where a bankrupt, after his certificate, and who traded again for himself, was left for several years in possession of his house, household goods, and furniture, in order to assist in settling the affairs of the estate, the assignees repeatedly stating the goods, &c. in their accounts with the creditors, as part of the estate; it was held, that such possession did not fall within the statute, so as to vest the goods in the assignees under a second commission, on the ground that the bankrupt had not the disposition so as to sell the goods, and that he was not the reputed owner. And Buller, J., said, that possession of the goods exposed for sale in a shop might be within the statute (see ante, p. 291); but possession of the furniture in a ready furnished house was no more evidence of a right to that furniture, than of a right to the house. And per Ashurst, J., the statute certainly does not extend to every case of possession; not, for instance, to the case of a ready furnished lodging (s). So where a ship, in course of construction, has been sold, and remains in the shipbuilder's yard for the purpose of being completed only. Holderness v. Rankin, 29 L. J. Chanc. 753. Property of wife.-The goods of a woman living with a bankrupt as his wife are subject to the same rule that applies to the goods of any third person in the bankrupt's order and disposition (t); unless she has been married to him in ignorance that he has a former wife living; in which case her consent cannot be inferred (u). And the choses in action of a wife may, it seems, be in the reputed ownership of a bankrupt, though he has never reduced them into possession, as where he deposited certificates of gas shares with a third person as a security for advances (x). But the possession which a husband, living with his wife, has of her property, settled before marriage to trustees for her separate use, is not sufficient to bring a case within the statute; and it will not be any objection to such a settlement that the goods were not described in the deed, or referred to in a schedule annexed (y). Thus, where furniture, linen and plate, belonging to B., were by deed assigned by him in contemplation of marriage, to trustees, in trust, after the marriage, to stand possessed thereof, during the joint lives of B. and his intended wife, for her separate use; and B., after the marriage, became bankrupt, the settled furniture, &c. then being in the house in which he resided with his wife; it was held, that the furniture was not within the section, as the (8) Walker v. Burnell, 1 Dough. 316; 3 T. R. 321, S. C. (t) Mace v. Cadell, Cowp. 232. (y) Jarman v. Woolloton, 3 T. R. 618, recognised in Earl of Shaftesbury v. Russell, 1 B. & C. 666. But see Darby v. Smith, 8 T. R. 82, recognised by Sir W. Grant, M. R., in Caffray v. Darby, 6 Ves. 497. See further on the subject of the wife's separate property, Erp. Massey, 2 Mout. & Ayr. 173; Exp. Elliston, ibid. 365; Parnham v. Hurst, 8 M. & W. 743; Carne v. Brice, 7 M. & W. 183; post, tit. Baron and Feme." possession followed the deed and was consistent with it; and that the fact of its not having been the wife's before marriage was immaterial (2). It is observable, however, that if stock in trade is thus settled on the wife, for the purpose of enabling her to carry on a separate trade, if the husband intermeddles in such trade, the property will be liable to his debts. By 12 & 13 Vict. c. 106, s. 126, if any bankrupt, being at the time insolvent, shall (except upon the marriage of any of his children, or for some valuable consideration) have conveyed, assigned or transferred to any of his children, or to any other person, any hereditaments, offices, fees, annuities, leases, goods, or chattels, or have delivered or made over to any such person any bills, bonds, notes, or other securities, or have transferred his debts to any other person, or into any other person's name, the court shall have power to order the same to be sold and disposed of for the benefit of the creditors under the bankruptcy; and every such sale shall be valid against the bankrupt, and such children and persons, and against all persons claiming under him. VIII. Of transactions not affected by Bankruptcy. To prevent the hardship caused by the operation of the rule, that the title of the assignees relates back to the act of bankruptey, the 12 & 13 Vict. c. 106, s. 133, enacts "that all payments really and bond fide made by any bankrupt, or by any person on his behalf, before the date of the fiat or the filing of a petition for adjudication of bankruptcy, to any creditor of such bankrupt, and all payments really and bond fide made to any bankrupt before the date of the fiat or the filing of