may be ordered to pay the sum of £60 with interest to the petitioners, in full discharge of his debt to the society, and in preference to his other creditors, under the following circumstances : The petition stated, that Hanson, who kept a public house, at which the society assembled, upon the 8th of October, 1805, the day of their annual meeting, as the father and treasurer of the society, had in his hands £30 belonging to them; and, the society having some money in the box, £20 was placed in the hands of Hanson, who gave as security his promissory note, expressed to be for the sum of £50, borrowed and received of the society, which he promised to pay upon demand with £4 per cent. interest. The other sum of £10 was stated to have been placed in his hands under the head of subsistence money. He paid interest upon the sum secured by the note for two years. Mr. Heald in support of the petition, referring to the late cases upon this Act of Parliament, contended that the whole of this sum of £60 was money in the hands of Hanson, as treasurer of the society, and, therefore, a debt under the Act to be paid in preference to his other creditors; distinguishing those cases, as the money was not in the possession of the party as an officer. Mr. Hall, for the assignee: Of this debt £50 clearly cannot be considered as within this Act of Parliament. That was not in his hands as an officer of the society; according to the words of the Act, money remaining due, received by virtue of his office, but money lent to him upon security, with interest at a particular rate: a case provided for by another clause of the Act. This case falls within the cases that have been mentioned, except as to the £10, which certainly is under different circumstances. The Lord Chancellor: It is not for my consideration whether this Act of Parliament, which certainly has a very harsh operation upon other creditors, excluding every fair, honest demand from sharing equally with these societies, was a reasonable provision of the legislature; but at least, those who claim the preference must show their right to it in the mode prescribed by the Act. The preference is given in respect of money, received by officers of these societies by virtue of their offices, but it never was the intention of the legislature that persons, to whom they chose to lend their money, should pay them in preference to other creditors. The preference is given only in respect of money, which got into the hands of officers independent of contract. This petition is entirely silent upon the fact, how far, and for what purpose, the rules of this society permitted the treasurer to receive and keep money, except the single allegation, that, as father and treasurer of the society, he had in his hands £30, which is an averment that he had that sum in his hands as treasurer. The whole of this sum of £50 was money in his hands by contract, not upon bond, or any obligation by virtue of his office. As to the £10, it is probable that sum, which is stated to have been placed in his hands as subsistence money, did get to him as treasurer. Keeping the public-house where they met, he might have had the money in his hands for that purpose. My opinion is that the legislature did not intend that these societies should have the very large remedies given to them by this Act of Parliament, unless the money was dealt with precisely as the Act directs; and if, instead of resting upon the security which the legislature gives them, they lend money to one of their officers upon a special contract between him and them, that is a loan to him, and is not to be considered as money in his hands by virtue of his office within this Act of Parliament. These societies must understand, that, if they will lend money upon special contract, they have not the remedies which they suppose they have. The order was accordingly made for payment of the sum of £10, but was refused as to the remainder of the petition. N.B.-See Friendly Societies Act, 1896, 59 & 60 Vic., cap. 25, sec. 35. 1841. Loan by Treasurer-Security in name of Society-Bankrupt Borrower-Security insufficient-Priority. Jan. 29. The treasurer of a Friendly Society having a debt due to him from a person who offers a security, takes the security in the name of the Society and retains the amount of his debt out of the society's moneys in his hands. Sometime afterwards he became bankrupt, having in the meanwhile debited himself annually in his accounts with the society with the interest on the amount for which the security was taken. The security proves insufficient, and was not in the description or taken in the manner required by the Friendly Societies Act. Held that the omission on the part of the society to take steps for setting aside the transaction, and calling in the money before the bankruptcy, did not deprive them of their statutory rights to be paid in full before the other creditors. THE LORD CHANCELLOR. 