assignees alleged to have been paid by way of fraudulent preference, the judge directed the jury, first, that if the bankrupts were induced to make the payment by pressure of the defendant; secondly, that if they were not influenced by the pressure, but acted voluntarily, and with a view to give a preference to the defendant in the event of a bankruptcy, the verdict should be for the plaintiffs; and, thirdly, that if the payment was made under the influence of the pressure of the defendant, and also with a desire to give a preference to the defendant in the event of a bankruptcy, the verdict should be for the defendant: it was held, that the direction was right; for to constitute a fraudulent preference the payment must be both voluntary and in contemplation of bankruptcy. Brown v. Kempton, 19 L. J., C. P. 169, Exch. Ch.

Payment by a trader who contemplates bankruptcy of a debt, not then due, upon a bonâ fide request of the creditor, is not in law a voluntary payment, the fact of the debt not being due is merely a circumstance for the jury in considering the question of fraudulent preference. Strachan v. Barton, 11 Exch. 647; 24 L. J., Exch. 182.

A trader being indebted to the defendant in 5701. upon a balance of accounts for goods, and being pressed for payment, as an inducement for forbearance executed a deed, by which he mortgaged to the defendant the public house in which he carried on his business, and assigned to him his trade and other fixtures, with a covenant for payment with interest by instalments, the period for payment extended over several months, with a proviso that on payment of the instalments the deed was to be void, but on default the defendant might enter and sell. He continued his business, receiving supplies of goods and advances from the defendant and making various payments to creditors, and he then became bankrupt: it was held, that the deed was not void as a fraudulent preference, for even if made in contemplation of bankruptcy it was not voluntary, but procured by pressure on the part of the defendant. Hall v. Tollnutt, 18 C. B. 505; 2 Jur. N. S. 904; 25 L. J., C. P. 267.

If the deed had been made with a view to give the defendant a fraudulent preference, the trader being uninfluenced by the pressure, it would have been void notwithstanding the pressure; but, as the pressure exercised some influence on his mind, there was no fraudulent preference. Ib.

If a trader on the eve of bankruptcy, yielding to the boná fide pressure of a creditor, give him a security on part of his property, this is not a fraudulent preference, although both parties may be aware of the impending bankruptcy, but if the debtor, even on pressure, assign the whole of his property to a creditor so as to disable him from continuing to carry on his business, this is a fraudulent preference and invalid against the other creditors upon a bankruptcy. The same

result follows where an exception from the whole property assigned is merely colourable. Johnson v. Fesenmeyer, 25 Beav. 88; affirmed on appeal, 3 De G. & J. 13; Stanger v. Wilkin, 19 Beav. 626. Smith v. Tims, 2 Jur. N. S. 1015.

A bond given in substitution for a voluntary bond is valid, although the obligor was in a state of insolvency when he executed the substituted bond, if the transaction is not tainted with mala fides on the part of any of the parties to it. Ex parte Hookins, 13 Jur. 114; 18 L. J., Bank. 11; 3 De G. & S. 549.

fact for a

Whether a payment was made by a party knowing the pro- Fraudulent bability of his becoming a bankrupt, and in order to prefer a preference a particular creditor, is a question of fact for a jury. Fidgean question of v. Sharpe, 5 Taunt. 539; Flook v. Jones, 4 Bing. 20; Gibson jury. v. Boutts, 3 Scott, 229; 4 Man. & G. 160. Whether or not a voluntary payment made by a trader in insolvent circumstances, and on the verge of bankruptcy, to a particular creditor, is void, as being a fraud upon the bankrupt laws, is a question of fact for the jury, depending upon the mind and intention of the party at the time of making the payment, to be collected from the surrounding circumstances. If his condition and conduct be such as to evince clearly a contemplation on the part of the trader that his embarrassments must of necessity end in bankruptcy, the jury will not be warranted in coming to any other conclusion than that the transaction is fraudulent. But, inasmuch as every man has, down to the time of committing an act of bankruptcy, the sole right of dominion over his property, such a payment cannot be held to be a fraudulent preference, where the bankrupt, at the time of making it, appears to entertain a bonâ fide hope or expectation that he may be extricated from his difficulties, without being made a bankrupt. Gibson v. Boutts, 3 Scott, 229; Atkinson v. Brindall, 2 Bing. N. C. 225. See Abbott v. Burbage, 2 Scott, 656; 2 Bing. N. C. 444.

