1 A secret profit, made by a promoter of a company out of the purchasemoney of a mine by an agreement with the vendors, unknown to the company, was held to be a debt due to the company incurred by fraud as well as a breach of trust (Emma Silver Mining Company v. Grant, 17 Ch. D., 122).

Where a debt arises from the fraud of partners the defrauded creditor can at his election prove either against the joint estate or the separate estates of the partners. Having made his election he may change it on refunding the dividend received with £4 per cent. interest (Ex pte Adamson, In re Collie, 8 Ch. D., 807).

If one partner fraudulently converts to his own use partnership property, the joint creditors are entitled to prove against his separate estate (Read v. Bailey, 3 App. Cas., 94).

Notwithstanding the receipt of dividends in respect of a debt incurred by fraud, the creditor is entitled to sue the bankrupt after his discharge for the balance remaining unpaid (Ex pte Hemming, In re Chatterton, 13 Ch. D., 163).

2 Under the Act of 1869, there was a continuing liability on the part of the debtor in respect of any breach of trust, but this Act confines such liability to cases where the breach of trust has been accompanied with fraud. When the bankrupt trustee's debt is one from which he is not released by the order of discharge, he is not entitled to any costs incurred before or after his bankruptcy in any administration action until he has made good his default (In re Basham, 23 Ch. D., 195). As to his right to costs, where the debt is one from which he is released, or for his subsequent services, see s.c.

(2.) An order of discharge shall release the bankrupt from all other debts provable in bankruptcy.I

1 s. 37.

A promise by a debtor to pay a debt from which he is released by his discharge is a nudum pactum (Heather v. Webb, 2 C. P. D., 1), but if there is a new consideration to support the promise e.g., if in consideration that the creditor will continue to supply him with meat, which the creditor does, the debtor promises to pay the old debt, an action will lie against him (Jakeman v. Cooke, 4 Ex. D., 26, cf. Kirkpatrick v. Tattersall, 13 M. & W. 766).

An order of discharge granted to a partner in respect of his separate estate was held by the Chief Judge to release him from his joint as well as his separate debts (Ex pte Hammond, In re Hammond and Nevard, L. R. 16, Eq. 614), but it was held by the Court of Appeal that a discharge granted by the joint creditors of a partner did not set him free from his separate liabilities (Meggy v. The Imperial Discount Co., 3 Q. B. D., 711; Ebbs v. Boulnois, L. R. 10, Ch. 479).

(3.) An order of discharge shall be conclusive evidence of the bankruptcy, and of the validity of the proceedings therein, and in any proceedings that may be instituted

s. 30.

ss. 30-32. against a bankrupt who has obtained an order of discharge in respect of any debt from which he is released by the order, the bankrupt may plead that the cause of action occurred before his discharge, and may give this Act and the special matter in evidence.

Undischarged bankrupt obtaining credit to extent of £20, to be guilty of misdemeanor.

(4) An order of discharge shall not release any person who at the date of the receiving order was a partner or co-trustee with the bankrupt or was jointly bound or had made any joint contract with him, or any person who was surety or in the nature of a surety for him.

31. Where an undischarged bankrupt who has been adjudged bankrupt under this Act obtains credit to the extent of twenty pounds or upwards from any person without informing such person that he is an undischarged bankrupt, he shall be guilty of a misdemeanor, and may be dealt with and punished as if he had been guilty of a misdemeanor under the Debtors Act, 1869, and the provisions of that Act shall apply to proceedings under this section.

Disqualifica tions of bankrupt.

PART II.

DISQUALIFICATIONS OF BANKRUPT.

32.—(1.) Where a debtor is adjudged bankrupt he shall, subject to the provisions of this Act, be disqualified for

(a.) Sitting or voting in the House of Lords, or on
any committee thereof, or being elected as a
peer of Scotland or Ireland to sit and vote
in the House of Lords;

(b.) Being elected to, or sitting or voting in, the House
of Commons, or on any committee thereof;
(c) Being appointed or acting as a justice of the

peace;

(d) Being elected to or holding or exercising the office of mayor, alderman, or councillor ;

H

(e.) Being elected to or holding or exercising the office ss. 32, 33.
of guardian of the poor, overseer of the poor,
member of a sanitary authority, or member of

a school board, highway board, burial board, or
select vestry.

(2.) The disqualifications to which a bankrupt is subject under this section shall be removed and cease if and when,

(a.) the adjudication of bankruptcy against him is

annulled; or

(b.) he obtains from the Court his discharge with a certificate to the effect that his bankruptcy was caused by misfortune without any misconduct on his part.

The Court may grant or withhold such certificate as it thinks fit, but any refusal of such certificate shall be subject to appeal.