1801. Feb. 7th. CASE 51. ASHLEY, EX PARTE. A person in the habit of receiving the money of a Aug. 8th. friendly society, having no treasurer appointed, upon notes carrying interest, payable a month after demand, is not an officer of the society, so as to entitle them to a preference under the Statute 33 Geo. III., c. 54, s. 10. Richard Smith and George Watson, attorneys, in partnership at Whitchurch, in Shropshire, were, from the commencement of the establishment of a friendly society, in the habit of receiving from the stewards the money of the society, whenever it amounted to a sum which they considered worth placing out at interest, giving their promissory notes from time to time carrying interest. Watson died; and Smith became bankrupt in 1795. At the time of his bankruptcy he was indebted to the stewards of the society to the amount of £145 upon his promissory notes, payable on one month's notice, which sum was composed of principal and interest due on several promissory notes of Watson & Smith. No person had been appointed treasurer of the society. The first of these petitions was presented by the steward of the society under the Act for the encouragement of friendly societies, to have the money due from the bankrupt paid by the assignees. The petition came on before Lord Rosslyn. Mr. Benyon, in support of the petition. Though there is no appointment of the bankrupt as treasurer in the books of the society, he was in the habit of receiving the money of the society from time to time, in which case your lordship has held that a person receiving the money from time to time is in the nature of a treasurer, and it is not necessary under the Act that he should be appointed. That is the only ingredient wanting in this case. Mr. Pemberton, for the assignees. It is not pretended that this bankrupt was either trustee or treasurer, or that he held any office. He was an attorney in the neighbourhood, in whose hands the stewards from time to time placed the money of the society, for which he gave them security. A prior clause in this Act authorises the treasurer or trustees to place out the money on private or Government securities. The clause, upon which this petition is presented, is expressly confined to money received by virtue of his office; and the intention clearly was, that only debts due by officers of the society should be preferred, not debts from people entrusted by them with the money. Mr. Benyon, in reply. This is not one act, but a constant habit, when any money was received, of paying it to these persons, and when it amounted to this sum of £145, a note was given. Lord Chancellor: It was not a deposit of money and one note given, but it is admitted that it was regularly paid to them upon interest, they giving their notes. In order to make interest of the money they paid it to an attorney of character, taking interest notes upon it. I think the petition right. Upon this judgment the order was made accordingly, that the assignees should pay to the stewards of the society the sum of £145. The other petition was afterwards presented, praying that the order might be discharged. That petition came before Lord Eldon. Mr. Romilly and Mr. Pemberton in support of the petition. Mr. Benyon (for the society): The late Lord Chancellor thought this case the same as Ex parte Askwith, and there have been several orders of the same kind, in which this has been considered equivalent to an appointment. Any person appointed to receive the money from time to time is treasurer for the time being. Lord Chancellor : The question is a dry question of fact, whether the bankrupt was or was not the treasurer of this society. If he was not, it is clear the society had not against individuals, with whom their officers chose to deal, the extensive remedies given by this Act against persons holding offices under them. I do not recollect enough of the cases cited to be able to state the particular circumstances, but I apprehend from the order in Ex parte Askwith, and what is now stated, those decisions went upon this, as a fact proved to the satisfaction of the court, that they were to be considered as treasurers, that they were in fact treasurers, and in the order Ex parte Askwith there is an allegation that the bankrupt entered into the society as an honorary member, served the office of president, and accepted that of treasurer, under what circumstances does not appear. No particular mode of election is pointed out by the Act, but he is in fact to be elected, and you must collect from the circumstances whether he is constituted treasurer or other officer. Suppose the steward had distributed the money among all the bankers of this city, taking notes payable at a month's notice with interest. No doubt the legislature did not mean that there should be 1,500 treasurers, and yet the same argument would prove them all so. This is, therefore, not a question at law, but whether, under the circumstances, putting the money into the hands of the bankrupt, payable by a note at a month with interest, he is to be considered treasurer where there is no other. Upon my view of the Act it does not occur to me that this bankrupt either received or retained this money by virtue of any office, or that the circumstances of this