*

of his wife, shall, if the settlor becomes bankrupt within two years after the date of the settlement, be void against the trustee in the bankruptcy, and shall, if the settlor becomes bankrupt at any subsequent time within ten years after the date of the settlement, be void against the trustee in the bankruptcy, unless the parties claiming under the settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor in such property had passed to the trustce of such settlement on the execution thereof.

(2.) Any covenant or contract made in consideration of marriage, for the future settlement on or for the settlor's wife or children of any money or property wherein he had not at the date of his marriage any estate or interest,† whether vested or contingent, in possession or remainder, and not being money or property of or in right of his wife, shall, on his becoming bankrupt before the property or money has been actually transferred or paid pursuant to the contract or covenant, be void against the trustee in the bankruptcy.

* See in connection with this exception, both in tn present and in the next sub-section, the Married Woman's Property Act, 1882 (45 & 46 Vict. c. 75.)

These words refer to the settlement of specific property or money wherein the debtor had not at the time of his marriage any estate or interest. They do not affect a covenant to settle a sum of money generally. In the case of ex parte Bishop v. Tönnies, L. R. 8 Ch. 718, it was held that " a covenant for payment of a sum of money not specifically ear-marked is not within this section " (i.e., the corresponding section of the Act of 1869), and the trustees of the settle. ment were allowed to prove against the estate for the amount cove qanted to be paid, less the value of any estate or interest which the bankrupt himself took under the settlement.

And against a trustee under a composition or arrangement under the conditions mentioned in section 18 (13).

(3.) "Settlement" shall for the purposes of this section include any conveyance or transfer of property.

48. Avoidance of Preferences in certain Cases.

* This clause is identical with section 92 of the Bankruptcy Act of 1869. It will be recollected that under sub-section (b), clause 4, it is an act of bankruptcy if a debtor "makes a fraudulent conveyance, gift, delivery, or transfer of his property, or of any part thereof." Such a conveyance will also be void under the 13 Eliz. c. 5, if made with intent to defeat, hinder, and delay creditors. And as the necessary consequence of the conveyance of the whole of a debtor's property, in consideration of a past debt only, must be to defeat and delay his creditors, such a conveyance would quite irrespective of this clause be void. The case which this clause is necessary to meet is the conveyance of a part of the debtor's property in consideration of a past debt; this (although not otherwise fraudulent), having a tendency to withdraw a part of the debtor's estate for distribution amongst the general body of his creditors, and to transfer it to one in preference to the rest. It is, as we have already seen, provided by sub-section (c) of clause 4 that it shall be an act of bankruptcy if the debtor makes a conveyance of his property or any part thereof or creates any charge thereon which would under this or any other act be a fraudulent preference if he were adjudged bankrupt." What then is a fraudulent preference under this clause and an act of bankruptcy under sub-section (c) of clause 4? The answer is that in order to bring such a transaction within the operation of the sub-section referred to or of this clause, the conveyance or transfer must be the voluntary act of the debtor-done with "a view of giving such creditor a preference over the other creditors." If there be no ground for inferring such a motive-that is to say, if there be no reason to suppose that it is the desire of the debtor to prefer one creditor to another - as if a payment be made on the application of a creditor, or under such pressure for payment as tends to interfere with the debtor's free will, or if the debtor acts in pursuance of a precedent, contract or agreement, or if the debtor acts under the apprehension of a civil or criminal proceeding, or if a creditor bona fide purchases part of the debtor's property in satisfaction of his debts, or if a payment be made in the usual course of

(1.) Every conveyance or transfer of property, or charge thereon made, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor, or any person in trust for any creditor, with a view of giving such creditor a preference over the other creditors shall, if the person making, taking, paying, or suffering the same is adjudged bankrupt on a bankruptcy petition presented within three months after the date of making, taking, paying, or suffering the same, be deemed fraudulent and void as against the trustee in the bankruptcy.

