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resigned his office of trustee. At the first meeting of creditors, J. Marland, the largest creditor, proved for an alleged debt of 75007, and the validity of the resolutions passed at this meeting depended upon the validity of this proof. The trustee afterwards disputed the proof upon the ground that a partnership existed between Marland and the debtor, and ultimately the judge directed an issue to try the question. The issue was tried on the 18th June, when the jury found that there was no partnership existing between Ashton and Marland.
On the 18th June an application was made to the court on behalf of the trustee that an account might be taken of the money due from the debtor to John Marland who claimed to be a creditor to the extent of 70001. and upwards, whereupon the judge made the following order: "Whereas it has appeared to me on satisfactory evidence, namely, on the evidence of the said liquidating debtor the said John Ashton, and of the said John Marland, that the said liquidation by arrangement cannot, in consequence of no proper accounts having been kept by either of the parties above-mentioned, and in consequence of the untrustworthy character of the statements made and the evidence given by them respectively on the occasion of the trial of the issue tried before me between the said John Marland and the said Thomas Taylor, and in consequence of the discreditable nature of the dealings and transactions of the said John Marland and the said John Ashton with one another, proceed without injustice and undue delay to the other creditors of the said John Ashton, now therefore, I adjudge the said John Ashton a bankrupt, and direct that proceedings be held accordingly, and that such account be taken before the registrar of this court under the said bankruptcy." John Ashton gave a written consent to this order, and a meeting of creditors thereunder was duly convened and held when Thomas Taylor was appointed trustee under the bankruptcy with a committee of inspection. John Marland, however, appealed against the order of adjudication.
Robson, for the appellant, contended that, as resolutions for liquidation by arrangement had been duly passed and registered, and the proceedings were in all respects regular, there was no sufficient cause for the court to take the conduct of the proceedings out of the hands of the creditors. What had given rise to the difficulty was a squabble about the appointment of a new trustee. If the
trustee had any reason to doubt the validity of Marland's proof, his proper course was to apply under the 73rd rule to the registrar to expunge it. It had never yet been decided that the court has power to proceed in a summary manner to adjudicate a liquidating debtor bankrupt. On the contrary it had been decided that the court cannot act without some application being made to it for that purpose. He cited
Ex parte James; Re Condon, L. Rep. 9 Ch. App. 609; 30 L. T. Rep. N. S. 773.
At any rate the judge had neither facts or evidenee before him to support the order which had been made.
De Gex, Q.C. and Finlay Knight, who appeared for the trustee, were not called upon.
The CHIEF JUDGE.-The administration of the bankruptcy laws is vested in the Court of Bankruptcy, and if the court think that the proceedings are going wrong, it is its duty to interfere and prevent any maladministration. Now the 12th subsection of the 125th section of the Act of Parliament enacts that "If it appears to the court on satisfactory evidence that the liquidation by arrangement cannot, in consequence of legal difficulties, or of there being no trustee for the time being, or for any sufficient cause, proceed without injustice or undue delay to the creditors, or to the debtor, the court may adjudge the debtor a bankrupt, and proceedings may be had accordingly." It is the court, therefore, that has to act in the matter, and it requires no petition in bankruptcy to be presented for that purpose. But it is for the court, acting upon the knowledge which it has of the proceedings that have been had before it, and if it think that bankruptcy and not liquidation is the more beneficial and proper course to be adopted to adjudge the liquidating debtor a bankrupt. When, therefore, I find an order, such as this, in all respects correct and in conformity with the statute stating the facts upon which the court proceeds, I am of opinion, upon the facts so stated by the learned judge, that if he had made any other order than such as he has made, he would have neglected his duty, because justice requires that the liquidation proceedings should be put a stop to, and that all the transactions between the debtor and Marland should be thoroughly investigated and sifted. I am of opinion, therefore, that this appeal must be dismissed with costs.
Solicitors for appellant, Phelps and Sidgwick.
END OF VOL. XXXII.