§ 9. respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings unless with the leave of the Court and on such terms as the Court may impose. Sub-s. (1). Sub-s. (2). Creditor hold ing security. Definition of "secured creditor." (2.) But this section shall not affect the power of any secured crcditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed. The official receiver is to remain receiver of the property, until the creditors appoint a trustee in manner provided by section 21. On the making of a receiving order the same consequences ensue as to the remedies of creditors against the debtor's property or person, as under section 12 of the Act of 1869 ensued upon adjudication, with this addition that a creditor cannot now after receiving order commence any action or other legal proceedings without leave of the Court. The rights of secured creditors to realize their securities are saved under this Act as under the old one. The Crown is bound by this section as to remedies against the debtor's property. See section 150, post. See as to remedies where a composition or scheme has been approved, post, section 18. As to the effect of this section on the remedies given by the Debtors Act, 1869, section 4, see Cobham v. Dalton, L. R. 10 Ch. 655; Earl of Lewes v. Barnett, 6 Ch. D. 252; and see section 4 of the Debtors Act, post. The relation of the title of the trustee in no way affects secured creditors whose title accrued prior to the act of bankruptcy to which the title of the trustee relates; but the Bankruptcy Act of 1849, s. 184, and most of the Bankruptcy statutes prior to that of 1869, contained a provision which deprived execution creditors of the benefit of their execution if they had not realized by seizure and sale before the adjudication. The Act of 1869 contained no section corresponding to that section, though it did contain a definition in section 16, subsection (5), of a secured creditor. This definition is in substance re-enacted in section 168 (1), which definition runs as follows: "Secured creditor' means a person holding a mort gage charge or lien on the property of the debtor, or any part thereof, as a security for a debt due to him from the debtor." § 9. But the present Act restores and extends the principle of Execution the old law applicable to creditors who have issued execution creditors, and or who claim by virtue of an attachment of debts, for by attachment of section 45 it is provided: (1) "Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due to him, he shall not be entitled to retain the benefit of the execution or attachment against the trustee in bankruptcy of the debtor, unless he has completed the execution or attachment before the date of the receiving order, and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor. (2) "For the purposes of this Act an execution against goods is completed by seizure and sale; an attachment of a debt is completed by receipt of the debt: and an execution against land is completed by seizure, or, in the case of an equitable interest, by the appointment of a receiver.” An "available act of bankruptcy" is one "available for a bankruptcy petition at the date of the presentation of the petition on which the receiving order is made;" section 168 (1), post. debts. Next, as to creditors claiming to be creditors holding Mortgagees, security otherwise than as execution creditors. A mere &c. licence to seize the debtor's property, if it has not been executed prior to the act of bankruptcy to which the title of the trustee relates, is determined by the commencement of the bankruptcy (Cole v. Kernot, L. R. 7 Q. B. 534; Thompson v. Cohen, 41 L. J. Q. B. 221), but an assignment, even though subject to a condition or defeazance, gives the assignee a security which (subject to the Bills of Sale Acts) he can enforce against the trustee in bankruptcy. It is, however, often very difficult to determine whether a particular instrument operates as an assignment or as a mere licence to seize. At Common Law a document purporting to be an assignment of property thereafter to be acquired by the assignor passes no property to the assignee unless and until there be, besides the acquirement of the property by the assignor, some actus interveniens, such as seizure by the assignee; but in Equity, although a contract engaging to transfer property not in existence as the property of the assignor cannot operate as an immediate alienation, yet, if the assignor afterwards become possessed of property answering the description in the contract, the contract will transfer the beneficial interest § 9. Discretionary to the purchaser immediately upon the property being Where, in an action on a bill of exchange, money was deposited in Court by the defendant to abide the event and the matter was submitted to arbitration, and before the award the defendant became bankrupt, it was held that the plaintiff was a creditor holding security. (Ex p. Tait, re Keyworth, L. R. 9 Ch. 379.) Where a bankrupt had accepted a bill conditionally on certain bills of lading being given up to him, the holder of the bill who also held the bills of lading, was held to be a creditor holding security on the property of the bankrupt under the Act of 1869. (Ex p. Brett, re Howe, L. R. 6 Ch. 838.) As to the effect of registration of judgments and stoporders, see 1 & 2 Vict. c. 110, ss. 13, 14. Section 42 regulates the power of a landlord to distrain for rent. As to taking accounts of property mortgaged, and the sale of such property, see Rules 65-70. As to voting by a secured creditor, see Schedule I., rules 10-12; and as to proof, Schedule II., rules 9—17. 