is, nevertheless, a valid transfer. Even when the 1, on a particular sale, to run away with the price. creditors, such sale is not an act of bankruptcy. chaser is a party to that intention, then it would nt transfer, within the statute." .: It may be an act of bankruptcy, though, if the onâ fide and without notice, the purchaser may be >w that it is no act of bankruptcy if the buyer that the sale is fraudulent: Harwood v. Bart. Caldecott (2), Bentliff v. Garnett (3). The verdict e proceeded on the ground that the jury thought rranted in finding for the plaintiff, without finding dants had notice of the fraudulent intention of the of opinion that the rule must be discharged. (After [ *21 issue to succeed her." Nor do we think this construction contrary to any intention of the testator, either presumably or to be collected from the will. It may very well be that the testator meant that if his daughter attained twenty-one, she should have the estate in fee, though she has no children. Of course, it would be a greater benefit to her and enable her to place herself better in life. It is true, he does not say so in words in the devise to her; but it may be he did not think it necessary. He may have thought it necessary to say that if she had lawful issue, though she died under twenty-one, she should take in fee; and that his brother and sister should not, and that they should only take if she died under age and without issue. On these grounds we think the rule should be made absolute.* Rule absolute. 1860. June 21. [16] [ 17 ] FRASER AND OTHERS, ASSIGNEES OF JAMES M'CLURE, A (6 H. & N. 16-21.) If a trader raises money by selling his goods at an under-value, (not for the purpose of carrying on his business, but in contemplation of stopping payment, and for the purpose of cheating his creditors), to one who has notice either by express information, or from the nature of the transaction, that he is selling his goods not in order to carry on his business but with a fraudulent intention, the sale is an act of bankruptcy and void, and the assignees may recover the goods from the purchaser. TROVER for silks, calicoes and other goods. Pleas. Not guilty, and Not possessed. At the trial, before Blackburn, J., at the Spring Assizes at Liverpool, it appeared, by the evidence for the plaintiff, that James M'Clure, the bankrupt, began business on his own account on the 18th August, 1859, and carried it on till the 23rd of September in the same year, having succeeded his uncle. During this period the bankrupt bought goods, to a very large amount from various persons, on credit, and sold them to the defendants for ready money. There were eight or nine sales to the defendants. The defendants generally bought all the goods which the bankrupt had in his possession at the time, within a few pounds' worth. On the 12th of August, while the bankrupt was clerk to his uncle (the uncle, who was known to the defendants, being absent from ill health), the defendant Sampson was introduced to the bankrupt as a person who would do business *for ready money, and the bankrupt sold him a parcel of calicoes and other goods at a very low price. On the 26th of August the bank * See Fairfield v. Morgan, 1 Taunt. 174 and Right v. Day, 11 R. R. 448 (16 East, 67). rupt bought from one W. Bryan 200 pieces of grey shirtings, which were invoiced to him at 217. 4s. 1d. These the bankrupt sold to the defendants within a day or two afterwards, and invoiced them as "job," at 170l. The bankrupt stated that this invoice was made out by the direction of the defendants; but the sum actually paid by them was little more than half of that mentioned in the invoice. On the 2nd of September the defendant Sampson went to the bankrupt and asked: "Can you not get me some silks?" The bankrupt purchased some silks of Messrs. Smith, and of Joynson & Co., which were invoiced to him at prices amounting to 3841. 15s. The defendants paid the bankrupt 150l., and by their direction a sham invoice was made out to the defendants, stating the price to be 3381. The defendant Sampson came to the warehouse several times on the same day, and asked if the silks had come in. All the transactions between the bankrupt and the defendants were of a similar character. For the purpose of showing the intent to become bankrupt and defraud his creditors, evidence was given that M'Clure had sold goods to other persons, in some cases in the presence of the defendant Sampson, under circumstances similar to those under which the sales to the defendants took place. It was further shown that the goods invoiced to the defendants as "job," that is unsaleable or damaged goods, were perfect, and that a reduction of 5 per cent. from the cost price would have insured an immediate sale in the market. The defendants contradicted the evidence for the plaintiff, and, in particular, swore that the invoices to them represented the price actually paid. The plaintiff's counsel, at the instance of the learned Judge, elected to rely on the transaction of the 26th of August as an act of bankruptcy. The learned Judge told the jury that if a sale or other disposition of the property of a trader takes place, at ever so ruinous a sacrifice, it is no act of bankruptcy if done for the purpose of providing funds to carry on the business, and the creditors are not delayed or defrauded of the money so substituted for the goods. Even if a trader gets goods on credit for the express purpose of immediately selling them for ready money, to carry on his business, it is not fraudulent in such a sense as to be an act of bankruptcy. But if a trader raises money by selling his goods at an under-value, not with the intention, however hopeless, of making a struggle to carry on his business, but in contemplation that he will stop payment, and for the purpose of cheating his creditors, that is an act of bankruptcy. And if, in R.R.