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PART VI.

retainer against real assets, except where he is liable to be sued as such (r). The right of retainer is also limited to the assets which come into the possession or control of the executor in his lifetime (s). It may be claimed against money paid into court on account of the estate, and if claimed against such fund by the executor in his lifetime, his representatives are entitled (). An order of the court that a claim shall be paid by the executor "in due course of administration" has not the effect of a judgment in giving priority, nor does it deprive the executor of the right of retainer (u). But the appointment of a receiver in an administration action prevents any retainer against the assets collected by him (r).-The right of retainer is not affected by the insolvency of the estate, or by the application of the rules of bankruptcy as to secured creditors under the Judicature Act, 1875, s. 10 (y). Nor is it affected by the statute abolishing the priority of specialty over simple contract debts (32 & 33 Viet. c. 46); except that in the case of an insolvent estate, the specialty and simple contract debts being charged rateably, the fund apportioned to the latter, against which only an executor can retain for a simple contract debt, is thereby increased (). In the case of an administration in bankruptcy under sect. 125 of the Bankruptcy Act, 1883, there is no right of retainer (a).

(r) Re Illidge, 27 C. D. 478; 53 L. J. C. 991.

(s) Re Compton, 30 C. D. 15; 54 L. J. C. 964.

(t) Re Compton, supra; Richmond v. White, 12 C. D. 361; 48 L. J. C. 798.

(u) Re Hubback, 29 C. D. 934; 54 L. J. C. 923. See Ex p. Campbell, 16 C. D. 198.

(x) Re Jones, 31 C. D. 440; 55 L. J.

C. 350; Re Harrison, 32 C. D. 395; 55
L. J. C. 687.

(y) Lee v. Nuttall, 12 C. D. 61; 48 L. J. C. 616; Re May, 45 C. D. 499; 60 L. J. C. 34.

(2) Wilson v. Coxwell, 23 C. D. 764; 52 L. J. C. 975; Re Jones, 31 C. D. 440 55 L. J. C. 350.

(a) See Re York, 36 C. D. 233; 56 L. J. C. 552; Re Williams, 36 C. D. 573; 57 L. J. C. 264.

CHAPTER VI.

ASSIGNMENT IN BANKRUPTCY.

Assignment in bankruptcy-property vesting in trustee-pro-
tected transactions......

PAGE

903

Rights of action of bankrupt-claims for personal injuries-
actions commenced before bankruptcy

905

Executory contracts of bankrupt-sale of goods-sale of land-
contracts involving personal skill or conduct

907

Disclaimer of contracts by trustee-disclaimer of lease.........

909

Goods in reputed ownership of bankrupt-things in action-trade
debts-reputation of ownership

911

.......

913

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Property held by bankrupt in trust-money held by bankrupt
agent-goods in possession of agent

After-acquired contracts of bankrupt-personal earnings-em-
ployment of bankrupt by trustee-second bankruptcy .... 914

ruptcy.

AN adjudication of bankruptcy operates as an assignment in law Assignment of all the property of a debtor for division amongst his creditors. in bankThe proceedings are now regulated by the Bankruptcy Act, 1883, and the amending statute of 1890. By the Bankruptcy Act, 1882, s. 5, upon a petition in bankruptcy the court may make a "receiving order" for the protection of the estate. And by sect. 9, on the making of such order an official receiver shall be thereby constituted receiver of the property of the debtor; with the ordinary powers of a receiver of the court (a). By sect. 20, in default of the creditors accepting a composition or arrangement with the debtor, the court shall adjudge the debtor bankrupt; "and thereupon the property of the bankrupt shall become divisible among his creditors and shall vest in a trustee." By sect. 54 (1), "until a trustee is appointed the official receiver shall be the trustee for the purposes of this Act"; and (2)" on the appointment of a trustee the property shall forthwith pass to and vest in the trustee appointed" (b). (3) The property shall pass and shall

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PART VI. Receiving order.

Property vesting in trustee.

Protected transactions.

vest in the trustee for the time being, without any conveyance, assignment or transfer whatever.-The receiving order has not the effect of an adjudication of bankruptcy in divesting the property of the debtor; who must sue in his own name to recover the assets, though he must hand over the proceeds of the action to the receiver (c). But upon the adjudication the official receiver, unless another person is appointed a trustee, becomes invested with the full powers of trustee over the property, including the power to sell (d).

