the bankrupt. It cannot be received as proof of any title or release under it. The deed was rightly, I think, admitted in evidence.

Mr. De Gex.-It is to be observed that the deed does not purport to convey all the bankrupt's estate, and it is also to be remarked that the other side ought to have shewn, but they wholly fail to do so, that the deed was executed in contemplation of bankruptcy. The evidence was wholly blank as to the existence of any promise or engagement on the part of the bankrupt to attend the meeting of creditors, failing to attend which had been construed into an act of bankruptcy. The learned counsel in support of the various points in his argument, cited

Gibbins v. Phillips, 7 B. & C. 529;

s. c. 6 Law J. Rep. K.B. 209. Van Casteel v. Booker, 2 Exch. Rep. 691; s. c. 18 Law J. Rep. (N.S.) Exch. 9.

Johnson v. Fesemmeyer, 25 Beav. 88: affirmed on appeal, 3 De Gex & Jo. 13.

Mr. Bacon appeared for the respondents, the petitioning creditors, but was not called upon.

The LORD CHANCELLOR.-I have before me the case of a man in insolvent circumstances, admitting, under his hand and seal, that he is unable to pay his debts, who makes a conveyance of what appears undoubtedly to be the greater part of his property, the object being, in the first place, to give a general species of charge in favour of his solicitor, a charge which is made to extend, not only to debts then due, but to those which should become due. The next charge I find is in favour of the trustee, an accountant; and then there are directions to apply the residue of the produce of the sale of the property, after payment of these general charges, in favour of such creditors as should come in and execute the deed. Now, there may be an act of bankruptcy in a payment of money voluntarily made in preference of either of his creditors, by a man knowing himself to be so insolvent that he must expect bankruptcy to be a thing of necessary consequence. There may be an act of bankruptcy by a fraudulent gift of part of a man's property to a creditor NEW SERIES, 32.-BankR.

may also

under such circumstances. There be an act of bankruptcy in a conveyance by a man of a proper and reasonable amount of his property, accompanied by such circumstances of insolvency as that the general body of his creditors are thereby defeated and delayed in the manner of distribution to which they would be entitled under the administration of the law. The question here is, whether the Commissioner was not right in holding the present deed to come under that category. I am told by the counsel for the bankrupt that the circumstances prove that this would not be a probable consequence of the present deed, because it is clear that the property was so large that the bankrupt might place it in the situation in which it now stands, and yet believe that the consequence would be to promote the interests of the creditors, instead of to delay them. I cannot come to that conclusion. I think this was a very improper deed to have been made; and I think the giving this charge to the solicitor must necessarily be attended with delay to the creditors. That being the necessary effect of the deed, it becomes a fraudulent conveyance within the meaning of the statute. The evidence in favour of the value of the property fails altogether to satisfy me that it ought to have the effect of confirming the deed. It shews me that the property was not of anything like the value that justified its being placed in this position. I think, therefore, the deed made as it has been, under circumstances of insolvency, merely for the purpose of getting hold of the property, and keeping the management, the conversion and the distribution of it entirely in the hands of the bankrupt's solicitor, is not such a deed as can be supported; and, as such, it is an act of bankruptcy within the statute. For these reasons I think that the Commissioner arrived at a right conclusion, and I shall not disturb his order. The deposit must be returned, aud the costs of the petitioning creditor beyond that amount be paid out of the estate.

E

Ex parte WOOLHEIM, in re

WOOLHEIM.

LORDS JUSTICES.
Nov. 14;
Dec. 6.
Annulling Adjudication-Costs as between

Co-respondents-Jurisdiction.

A trader, resident in Scotland, was ad judged bankrupt on the petition of a credi tor resident in the same country. The trader brought an action against the petitioning creditor, but the latter refused to appear to it. The Court ordered that if he did not appear to the action within ten days the adjudication should be annulled; and he having failed so to appear, the adjudication was annulled.

The Court has jurisdiction to order a respondent in bankruptcy to pay the costs of a co-respondent. The official assignee, on the above bankruptcy being annulled, was allowed his expenses of the custody and sale of the bankrupt's estate out of the assets received by him, and the petitioning creditor was ordered to pay the amount of such expenses to the bankrupt as well as his costs and the costs of the official assignee.

Mr. Solomon Woolheim, a trader, residing and carrying on business in Glasgow, was adjudicated bankrupt on the petition of a creditor who also resided in Scotland. Mr. Woolheim, after the adjudication, had commenced an action against the petitioning creditor, but that person had neglected and still refused to enter an appearance.

