Action by Bankers to recover the Amount of a Cheque paid

by Mistake.

bankers
to recover

money paid

1. The plaintiff is a public officer of the C. and C. Banking Action by Company, entitled by Act of Parliament to sue in the name of their public officer. 2. The C. and C. Banking Company has its principal place by mistake. of business at C., but it also has branches at P., at A., and at other places.

3. These branches are quite independent of one another and of the central bank at C., and are, in fact, separate banks with separate customers, and separate accounts and books.

4. On the 24th April, 1876, one J. W. delivered to the defendant a cheque on the said A. branch, where he had an account. The following is a copy of such cheque and of the indorsements on it :

5. On the 25th April, 1876, the defendant presented the said cheque to the said P. branch, and requested the manager of the said branch to cash the said cheque.

6. The manager of the said P. branch knew nothing about W. and the state of his accounts with the A. branch.

7. The manager of the said P. branch cashed the said cheque on the credit of the defendant and as a matter of favour to him, and not otherwise, and in cashing the said cheque the said manager did not pay the said cheque, nor had he any intention. of doing so.

8. The said P. branch forwarded the cheque in due time to the A. branch, who returned the said cheque to them dishonoured. 9. The said W. had overdrawn his account, and the said A. branch were justified in refusing to pay the same.

Action by bankers

to recover

money paid by mistake.

Defence.

10. The plaintiff claims:

£392 and interest thereon from April 24th till judgment, as money lent and advanced and as money received by the defendant for the use of the plaintiff, the consideration for the same having failed.

Statement of Defence.

1. The defendant does not admit the allegations in the 3rd paragraph of the statement of claim.

2. The defendant admits that the said J. W. delivered to the defendant on April 24th a cheque on the C. and C. Banking Company, and that the said cheque was in the words and figures set out in the 4th paragraph. The defendant does not admit that the said cheque was drawn on the A. branch solely, but refers to the said cheque, and submits that the same was drawn on the said C. and C. Banking Company generally.

3. The said cheque was delivered to the defendant at P., on the said 24th April, after banking hours, and the defendant presented the same on the 25th April at the said branch, as and being a branch of the said C. and C. Banking Company, on which the said cheque was drawn for payment in the ordinary course, and the same was thereupon paid. Save as aforesaid the defendant denies the allegations in the 5th and 7th paragraphs respectively.

4. The defendant does not admit the allegations in the 6th paragraph.

5. The defendant kept no account with the said banking company, and was not personally known to the manager of the P. branch by whom the said cheque was paid. The said cheque was voluntarily paid by the said P. branch to the defendant, and was not cashed on the credit of or as a favour to the defendant. 6. The defendant does not admit the allegations in the 8th and 9th paragraphs of the statement of claim.

7. On the 26th of April the said J. W. paid to the manager of the A. branch of the said banking company (who was the agent thereof for the purpose of receiving such payment) a large sum of money, to wit, £2466 18s. 8d., for the express purpose of meeting and providing for various cheques drawn by the said J. W. on the said banking company, including the cheque referred to in the statement of claim, and the said

manager and the said banking company received such money Action by upon the terms that the same should be so applied, and have bankers thenceforward retained and still retain the same.

8. The defendant denies that the said sum of £392, or any part thereof, was money lent by the plaintiff as the said banking company to the defendant, or was money received by the defendant for the use of plaintiff or the said banking company.

Reply.

The plaintiff joins issue on the defence of the defendant, except so far as it admits the allegations in the statement of claim.

to recover

money paid

by mistake.

Bankruptcy (a).

Action by Trustee in Bankruptcy for a Debt due to the

Bankrupt.

1. The plaintiff is the trustee of the estate of G. K., who was, on the day of

1877, duly adjudicated a bank

rupt in the London Bankruptcy Court.

Property vested in trustee.

