Exchequer Reports.

MICHAELMAS TERM, 29 VICT.

1865.

STANGER and Another v. MILLER.

Nov. 13.

THE declaration stated that the plaintiffs," the trustees In an action

on behalf of the creditors of J. Bowles, a debtor, under a deed or instrument made and entered into between the said J. Bowles of the first part, the plaintiffs, as such trustees, of the second part, and the said creditors of the said J. Bowles of the third part, relating to the debts and liabilities of the said J. Bowles and his release therefrom, according to the clauses of the Bankruptcy Act, 1861, relating to trust deeds for the benefit of creditors, and under which said deed or instrument, all things necessary in that behalf having happened and been done, all the property comprised in the said deed or instrument, including the causes of action hereinafter mentioned, was and is vested in the plaintiffs, as such trustees as aforesaid," by &c., sue, &c.-"For money payable by the defendant to the said J. Bowles at the time of executing the said deed or instrument for goods bargained and sold by the said John Bowles to the defendant," &c.

The defendant pleaded (inter alia), as defence on equitable grounds to parcel of the money claimed, a plea, in substance, stating that the defendant and one G. Miller respectively demised and leased to the said J. Bowles, their VOL. IV.-H. & C.

B

EXCII.

of a deed by trustees made by a

debtor under the Bankruptcy Act, 1861, the

defendant

a debt for

may set off rent payable debtor under to him by the demise, and

a

which became

due after the

execution of

the deed, but registration.

before its

1865.

STANGER

V.

MILLER.

respective undivided moieties of a certain messuage, to hold from the 25th March, 1861, for the term of twentyone years, at the yearly rent of 1507., payable by equal quarterly payments upon the 24th June, 29th September, 24th December and the 25th March: and the said J. Bowles did thereby covenant with the defendant and the said G. Miller that he would during the said term pay the said yearly rent of 150%. upon the days appointed for payment thereof: that J. Bowles entered upon the demised premises: that G. Miller died, having devised his reversion to the defendant: that "after the death of G. Miller, and during the continuance of the term, the sum of 371. 10s. for one quarter's rent of the said demised premises for the quarter of the year ending on the 24th December, 1864, became and was due and payable by the said J. Bowles to the defendant, who was then entitled to the reversion as aforesaid that the said J. Bowles, before and at the time of the registration of the said deed or instrument in the declaration mentioned, and before the defendant had any notice or knowledge of the said deed or instrument, or of any act of bankruptcy committed by the said J. Bowles, and until and at the commencement of this suit, was and still is indebted to the defendant in an amount equal to that part of the plaintiff's claim to which this plea is pleaded, for the said quarter's rent which became due and payable as aforesaid on the said 24th December, 1864, which amount the defendant is willing to set off against that part of the plaintiffs' claim to which this plea is pleaded."

Demurrer, and joinder therein.

Patchett, in support of the demurrer.-These are not mutual debts between the plaintiffs and defendant within the meaning of the 2 Geo. 2, c. 22, s. 13. Upon the execution of the deed the rights of Bowles against his

debtors vested in the trustees: Symons v. George (a); and the defendant cannot set off against their claim a debt subsequently due from Bowles to him. It does not appear by the plea how the debt attempted to be set off became due, except that it was for rent due from Bowles before the registration of the deed, and it may be that the trustees, considering the lease of no value, allowed him to continue in possession, so that he would be liable to pay the rent notwithstanding the transfer of his estate to the trustees. In bankruptcy, the rent may be apportioned, but if the bankrupt continues in possession until the rent becomes due, the landlord may distrain his goods. [Channell, B.— Suppose the plaintiffs had been assignees under a bankruptcy, would there not have been a good "mutual credit" between the parties within the 171st section of the Bankrupt Law Consolidation Act, 1849? Under the 197th section of the Bankruptcy Act, 1861, the trustees are in the same position as assignees in bankruptcy.] Rent payable under a demise on a quarter day is not a "mutual credit" during the currency of the quarter. If it were, the 150th section of the Bankruptcy Act, 1861, would not have been required. There is no credit between the landlord and tenant; for rent payable under a demise does not, like interest, accrue de die in diem, but it becomes a debt instanter on the day on which it is reserved. [Channell, B.-The landlord may well be said to credit the debtor with the use and occupation of the house, and that is a credit which must in its nature terminate in a debt: note to Rose v. Hart, 2 Smith's Lead. Cas., p. 260, 5th ed.] In order to be the subject of set off, there must not only be mutual debts, but the debts must be mutual between the plaintiff and defendant: Isberg v. Bowden (b). [Channell, B.

