everything, in order that they may ascertain what is coming to them. They are entitled, just as the creditors under the first bankruptcy are entitled, to have accounts of all those transactions that have taken place, and which amount, by his own account, to millions. It may be he may not be able to give a satisfactory account; what, I am afraid, is much more certain is, that he will be unable to give any account as to there being assets coming to these parties. It is perfectly clear that this person is not to hold his creditors at defiance in the way he seems to me to be doing, and, therefore, I think the Commissioner was perfectly right in both orders, and I dismiss both these appeals with costs.

Solicitors-Messrs. Ashurst & Co., for bankrupt; Messrs. Linklater & Hackwood, for creditors.

This was an appeal from the decision of the Commissioner of the Birmingham District Court of Bankruptcy, confirming the adjudication.

Ann Colemere, the alleged bankrupt, was in business as a grocer and provision-dealer in Ellesmere; and the act of bankruptcy relied upon was a bill of sale of all her real and personal estate and effects, stock in trade, household furniture, goods, chattels and other effects, including book debts, in consideration of 1507.

The money was advanced to Mr. Colemere on the 19th of April, 1865, by Mr. Saltar, a solicitor at Ellesmere, out of a larger sum of money belonging to a Mr. Carsley, a smith and farrier there, and

placed in his hands for investment, but the bill of sale was not actually executed till the 18th of May. On the 25th of May, Carsley having taken possession, sold and transferred the goodwill and stock-in-trade to one Lindop, a former shopman of Mrs. Colemere, and Lindop took possession, and caused his own name to be put over the shop. Mrs. Colemere, however, still retained possession of the furniture, and lived in the house.

The whole, or very nearly the whole of the 150l. advanced by Carsley was applied by Mrs. Colemere in the payment of existing debts.

On the 8th of June, 1865, Mrs. Colemere was adjudicated bankrupt on the petition of the Whitchurch and Ellesmere Banking Company, to whom she was indebted upon a guarantie.

The case was argued by

Mr. De Gex and Mr. Fry, for the appellant; and

Mr. Bacon and Mr. Kay, for the petitioning creditors.

The following cases were cited: Whitwell v. Thompson, 1 Esp. 68. Hutton v. Cruttwell, 1 El. & B. 15; s. c. 22 Law J. Rep. (N.S.) Q.B. 78. Harris v. Rickett, 4 Hurl. & N. 1; s. c. 28 Law J. Rep. (N.s.) Exch. 197. Bittlestone v. Cooke, 6 El. & B. 296; s. c. 25 Law J. Rep. (N.S.) Q.B. 281. Pennell v. Reynolds, 11 Com. B. Rep. N.S. 709.

Harwood v. Bartlett, 6 Bing. N.C. 61; s. c. 8 Sc. 171; 9 Law J. Rep. (N.S.) C.P. 105.

Whitmore v. Claridge, 31 Law J. Rep.
(N.S.) Q.B. 141.

Rose v. Haycock, 1 Ad. & E. 460;
s. c. 3 N. & M. 644.
Baxter v. Pritchard, 1 Ad. & E. 456;
s. c. 3 N. & M. 638; 3 Law J. Rep.
(N.S.) K.B. 185.

The LORD CHANCELLOR. This is an important general question, and it has been very ably argued on both sides; but I confess I do not entertain any doubt on the point, and I am clear there has been no act of bankruptcy here.

With regard to the facts, it appears that Mrs. Colemere, the alleged bankrupt, was carrying on a small business, in the town

of Ellesmere, in the beginning of this year. She was, no doubt, in embarrassed circumstances-how far that was known to others does not appear; but she applied in the month of April to her solicitor, Mr. Salter, to try and effect through him a loan of money. Mr. Salter had in his hands 2007, belonging to another client of his of the name of Carsley, a blacksmith in the neighbourhood. He had that money in his hands for the purpose of putting it out at interest; and he, in order to further the views of the client who wanted to borrow, and at the same time the views of the client who wanted to lend, agreed that he would invest 150l., part of Carsley's money which he held in his hands, on loan to Mrs. Colemere, upon an assignment to him of all her stock in trade and property by way of security. Was that or was that not an act of bankruptcy on the part of Mrs. Colemere? I do not think that the additional circumstances which are proved in evidence really tend to throw any light whatever upon the subject. It appears to me that this loan having been made, and I must take it the agreement for the bill of sale, the security, having been made also on the 19th of April-for that is not disputed-the bill of sale, although not actually executed till the 18th of May, must be treated as part of the same transaction. It appears that on the 25th of the following month of May, five weeks after the money was advanced, all the stock and property were assigned to another person, and Mrs. Colemere was manifestly insolvent. That might have been the motive in her mind which induced her to give up this property; and when she got this money, 150l., she meant to apply it in paying creditors, who she thought had a preferable claim to that of the bank. That I know not. It may be, or may not; but for the reason I will state, I do not think that of the slightest importance.