loan, payable at a month with interest, will make him a treasurer, merely because no other treasurer was appointed; or that you shall imply upon the mere receipt of the money with such security, that he is a treasurer, either self-elected, or with the approbation of the society; for it would go this length, that everyone receiving the money would be treasurer, if no other was elected. The treasurer is to be the creature of election. A preceding clause of the Act has clearly contemplated this case. Under that clause if there was a treasurer, or, if not, a trustee, who laid out money upon private security of this sort, the persons would have the money in their hands; but the legislature confines the special remedy to the case of those, who have it, not as debtors merely, but in that character, and also as having charged upon them duties and trusts; for the clause giving this special and extensive remedy does not give it to those to whom the officers of the society have lent the money, but stops short. The eighth section is also material. If the relation in which this person stood to the society was formed by a security, in which they expressly stipulate that he shall not pay over the money upon demand, can the intention of the transaction be to place him in an office, the person exercising which the legislature has said shall pay it over on demand, upon whom therefore the society might, contrary to the stipulation of the note, call to have it paid over at a moment's notice? Observe the consequence in another respect. If benevolent persons should give these societies property, or if persons should withhold money which they had a right to demand, the society would under this construction of the Act be enabled to call upon this person as treasurer, and would file their bills, and defend their suits, in his name. He must therefore be a person elected, and accepting the office, and it is too much to say, a person, to whom their money is lent upon this sort of security, is ipso facto to become the treasurer by the fact of that loan, liable to the duties, inconveniencies, and obligations, imposed by the Act upon the officers. Therefore, not meaning to say the cases referred F to are not rightly decided, if the Lord Chancellor collected that the parties had accepted the office, however elected into it, it does not appear so to me, that it ever was the intention to constitute in this person the character of treasurer; and it is impossible to argue it so high from the mere fact of his becoming a debtor to the society, that he became an officer of the society; and then it is clear that they have not this remedy against him. Reverse the order, and let them prove the debt under the commission. N.B.-See Friendly Societies Act, 1896, 59 & 60 Vic., cap. 25, sec. 35. COURT OF APPEAL. Before THE MASTER OF THE ROLLS AND CASE 52. IN RE MILLER. EX PARTE OFFICIAL RECEIVER. Friendly Societies Act, 1875 (38 & 39 Vic., cap. 60), LORDS JUSTICES sec. 15, sub-sec. 7-Bankruptcy Act, 1883-Preferential LINDLEY AND Payments Act, 1888-Treasurer Bankrupt—Indebted A. L. SMITH. to Society-Preferential claim. Held that the society were entitled to be paid out of the assets of the bankrupt in preference to all debts or claims against his estate, even though he had not the money in his possession in specie and it could not be traced. The This case raised a very important question of special interest at the present time to members of friendly societies. The bankrupt (J. Miller) carried on business as a publican, and acted as treasurer of a friendly society, in which capacity he received subscriptions, &c., for the society. At the time of the bankruptcy the bankrupt was indebted to the society in respect of such moneys so received in the sum of £100 6s. 7d., but the money was not in his hands in specie, nor was it in a condition in which it could be followed in any banking account or earmarked. The bankrupt had absconded, and his entire available estate realised by the trustee amounted to something over £200. The question arising in this case was whether the friendly society was entitled to preferential payment before all other creditors of the debtor, or whether the society could only rank pari passu with the other creditors. Divisional Court had held that the question had previously been before the courts in the case of "Ex parte Edmunds, in re Atkins, 46 Law Times Reports, 240, and decided in favour of the friendly society then interested by Vice-Chancellor Bacon, by which decision the court was bound. The present case was an appeal from the decision of the Divisional Court, the question really turning on the true construction of section 15, sub-section (7), of the Friendly Societies Act, 1875, by which, upon the death or bankruptcy of "any officer of a society having in his possession, by virtue of his office, any money or property belonging to the society, the trustee in bankruptcy shall, upon demand in writing, pay such money and deliver over such property to the trustees of the society in preference to any other debts or claims. against the estate of such officer." |