(a) 3 H. & C. 68; in error, id. 996.

(b) 8 Exch. 852, 858.

1865.

STANGER

v.

MILLER

1865.

STANGER

V.

MILLER.

That was a decision upon the Statute of Set-off, 2 Geo. 2, c. 22, s. 13.]

Keane, in support of the plea.-The registration of the deed is the dividing line, not its execution. That appears from the form of deed given by Schedule D. under the 200th section of the Bankruptcy Act, 1861, by which the debtor conveys his estate and effects to trustees to be administered as if he had been at the date thereof duly adjudged bankrupt. The word "date" has reference to the memorandum on the face of the deed of the day and the hour of the day of registration, required by the 196th section. Under the 150th section, the defendant might, in bankruptcy, have proved for a proportionate part of the rent up to the day of the adjudication; and therefore, although by the terms of the lease the rent was not due when the deed was executed, by force of the 150th section it accrued de die in diem. Until registration the title to the property remains in the debtor, and all actions must be in his name. If the debtor had sued the defendant, and the latter had pleaded this set-off, the debtor could not have replied that he was suing on behalf of the trustees, because the plea alleges that the defendant had no notice or knowledge of the deed: Buck v. Lee (a). By the 197th section, upon registration of the deed all parties are placed in the same position as if the debtor had been adjudged a bankrupt. The 199th section also shews that it is the registration which renders the deed operative. The deed, when registered, did not relate back to the time of its execution so as to defeat the defendant's right of set-off: Ex parte Harrison (b). The principle on which the doctrine of setoff in bankruptcy proceeds is explained by Tindal, C. J., in Gibson v. Bell (c).

(a) 1 A. & E. 804.

(b) 26 L. J. Bank. 30.

(c) 1 Bing. N. C. 743.

Patchett, in reply.-The trustees might sue upon the deed before its registration. Registration is only necessary for the purpose of giving the trustees rights against nonassenting creditors. [Pollock, C. B.-Is there any instance of an action by trustees before registration? No doubt, where property is assigned by deed the trustees may sue for it, because the assignment is good at common law; but the assignment will not operate upon a debt so as to enable the trustees to sue for it in their own names unless the requisites of the statute are complied with.] By the 194th section, the only effect of not registering the deed is that it cannot be received in evidence. [Pollock, C. B.-The 197th section says that "from and after the registration" certain things shall take place; which is, in effect, saying that they shall not take place before.] The 7th condition of the 192nd section, which requires possession of the debtors to be given to the trustees immediately upon the execution of the deed, shews that the time of execution, not of registration, is the dividing line.

POLLOCK, C. B.—We are all of opinion that the plea is good. The plaintiffs, trustees of a deed under the Bankruptcy Act, 1861, claim a debt due from the defendant to the maker of the deed. But the right to sue for it did not pass upon the execution of the deed, nor until its registration, when the power of suing as in bankruptcy is created by the express provision of the 197th section. The defendant pleads a set-off for rent due to him from the debtor under a demise; and it is argued that as the rent became due after the execution of the deed it cannot be set off against the plaintiffs' claim. But the 150th section provides that in case of bankruptcy the person entitled to the rent may prove for a proportionate part thereof up to

1865.

STANGER

v.

MILLER.