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against the assignees. It is enacted (/) that if any bankrupt, being at the time insolvent, shall (except upon the marriage of his children, or for some valuable consideration,') convey, assign, or transfer his goods and chattels, &c., the commissioners shall have power to sell and dispose of the same; though the sale is declared to be valid against the bankrupt, and all persons claiming under him.
Section II.—Of Transfer of Goods by a Trader after he has committed an act of Bankruptcy.
After an act of bankruptcy, the trader has strictly Transfer no power whatever of disposing of his goods(«) ; for roptey"k" the property in a bankrupt's goods and chattels passes to the assignees, by relation, from the moment of the bankruptcy (b). Accordingly, it has been held that a sale or gift of the property by the bankrupt, after a commission has been awarded, though the commissioners have not become possessed of the goods, is void (c). So is a sale of goods generally,
(J) 6 Geo. IV. c. 16, s. 73. See 1 Mont. & Gregg, B. L. p, 449, (3rd Ed.)
(a) Waller v. Drakeford, 1 Stark. N. P. C. 482; Allansnn v. Atkinson, I M. & S. 583 ; Copland v. Stein, 8 T. R. 199.
(b) Cooper v. Chitty, 1 Burr. 20 ; Lazarus v. Waithman, 5 B. Moore, 313; Copland v. Stein, 8 T. R. 208.
(c) Smith v. Mills, Moor. 594.
after an act of bankruptcy has been committed, even before the commission is sued out (d). when good. But, for the security of purchasers, it is enacted, that conveyances and other contracts, and dealings, by the bankrupt, made more than two calendar months (e) before the date and issuing of the commission (/); and payments really and bond fide made by the bankrupt to any creditor, at any time before the suing out of the commission (g), shall be valid, provided the party had no notice of any prior act of bankruptcy committed. And even where the party has notice, a bond fide purchase, for valuable consideration, shall not be impeached, unless the commission shall have been sued out within twelve calendar months after the act of bankruptcy (A).
- Under the statute it was held, where a bankrupt's property was sold more than two months before the issuing of the commission, and part was purchased by a creditor, that, in an action brought by
(d) Dyson v. Glover, 3 Salk. 60. [It has been said, that a sale of goods by a bankrupt, even in market overt, did not alter the property against the assignees; Per Twysden, J. 1 Sid. 272. Qu? unless the vendee acted collusively.]
(e) If the time is saved by a single hour, it is sufficient; Godson v. Sanctuary, 1 Nev. & M. 52; Come v. Harris, 1 M. & Malk. 141.
(/) 6 Geo. IV. c. 16, s. 81.
(A) Id. sect. 86. [This enactment is new; the old statutes contained sections similar to the 81st and 82nd.]
the assignees for the price, the sale must be deemed to have been made by the bankrupt, and not by the assignees, and that the defendant was therefore entitled to set off the debt due to him from the bankrupt (i). Where the bankrupt, after a secret act of bankruptcy, sells goods for a valuable consideration, it is protected by the statute (k); provided, however, that it be all one transaction, and provided that the parties really had a sale in contemplation (/). So, bona fide payments, after a secret act of bankruptcy, for actual debts, without any fraudulent preference, are protected by the statute (m), provided they be according to the ordinary and established course of dealing (n). It was held by Tindal, C. J., that giving a quantity of books, in payment of a dishonoured acceptance, was not a payment within the statute (o).
(t) South-wood v. Taylor, 1 B. & A. 471. See Hankey v. Smith, 3 T. R. 507, n.; Atkinson v. Elliott, 7 T. R. 378.
(A) Hill v. Farnell, 9 B. & C. 45; Cash v. Young, 2 B. & C. 413.
(t) Carter v. Breton, 6 Bingh. 617. See Lloyd & Welsby,' Merc. Ca. 290.
(m) Tucker v. Barrow, 1 M. & Malk. 141; S. C. 3 C. & P. 85; Shaw v. Battley, 4 B. & Ad. 801; Churchill v. Crease, 5 Bingh. 177; Teal e v. Yonge, 1 M'Clel. & Y. 497; Cox v. Morgan, 2 B. & P. 398.
(n) Bolton v. Jager, 1 Ry. & M. 265; Hovil v. Browning, 7 East, 154 ; Harwood v. Lamas, 11 East, 127; Bishop v. Craws/iay, 3 B. & C. 415. It seems to be immaterial that the party receiving the money knew that the trader was in difficulties at the time; see 3 C. & P. 88.
(o) Smith v. Moon, 1 M. & Malk. 458.
When not protected, the sale is voidable only.
Even where the transfer by the bankrupt is not protected by the statute, it is only voidable at the election of the assignees, and no objection can be taken by third parties (p). Therefore, any act done by the assignees, affirming the transaction, makes it valid (q); as bringing assumpsit or debt, instead of trover, against the vendee (r). Nor can they repudiate the contract, after they have once affirmed it (s). If the assignees bring assumpsit, or other action in form ex contractu, the vendee may set off a debt due to him from the bankrupt if). But a mere demand of payment, made by the assignees, does not conclude them from recovering in trover (w).
Delivery of goods to bankrupt.
Section III.— Of delivery of Goods or Money to a
(p) Laroche v. Wakeman, Peake, 140; Webb v. Fox, 7 T. R. 391 ; Fowler v. Down, 1 B.& P. 44; Ashley v. Kell, 2 Str. 1207.
(q) Wilson v. Poulter, 2 Str. 859; Read v. Vaughan, 7 Mod. 461; Butler v. Carver, 2 Stark. N. P. C. 433; Reed v. James, 1 Stark. N. P. C. 134; Bradbury v. Anderton, 1 Cr. Mees. & Rose. 493, 494, (per Parke, B.).
(r) Hussey v. Fidell, 3 Salk. 59; S. C. 12 Mod. 324 ; Burra v. Clarke, 4 Campb. 355; Evans v. Mann, Cowp. 569.
(*) Brewer v. Sparrow, 7 B. & C. 310; Vernon v. Hanson, 2 T. R. 287.
(<) Smith v. Hodson, 4 T. R. 211.
(») Hurst v. Gwennap, 2 Stark. N. P. C. 306. [And the Court afterwards refused a rule.]
party has no notice of a prior act of bankruptcy committed, all contracts and other dealings and transactions with the bankrupt, bondfide made and entered into, more than two calendar months (a) before the date and issuing of the commission, shall be valid (&); and also all payments bondfide made to the bankrupt (c), and delivery to the bankrupt of any goods, &c, which belong to him (d), at any time before the date and issuing of the commission, shall be valid.
Payment of bills in order to support the credit what deai
. ings pro
of a trader in embarrassed circumstances, without tected.
notice of his bankruptcy, is not fraudulent (e). An auctioneer is protected in paying over the proceeds of the sale to his principal (who is in prison), without notice of an act of bankruptcy committed by the latter (/). So, a factor is protected in paying, after notice of his principal's bankruptcy, a bill drawn by the latter and accepted by the factor
(a) Vid. supra, p. 114, note (c). \b) 6 Geo. IV. c. 16, s. 81.
(c) Id. section 82.
(d) Id. section 84.
(e) Foxcroft v. Devonshire, 2 Burr. 931 ; S. C. 1 Bl. Rep. 193. See remarks on this case in Copland v. Stein, 8 T. R. 204, 206.
(/) Coles v. Robins, 3 Campb. 183; Coles v. Wright, 4 Taunt. 198. In the latter case the party who actually paid the money was in fact cognizant of the act of bankruptcy, but as he was not the auctioneer himself but a mere bearer or messenger, he was held not liable.