to have committed more acts of bankruptcy than one, ss. 43,44. to have relation back to, and to commence at, the time of the first of the acts of bankruptcy proved to have been committed by the bankrupt within three months next preceding the date of the presentation of the bankruptcy petition; but no bankruptcy petition, receiving order, or adjudication shall be rendered. invalid by reason of any act of bankruptcy anterior to the debt of the petitioning creditor. Under the Act of 1869, the bankruptcy related back to the first act of bankruptcy committed within twelve months next preceding the order of adjudication. It is now changed to three months next preceding the date of the presentation of the bankruptcy petition; the proviso, too, rendering it necessary to show that at the time of the commission of such prior act of bankruptcy the bankrupt was, and still continued to be, indebted in a sum sufficient to support a petition in bankruptcy, is omitted. 1 The word was "completed" in the Act of 1869. When the prior act of bankruptcy is a voluntary one on the part of the bankrupt and necessarily void, the title of the trustee has relation back to the moment of time anterior to the act, so as to defeat the fraudulent disposition of his property by the bankrupt (Ex pte Payne, In re Cross, II Ch. D., 539, at p. 553; Ex pte Eyles, In re Edwards, L. R. 16, Eq. 99). But when the act of bankruptcy is in invitum so far as the bankrupt is concerned, e. g., an execution levied by seizure and sale, the trustee's title relates back only to the completion of the act by the sale, and this being a perfectly lawful proceeding on the part of the creditor, stands good except so far as it is infringed upon by the provisions of the Act (see ss. 45, 46; Ex pte Villars, In re Rogers, L. R. 9, Ch. 432); consequently a creditor, who levies an execution by seizure and sale, and a few days afterwards a second one, is entitled to the proceeds of the first but not of the second, because at the time of levying it he must be taken to have had notice of the prior act of bankruptcy completed by the seizure and sale under his first execution (Ex pte Dawes, In re Husband, L. R. 19, Eq. 438). property 44. The property of the bankrupt divisible amongst Description his creditors, and in this Act referred to as the property of bankrupt's of the bankrupt, shall not comprise the following par- divisible ticulars : (1.) Property held by the bankrupt on trust for any other person: When property, held by the bankrupt as trustee or agent, has been converted by him into another form, whether it be another description of property or money, such property in its altered form is impressed with the amongst F s. 44. Ex pte trust so long as it is capable of being identified and ear-marked (Taylor v. Plumer, 3 M. & S., 562; In re Hallett's Estate, 13 Ch. D., 696, pp. 707— 721, where Jessel, M. R., in an elaborate judgment, considers all the old decisions; Harris v. Truman, 7 Q. B. D., 340, s.c., 9 Q. B. D., 264; Ex pte Cooke, In re Strachan, 4 Ch. D., 123). If a trustee or agent mixes trust moneys with his own at his bankers the rule in Clayton's Case (1 Mer. 572), attributing the first sum drawn out to the first sum paid in, will not be applied, but he will be taken to have drawn out his own money in preference to the trust money so that the balance will be applicable to the trust (In re Hallett's Estate, 13 Ch. D., 696; overruling, on this point, Pennell v. Deffell, 4 De G. M. & G., 372; Frith v. Cartland, 2 H. & M., 422; and Brown v. Adams, L. R. 4, Ch. 764). Where a trustee or executor carries on the business of his testator, and becomes bankrupt, that part only of the testator's estate which is authorised to be employed for the purpose, and not the whole estate, will be divisible amongst the creditors (Ex pte Garland, 10 Ves., 110; Thompson v. Andreas, 1 Myl. & K., 116; Fraser v. Murdoch, 6 App. Cas., 855). Goods and chattels, which include bills of exchange, held by the bankrupt for a specific purpose are clothed with a species of trust and do not pass to his trustee, but must be applied for the benefit of the depositor according to the original contract (Belcher v. Campbell, 8 Q. B., 1; Ex pte Copeland, 2 Mont. & Ayr., 177, 3 Deac. & Ch. 199. In the case of Ex pte Waring, 19 Ves., 344, 2 Rose 182, 2 Gl. & J., 404, this rule was extended to third persons, when the depositor and depositee were both insolvent, not on account of any privity of contract or equity between such third persons and the depositee, but as a mode of working out the equities between the insolvent estates of the two original parties to the security, the depositor and depositee. It was accordingly held, both the acceptor and drawer of certain bills of exchange being insolvent, that the holders were entitled to the proceeds of certain securities deposited by the drawer with the acceptor. See also City Bank v. Luckie, L. R. 