on the limited scope of the

(a) 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 have not been to prison. The act was amended by the 7 & 8 Vict. c. 96, now in part repealed by the 12 & 13 Vict. c. 106, which enables an insolvent trader to petition for protection, ss. 211 to 223. See as to the 7 & 8 Vict. c. 96, the case of Phillips v. Pickford, 19 L. J. 171; and as to 12 & 13 Vict. c. 106, ss. 211 and 216. Levy v. Horne, 19 L. J. 260, Exch.

(b) 1 & 2 Vict. c. 110, s. 75.

(c) 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.