Now, the act of parliament says, that if any trader shall make or cause to be made any fraudulent grant or conveyance of his lands, tenements, goods or chattels, &c., he shall be deemed to have committed an act of bankruptcy. Well, early after that enactment was made it is a substantial repetition of a very old enactment passed NEW SERIES, 35.-BANKR

in the reign of James the First-it was held that any assignment made by a trader of all his goods was necessarily a fraudulent assignment, because it prevented him from carrying on his trade. Therefore, whenever a trader had assigned all his goods he had necessarily committed an act of bankruptcy. But in comparatively modern times a very reasonable qualification has been introduced; the assignment must be an assignment not for the purpose of raising money to enable him to go on with his trade, but for the purpose of paying some favoured creditor or all his creditors, other than through the instrumentality of the Court of Bankruptcy. In either case it was an act of bankruptcy. But if it was for the purpose of enabling him to raise money to go on with his trade, that cannot be called a fraudulent act as tending to defeat and delay his creditors. It might be probably the wisest step he could have taken to promote the interests of his creditors. That being so, many cases have arisen in modern times of the application of those principles to the enactment as contained in the Bankruptcy statutes.

Now, in this case, I think upon the facts I must come clearly to this conclusion, certainly, that Mr. Carsley did not know that he was lending this money for any fraudulent purpose of delaying creditors; and I think I must also come to the conclusion that neither was that known to Mr. Salter, who was his solicitor and the solicitor of Mrs. Colemere. I think I may assume that Mr. Salter knew that Mrs. Colemere had pressing creditors. Indeed, she applied to him because she had some pressing creditors, and she wanted to get the money. But that does not appear to me at all to lead to the inference that Mr. Salter knew she was insolvent, or that she meant to apply this money otherwise than in the most legitimate way for the purposes of her trade. It was said that what was known to the client must have been known to the solicitor. That must be taken with great qualification. Certainly, when a solicitor is acting for both parties, facts, which are important and which are known to the solicitor, may be said to be known to both parties; it is carrying that proposition a great deal further to say, that facts known

C

to the client are to be taken as known to the solicitor. But to say that a fact not connected with the loan of the money, but a fact which was in the mind of the borrower as to how she intended to dispose of the money which she borrowed when she got it should be known to the solicitor, seems to me to be perfectly preposterous. Therefore I cannot look at this case in any other way than that Carsley had 1507. which he honestly lent to this lady upon the assignment of all her property, that assignment being made concurrently with his advance.

The point which at one time pressed me in the argument, catching some of the expressions as well as I could in some of the cases, was, whether an assignment of all the property might not in the view of the law be taken to be of itself prima facie evidence that it was fraudulent, throwing on the person lending money the burden of proving that it was not fraudulent. I am not clear that in this case this would have made any difference to my mind, because I do not think that in any view of the case this assignment could be said to have been fraudulent. The only suggested fraud is not that the transaction itself was tending to delay the creditors, but that the mode in which the person who got the money meant to deal with it would afterwards delay the creditors. I do not think that that would be considered a fraudulent act; but on considering the authorities, and weighing the case in my mind, I am clear that the law goes much beyond that. It does not throw upon the person lending the money the obligation of shewing that it was honest. A person lending money upon an assignment of all, is just like a person lending money upon an assignment of half; it is a transaction which the party lending has a right to suppose is perfectly honest, and will, or at all events may, conduce to the interests of the creditors, instead of defeating them. I adhere to the doctrine as laid down by Mr. Justice Willes, in Pennell v. Reynolds, as it appears to me very substantially and correctly: "A person dealing bona fide with the bankrupt would be safe. Unless he knows, or from the very nature of the transaction must be taken necessarily to have known, that the object was to