Mr. De Gex, in support of an application on behalf of the bankrupt to annul the adjudication, argued that, for the purposes of this case, Scotland must be considered a foreign country, and said that there was no instance of a trader who had traded solely in a foreign country having an adjudication of bankruptcy in this country sustained against him. The petitioning creditor had availed himself of the law of England in obtaining the adjudication, and yet refused to submit to the jurisdiction of our Courts by failing to appear to the action.

Mr. Ernest Reed, for the petitioning creditor, said that as his client resided in Scotland, in which country the bankrupt carried on business, if any ground existed for the bringing of the action, it ought to have been brought there.

Mr. Bagley, appearing for the official

assignee, left the case wholly in the hands of the Court.

Their LORDSHIPS ordered that the adjudication should be annulled unless the petitioning creditor appeared to the action within ten days.

Dec. 6. Mr. De Gex informed the Court that the petitioning creditor had not appeared to the action.

No counsel appeared for that person.

Their LORDSHIPS made an order absolute for annulling the adjudication, and asked what was asked as to costs.

Mr. Bagley, for the official assignee, submitted to the judgment of the Court whether he ought not to be at liberty to retain his costs and expenses out of the assets which had reached his hands. In the performance of his duty he had taken possession of a considerable quantity of goods, and had, with the concurrence of Mr. Woolheim, sold them, and held the money in his hands.

Mr. De Gex, for Mr. Woolheim, contended that the party who, while the bankruptcy was in existence, held the office of official assignee, had, from the moment the adjudication was declared to be annulled, no power to retain any portion of the estate, but must hand it back to the lawful custody, namely, to that of the person whose bankruptcy had been annulled. Such was the case in lunacy after a commission de Lunatico Inquirendo had been declared void—In re Windham (1). In the present case Mr. Woolheim was the party injured by these proceedings, which it was shewn ought never to have been instituted, and yet a party who only sustained his office by the validity of the adjudication which had been annulled asked that Mr. Woolheim should bear the costs incurred by that party. If the official assignee had honestly any claim, it was against the petitioning creditor, through whose invalid act all the mischief had been occasioned.

Mr. Bagley submitted that the Court had no jurisdiction to order costs to be paid by one respondent to another. In Chancery, as he understood, the course was to order

(1) 31 Law J. Rep. (N.S.) Chanc. 720.

the plaintiff to pay the costs of a defendant who was entitled to receive costs, and to order the defendant, who ought to bear the costs of the suit, to repay to the plaintiff the costs so paid by him.

LORD JUSTICE TURNER.-That is the course in Chancery, but I do not think that it is so in proceedings in Bankruptcy.

Their LORDSHIPS said, that in annulling the adjudication they should order the petitioning creditor to pay the costs of the bankrupt and of the official assignee, and direct that the latter should be allowed the expenses of the custody and sale of the bankrupt's estate out of the assets received and retained by him, and that he should pay over to the bankrupt any surplus, and that the petitioning creditor should pay to the bankrupt the amount so deducted by the official assignee. The order of the Court would be without prejudice to any action which the bankrupt might commence against the petitioning creditor.

Trader-Debtor Summons and Admission of Debt-Composition Deed-Cessio Bonorum -Bankruptcy Act, 1861, ss. 192, 194.-Adjudication of Bankruptcy notwithstanding Registration of Deed of Arrangement.

A creditor having commenced proceedings in Bankruptcy against his debtor by traderdebtor summons, under which the debtor signed an admission of the debt, and four days after executed a composition deed, which was afterwards duly registered, it was held by one of the Commissioners, that such debtor was not protected by the certificate of registration from an adjudication of bankruptcy, upon the petition of the creditor, the act of bankruptcy being non-payment of the debt within the time limited by the act of 1849. On appeal to the Lords Justices, it was held, that the certificate of registration of a composition deed by a trader is not conclusive evidence that all the conditions of section 192. of the Bankruptcy Act, 1861, have been complied with; and on a question arising whether the necessary assents of

creditors had been actually given, these assents were ordered to be produced; and as it then appeared that they were in part conditional and not absolute, and that on the condition not being fulfilled the necessary proportion of creditors would not have assented, the deed was held to be not a valid ground for annulling an adjudication subsequent to the date of the deed; and that the bankrupt seeking to annul the adjudication may adduce further evidence; and (per Lord Justice Turner) the 192nd section extends to deeds of composition, although they neither contain, nor are accompanied by, any cessio bonorum; but the words "between a debtor and his creditors" in that section refer to all the creditors, and not some of them only. The appeal was therefore dismissed.