(2.) This section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the bankrupt.*

49. Protection of bona fide Transactions without Notice.+-Subject to the foregoing provisions of this Act with respect to the effect of bankruptcy on an execubusiness, and is bona fide on the part of the creditor-such transactions will not be an act of bankruptcy or be avoided by the present clause. Indeed, they are in many instances expressly protected by the next clause (49) if they do not fall within the provisons at the end of that clause. On the other hand it must be borne in mind that, under clause 25, subsection (3) "no payment or composition made, or security given after arrest made is exempt from the provisions of the Act relating to fraudulent preferences." Fraudulent preferences will, or may be, void against a trustee under a composition or arrangement by clause 18.

* This sub-section so far limits the operation of the first sub-section as to prevent the trustee from following property acquired by a creditor under a fraudulent preference, into the hands of a person who has subsequently purchased, or otherwise taken it from such creditor in good faith, and for a valuable consideration.

This clause differs materially, both in the drafting and in the

tion or attachment,* and with respect to the avoidance of certain settlements† and preferences,‡ nothing in this Act shall invalidate, in the case of a bankruptcy—

(a.) Any payment by the bankrupt to any of his
creditors,

(b.) Any payment or delivery to the bankrupt,
(c.) Any conveyance or assignment by the bank-
rupt for valuable consideration,§

(d.) Any contract, dealing, or transaction by or

with the bankrupt for valuable consideration,

Provided that both the following conditions are complied with, namely

(1.) The payment, delivery, conveyance, assignment, contract, dealing, or transaction, as

substance of some of its provisions, from the corresponding clauses (94 and 95) in the Act of 1869. In order to ascertain its real bearing in any particular case, it will be necessary to have careful and constant regard to the "foregoing provisions" of the act referred to in the first few lines of the clause, and to the proviso and the two conditions therein specified, with which the clause concludes. Not one of the payments, conveyances, &c., numbered (a.) to (d.) will be valid against the trustee if they sin in any way against these provisoes or conditions.

*See ante, clauses 45 and 46.

+ See ante, clause 47.

Ante, clause 48.

§ It must be recollected that if a duly registered bill of sale, comprises property in the possession, order or disposition of a bankrupt in his trade or business, it may not only be set aside under the conditions referred to in the present clause as invalidating various transactions, but it may also become invalid under sub-section (iii.) of clause 44 if the goods over which it extend remain in the order and disposition and reputed ownership of the bankrupt down to the time of the commencement of his bankruptcy. (See ante, note to clause 44.)

the case may be, takes place before the date of the receiving order ;* and

(2.) The person (other than the debtor) to, by, or with whom the payment, delivery, conveyance, assignment, contract, dealing, or transaction was made, executed, or entered into, has not at the time of the payment, delivery, conveyance, assignment, contract, dealing, or transaction, notice of any available act of bankruptcy† committed by the bankrupt before that time.‡

Realization of Property.

50. Possession of Property by Trustee.§—(1.) The * Whether the person to or with whom the payment, conveyance, transaction, &c., was made or took place had or had not notice thereof. + When an act of bankruptcy has, in fact, been committed, any communication which brings it to the knowledge of a person in such a way as should induce him, as a reasonable man, to believe that the notification is true-will be sufficient notice of an act of bankruptcy under this sub-section. Notice, in fact, means either knowledge or the wilfully abstaining from acquiring knowledge; and a knowledge of facts from which it is reasonable to draw the inference that an act of bankruptcy has been committed is a sufficient notice, even although the person who had such knowledge deny that he drew such inference, or that he knew that the facts of which he had knowledge amounted to an act of bankruptcy. (Hope v. Meek, 10 Ex. 829; Bird v. Bass, C.M. & G. 143; Smith v. Osborne, 1 F. & F. 267; Exparte Snowball re Douglas, L.R. 7 ch. 524; Lackington v. Elliot, 8 Scott N.R. 275.) Notice to a solicitor employed in any particular matter, or even sometimes to the solicitor's clerk, is notice to the client. But notice to the sheriff or the sheriff's officer in possession is not notice to the execution creditor.

That is available at the time of the payment, delivery, conveyance, &c., not merely for the receiving order actually made, but for any that might have been made.

§ This clause substantially re-enacts the principal provisions of