defeat and delay the creditors, the deed cannot be impeached." I also refer to an observation of a very able Judge, whose loss we deplore, namely, Mr. Justice Crompton, in Bittlestone v. Cooke, that it is very consistent with the present mercantile usage that these advances should now be made, and he suggests something which shews to me the great difficulty there would have been about this doctrine of an assignment of all being necessarily fraudulent when first established. He suggests a difficulty, because even according to the doctrine then held, if a trader pledged his whole property in separate parcels to different pledgees, the transactions would not be impeachable; and he says it is difficult to see why the transaction should be invalid if all the property is included in one pledge to one person, if that be most convenient. On these authorities it appears to me, therefore, that this is a perfectly unimpeachable deed.

Then Mr. Bacon says the deed may be unimpeachable, and yet it may be an act of bankruptcy. That I cannot understand; because if the deed is impeachable, it can only be impeachable so as to constitute an act of bankruptcy because it is fraudulent; but if it is fraudulent, the deed is void. It will not be an act of bankruptcy, because the person who receives the money has it in contemplation possibly to deal with the money in some way that may constitute an act of bankruptcy. That is not what can be looked to in considering whether the deed itself is fraudulent. The deed itself, if fraudulent, would be impeachable; if not impeachable, it is not an act of bankruptcy.

In my opinion, therefore, the Commissioner has come to an erroneous conclusion in this case; and consequently the adjudication must be annulled, and the deposit must be returned.

Solicitors-Messrs. Clarke, Gray & Woodcock, agents for Messrs. Rawlins & Rowley, Birmingham, for appellant; Messrs. Cunliffe & Beaumont, agents for Mr. J. G. Etches, Whitchurch, for respondents.

Before the Bankrupt Law Consolidation Act, 1849, came into operation, a certificated bankrupt gave to a creditor a promissory note for the amount of a debt incurred before the bankruptcy. After the passing of that act, the 204th section of which enacts that a bankrupt shall not be liable upon any promise to pay a debt discharged by his certifi cate, the bankrupt, having paid off part of the money due on the promissory note, gave a fresh promissory note for the balance, in substitution for the original note:-Held, that the validity of the new note was not affected by the act of 1849, the note in substitution for which it was given having been given at a time when it was lawful for a bankrupt to renew a debt contracted prior to his bankruptcy.

On the 4th of June, 1849, William Pryterch, who had been bankrupt, but had obtained his certificate, gave to Mr. Edwards a promissory note for 1207. in satisfaction of a debt incurred prior to the bankruptcy.

The Bankrupt Law Consolidation Act, 1849, came into operation on the 11th of October, 1849, and by the 204th section of that act it was enacted, that "no bankrupt after his certificate shall have been allowed shall be liable to pay or satisfy any debt, claim or demand from which he shall have been discharged by virtue of such certificate, or any part of such debt, claim or demand upon any contract, promise or agreement made after the issuing of the fiat or filing of the petition for adjudication of bankruptcy; and if any bankrupt be sued upon any such contract, promise or agreement, he may plead the general issue, and give this act and the special matter in evidence" (1).

Pryterch afterwards paid Edwards 201 on account, and in 1855 gave him a fresh promissory note for 100., the balance of the debt. He afterwards paid further sums

(1) This section is now repealed, and the 164th section of the Bankruptcy Act, 1861, substituted.

on account; and on the 17th of July, 1861, gave a new note for 781., the balance then remaining due, in exchange for the 1007.

note.

Edwards sued upon this note, and recovered judgment and levied execution; and on the 11th of January, 1864, filed his petition for adjudication in bankruptcy.

Pryterch was accordingly adjudicated bankrupt; but the Commissioner of the Liverpool District Court of Bankruptcy (Mr. Commissioner Perry) annulled the adjudication, on the ground that the note which constituted the petitioning creditor's debt was an accommodation note, and given without consideration.

Mr. Edwards now appealed from this decision.