5, Ch. 773; Ex pte Smart, In re Richardson, L. R. 8, Ch. 220; Trimingham v. Maud, L. R. 7, Eq. 201. There must be two insolvent estates in course of administration (Powles v. Hargreaves, 3 De G., M. & G. 430; Ex pte General South American Co., In re Yglesias, L. R. 10, Ch. 635; Ex pte Gomez, In re Yglesias, L. R. 10, Ch. 639, 648), if one of them turns out to be solvent the rule will not apply (In re New Zealand Banking Corporation, L. R. 4, Eq. 226). Not only must there be a double insolvency but also a double right of proof against the two estates. The rule will not therefore apply where the bills drawn by the one insolvent have not been accepted by the other (Vaughan v. Halliday, L. R. 9, Ch. 561). The rule applies only where the property of the acceptor has been pledged with the drawer, or the property of the drawer has been pledged with the acceptor, and not where the property is exclusively the property of one of the parties (Ex pte Lambton, In re Lindsay, L. R. 10, Ch. 405, Where bills are drawn by an agent or vendor on a principal or purchaser in respect of goods, consigned to the latter in such a way that the property in the goods passes and that the agent or vendor retains no power of appropriating the proceeds of such goods, then the rule does not apply (Ex pte Banner, In re Tappenbeck, 2 Ch. D., 278), if, however, it had been agreed that the proceeds of the goods shall be applied in taking up the bills, then the rule will be applicable (Bank of Ireland v. Perry, L. R. 7, Ex. 14). Two firms, one in Bombay and the other in London, were engaged in a joint adventure of buying and selling goods in England and India, cargoes being consigned specially to meet acceptances. On the insolvency of both firms, it was held that the rule applied subject to the rights of the joint creditors of the aggregate of the two firms to have the proceeds of the cargoes applied as part of the aggregate estate (Ex pte Dewhurst, In re Leggatt, L. R. 8, Ch. 965). If the bill-holder has proved before the securities have been realised, he must, in order to entitle himself to the benefit of the rule, deduct the amount of the proceeds from his proof and refund any dividends received in respect of the excess of the original over the reduced proof (In re Barned's Banking Co., L. R. 19, Eq. 1, affirmed L. R. 10, Ch. 198). (2.) The tools (if any) of his trade and the necessary wearing apparel and bedding of himself, his The personal or daily earnings of a bankrupt do not pass to the trustee, for the reason that a man must live, but anything that may be termed profits will pass (Emden v. Carte, 17 Ch. D., 768; Williams v. Chambers, 10 Q. B., 337). On the making of an administration order in a County Court, the Judge has power to direct payment out of earnings (s. 122 (1)). But it shall comprise the following particulars : (i.) 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; and, (ii.) The capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy1 or before his discharge, except the right of nomination to a vacant ecclesiastical benefice; and, S. 44. s. 44. Real estate. Estates-tail. Estates defeasible. 1 The bankruptcy commences at the time of the first act of bankruptcy proved to have been committed by the bankrupt within three months next preceding the presentation of the petition (s. 43). Property is defined in s. 168, and includes "money, goods, things in action, land, and every description of property, whether real or personal and whether situate in England or elsewhere; also, obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as above defined." It vests in the trustee immediately upon the debtor being adjudged bankrupt, or in the official receiver if no trustee is then appointed, and on the appointment of a trustee forthwith passes to and vests in him (s. 54 (1) (2)); and in his hands is bound by all the equities affecting it in the bankrupt's hands, except as to any which may be impeachable under the provisions of the Act (Ex pte Holthausen, In re Scheibler, L. R. 9, Ch. 722, at p. 726). As to the mode of realising and dealing with particular classes of property, see ss. 50-57. Real estate is, as a rule, governed by the lex loci rei sitæ (Cockerell v. Dickens, 1 Mont., D. & De G. 45, at p. 79, s. c. 3, Moo. P. C. 98, at p. 133), but by the terms of this Act property is defined as comprising "property whether real or personal and whether situate in England or elsewhere" (s. 168); it would therefore seem that land, situate within the limits to which an Act of the Imperial Legislature extends, will pass, and that as to land in a foreign country, the Court might compel the bankrupt, as one of the conditions of granting his discharge (s. 28 (2)), or under s. 24 (3) to realise or assist in realising it for the benefit of his creditors. A firm in London made a deposit of title deeds of certain real estate in Shanghai, as a security, with a firm in