By sect. 44, "The property of the bankrupt divisible among his creditors, and in this Act referred to as the property of the bankrupt, shall not comprise: (1) property held by the bankrupt on trust for any other person; (2) the tools of his trade and the necessary wearing apparel and bedding of himself, his wife and children, to a value not exceeding twenty pounds in the whole.” But it shall comprise "all such property as may belong to or be vested in the bankrupt at the commencement of the bankruptcy or may be acquired by or devolve on him before his discharge" (e). The commencement of the bankruptcy is defined by sect. 43, as having relation back to "the time of the act of bankruptcy being committed on which a receiving order is made; or if the bankrupt is proved to have committed more acts of bankruptcy than one, the time of the first of the acts of bankruptcy proved to have been committed within three months next preceding the date of the presentation of the bankruptcy petition." The trustee in bankruptcy is also entitled to attack conveyances made by a bankrupt in fraud of creditors, and to obtain a transfer of the property to himself either under sect. 47 of the Bankruptcy Act, 1883 (ƒ), or the statute 13 Eliz. c. 5 (g).

Sect. 49 protects from the operation of the Act in vesting the property of the bankrupt, any payment, delivery, conveyance, assignment, contract, dealing or transaction, for valuable consideration, which takes place before the date of the receiving order, and in which the party, other than the debtor, has not at the time of the transaction notice of any available act of bankruptcy (h).

(c) Rhodes v. Dawson, 16 Q. B. D. 548; 55 L. J. Q. B. 134; Ex p. Mason, (1893) 1 Q. B. 323. See Re Sartoris, (1892) i Ch. 11; 61 L. J. C. 1; Re Berry, (1896) 1 Ch. 939; 65 L. J. C. 245.

(d) Turquand v. Bd. of Trade, 11 Ap. Ca. 286; 55 L. J. Q. B. 417.

(e) Ex p. Jenks, 71 L. J. K. B. 465; (1902) 1 K. B. 719.

(f) See Ex p. Brown, (1893) 1 Q. B. 181; 62 L. J. Q. B. 277; Ex p. Harvey, 15 Q. B. D. 682; 54 L. J. Q. B. 554; Ex p. Norton, (1893) 2 Q. B. 381; 62 L. J. Q. B. 457.

(g) See Twyne's case, 3 Co. 81; 1 Sm. L. C. 1; Re Holland, 71 L. J. C. 518; (1902) W. N. 90.

(h) See Hood v. Newby, 21 C. D. 605;

CHAP. VI.

ruptcy.

Rights of property which are vested by contract before any act of bankruptcy, as a security upon goods or an irrevocable licence to seize goods, are protected independently of the above section; though not realised until after an act of bankruptcy (i).-Notice Notice of act of an intention to commit an act of bankruptcy, as the intention of of bankpresenting a liquidation petition, is not notice of an act of bankruptcy within the section; and a transaction effected without notice of the presentment of the petition is protected (j). Notice that a petition in bankruptcy has been filed is notice of the act of bankruptcy alleged in the petition (k). Transactions taking place after the date of the receiving order, though without notice of it, are in general not protected: as a payment to the bankrupt of the purchase money of land sold by him before bankruptcy (1); or a payment to the bankrupt of money received by an agent of the bankrupt before the bankruptcy (m). Payment of a debt to the bankrupt by a post-dated cheque was held to be protected, though the drawer had notice of an act of bankruptcy before the cheque became due and did not stop it (»).

action of

bankrupt.

The property of the debtor vesting in the trustee comprises Rights of rights of action for debts or money payable, and for damages for breaches of contract, and for injuries to his property: as a right of action for not delivering building materials to execute a building contract (o); for wrongfully depriving the debtor of the use of a machine in his business (p); for not indemnifying the debtor as the assignor of a lease (q); for not indemnifying the debtor, as underlessee, against a distress upon his goods for the rent due to the superior landlord (); for the negligence of a solicitor in allowing property to be taken in execution (s); for a wrongful dismissal

.

52 L. J. C. 204; Hance v. Harding, 20 Q. B. D. 732; 57 L. J. Q. B. 403; Wild v. Southwood, (1897) 1 Q. B. 317; 66 L. J. Q. B. 166.