such petition, and all conveyances by any bankrupt bona fide made and executed before the date of the fiat or the filing of such petition, and all contracts, dealings, and transactions by and with any bankrupt really and bond fide made and entered into before the date of the fiat or the filing of such petition, and all executions and attachments against the lands and tenements of any bankrupt bona fide executed by seizure, and all executions and attachments against the goods and chattels of any bankrupt bona fide executed and levied by seizure and sale (see post, p. 304) before the date of the fiat or the filing of such petition, shall be deemed to be valid, notwithstanding any prior act of bankruptcy by such bankrupt committed, provided the person so dealing with or paying to or being paid by such bankrupt, or at whose suit or on whose account such execution or attachment shall have issued, had not, at the time of such payment, conveyance, contract, dealing or transaction, or at the time of so executing or (z) Simmons v. Edwards, 16 M. & W. 838. levying such execution or attachment, or at the time of making any sale thereunder, notice of any prior act of bankruptcy by him committed; provided also, that nothing herein contained shall be deemed or taken to give validity to any payment or to any delivery or transfer of any goods or chattels made by any bankrupt, being a fraudulent preference of any creditor of such bankrupt, or to any conveyance or equitable mortgage made or given by any bankrupt by way of fraudulent preference of any creditor of such bankrupt, or to any execution founded on a judgment on a warrant of attorney, or cognovit actionem or judge's order, obtained by consent (a) given by any bankrupt by way of fraudulent preference" (b). It is to be observed that many of the decisions cited with respect to this section are based upon a state of the law when the act of bankruptcy and not the notice of it marked the period antecedent to the filing of the petition, when the protection ceased to obtain. The principle, however, will be found equally applicable to the existing state of the law as contained in the above section. Payments (c). The provision with respect to payments is similar to that of the 6 Geo. IV. c. 16, s. 82. Many questions were formerly raised as to what did or did not amount to a payment (d). Now, however, that "contracts, dealings, and transactions," are put upon the same footing as payments, and need not, to be valid, necessarily have taken place more than two months before the filing of the petition, as was the case under the 6 Geo. IV. c. 16, s. 81, the distinction above adverted to has ceased to be of such material importance. The payment must be really and bona fide made. "A bond fide payment imports something different from, and additional to, an actual payment. The words bona fide were inserted by the legislature, to raise the question whether the money had been paid honestly and fairly in the course of an honest transaction" (e), and without intention of being reclaimed (ƒ). As where a trader, who was concealing himself from his general creditors, in part payment of a debt, delivered a bill of exchange to a creditor with whom he was in friendly communication (g). So a payment by (a) This proviso with regard to executions would seem to be an extension of the 6 Geo. IV. c. 16, s. 108, under which a judgment creditor by default, confession, or nil dicit, was only entitled to come in rateably with the other creditors. See Andrews v. Diggs, 4 Exch. 827, per Rolfe, B. (b) What amounts to a fraudulent preference has been discussed, ante, p. 248. (c) As to what amounts to payment under the garnishment clauses of 17 & 18 Vict. c. 125, see Turner v. Jones, 1 H. & N. 878. (d) See Bradbury v. Anderton, 1 C. M. & R. 486. (e) Per Tindal, C. J., in Devas v. Venables, 3 B. N. C. 403. (f) Gibson v. Muskett, 4 M. & G. 160. (g) Bagnall v. Andrews, 4 M. & P. 839. two partners of partnership assets in discharge of a private debt of one of the partners, when they were in a state of hopeless insolvency, is not a bona fide payment within the act (h). But a payment made to a creditor by a trader under arrest is protected (i). A delivery by a bankrupt of goods as payment is a payment within the act (k). Secus, if the goods be given as security (1), or as a set off only (m). If a payment is made to a bankrupt in respect of a fair bond fide sale, though in a transaction not in the way of the trader's usual business, it is protected (n), whether the payment be made in money or by a bill of exchange (0). Aliter, where the purchaser knows (p), or has the means of knowing (q), that the sale is forced, and the transaction dishonest (r). So a