-VOL. CXXIII. 23 FRASER v. LEVY. 18 FRASER v. LEVY. [*19] committing this act of bankruptcy, he sells at a price, whether ruinously or not ruinously low, to another, who at the time has notice, knowing, either from express information or the nature of the transaction, that the debtor is selling, not in order to make a struggle to carry on his business, but with a fraudulent intention, the sale is void as regards the purchaser, and the assignees may recover the goods from him. The learned Judge then asked the jury whether, under all the circumstances, the sale was such an act of bankruptcy as defined by him? And whether the defendants, at the time they gave the money for the goods, were aware that the sale was such as to make it an act of bankruptcy? What did the bankrupt mean on the 26th of August? And what did the defendants know he meant ? His Lordship pointed out that it was clear the defendants knew that the bankrupt was disposing of his goods on ruinous terms; but it did not follow that they knew he was raising money for any other *purpose than that of struggling to carry on his business; and told the jury that if they thought that the bankrupt, on the 26th of August, was contemplating stopping business and defrauding his creditors, it was an act of bankruptcy; and if the defendants knew that on the 26th of August, the verdict should be for the plaintiffs; if not, for the defendants. The jury found a verdict for the plaintiffs. Overend, in Easter Term, obtained a rule nisi for a new trial, on the ground of misdirection, and that the verdict was against evidence, against which Knowles and Wheeler now showed cause: The facts showed that the bankrupt sold the goods, not for the purpose of carrying on his business, but simply to put the money into his pocket, and place it out of the reach of his creditors. The learned Judge admitted the authority of Lee v. Hart (1). Overend and Milward, in support of the rule: The learned Judge misdirected the jury in telling them that if a trader sells goods below their value, in contemplation that he will stop payment, and for the purpose of cheating his creditors, it is an act of bankruptcy. In Baxter v. Pritchard (2) it was held that an assignment by a trader of his whole stock, with intent to abscond from his creditors and carry off the purchase-money, is not an act of bankruptcy when the purchaser pays a fair price, and is ignorant of the trader's design. In Lee v. Hart (1), PARKE, B., said: "There may be a transfer of goods by sale, with a fraudulent intent on the part of the (1) 105 R. R. 843 (10 Ex. 555; 11 (2) 40 R. R. 335 (1 Ad. & El. 456). Ex. 880). trader, which is, nevertheless, a valid transfer. Even when the trader intended, on a particular sale, to run away with the price. and cheat his creditors, such sale is not an act of bankruptcy. But if the purchaser is a party to that intention, then it would be a *fraudulent transfer, within the statute." (MARTIN, B.: It may be an act of bankruptcy, though, if the purchase be bonâ fide and without notice, the purchaser may be protected.) The cases show that it is no act of bankruptcy if the buyer has no notice that the sale is fraudulent: Harwood v. Bartlett (1), Cook v. Caldecott (2), Bentliff v. Garnett (3). The verdict here may have proceeded on the ground that the jury thought themselves warranted in finding for the plaintiff, without finding that the defendants had notice of the fraudulent intention of the seller. MARTIN, B.: We are all of opinion that the rule must be discharged. (After going through the facts and showing that the verdict was not against the evidence, his Lordship proceeded): "The 12 & 13 Vict. c. 106, s. 67 (4), enacts that if any trader, liable to become bankrupt, shall make "any fraudulent gift, delivery or transfer of any of his goods or chattels " with intent to defeat or delay his creditors, such trader shall be deemed to have thereby committed an act of bankruptcy. This, no doubt, is a re-enactment of the old provisions on the subject, and we must be bound by the decisions in construing it. It was contended by the defendants' counsel that in order to make the sale of goods an act of bankruptcy the buyer must be a party to the fraud. If I were to put a construction on the statute, I should think that the fraud pointed at is the fraud of the trader, and that what passes in his mind is the real criterion whether the sale is an act of bankruptcy or not. But it is not necessary to give an opinion as to the case of Baxter v. Pritchard (5), because the summing up gives full effect to it; the learned Judge expressly told the jury to find for the defendants unless they thought that the defendants *were aware of the fraudulent intent of the bankrupt. The case of Lee v. Hart (6), as it appeared when tried before me, was very different to the present. It was no more than this-Peters, a needy man, was selling goods, the purchaser higgling and dealing as hard as he could. (1) 54 R. R. 724 (6 Bing. N. C. 61). (2) Moo. & Mal. 522. (3) 1 Car. & K. 326. (4) See now s. 4 of the Bankruptcy Act, 1883. (5) 40 R. R. 335 (1 Ad. & El. 456). Ex. 880). |