Prussia and agreed to complete a mortgage of the property: Held, that the contract was binding on the trustee in bankruptcy of the London firm and an order was made for the sale of the property (Ex pte Holthausen, In re Scheibler, L. R. 9, Ch. 722). A bona fide unimpeachable contract having been made for the sale of certain leasehold property but the assignment not having been executed, it was held, on the bankruptcy of the vendor, that the legal estate vested in his trustee subject to the equity of the purchaser under the contract to have the property conveyed to him on the payment of the purchase-money, and that he having paid the bankrupt after the adjudication, although without notice of it, could not compel the trustee to assign the property to him (Ex pte Rabbidge, In re Pooley, 8 Ch. D., 367). Power is given to the trustee to deal with estates, to whicht he bankrupt may be beneficially entitled as tenant in tail, in the same manner as the bankrupt might have dealt with them, and sections 56—73, inclusive of the Fines and Recoveries Act, 3 & 4 Will. IV., c. 74, are made applicable to proceedings under this Act (s. 56 (5) ). If the lands of the bankrupt are of copyhold tenure, and by the custom of the manor a tenant in tail not in possession is prohibited from levying a fine and creating a base fee, the trustee will also be bound by the custom (Johnson v. Smiley, 17 Beav., 223, at p. 231). Property may be limited to a man until he becomes bankrupt, or may be given to him for life with a gift over, or proviso for cesser, in the event of his bankruptcy or of alienation by him, and in any of these cases the property will, on the bankruptcy of the donee, go over, and not be distributable among his creditors (Brandon v. Robinson, 18 Ves., 429, 1 Rose, 197; Rochford v. Hackman, 9 Hare, 475; Joel v. Mills, 3 K. & J., 458; Ex pte Eyston, In re Throckmorton, 7 Ch. D., 145; In re Amherst's Trusts, L. R. 13, Eq. 464). Similar limitations may be created in favour of the husband out of the wife's property in a settlement made in consideration of marriage (Lester v. Garland, 5 Sim., 205; Higinbotham v. Holme, 19 Ves., 82, at p. 92). s. 44. But any settlement made by a man of his own property on himself with a limitation over in the event of his bankruptcy would be void as a fraud on the bankrupt laws, and the property therein comprised would consequently be divisible (Lester v. Garland, suprà; Higinbotham v. Holme, suprà; Whitmore v. Mason, 2 J. & H., 204 ; Ex pte Jay, In re Harrison, 14 Ch. D., 19; In re Pearson, Ex pte Stephens, 3 Ch. D., 807). Every description of estate or interest, present or future, vested or con- Future estates and interests. tingent will pass to the trustee (s. 168). Yet it would seem that a bare possibility- -a mere spes successionis--will not pass, but that it must amount to such a possibility as can be assigned or released before the bankrupt is discharged (Moth v. Frome, I Amb. 394; In re Inkson's Trusts, 21 Beav., 310; Gibbins v. Eyden, L. R. 7, Eq. 371 ; cf. In re Vizard's Trusts, L. R. 1, Ch. 588). The capacity to exercise all powers which the bankrupt might have Powers. exercised for his own benefit is given to the trustee (sub-s. (ii.), suprà), hence a tenant for life, with an ultimate remainder in fee in default of appointment by himself or by himself and another, cannot by exercising such power after his bankruptcy deprive his trustee of his interest in the remainder (Hole v. Escott, 2 Keen, 444; Badham v. Mee, 1 Myl. & K., 32). But a power of appointment in gross, the exercise of which does not affect his creditors, may be exercised by a man notwithstanding his bankruptcy (Wickham v. Wing, 2 H. & M., 436; In re Aylwin's Trusts, L. R. 16, Eq. 585; Haswell v. Haswell, 2 De G., F. & J. 456), unless the settlement indicates an intention that it should be exercised only while the appointor's interest in the property continues (Haswell v. Haswell, suprà). The consent of a tenant for life to the exercise of a power of sale may, in the event of his bankruptcy, be given by him with the concurrence of his trustee (Holdsworth v. Goose, 29 Beav., 111; Eisdell v. Hammersley, 31 Beav., 225; Alexander v. Mills, L. R. 6, Ch. 124, at p. 135). Leasehold interests pass to the trustee, but special provision is made for Leaseholds. him to disclaim them so as to discharge the bankrupt and his property from any further liability in respect thereof after the date of such disclaimer, and to relieve himself from all personal liability (s. 55 (1) (2)). Lands held by copyhold or customary tenure vest in the trustee without Copyholds. any surrender or admittance, and may be conveyed to such uses as the trustee may appoint (s. 50 (4)). The customs of a manor bind the trustee in the same manner as the bankrupt (Johnson v. Smiley, 17 Beav., 223, at p. 231). Personal estate whether situate in England or elsewhere is expressly Personal estate. |