payment to a bankrupt by cashing a bank post bill is good (s). Payment by a merchant to a manufacturer, by whom he has ordered goods to be made, of a sum in excess of the agreed price of the goods, in the absence of any specific appropriation of the money (or part of it) to the goods ordered is not (semble) a payment within the act (t). It is more in the nature of a general advance or loan to the bankrupt, which is not a payment within the act (u). A banker is liable for money received and paid on the bankrupt's account, after notice of an act of bankruptcy, for there is nothing in his particular situation to exempt him from the general law (x). Money paid into court is not a payment to a creditor (y); and payments made after an act of bankruptcy, and with notice, are not protected, though made in pursuance of an order of the bankrupt given before (2). The payment, if made by the bankrupt, should be by him or by some person on his behalf, and with his authority. And it has been held, "that a payment extorted by compulsion of legal process from one who happened to have effects of the bankrupt in his hands at the time, is not a payment by the bankrupt, who was not even conscious of the fact" (a). The provisions of this section, with respect to payments, apply not only to the case of a sole trader but to that of a firm, where the act of bankruptcy is com (h) Turquand v. Vanderplank, 10 M. & W. 180. (i) Cox v. Morgan, 2 B. & P. 398. (k) Cannan v. Wood, 2 M. & W. 465. But see Smith v. Moon, M. & M. 458. Unless it amount to a fraudulent preference. See ante, p. 300. (1) Wright v. Fearnley, 6 B. N. C. 446. (m) Carter v. Breton, 6 Bingh. 617. But such a case would be a "contract, dealing, or transaction." See per Tindal, C. J., in Wright v. Fearnley, 5 B. N. C. 95. (n) Hill v. Farnell, 9 B. & C. 45. (0) Wilkins v. Casey, 7 T. R. 711. (p) Ward v. Clark, M. & M. 497. (q) Devas v. Venables, 3 B. N. C. 400. (r) Such a sale would be an act of bankruptcy, ante, p. 245. In payments by a bankrupt, the question of notice is of course immaterial. (s) Willis v. Bank of England, 4 A. & E. 21. (1) Bishop v. Crawshay, 3 B. & C. 415. (u) Crowfoot v. London Dock Company, 2 C. & M. 637. (x) Vernon v. Hankey, 2 T. R. 113; Hammersley v, Purling, 3 Ves. 757. (y) Farrell v. Alexander, 1 N. & M. 132. (z) Green v. White, 3 B. N. C. 59. mitted by one partner, and the payment is made by him on behalf of the partnership, after notice of the act of bankruptcy, such payment not being protected (b). Conveyances, Contracts, Dealings and Transactions.—Where the conveyance, contract, &c., is substantially entered into before notice of the act of bankruptcy, the acts which are subsidiary to it may, it would seem, be done after such notice, as being in themselves matters of duty only, and obligatory upon the person conveying, contracting, &c. Thus, where a bill was transferred by a debtor for valuable consideration, but the indorsement was forgotten, held that he might indorse it after he had become bankrupt (c). So where a conveyance is complete before notice, it may be enrolled after notice (d). And where goods at sea are assigned before notice, and an undertaking given to indorse the bills of lading, they may be so indorsed after notice (e); and the same with an indorsement of registry, the sale and assignment of the ship having taken place before notice of the act of bankruptcy (ƒ). A conveyance, which is in itself an act of bankruptcy, e.g., a transfer of goods made voluntarily and in contemplation of bankruptcy, is not protected (g). Where, however, in 1828, A. conveyed his whole property to trustees in trust for his creditors, and in 1830 they and A. afterwards sold part of the estates to B., who in 1833 sold to D., who objected to the title, alleging that the conveyance in 1828 was an act of bankruptcy, no commission having issued within five years after the act of bankruptcy, which was then the prescribed period, it was held that the transaction was protected (h). The words "contracts, dealings and transactions" are very comprehensive. "The word transaction,' as here used, has not any extraordinary or technical meaning, but is used in its ordinary sense of act, doing, negotiation, or dealing,' as defined in the common dictionaries; and bona fide transactions, between the act of bankruptcy and the filing of the petition, may reasonably be rendered valid, as to those who have no notice of the act of bankruptcy, in the same manner as if they had occurred before the act of bankruptcy" (i). Under the 12 & 13 Vict. c. 106, s. 125 (ante, p. 283), goods are not in the possession of the bankrupt at the time 3 & 4 Will. IV. c. 55, was repealed by (i) Per cur. in Brewin v. Short, infra. |