This was an appeal by Mr. Samuel Bagley Rawlings, a miller, at Oakham, in Rutlandshire, against an order of Mr. Commissioner Goulburn refusing to annul an adjudication that had been made against him.

The petitioners, Messrs. Lucy & Son, were creditors of the bankrupt in the sum of 250l. 9s. 3d., in respect of which they proceeded against him under a trader-debtor summons, in answer to which he signed an admission in the usual form on the 7th of October.

By the 81st section of the Bankruptcy Act, 1849, a debtor having signed an admission of debt under a trader-debtor summons has seven days within which to pay, secure or compound to the satisfaction of the creditor; and if he do not, he commits an act of bankruptcy on the eighth day.

The seven days expired on the 14th of October, and the bankrupt, having failed to comply with the requisitions of the statute, committed an act of bankruptcy on the 15th. The Messrs. Lucy thereupon presented their petition for an adjudication of bankruptcy on the 15th of October against Rawlings, who was adjudicated on the 27th. On the 3rd of November the bankrupt gave notice to dispute the adjudication upon all points, and at the same time gave notice that he had on the 11th of October duly executed a deed of arrangement and composition with his creditors within the 192nd section of the Bankruptcy Act, 1861, and that such deed had been duly registered on the day of its date.

The deed referred to was dated the 11th

of October 1862, and made between the bankrupt of the first part, Martha Rawlings, his mother, and J. Brown of the second part, and the several persons whose names were contained in the schedule thereunder written, and who by themselves, their partners or agents respectively had executed the deed, being creditors of Rawlings, of the third part; and reciting the indebtedness of Rawlings to the parties of the third part, and that J. Brown was a large creditor, and that it was agreed between the several persons parties thereto that Martha Rawlings and J. Brown should pay to the several creditors of Rawlings a composition of 78. 6d. in the pound on the amount of their respective debts, which was to be accepted by them in full satisfaction and discharge of their debts by three equal instalments of 28. 6d. each at the expiration of three, six and nine months from the date thereof, and to be secured by the joint and several promissory notes of Rawlings, Martha Rawlings and J. Brown; and reciting that the several promissory notes had been delivered to the several creditors, and that, to enable Martha Rawlings and J. Brown to meet the notes at maturity, it had been agreed between the parties thereto that all his stock-in-trade, monies, trade effects, and all other the estate and effects of S. B. Rawlings, should be assigned unto Martha Rawlings and J. Brown in manner thereinafter mentioned; it was witnessed, that Rawlings, with the full consent and approbation of his said creditors, transferred and assigned, and his said creditors ratified and confirmed unto the said Martha Rawlings and J. Brown, their executors, administrators and assigns, all his estate and effects belonging to his said business, and all other his estate and effects whatsoever, his wearing apparel alone excepted, with the usual power to them, as his attornies, to collect and get in the same, give receipts, adjust and settle accounts, and the like usual provisions. And a covenant was inserted as follows: "And in consideration of the premises, they, the said creditors, parties hereto of the third part, do hereby, for themselves severally and respectively, and for their several and respective heirs, executors and administrators, covenant and agree with the said Martha Rawlings and John Brown, their executors and administrators, that the said

composition so agreed to and secured as aforesaid shall be, and the same is hereby taken and accepted by them the said creditors respectively, in full satisfaction and discharge of their several and respective debts and demands against the said Samuel Bagley Rawlings, the full amount of which said debts and demands are set opposite to the respective names of the said creditors executing these presents in the schedule hereunder written." The deed also contained a covenant on the part of Rawlings for further assurance; and it was executed by Rawlings, Martha Rawlings and Brown, but by no creditor.

Before the learned Commissioner, in opposition to the adjudication, it was asserted and argued as follows: The bankrupt's debts amounted to about 5,000l., and a large majority of his creditors, representing debts to the amount of 4,461., had assented to the deed. The dissentient creditors represented about 6007. Under the traderdebtor summons no act of bankruptcy was committed until the eighth day after the 7th of October, the day on which the summons was returnable and the admission signed. The deed was executed on the 11th of October, and registered the same day, so that when the deed was registered no act of bankruptcy had been committed. In a trader-debtor summons the act of bankruptcy by non-payment did not relate back to the service of the particulars of demand. The notes securing the instalments had been handed to the creditors, and the property assigned to the sureties absolutely to indemnify them in case they should be called on to pay.

