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particular security was received under special circumstances,

§ 44. which would take it out of the common rule.” (Brandao y. Barnett, 12 Cl. & F. 789; In re Meadows, 26 Beav. 588 ; 28 L. J. Ch. 891 ; Jones v. Peppercorn, 28 L. J. Ch. 153 ; Ex p. Barkworth, 2 De G. & J. 194: 27 L. J. Bank. 5; Watts v. Christie, 11 Beav. 546; 18 L. J. Ch. 173.)

The mere fact that a merchant has drawn upon the bank- Rights of unrupt for the price of goods will not give him a right to insist paid vendor. on the appropriation of the goods to the payment of the price, even though the goods remain in specie in the hands of the bankrupt at the time of the bankruptcy; nor does a trustee in bankruptcy, by receiving goods sold on credit after the bankruptcy, create any trust in favour of the vendor or consignor. (Ex p. Rhodes, re Shackelton, L. R. 10 Ch. 446, affirmed sub nom. Ex p. Whittaker, re Shackleton, 44 L.J. Bank. 91.) But where the vendor has forwarded the goods under a mistake, the trustee of the supposed vendee must restore the goods or pay the amount due for them. (Ex p. Barnett, re Reed, 3 Ch.D. 123.) The appropriation of goods to cover acceptances as between drawer and acceptor will not give the holders of the bills a lien on the goods so as to make the acceptors trustees for them, and they can only prove in the bankruptcy of the acceptors for the balance remaining after application of the goods to satisfy the accept

(Banner v. Johnston, L. R. 5 H. L. 157.) The decision in Tooke v. Hollingworth, 5 T. R. 215, that the assignees of one Daniell, a bankrupt, who had purchased gold coin of one Tooke, were trustees of the coin received by them after the bankruptcy, seems to rest, not on any general right of unpaid vendors, but upon the ground that the particular facts disclosed a contract between Tooke and Daniell that the coin forwarded should be specifically appropriated to meet the outstanding drafts of Tooke on Daniell for the price of the coin. (Cf. Ex p. Banner, re Tappenbeck, 2 Ch. D. 278.)

Property deposited with the bankrupt for a specific purpose Property, must be returned to the depositor by the trustee in bank- deposited for ruptcy, unless the bankrupt had a beneficial interest in the specific purperformance of the trust, in which case the depositor is only pose. entitled to a return of the deposit on satisfying the lien or other interest of the bankrupt. (Ex p. Buchanan, 1 Rose, 280; Ex p. Pease, 1 Rose, 232.) The general lien of a consignee on goods consigned to him cannot be set up against specific instructions given by the consignor for the application of the goods. (Frith v. Forbes, 32 L. J. Ch. 10.) À remarkable instance of the effect of bankruptcy on deposit for a specific purpose is the case of Edwards v. Glynn, 28 L. J. Q. B. 350, in which case it was held by Erle and Crompton, JJ., that where money was advanced to a country

ances.

a

§ 44.

Equities.

bank on the understanding that it should not be used unless there was a probability of it being sufficient to carry the bank over an expected crisis, and the bank finding that it would not be sufficient for that purpose, returned the money to the lender and stopped payment, the assignees in bankruptcy could not recover the money so repaid, because neither they nor the bankrupt banker had any right to retain the money, the special purpose for which it was advanced having failed. See further as to such a repayment not being a fraudulent preference, Ex p. Kelly, re Smith Fleming & Co., 11 Ch. D. 306.

Generally, the trustee in bankruptcy takes the estate subject to the same equities as those to which it was subject in the hands of the bankrupt, i. e., all such property as he does not take by a title superior to that of the bankrupt. (Harris v. Truman g Co., 7 Q. B. D. 340 ; 9 Q. B. D. 264.) Somewhat analogous to trusts affecting the property while in the hands of the bankrupt are equities arising in respect of property which has been with the consent, or at the legally implied request, of the bankrupt augmented or benefited at the expense of third persons since the date to which the title of the trustee relates. Thus, where a person paid £78 to prevent a distress on a bankrupt's premises and sold goods of the bankrupt’s, value £49, the assignees were restrained by injunction from bringing an action to recover the £49 (Ex p. Elliot, 5 M. & A. 664), and a person who had paid off a distress for rent on the bankrupt's property was held to be entitled to be repaid out of the estate before the creditors received any dividend. (Ex p. Kennard, re Humphreys, 21 L. T. 684.) Generally, the trustee as an officer of the Court will be ordered to do the fullest equity, and that even in some cases where the circumstances would give rise to no legal right, and perhaps not even to a right which could be enforced in a court of equity as against an ordinary litigant. (Ex p. James, re Condon, L. R. 9 Ch. 609.)