It has been laid down, that whether or not a payment by a trader is made in contemplation of bankruptcy is so much a question of law, that though two juries have decided it in the negative, the court, if satisfied that their conclusion is erroneous, will send the cause down to a third trial. Gibson v. Muskett, 3 Scott, N. R. 427; 4 Man. & G. 160. This doctrine, however, was questioned by Lord Denman, C. J. See Marshall v. Lamb, 5 Q. B. 115; Gibson v. Bruce, 6 Scott, N. R. 309; 5 Man. & G. 199. A fraudulent preference in contemplation of bankruptcy may be inferred by a jury from circumstances, without proof that a distinct act of bankruptcy was contemplated. Aldred v. Constable, 4 Q. B. 674. Where proof was given of the bankrupt having executed the security while in embarrassed circumstances, and under expectation of being imprisoned and compelled to go up to London from the country, where he traded, the judge told the jury that, if

Apprehension of legal proceedings.

the bankrupt contemplated only insolvency and a discharge by the Insolvent Debtors Court, there was no fraudulent preference in contemplation of bankruptcy: but that was held to be a misdirection. Aldred v. Constable, 4 Q. B. 674.

The question of fraudulent preference depends on what passes in the mind of the party making, the payments at the time they are made; if he acts in pursuance of a contract or engagement, or otherwise under such circumstances that he cannot have a choice, the payments are evidently not the result of preference. Vacher v. Cocks, 1 B. & Ald. 152, per Bayley, J. See Cowp. 117; Wilson v. Balfour, 2 Camp. 579; Gladstone v. Hadwen, 1 Mau. & S. 517.

A voluntary payment is a payment simply by the act and will of the party making it, and if there is anything to interfere with or control his will, then it is not a voluntary pay.. ment. Per Alderson, B., Strachan v. Barton, 11 Exch. 650. Payment by a trader, who contemplates bankruptcy, of a debt not then due, upon a bonâ fide request of the creditor, is not in law a voluntary payment; the fact of the debt not being due is merely a circumstance for the jury in considering the question of fraudulent preference. Strachan v. Barton, 11 Exch. 647.

The objection of fraudulent preference does not apply where the act done is occasioned by the threat or even the mistaken apprehension of legal proceedings, whether civil or criminal. Thompson v. Freeman, 1 T. R. 155; De Taste v. Carol, 1 Stark. 88; or upon the pressure and application of the creditor; Casser v. Gough, 1 T. R. 156; Smith v. Payne, 6 T. R. 152; Crossby v Crouch, 2 Camp. 165; 11 East, 256. A demand of a debt not yet due has the same effect. Hartshorn v. Slodden, 2 Bos. & P. 582. It seems that the return of goods by the hirer to the lender under threat of a fiat in bankruptcy is not a fraudulent preference. Ex parte Whitby, Mont. & C. 671. A preference by an insolvent trader to a particular creditor is not fraudulent, if originating bona fide in the urgency of the creditor. Morgan v. Brundrett, 2 Nev. & M. 281; Reynard v. Robinson, 3 Moore & S. 127; 9 Bing. 717. To determine whether a fraudulent preference has been given by a bankrupt to one of his creditors by a payment, it will be for the jury to say whether the payment was voluntary, and without any pressure by the creditor, and was made when the debtor knew that he must be a bankrupt, and in contemplation of bankruptcy. In order to constitute "pressure," it is not necessary that legal proceedings should have been resorted to, for if the pressure was such that it overweighed the bankrupt's own inclination, and induced him to pay against his will, that would be sufficient pressure within the meaning of the bankrupt laws. From a person being in embarrassed circumstances, it does not necessarily follow that he contemplates bankruptcy, as he may hope that his affairs may rally

and come round. Green v. Bradfield, 1 Car. & Kir. 449. Though there is a desire to favour a particular creditor, yet, if there is pressure the payment or transfer is valid, but it is the province of the jury to decide whether the pressure was real or only colourable. Graham v. Canely, 3 F. & F. 206. See Cook v. Rogers, 5 Moore & P. 353. In an action by assignees of a bankrupt to recover back money alleged to have been paid by the bankrupt to the defendant by way of fraudulent preference, in contemplation of bankruptcy, the judge, assuming that there had been such a degree of importunity on the part of the creditor as would under ordinary circumstances repel the presumption of the payment being voluntary, left it to the jury to say whether it was made in consequence of that importunity, or with a view to a fraudulent preference of the defendant. It was held that this was a proper direction. Cook v. Pritchard, 6 Scott, N. R. 34; 5 Man. & Gr. 329; and see Pritchard v. Hitchcock, 6 Scott, N. R. 851. A trader being pressed, conveyed his estates on trusts to sell and pay the pressing creditors, with a further trust to pay debts to certain relatives: the court considered this an undue preference and an act of bankruptcy. Morgan v. Horseman, 3 Taunt. 241.