(3.) The disqualifications imposed by this section shall extend to all parts of the United Kingdom.

This Part of the Act (ss. 32-36) applies only to a debtor who is adjudged bankrupt, and not to a compounding or arranging debtor. See Ex pte Pooley, In re Russell, L. R. 7, Ch. 519.

seat in House

33.—(1.) If a member of the House of Commons is Vacating of adjudged bankrupt, and the disqualifications arising of Commons. therefrom under this Act are not removed within six months from the date of the order, the Court shall, immediately after the expiration of that time, certify1 the same to the Speaker of the House of Commons, and thereupon the seat of the member shall be vacant. 1 Form No. 123 in the Appendix.

(2.) Where the seat of a member so becomes vacant, the Speaker, during a recess of the House, whether by prorogation or by adjournment, shall forthwith, after receiving the certificate, cause notice thereof to be published in the London Gazette; and after the expiration of six days after the publication shall (unless the House has met before that day, or will meet on the day of

Power for court to

womul adjudi ention in

Many at auctories the Speaker of the House of
Cue is vacant to the ders of the Crown

make out writs for the election of members to wennen in the manner therein mentioned; *and for suberinuding other provisions for the like *parum," so far as those powers enable the Speaker to rominate and appoint other persons being members of The Home of Commons to issue warrants for the making out of new writs during the vacancy of the office of Speaker or during his absence out of the realm, shall extend to enable him to make the like nomination and appointment for issuing warrants, under the like circumstances and conditions, for the election of a member in the room of any member whose seat becomes vacant under this Act.

34. If a person is adjudged bankrupt whilst holding the office of mayor, alderman, councillor, guardian, overseer, or member of a sanitary authority, school board, highway board, burial board, or select vestry, his office shall thereupon become vacant.

35.-(1.) Where in the opinion of the Court a debtor ought not to have been adjudged bankrupt, or where it is proved to the satisfaction of the Court that the debts Certain cases of the bankrupt are paid in full, the Court may, on the application of any person interested, by order, annul the adjudication.

Form No. 40 in the Appendix.

The power to annul an adjudication conferred by this section is appa rently to be exercised only in two cases-(1) where the adjudication ought not to have been made; (2) where the debts are paid in full,

Power is given by s. 23 (2) to annul an adjudication where a composi tion or scheme is accepted by the creditors and approved by the Court after the adjudication has been made.

In the opinion of Bacon, C.J., there is an inherent power in the Court to annul an adjudication: "without any special enactment, I do not entertain the slightest doubt that the Court of Bankruptcy has power at any time, for good reasons, to annul any bankruptcy in which an adjudication may have been made" (Ex pte Ashworth, In re Hoare, L. R. 18, Eq. 705, at p. 713).

2. Where an adjudication is annulled under this section all sales and dispositions of property and payments duly made, and all acts theretofore done, by the official receiver, trustee, or other person acting under their authority, or by the Court, shall be valid, but the property of the debtor who was adjudged bankrupt shall vest in such person as the Court may appoint, or in default of any such appointment revert to the debtor for all his estate or interest therein2 on such terms and subject to such conditions,3 if any, as the Court may declare by order.

1 Subject to a right on the part of any debtor to the bankrupt to set off any debt which he might have proved against the bankrupt (West v. Baker, I Ex. D., 44).

When the Court on annulling the bankruptcy approves a scheme vesting the bankrupt's property in a trustee, an execution creditor who was in possession of certain property of the bankrupt, but has not sold at the time of the receiving order, cannot then proceed with the execution (s. 45); see In re Chidley, In re Lennard, 1 Ch. D., 177, cf. Crew v. Terry, 2 C. P. D., 403. 2 The effect of annulling the bankruptcy is to remit the bankrupt to his original powers and rights in respect of his property; consequently it was held that money, paid into a bank by the trustee of a bankrupt, on the annulling of his bankruptcy became his money as from the moment it was paid in, so as to entitle him to set it off against a claim made against him by the trustee of the bankers who became insolvent before his bankruptcy was annulled (Bailey v. Johnson, L. R. 7, Ex. 263, affirming s. c., L. R. 6, Ex. 279).

* Where one of the terms of a composition accepted on the annulling of the bankruptcy was that the property of the bankrupt should be handed back to him on confirmation, it was held that he took it again subject to the unexhausted rights of an execution creditor (Crew v. Terry, 2 C. P. D., 403), but now it seems that the rights of the execution creditor would be barred (s. 45). See note (1) suprà.

(3.) Notice of the order annulling an adjudication shall be forthwith gazetted and published in a local paper.1 1 r. 158.

s. 35.

E