(i) Krehl v. Central Gas Co., L. R. 5 Ex. 289; 39 L. J. Ex. 197; Ex p. Dickin, 4 C. D. 524; 46 L. J. B. 26. See Ex p. Attwater, 5 C. D. 27; 46 L. J. B. 41; Ex p. Payne, 11 C. D. 539; Ex p. Barter, 26 C. D. 510; 53 L. J. C. 802.

(j) Ex p. Arnold, 3 C. D. 70; 45 L. J. B. 130.

(k) Lucas v. Dicker, 6 Q. B. D. 84; 50 L. J. Q. B. 190.

(1) Ex p. Rabbidge, 8 C. D. 367; 48 L. J. B. 15.

(m) McEntire v. Potter, 22 Q. B. D.

438.

(n) Ex p. Richdale, 19 C. D. 409; 51 L. J. C. 462.

(0) Wright v. Fairfield, 2 B. & Ad. 727.

(p) Stanton v. Collier, 3 E. & B. 274; 23 L. J. Q. B. 116.

(9) Re Perkins, (1898) 2 Ch. 182; 67 L. J. C. 454.

(r) Hancock v. Caffyn, 8 Bing. 358; 1 L. J. C. P. 104.

(s) Wetherell v. Julius, 10 C. B. 267; 19 L. J. C. P. 367.

PART VI.

Personal injuries.

Actions com

of the debtor from his employment (t). Rights of action of the above kind, in the words of the Act, "shall be deemed to have been duly assigned to the trustee"; and they pass to the trustee without interference on his part (u). The trustee may sue in his own name on behalf of the creditors, and recover the same amount of damages as the debtor himself would have recovered (r); or he may compromise the action for an amount less than is claimed (y). And he may sell and assign the same right for the benefit of the creditors, without infringing the law against maintenance and champerty (z).

Rights of action for injuries to the person of the debtor do not pass to the trustee: as "a right of action for an assault and battery, or for slander, or for the seduction of a child or servant; and the same may be said of some personal injuries arising out of breaches of contract, such as contracts to cure or to marry; and if, in the cases last supposed, a consequential damage to the personal estate follows from the injury to the person, that may be so dependent upon and inseparable from the personal injury which is the primary cause of action, that no right to maintain a separate action in respect of such consequential damage will pass to the assignees of a bankrupt " (a). Accordingly a right of action for the negligence of a solicitor in allowing his client to be detained in execution, and for the trouble and expense of obtaining his release, was held not to pass to the assignee in bankruptcy; as being a personal wrong notwithstanding the pecuniary loss (b). But if the cause of action primarily affects the estate of the bankrupt it passes to the trustee, though special damage of a personal kind may also accrue which the trustee would not be entitled to claim; as a right of action against a solicitor for fraudulently selling the property of his client at an inadequate price, with the special consequence to the client of becoming bankrupt (c).

An action commenced before bankruptcy does not become abated menced before by reason of the bankruptcy, "if the cause of action continue.” bankruptcy.

(t) Beckham v. Drake, 2 H. L. C. 579;

9 E. R. 1213; Emden v. Carte, 17 C. D.
768; 51 L. J. C. 41.

(u) Sect. 50 (5). See Stanton v. Collier,
supra.

(x) Ashdown v. Ingamells, 5 Ex. D. 280; 50 L. J. Ex. 109.

(y) Leeming v. Murray, 13 C. D. 123; 48 L. J. C. 737.

(z) Scear v. Lawson, 15 C. D. 426; 50 L. J. C. 139; Guy v. Churchill, 40 C. D.

481; 58 L. J. C. 345.

(a) Per cur. Drake v. Beckham, 11 M. & W. 319; affirmed nom. Beckham V. Drake, supra; Rogers v. Spence, 12 Cl. & F. 700; 8 E. R. 1586.

(b) Wetherell v. Julius, 10 C. B. 267; 19 L. J. C. P. 367. See Rose v. Buckett, (1901) 2 K. B. 449; 70 L. J. K. B. 736.

(c) Stanton v. Collier, 3 E. & B. 274; 23 L. J. Q. B. 116; Morgan v. Steble, L. R. 7 Q. B. 611; 41 L. J. Q. B. 260.

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