not volun

A payment is not voluntary which is made by a bankrupt What payto a creditor in consideration of the latter relinquishing some ments are right he then possessed, although the creditor may not, pre- tary. viously to relinquishing such right, have stipulated for any payment by the bankrupt. Dea. B. L. 499, 2nd ed.; Mavor v. Groome, 1 Bing. 261; Stevenson v. Wood, 5 Esp. 200. A trader, engaged in extensive concerns, was in perilous circumstances, and likely to become bankrupt, although not suspected, from January, 1831, to January, 1832, when he actually became bankrupt. Among others he owed his son 12,000l., which debt, upon his son's marriage, was settled on the son's wife. In May, 1831, some of the trader's property in Middlesex was released from mortgage, and the trader, at the request of his son, on the 31st July, 1831, conveyed it to the trustees under his son's marriage settlement, as a security for or in discharge of the debt due from him to his son. The transfer was not registered or otherwise made public till after the trader's bankruptcy. A jury having found that it was not made voluntary by way of fraudulent preference, or in contemplation of bankruptcy, the court refused to grant a new trial. Belcher v. Prettie, 19 Bing. 408; 4 M. & Sc. 295. The defendants, bankers, discounted for a customer two bills, one of which was accepted by a third party for B.'s accommodation, and the payment of the other guaranteed by L., due respectively the 8th and 10th January. On the 3rd January, B., who was in a state of insolvency, went to the defendants' banking-house, accompanied by L., and paid into his (B.'s) account with them a sum sufficient to cover the two bills, and

then drew and gave to L. two cheques for the amount of the bills, which cheques L. handed over to the defendants in satisfaction of the bills. B. committed an act of bankruptcy on the 9th January. It was held, that this was not a fraudulent preference of the defendants so as to entitle the assignees of B. to maintain an action against them for money had and received, the preference, if any, having been given to L. Abbott v. Pomfrett, 1 Sc. 470; 1 Bing. N. C. 462. In an action by assignees of a bankrupt to recover property on the ground of a fraudulent preference, no amount of embarrassment is sufficient to show that it was in contemplation of bankruptcy, if there were also a hope of assistance, but to prove that the transfer is not voluntary, it must appear that there was such pressure as would be likely to cause the bankrupt to make the transfer. Kinnear v. Johnson, 2 F. & F. 753. A banking firm was in insolvent circumstances, and about to stop payment; A., a partner in the firm, informed B. of the fact, in order that the private balance of C., B.'s father, might be drawn out of the bank; but desired him not to let it be known to D. (a shareholder in an assurance company, which also had an account with the bank), as he, A., did not wish the directors to know it. C.'s private balance was, in consequence, drawn out the next day. On the evening of that day A. informed D. of the state of the house. D., being a managing director of the insurance company, took measures by which the company's account was drawn out by a cheque upon the bank. Two days afterwards the house stopped. It was held, that this was not a fraudulent preference of the insurance company, but nothing more than ordinary payment on a banker's cheque. Belcher v. Jones, 2 Mees. & W. 258; see Thompson v. Beatson, 1 Bing. 145; 7 Moore, 548.

Bankers in London, and the London agents of the bankrupts, who were bankers at B., advanced to them 3,000l. to meet an expected run on their bank, on a guarantee which was signed on the understanding (of which the London bankers were not aware) that it should not be used unless it could carry them over the crisis. On the day before the expected run one of the bankrupts went with the guarantee to London, and received the 3,000l. from the London bankers in notes and gold, placed in a box. On his return to B., on the same night, he ascertained from his partner that it was hopeless to expect to meet the run, and before they opened the box they discussed the propriety of returning the 3,0001. During the discussion a letter was received from one of the guarantors, begging the bankrupts not to make use of the 3,000, and saying that they could not do so honorably. That letter, according to the evidence of one of the bankrupts, strengthened his own opinion, and they then determined to return the 3,0007., and to suspend payment next morning.