Relation

(a) Actions by trustees in bankruptcy.]-By the joint operation of the 11th and 17th sections of the Bankruptcy Act of 1869, all the property of a bankrupt divisible among his creditors as defined by the 17th section, including choses in action, becomes absolutely vested in the trustee on his appointment. His title relates back to the act of bankruptcy on which the adjudication was founded, or if there have been several acts of bankruptcy within twelve months before the date of adjudication, back of his then to the first of such acts; but it does not relate back to the twelve months before, unless at the time of committing the act of bankruptcy the bankrupt was then indebted to some creditor or creditors in a sum or sums sufficient to support an adjudication, and such sum or sums remained due at the date of adjudication. As to relation back in case of non-payment of debt under debtors' summons, see Ex parte Wier, L. R. 6 Ch. 875.

title.

By sect. 22, par. 2, "Where any portion of the property of the bank. rupt consists of things in action, any action, suit or other proceeding for the recovery of such things instituted by the trustee shall be instituted in his official name as in this Act provided; and such things shall for the purpose of such action, suit, or other proceeding be deemed to be assignable in law, and to have been duly assigned to the trustee in his official capacity." By sect. 83, sub-sect. 7, the official name is "the trustee of the property of , a bankrupt," inserting the name of the bankrupt. Under former bankruptcy statutes, it was held that where the appoint- trustee ment of an assignee was duly vacated, and a new assignee was ap- sues. pointed, the latter became assignee from the first appointment by relation. (Aldrett v. Kettridge, I Bing. 355.) There seems to be scarcely

Name in

which the

Claim by trustee for

debt due to bank

rupt.

Interests of the bankrupt that pass to the trustee.

Rights of action for breach of contract pass to trustee.

When rights of

action for tort pass to trustee.

2. Before the said date and the said adjudication, the defendant was indebted to the said G. K., for goods sold and delivered

room for the application of this doctrine under the present law, as by the 83rd section sub-sect. 6, "the property of the bankrupt shall pass from trustee to trustee, including under that term the registrar when he fills the office of trustee, and shall vest in the trustee for the time being during his continuance in office without any conveyance, assignment, or transfer whatever."

An option which the bankrupt had to take a lease, passes to his trustee. (Buckland v. Papillon, L. R. 2 Ch. 67; and see Simpson v. Bathhurst, L. R. 5 Ch. 193, 202, as to the power of renewing a lease vested in the bankrupt before adjudication.) Where property was given to an uncertificated bankrupt contingently on his obtaining his certificate, this right was held to pass on the happening of that event to the assignee. (Davison v. Chalmers, 33 L. J. Ch. 622.) Though this case was decided under the Act of 1861, it would apply under the present Act. Money paid away for value by an uncertificated bankrupt cannot be followed by the trustee, though the payee had notice of the bankruptcy. (Ex parte Dewhurst, L. R. 7 Ch. 185.)

All rights of action for breach of contract liquidated or not pass to the trustee. (Wright v. Fairfield, 2 B. & Ad. 727.) The right to enforce unexecuted contracts which may be performed by the trustee on behalf of the bankrupt, and such as would pass to his executor if he died, will pass to the trustee. (Gibson v. Carruthers, 8 M. & W. 333.) But semble if the contract be one with the bankrupt, his executors, and administrators, the right to complete it would not pass to the trustee. (Knight v. Burgess, 33 L. J. Ch. 727.)

Where the right of action of the bankrupt's wife is such that if vested in the bankrupt alone it would pass to the trustee, the interest of the bankrupt in such right of action passes to the trustee. (Richbell v. Alexander, 30 L. J. C. P. 268.)

The right of action arising out of certain torts committed against the bankrupt before adjudication passes to the trustee; in other cases it does not; the test being, was the wrong one which was personal to the bankrupt, and for which he would be entitled to a remedy whether his property was impaired or not? in which case the cause of action does not pass to the trustee, but remains in the bankrupt-or was a pecuniary loss and damage to the estate the substantial and primary cause of action? in which case it passes to the trustee, though involving personal inconvenience to the bankrupt. (Wetherell v. Julius, 10 C. B. 267.) Thus a right of action for trespass to a dwelling-house, and disturbing the bankrupt in the enjoyment of it by which he was prevented carrying on his business was held not to pass to the assignee. The right of action for a wrongful dismissal passes to the trustee, at least it formerly did to the assignee (Beckham v. Drake, 2 H. L. C. 579). It is perhaps not easy to recognize in these cases any very striking illustrations of the distinction just pointed out, as a wrongful dismissal seems a matter somewhat "personal to him who is dismissed. In the case Wetherell v. Julius, supra, the distinction was drawn between a right of action against a solicitor for negligence occasioning the arrest of the bankrupt, and negligence leading to a sequestration of the profits of the bankrupt's benefice; in the former case the cause of action not devolving, but in the latter passing to the trustee. On the principle of this distinction it was held that an action for negligence against a solicitor, in consequence of which the client had a judgment passed against him, and was adjudicated bankrupt passed to the assignee. (Crawford v. Cinnamond, Ir. R. 1 C. L.