Mr. Bacon and Mr. Yate Lee, for the appellant. Before the passing of the Bankrupt Law Consolidation Act of 1849 a bankrupt was perfectly capable of reviving any debt from which he was discharged by his certificate, subject only to the 5 & 6 Vict. c. 122. s. 43, which required the agreement to pay to be in writing signed. by him. There was nothing, therefore, to invalidate the note, which was given before the act of 1849 came into operation; and the subsequent notes were given for the balance due from time to time on that note, and not by way of renewal of the original debt.

Mr. E. H. Reed, in support of the Commissioner's decision, contended that the note of the 17th of July, being given in discharge of a debt that was barred by the certificate, did not constitute a good petitioning creditor's debt, and the adjudication ought to be annulled.

The LORD CHANCELLOR, without hearing a reply, said there was no doubt that at the time the original note was given, it was perfectly competent to a bankrupt voluntarily to give security for a debt incurred prior to his bankruptcy and barred by his certificate, and if he chose to do so he might be sued upon that security. The note of the 4th of June, 1849, was a perfectly valid note, and constituted a good consideration for the notes subsequently given; and to treat the note of July, 1861, for the balance due upon the original note, as anything else than a

The Bankruptcy Act, 1861 (24 & 25 Vict. c. 134), 88. 192, 198, 200.-Registration of Composition Deed-Leave to issue Execution-Laches.

After a composition deed, registered under the 200th section of the Bankruptcy Act, 1861, had been acted upon for eleven months, the Court, in the exercise of its discretion, refused, at the instance of a dissenting creditor, to rescind the order for registration, or to give leave, under the 198th section of the act, to issue execution notwithstanding the deed.

This was a motion, by way of appeal from an order of Mr. Acting Commissioner Winslow refusing an application, on the part of a judgment creditor, seeking to rescind an order of Mr. Commissioner Fane, whereby he allowed the debtors to register a deed of assignment under the 200th section of the Bankruptcy Act, 1861, without the assent of the necessary majority of all their creditors, and also seeking for leave to avail himself of his execution under the judgment notwithstanding the deed.

The circumstances that gave rise to these proceedings were as follows:

On the 14th of May, 1864, Messrs. Ellis, Newman & Ellis executed an assignment of all their joint and separate estate to trustees for the benefit of creditors according to the form given in Schedule D. to the Bankruptcy Act, 1861, and under the 200th section of the act the debtors, not having been able to obtain the assent of the majority in number representing threefourths in value of the creditors, by reason

of their being unable to ascertain by whom bills of exchange and other securities were held, and by reason of the absence of creditors in foreign countries (the other parts of the section having been complied with), applied to Mr. Commissioner Fane to allow the deed to be registered, which he did. The deed was duly registered on the 11th of June, 1864, and the debtors received their protection as in Bankruptcy.

Mr. Banfield, a dissenting creditor, brought an action against the debtors on a bill of exchange, and judgment was signed in default of appearance; and on the 23rd of September, 1864, two of the debtors were arrested under a ca. sa., issued at the instance of Mr. Banfield. On the 27th of the same month application was made to Mr. Justice Shee, by summons at chambers, to discharge them out of custody. Counsel were heard on both sides and affidavits read, and Mr. Justice Shee ordered the discharge of the defendants. On the 11th of May, 1865, a motion was made on behalf of Mr. Banfield that the order of Mr. Commissioner Fane, allowing the deed to be registered, might be cancelled, or that leave might be granted to issue execution, and this motion was dismissed, with costs. His Honour the Acting Commissioner, in delivering judgment, said, that if it had been clearly shewn, as had been attempted, that a creditor said to be absent in foreign countries was really in England and in communication with one of the debtors, and that such fact was suppressed by the debtors on making their application, he would have had much difficulty in refusing the motion, notwithstanding the time which had elapsed since the registration was allowed; but the evidence shewed that this creditor had in fact left this country and returned to Spain before the deed was executed, and he did not come here again. As to the bills of exchange, it appeared that a gentleman who knew most about the bill transactions was employed by the debtors to make inquiries as to the holders, that he did inquire and make up a truthful account of those bills the holders of which he could not find out, and the debtors adopted this account and swore it was correct to the best of their belief. He thought creditors had no right to lie by, and at the end of a year to come to the