Sub-section (2) is the same as section 15, sub-section (2) of the Act of 1869.

Clauses (i.) and (ii.) are the same as sub-sections (3) and (4) of section 15 of the Act of 1869, except that the words “ before his discharge” are substituted for during the continuance of the bankruptcy.

By section 3 of the Married Women's Property Act, 1882, it is provided that “ any money or other estate of the wife lent or entrusted by her to her husband for the purpose of any

trade or business carried on by him, or otherwise, shall be treated as assets of her husband's estate in case of his bankruptcy, under reservation of the wife's claim to a dividend as a creditor for the amount or value of such money, or

Sub-s. (2).

Clause (i).

other estate after, but not before, all claims of the other § 44. creditors of the husband for valuable consideration in money or money's worth have been satisfied.”

Copyhold and customary property was expressly excepted Copyhold and from the operation of section 142 of the Act of 1849, and

customary under the old law did not vest in the assignees, although the property. Court had power to dispose of such property for the benefit of the creditors, and to make an order vesting the copyhold or customary land in such person as the Court might direct (12 & 13 Vict. c. 106, s. 209; 24 & 25 Vict. c. 134, s. 114); and upon the vendees of such copyhold or customary lands compounding with the lords of the manors for the fines usually paid, the lords were bound to admit them as tenants (12 & 13 Vict. c. 106, s. 210). Copyhold and customary property seems, however, under this Act, to be included in the definition of property (section 168) and to vest in the trustee, although, as will be seen hereafter (section 50 (4)), the trustee is not compellable to be admitted to such property, but his appointee shall be admitted.

Property is defined in section 168 as follows:-"Property” Definition of includes money, goods, things in action, land, and every property. 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. The words “whether situate in England or elsewhere” did not occur in the definition given by the Act of 1869.

The principal difficulty which arises in the construction of the above definition is as to what constitutes a contingent interest so as to pass to the trustee in bankruptcy.

Contingent interests of the bankrupt have, under the prior Contingent statutes, passed to the assignees in bankruptcy, and therefore interests. authorities under the former Acts remain so under the present; but a mere possibility of an interest will not pass to the trustee. (Carlton v. Leighton, 3 Mer. App. 667; and see the judgment of Turner, L. J., Re Vizard's Trusts, L. R. 1 Ch. 588.) Thus, where a fund stands limited to one for a term, with remainder to such persons as a certain person may appoint, and in default of appointment to certain named persons, one of whom becomes bankrupt before either appointment or default in appointment, his interest if it afterwards accrue by default of appointment passes to his trustee; but if it accrue by virtue of the appointment it does not, because although the appointment for many purposes takes effect as if written into the original instrument, yet there is no relation back as to the time of the title accruing. (Re Vizard's Trusts,

8 44. ubi sup. ; Duke of Marlborough v. Lord Godolphin, 2 Ves. sen.

61.) Again, where a bankrupt, after obtaining his certificate of discharge, became entitled to an estate by the curtesy, but at the date of his discharge his wife was only tenant in fee in remainder expectant upon a life interest, it was held that, until the estate subject to the curtesy became vested in the wife in possession, the husband had no inchoate or transmissible interest which could pass to the assignees. (Gibbins v. Eyden, L. R. 7 Eq. 371; see also Johnson v. Smiley, 17 Beav.

223; 22 L. J. Ch. 826.) As a general Generally, it has been held that according to the general rule, all bank

scope and spirit of the bankruptcy laws, every beneficial rupt's property vests in

interest which the bankrupt has, should be disposed of for the the trustee.

benefit of his creditors. (Smith v. Coffin, 2 H. Bl. 451.) It is more useful, therefore, in a manual like this, to call attention to the few excepted interests of the bankrupt which do not pass,

than to dwell upon the numerous cases which afford instances of particular kinds of property passing to the trustee

in bankruptcy. Exceptions.