by the said G. K. to the defendant (particulars whereof have Claim by been delivered to the defendant), in the sum of £85.

325, Ex.) So an action for misrepresentation whereby the plaintiff lost £2000, and was in consequence adjudicated bankrupt, though involving personal annoyance, trouble, and discredit, was held to pass. (Hodgson v. Sydney, L. R. 1 Ex. 313.) In this case Bramwell, B. (now Lord Justice) suggested that the same tort may have two different characters, one giving the trustee a right of action on behalf of the estate, and the other giving the bankrupt a right of action on account of the personal injury. This it must be remembered is not a decision but only a dictum, and with the utmost deference for so high an authority there appear some practical difficulties in the way of applying such a doctrine. There is no analogy between such a case and one where a tort, such as a libel, is committed, affecting a number of persons, each of whom may claim damages, for here the injury is only committed against one person, and the suggestion is that you are to allow that person to be as it were multiplied for the purpose of creating separate torts.

One of the most frequent subjects of controversy in suits for the detention or conversion of chattels, by as well as against the trustees of bankrupt estates is the "order and disposition clause (sect. 15, sub-sect. 5). The subject is too large to be dealt with in a work of this scope, and, indeed, it scarcely comes within it. The law on the subject will be found very clearly and comprehensively stated in "Roche & Hazlitt's Bankruptcy Law." It is well, however, to notice that things in action other than debts due to the bankrupt in the course of his trade or business, are not goods and chattels within the meaning of that clause, which it may be stated only relates to traders.

In certain transactions between the bankrupt and others, where the bankrupt disposes of goods, &c., after an act of bankruptcy has been committed, the trustee has the option either of adopting the contract made by the bankrupt, and suing the party in an action ex contractu, or of disaffirming the contract, and suing the person dealing with the bankrupt for conversion or detinue. In such cases if the trustee adopts the transaction, he cannot afterwards treat the other party to the transaction as a wrongdoer. (Smith v. Baker, L. R. 8 C. P. 350; and see Marks v. Feldman, L. R. 5 Q. B. 275, Ex. Ch.) Where there has been a collusive sale or transfer of goods by the bankrupt in contemplation of bankruptcy, there is no conversion without a demand and refusal, unless the sale amounts to an available act of bankruptcy, as the property is transferred subject to the transfer being avoided. (See Stevenson v. Newnham, 22 L. J. C. P. 110, Exch.) But if the goods have been converted into money an action for money had and received is maintainable by the trustee, without prior notice of the disaffirmance of the sale or transfer of the goods. (Heilbut v. Nevill, L. R. 5 C. P. 478, Exch.) If the sale or transfer amount to an available act of bankruptcy, as a fraudulent preference, then immediately on the adjudication, it is avoided by reason of the relation back of the title of the trustee to the act of bankruptcy; it is then a dealing with the property of the trustee, and absolutely void. But the right above referred to of disaffirming any prior fraudulent preference is quite distinct from the right which he takes by virtue of the relation back of his title; in the former case the transaction standing good unless repudiated or disaffirmed, in the latter it being absolutely void. (See Heilbut v. Nevill, L. R. 4 C. P. 354, 359; Marks v. Feldman, L. R. 5 Q. B. 275, Ex. Ch.) Although the assignment by a debtor of all his goods for a past debt is an act of bankruptcy, yet if there is no relation back to that act the trustee cannot, if there be no fraud in fact or any

trustee for debt due to bankrupt.

Order and disposition

clause.

When the trustee may affirm or disaffirm dealings of the bank

rupt.