10. (1.) The Court may, if it is shown to be necessary appointment for the protection of the estate, at any time after the pre powers as to sentation of a bankruptcy petition, and before a receiving § 10. order is made, appoint the official receiver to be interim of receiver receiver of the property of the debtor, or of any part thereof, and stay of proceedings. and direct him to take immediate possession thereof or of any part thereof. (2.) The Court may at any time after the presentation of a bankruptcy petition stay any action, execution, or other legal process against the property or person of the debtor, and any Court in which proceedings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceedings or allow them to continue on such terms as it may think just. Sub-section (1) gives power to appoint the official receiver Sub-s. (1). to be interim receiver, where necessary for the protection of the estate, between the time of the presentation of the petition and the making of a receiving order on the hearing of the petition. It seems unfortunate that the term interim receiver should also be used in section 70 in relation to another interim, i. e., that between the receiving order and the appointment of a trustee. The interim receiver who may be appointed under this section corresponds to the receiver which the Court had power to appoint under section 13 of the Act of 1869. Section 12 provides for the appointment by the official receiver of a special manager. It does not seem clear whether an official receiver acting under this section as interim receiver would have this power. Sub-section (2), besides giving, as section 13 of the Act of Sub-s. (2). 1869 did, power to the Court, i. e., "the Court having jurisdiction in bankruptcy" (section 168 (1)) to stay any action, execution, or process against the debtor or his property, gives power to any Court before whom any such proceedings are pending, on proof that a bankruptcy petition has been presented, to stay the proceedings or allow them to be continued on just terms. Section 102 (4) gives a judge of the High Court who has made a receiving order power to order the transfer to himself of any action pending in any other division brought or continued by or against the bankrupt. § 10. Power to restrain. Under the Act of 1869 the practice was not to restrain unless a receiver had been appointed. (Ex p. Robinson, 22 L. T. 247; Re Davies, 21 L. T. 685; Ex p. Rocke, re Hall, L. R. 6 Ch. 795.) It was held in Ex p. Ditton, re Woods, 1 Ch. D. 557, that the power given to the Court of Bankruptcy by the Act of 1869 to restrain actions in other Courts by injunction was unaffected by the Judicature Act, 1873, section 24, sub-section (5). The powers given to the Court by the present Act are similar to those contained in the Act of 1869, but wider, not being confined, as was the case in section 13 of that Act, to actions, &c., in respect of any debt provable in the bankruptcy. But, notwithstanding this extension, it is not conceived that the Court would ordinarily restrain an action for fraud or other pure tort, as the remedy in such cases is not taken away by section 9. Under the Act of 1869 it was decided that the Crown could not be restrained under section 13 (Er p. Postmaster-General, re Bonham, 10 Ch. D. 595), but now the Crown is by section 150 bound by the provisions of the Act as to remedies against the debtor's property. It was held under the old Act that where after an action had been commenced against joint debtors, and a petition in bankruptcy, or under sections 125, 126, was presented against or by one of them, the Court had no power to restrain the joint action (Ex p. Isaac, re De Vecchi, L. R. 6 Ch. 58), but the Court might restrain a joint action commenced after one of the defendants had been adjudicated bankrupt, or after the commencement of the liquidation, because in such a case the plaintiff ought, in accordance with section 112 (which is the same as section 114 of the present Act), to have proceeded against the solvent debtors only. (Ex p. Mills, re Manning, L. R. 6 Ch. 594.) In all cases, however, the grant of the injunction is discretionary. (Ex p. Mills, re Manning, ubi sup. ; Ex p. Rogers, re Boustead, 16 Ch. D. 665.) The Court will not restrain a mortgagee or other secured creditor in the exercise of his legal remedies. (Ex p. Hirst, re Wherly, 11 Ch. D. 278.) An alleged bill of sale holder, however, or other mortgagee, whose title there is substantial ground for impeaching, will, it is submitted, be restrained by the Court, not under the powers of this section, but in the exercise of its power as a Court of Equity, in any case where an injunction is necessary for the preservation of the property. (Ex p. Bayley, re Hart, 15 Ch. D. 223.) In practice, receivers showing sufficient prima facie grounds for impeaching the title of mortgagees have obtained such injunctions until the appointment of a trustee. |