Notwithstanding the wide terms of the vesting clause in the sub-section read in the light of the definition of "property” contained in section 168, yet sometimes property which would have vested in the bankrupt had he remained solvent will not vest upon his bankruptcy in the trustee, or will not vest in him so beneficially.

This results from some one or other of the following causes :(1) The operation of bankruptcy as a condition subsequent

defeating bankrupt's interest. (2) The operation of bankruptcy quá insolvency in qualify

ing the contractual rights which the bankrupt, as a

solvent man, possessed. (3) The personal nature of the right vested in the bankrupt. (4) The express exceptions created by sections of the

Bankruptcy Act.

(5) Grounds based on the general policy of the law. Where bank First, then, an owner of property may, upon alienation, ruptcy deter- qualify the interest of his alienee by a condition defeating it mines his

on his bankruptcy, so that it will not pass to his trustee on his interest.

bankruptcy. *(Roe v. Galliers, 2 T. R. 133.) Such conditions operating by way of defeazance, are generally construed strictly; and therefore a defeazance on assignment, unless there is a specific provision to the contrary (Lear v. Leggett, 2 Sim. 479), was held to mean a voluntary assignment, and not to extend to an assignee in bankruptcy under the old law. Again, where an absolute interest purported to be defeated on assignment or bankruptcy, without any limitation over, it was held that the condition was in terrorem merely, and the defeazance void. (Bird v. Johnson, 18 Jur. 976.) So, too, where an § 44. annuity was not made determinable by bankruptcy expressly, but was given for the bankrupt's "personal support, and to be paid from time to time into his proper hands, and not to any other person, and his receipt alone to be a sufficient discharge,” it was held to pass to his assignees in bankruptcy (Graves v. Dolphin, 1 Sim. 66); and a similar decision was given in Brandon v. Robinson, 1 Rose, 197 ; 18 Ves. 429, where the annuity was payable into the bankrupt's hands to the intent that the same, or any part thereof, should not be assignable. But see Ex p. Eyston, re Throckmorton, 7 Ch. D. 145.) If, however, the bankrupt, on his bankruptcy, take some, though a different interest to that defeated by the bankruptcy, this will pass to his trustee. (See Kearsley v. Woodcock, 3 Hare, 185; Holmes v. Penny, 3 K. & J. 90 ; Sharp v. Casserat, 20 Beav. 470.) An interest applicable for the benefit of a bankrupt at the absolute discretion of trustees will not pass to the trustee in bankruptcy (Holmes v. Penny, 3 K. & J. 90), although, of course, any part which the trustees do so apply, will pass to the trustee.

As to when a bankruptcy existing at the time of the accrual Bankruptcy of the bankrupt's interest will or will not operate as a defeaz- as defeazance. ance, see Trappes v. Meredith, L. R. 7 Ch. 248; Manning v. Chambers, 1 De G. & Sm. 282; Seymour v. Lucas, 1 De G. & Sm. 177; and White v. Chitty, L. R. 1 Eq. 872; Re Parnham's Trusts, L. R. 13 Eq. 413; Re Amherst's Trusts, L. R. 13 Eq. 464; Ancona v. Waddell, 10 Ch. D. 157.

But the owner of property cannot, by contract, or otherwise, Limitation by qualify his own interest by a condition determining or con- bankrupt detrolling it in the event of his own bankruptcy to the prejudice feating his

own interest of his creditors (note to report of Wilson v. Greenwood, 1 Swan. 481 ; cf. Ex p. Warden, ie Williams, 21 W. R. 51.) Thus, ruptcy inwhere standing timber was sold to a trader, with a proviso operative. that in case of bankruptcy the vendor might retake it, this proviso was held void as against the assignees (Holroyd v. Gwynne, 2 Taunt. 176); and when a deed of partnership contained a provision that, in case of the withdrawal or bankruptcy of a partner, an account should be taken and a valuation made of his share and interest in the partnership property, with the exception of a particular lease, it was held that this exception was void as against the assignees of a partner who became bankrupt (Whitmore v. Mason, 2 J. & H. 204; 31 L. J. Ch. 433); and in Ex p. Mackay, re Jeavons, L. R. 8 Ch. 643, where a patentee sold to some iron manufacturers a patent in consideration of the manufacturers paying to the patentee certain royalties, and they at the same time lent him a sum of money, on the terms that the manufacturers

on bank

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