The Commissioner, however, said, on giving judgment on the 6th of November 1862: "I have no doubt whatever upon this case. This is an attempt to bring within the provisions of the act of parliament certain practices with regard to deeds which were never contemplated by the legislature. It is contended that a debtor may, notwithstanding an assignment to third parties, keep possession of everything for himself, to do with it as he pleases. I think that is exactly what the act of parliament is intended to prevent. Then it is said, that the two persons named in the deed are not eo nomine trustees at all, and that there is no resulting trust; but it is quite clear to my mind that they

were virtually and actually trustees for the benefit of creditors, and that, being trustees, the seventh condition of the 192nd section will apply. But it is said, that the persons to whom the property is assigned take it not as trustees, but as assignees absolutely, and that the property is given up because the promissory notes have been delivered out to the creditors; that is, the debtor giving to them bits of paper, and keeping the substantial property himself. I think I should greatly err if I were to accede to such a proposition, or put the construction contended for upon the act of parliament. I think I must refer back to the act of bankruptcy, which is the trader-debtor summons, and, those proceedings being before the execution of the deed, that the deed is bad, and that the adjudication of bankruptcy must be affirmed."

The appeal now came on for argument. Mr. Ernest Reed (in the temporary absence of his leader, Mr. Bacon), for the appellant, said-The question for discussion was, whether a deed of composition was within the meaning of section 192. of the Bankruptcy Act, 1861. He contended it was. The respondent would, no doubt, rely on Tetley v. Taylor (1), and the more recent decision in Walter v. Adcock (2), to prove the contrary. It was, therefore, necessary to review the past law of Bankruptcy in order to interpret the recent enactments. Prior to 1849 the estates of debtors in Bankruptcy were administered by the Court, but in that year arrangements by deed executed by a debtor and acquiesced in by a certain majority of creditors were sanctioned by statute. Experience, however, proved, that whilst the commercial advantages of such arrangements were considerable, the protection afforded to the debtor and his property was precarious; and dissenting creditors, relying on technical difficulties, succeeded in their attacks on both. It was contended the new law of 1861, by express words, had remedied the defects of the old law of 1849, enlarged the power of creditors, and given a wider scope to arrangements by deed. This pro

(1) 1 El. & B. 521; s. c. 21 Law J. Rep. (N.S.) Q.B. 2, 346.

(2) 7 Hurl. & N. 541; s. c. 31 Law J. Rep. (N.S.) Exch. 380.

position would be apparent from a comparison of the statutes. Under the old law there was but one mode of changing from bankruptcy to arrangement, and that was provided for by section 230. of the act of 1849; but to give effect to that section nine-tenths of the creditors present at a meeting were required to assent to the composition. Under the new law, the creditors were empowered to resolve upon any arrangement. Section 110. of the act of 1861 empowered the majority in value present at a meeting to resolve that no further proceedings should be taken in bankruptcy; and if this resolution was assented to at a subsequent meeting by a majority in number representing threefourths in value of the creditors present, the estate was forthwith removed from the Court and administered according to the will of the creditors. Again, section 185. of the same act invested three-fourths in number and value of the creditors present or represented at a meeting in Bankruptcy with authority to resolve that the estate ought to be wound up under a deed of arrangement; and if the Court found the resolution reasonable, the bankruptcy was annulled and the debtor protected. These sections proved the intention of the legislature to invest the persons most interested, viz., the creditors, with new and enlarged powers; and section 192. clearly indicated that old restrictions were swept away and a wider scope given to arrangements by deed. Under the 224th section of the old law, the deed was to be signed by sixsevenths in value and number of the creditors in order to render it valid and effectual; and the three following sections imposed further conditions on the debtor. The deed would not protect him from the attacks of non-executing creditors until after the expiration of three months from the time when the creditors received notice of the suspension and of the proposed deed, unless the Court granted a certificate declaring the deed duly executed; but even then fourteen days' notice of the intention to ask for such a certificate was to be served on every creditor, and it was incumbent on the trustees or two creditors to certify that the deed had been duly executed by the necessary majority. The result was, that either within the fourteen days, or within