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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.
money paid 8. The defendant denies that the said sum of £392, or any by mistake. 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.
Bankrupt. 1. The plaintiff is the trustee of the estate of G. K., who Claim by was, on the
debt due to rupt in the London Bankruptcy Court.
(a) Actions by trustees in bankruptcy.]-By the joint operation of the Property 11th and 17th sections of the Bankruptcy Act of 1869, all the property of a vested in bankrupt divisible among his creditors as defined by the 17th section, trustee. 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 Relation 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
title. 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.
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 assign. able 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 Name in property of -, a bankrupt,” inserting the name of the bankrupt.
which the 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, 1 Bing. 355.) There seems to be scarcely
Claim by 2. Before the said date and the said adjudication, the defentrustee for dant was indebted to the said G. K., for goods sold and delivered debt due to bank, rupt.
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." Interests An option which the bankrupt had to take a lease, passes to his trustee. of the (Buckland v. Papillon, L. R. 2 Ch. 67; and see Simpson v. Bathhurst, bankrupt Ì. 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 uncer. to the tificated bankrupt contingently on his obtaining his certificate, this right trustee. 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.) Rights of All rights of action for breach of contract liquidated or not pass to the action for trustee. (Wright v. Fairfield, 2 B. & Ad. 727.) The right to enforce breach of unexecuted contracts which may be performed by the trustee on behalf contract 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 trustee. if the contract be one with the bankrupt, his executors, and administra
tors, the right to complete it would not pass to the trustee. (Knight r. 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. Č. P. 268.) When
The right of action arising out of certain torts committed against the rights of bankrupt before adjudication passes to the trustee ; in other cases it does action for
not; the test being, was the wrong one which was personal to the bank. tort pass
rupt, and for which he would be entitled to a remedy whether his proto trustee. perty 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 inconveni. ence 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.
trustee for debt due to bankrupt.
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. (IIodgson 1. 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 deten- Order and tion or conversion of chattels, by as well as against the trustees of bank. disposition rupt estates is the “order and disposition clause (sect. 15, sub-sect.5). The clause. 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 When the bankrupt disposes of goods, &c., after an act of bankruptcy has been trustee committed, the trustee has the option either of adopting the contract may affirm made by the bankrupt, and suing the party in an action ex contractu, or of or disaffirm disaffirming the contract, and suing the person dealing with the bankrupt dealings of for conversion or detinue. In such cases if the trustee adopts the trans- the bankaction, he cannot afterwards treat the other party to the transaction rupt. 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 lleilbut 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
Claim by 3. The said sum remained due at the date of the said adjuditrustee for cation. debt due to bankrupt.
intention to prefer, disaffirm the transaction nor sue for the price of the
goods if sold. (Jones v. Harber, L. R. 6 Q. B. 77.). Protected The following transactions are protected by the Bankruptcy Act, 1869, transac- viz., by sect. 94, sub-sect. 3, “any contract or dealing with any bankrupt tions made in good faith and for valuable consideration before the date of the in bank order of adjudication by a person not having, at the time of making such ruptcy : contract or dealing, notice of any act of bankruptcy committed by the ss. 94 & 95. bankrupt and available against him for adjudication;" and sect. 95, sub
sect. 1, " any disposition or contract with respect to the disposition of property by conveyance, transfer, charge, delivery of goods, payment of money, or otherwise howsoever, made by any bankrupt in good faith and for valuable consideration before the date of the order of adjudication, with any person not haring at the time of the making of such disposition of property, notice of any act of bankruptcy committed by the bankrupt
and available for adjudication.". Effect of The effect of these provisions is to limit the relation of the title of the above trustee in those cases to which they apply, to the order of adjudication sections. instead of to the act of bankruptcy as in ordinary cases. The authorities
above cited, as to the right of the trustee to disaffirm certain transactions and treat others as absolutely void, have been with one exception decided subsequently to the passing of the Act, and do not apply to those cases where the person dealing with the bankrupt has acted bona fide and in ignorance of the act of bankruptcy, such as are contemplated by these
provisions. When an
Questions not unfrequently arise as between the trustee in bankruptcy execution
and execution creditors. On this subject, the 95th section (sub-sections creditor is 2 & 3) provides that any execution or attachment against the land or protected.
goods of the bankrupt executed in good faith by seizure in the case of land, and by seizure and sale in the case of goods, before the date of the order of adjudication, if the person on whose account such execution or attachment was issued, had not at the time of the same being so executed by seizure, or seizure and sale as the case may be, notice of any act of bankruptcy committed by the bankrupt and available against him for adjudication shall be valid notwithstanding any prior act of bankruptcy. It has been held under this section that where the seizure is made after an act of bankruptcy, but without notice thereof, the execution creditor is entitled to the proceeds of the sale, as the words " notice of any act of bankruptcy" mean notice prior to the seizure. (Ex parte Schulte, L. R. 9, Ch. 409.)
