debts or claims against his estate (see 38 & 39 Vict. c. 60, s. 15, par. 7).

Surplus. Subject, however, to the above exceptions, all debts proved in the bankruptcy are to be paid pari passu. And if there is any surplus after payment of the foregoing debts it is to be applied in payment of interest from the date of the receiving order at the rate of 4 per cent. per annum on all debts proved in the bankruptcy.

SECTION 4.

OF THE PROPERTY AVAILABLE OR NOT FOR THE PAYMENT OF DEBTS.

On an adjudication of bankruptcy taking place the bulk of the bankrupt's property becomes available for distribution among his creditors. his creditors. As certain property is excepted from this rule, however, it is necessary to consider what portion under the Act is not, and what is, divisible among them. The following particulars of the property of the bankrupt are not divisible among his creditors.

Property not Available. (1) Property held by the bankrupt in trust for any other person.

(2) The tools (if any) of his trade and the necessary wearing apparel and bedding of himself, his wife, and children, to a value, inclusive of tools and apparel and bedding, not exceeding 207. in the whole (sect. 44).

As under the Bankruptcy Act, 1869, the word "trust" in the first of these provisions would bear,

it is presumed, a somewhat extended meaning. In Williams on Bankruptcy (2nd ed., p. 68), trusts are divided into the following classes:

(a) Express trusts-where the trust is the origin of the legal ownership of the bankrupt :

(b) Trusts virtute officii, examples of which are found in the case of executors and administrators:

(c) Trusts created by the bankrupt, who retaining the legal ownership has divested himself of the whole or part of the beneficial interest:

(d) Where property is in the hands of a man as an agent or factor, it will be considered to be held by him as a trustee, and should he become bankrupt it will belong to his principal; but the property must be capable of being traced, and must not have been left with the agent under such circumstances as would render him the reputed owner.

As before stated (ante, p. 42), the removal of a bankrupt trustee from his trusteeship where it is thought expedient is provided for by sect. 147 of the Act.

Property Available. The following property is by the express words of the Act, divisible among the creditors (sect. 44).

(1) 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.

To this broad rule, however, it is presumed there are certain exceptions. For example-(a) money earned wholly by the personal labour of a bankrupt during his bankruptcy, at all events, if not more than reasonably sufficient for his support, was held under the old law not to pass to the trustee (Wadling v. Oliphant, L. R., 1 Q. B.

145). Also (b) where goods have been sold on credit, and the vendee becomes insolvent before they have come into his actual or constructive possession, the vendor may stop them as long as they are in transit. And (c) rights of action to recover damages for bodily or mental sufferings or personal inconvenience sustained by the bankrupt will not pass to his trustee.

In certain cases, also, as for example, when the bankrupt is a clergyman or an officer of the army or navy, or engaged in the civil service, the trustee must not take the whole of the salary for distribution, but must allow a certain specified portion for the maintenance of such bankrupt. See further on this point, post, p. 78.

(2) 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 bankruptcy, or before his discharge, except the right of nomination to a vacant ecclesiastical benefice.

(3) All goods being at the commencement of the bankruptcy in the possession, order, or disposition of the bankrupt in his trade or business by the consent and permission of the true owner, under such circumstances that he is the reputed owner thereof: Provided that things in action other than debts due or growing due to the bankrupt in the course of his trade or business, shall not be deemed goods within the meaning of this section.

By this provision it will be seen the goods must be in the bankrupt's possession, order, or disposition in his trade or business at the commencement of the bankruptcy-the bankrupt must be the reputed owner-the true owner must consent. By the true owner is meant

he who has the right to determine the appearance of possession in the bankrupt, and his title to do so may be either legal or equitable.

The meaning of the phrase, "at the commencement of the bankruptcy," is thus defined in sect. 43 of the Act. It is there provided that "the bankruptcy of a debtor, whether the same takes place on the debtor's own petition or upon that of a creditor or creditors, shall be deemed to have relation back to and commence at the time of the act of bankruptcy being committed on which a receiving order is made against him, or if the bankrupt is proved to have committed more acts of bankruptcy than one, to have relation back to and 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."

SECTION 5.

OF THE EFFECT OF BANKRUPTCY ON
ANTECEDENT TRANSACTIONS.

Avoidance of Voluntary Settlements

Fraudulent Preference

Protection of Bona fide Transactions

Restriction of Rights of Creditor under Execution, &c.
Duties of Sheriff where Goods taken in Execution

Avoidance of Voluntary Settlements and Fraudulent Preferences. Voluntary settlements

and fraudulent preferences made by a debtor are by the Act in certain cases rendered void against the trustee in bankruptcy. The former are dealt with by sect. 47, which provides that (1) "any settlement of property not being a settlement made before and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right 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 trustee 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 the 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."

"Settlement" shall for the purposes of the above