An execution protected under these provisions may be an act of bank. ruptcy which may avoid a subsequent execution levied by the same creditor. (Ex parte Dawes, L. R. 19 Eq. 438.)
Where the seizure of the debtor's goods is prior to any act of bank. ruptcy to which there is relation, the right of the execution creditor to obtain payment of his debt by sale is not under the Act (1869), in general affected by a subsequent act of bankruptcy followed by adjudi. cation, for he is "a creditor holding security" under sect. 12, and there is nothing in this Act as in that of 1849 to avoid such security. (Slater v. Pinder, L. R. 7 Ex. 95 (Exch. Ch.); and see Ex parte Rocke, L. R. 6 Ch. 795; and Ex parte Lovering, L. R. 17 Eq. 452.) Such“ security” is not acquired by the mere delivery of the writ to the sheriff, and not until seizure. (Ex parte Williams, L. R. 7 Ch. 314.)
The fact of a seizure and sale amounting to an act of bankruptcy under sect. 6 of the Act does not affect the execution creditor's right under sect. 95, unless the case falls within the 87th section. If it fall within
4. The defendant has not paid the same or any part thereof Claim by to the plaintiff.
for debt The plaintiff claims :
bankrupt. that section the sheriff may still sell, and if he receives no notice within The rights fourteen days that a petition has been presented, he may pay the amount of an levied to the execution creditor, who is entitled to retain it unless he execution had notice of an act of bankruptcy prior to the seizure. (Ex parte Villars, creditor L. R. 9 Ch, 432.)
as against A private sale by the debtor, being then in insolvent circumstances, to the the trustee. execution creditor of goods seized to avoid a sale by the sheriff, is a fraudulent transfer under sect. 6, and is not protected either by the 87th or 95th section, so that the trustee is entitled to recover them or their price. (Ex parte Pearson, L. R. 8 Ch. 667.) And the trustee is entitled to goods seized by the sheriff, if on the sale of them he would be entitled to the proceeds under the 87th section. (Ex parte Rayner, L. R. 7 Ch. 325.) The 87th section does not apply to cases where before seizure the debtor delivers bills to the sheriff, which the execution creditor accepts in satisfaction of the judgment, and such payment is valid (Ex parte Brooke, L. R. 9 Ch. 301); nor where the money is paid after seizure and before sales, and the creditor agrees to take it on account of the debt. (Stock v. Ilolland, L. R. 9 Ex. 147.)
Suits by trustee and solvent partner of bankrupt.]-By sect. 105 of Trustee and B. A., 1869, " Where a member of a partnership is adjudged bankrupt, a solvent the Court of Bankruptcy may authorize the trustee, with consent of the partner creditors, certified by special resolution to commence and prosecute any suing action or suit in the names of the trustee and of the bankrupt's partner ; together. and any release by such partner of the debt or demand to which the action or suit relates, shall be void ; but notice of the application for authority to commence the action or suit shall be given to such partner, and he may show cause against it, and on his application the Court may, if it think fit, direct that he shall receive his proper share of the proceeds of the action or suit, and if he does not claim any benefit therefrom he shall be indemnified against costs in respect thereof as the Court directs."
It sometimes happens in cases of fraudulent preferences that the trustee and a partner of a bankrupt may maintain an action which the partners could not. These are cases where the trustee avoids the preference. (Heilbut v. Nevill, L. R. 5 C. P. 478, Exch.)
Claims by Claims by a trustee in bankruptcy as such shall not, unless by leave of trustee the Court or a judge, be joined with any claim by him in any other shall not capacity. (Judicature Rules, Order XVII., rule 3.)
be joined DEFENCES. - Denial of official character.)—By Order XIX. r. 11, if with claims either party wish to deny the right of any other party to claim as trustee in any whether in bankruptcy or otherwise, he must deny it specifically.
other Payment.-By the 94th section, sub-section 1, payments made in good capacity. faith and for valuable consideration to a bankrupt before the date of the When pay. order of adjudication by a person not having at the time of such pay. ment to a ment, notice of any act of bankruptcy committed by the bankrupt and
person available against him for adjudication are valid.
having Mutual credits set-off.-By sect. 39, where there have been mutual committed credits, mutual debts, or other mutual dealings between the bankrupt an act of and any other person proving or claiming to prove a debt under the bankbankruptcy, an account shall be taken of what is due from the one party ruptcy to the other in respect of such mutual dealings, and the sum due from the good. one party shall be set off, and the balance of such account and no more
Set-off. shall be claimed or paid on either side respectively ; but a person shall not be entitled under this section to claim the benefit of any set-off