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BANKRUPTCY. party has no notice of a prior act of bankruptcy committed, all contracts and other dealings and transactions with the bankrupt, bona fide made and entered into, more than two calendar months (a) before the date and issuing of the commission, shall be valid (6); and also all payments bona fide 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 deal

ings proof 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 (f ). 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. supru, p. 114, note (e).
(6) 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.

(f) 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.

before notice (g). So, bona fide payments by purchasers to bankrupt-vendors, without notice, are protected, whether the sale took place before or after the act of bankruptcy (h). It has been held, that a bill of exchange given in payment to the bankrupt, although the bill did not become payable till after the bankruptcy, was a payment protected by the statute (i). And returning to the bankrupt-vendor a bill, which had been accepted by him, but which when due had been dishonoured, is a good payment within the statute (k). But the payments must be according to the ordinary course of trade and dealing (l); and it has been held that payment of an anticipated debt is not

protected (m). Not volun. Voluntary payments made to, or on behalf of, ments with the bankrupt, after notice of an act of bankruptcy

committed, are not protected (n). But where the

tary pay

notice.

(g) Wilkins v. Casey, 7 T. R. 711.

(1) Cash v. Young, 2 B. & C. 413; Hill v. Farnell, 9 B. & C. 45; which seem to overrule Sanderson v. Gregg, 3 Stark. N. P. C. 72. See 9 B. & C. 51.

(0) Bennet v. Spackman, 1 C. & P. 274.

(k) Mayer v. Nias, 1 Bingh. 311; although the goods were agreed to be sold on ready money terms.

(1) Ward v. Clarke, 1 M. & Malk. 497. And see above p. 115. (m) Bishop v. Crawshay, 3 B. & C. 415.

(n) Vernon v. Hankey, 2 T. R. 113; King v. Leith, 2 T. R. 141. In the latter case, the act of bankruptcy was only inchoate. [The issuing of the commission is not in itself notice in law of an act of bankruptcy; Sowerby v. Brooks, 4 A. & B. 523.]

payment is enforced by coercion of law, as where the trader has recovered judgment in a suit at law, before any commission has been sued out(0); or even after a commission has issued, and while it remains in force, but has not been proceeded upon (p); such payment is protected. However, if there be collusion between the bankrupt and the party making the payment, or, it seems, even if any steps have been taken by the party to facilitate the recovery, as by accepting short notice of trial (9), the assignees of the bankrupt may compel repayment. And the debtor ought to wait until the judgment has been actually obtained; therefore, where a creditor of the bankrupt sued the latter in the Mayor's Court, and an attachment issued against funds, in the hands of a third party, belonging to the bankrupt, it was held that the garnishee was not justified in paying the money.under the attachment (r).

(0) Foster v. Allanson, 2 T. R. 479; Prin v. Beal, 3 Keble, 231 ; Andrews v. Spicer, id. 616.

(p) Fuller v. Gibson, 2 Cox, 24. And as the debtor is safe in paying the money under a verdict at law obtained bona fide, it is no defence at law to a suit for the recovery of a debt due, that the plaintiff has committed an act of bankruptcy, of which the defendant has notice, (2 T. R. 479); nor will a Court of Equity interfere, (2 Cox, Rep. 24).

(9) 2 Cox, Rep. 26, per Ashurst, J.
(r) Windham v. Paterson, 1 Stark. N. P. C. 147.

Section IV.-Of Goods continuing in the Possession

of a Trader (whether Vendor or Vendee) at the Time of his Bankruptcy.

possession

It has been already stated, that the continuance of possession by the vendor, after a transfer of the property by a bill of sale, is a strong badge of fraud, and tends to show that the sale was collusive, and void against creditors within the statute

of Elizabeth (a). By the Bankruptcy Act it is Property in enacted, that if any bankrupt, at the time he beof bankrupt comes bankrupt, shall, by the consent and permisof bank- sion of the true owner, have, in his possession,

order, or disposition, any goods or chattels, whereof he was the reputed owner, or whereof he had

taken upon himself the sale, alteration, or disposiPasses to tion, as owner, the commissioners shall have power the assig.

to sell and dispose of the same (6). .

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nees.

Under the statute, the goods must have been in possession of the bankrupt at the time (e) of his

(@) 13 Eliz. c. 5; supra, p. 99. See the cases there cited upon the statute of Elizabeth. The principle upon which those cases are decided is founded upon the analogy of this provision of the Bankrupt Act.

(6) 6 Geo. IV. c. 16, s. 72. A similar enactment was contained in the repealed statute, 21 Jac. I. c. 19, s. 11.

(c) Therefore goods, coming into the bankrupt's possession after his bankruptcy, do not pass under the statute ; Lyon v. Weldon, 2 Bingh. 334.

INSC

been with consent of Owner.

bankruptcy; therefore, if the owner take possession at any time before that event actually happens, it will be sufficient to protect his property (d); though it be but a single day (e).

The goods must have been in the bankrupt's Must have possession, with the consent and permission of the consent of true owner (f); therefore, where the vendee of a chattel sent it to the vendor, in order that some alteration might be made, which not being done, he became dissatisfied, and demanded it back again, on the bankruptcy of the vendor before redelivery to the vendee, the property was held not to pass to the assignees (g). So, where the vendor gave notice to the carrier to stop the goods in transitu, but they were delivered by mistake to the bankrupt-consignee, the sale was held to be rescinded by the notice, and the property to have revested in the vendor (h). So, where the true owner demanded the goods on the day before the bankruptcy, but the insolvent refused to deliver

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(d) Jones v. Dwyer, 15 East, 21.

(e) Arbouin v. Williams, 1 Ry. & M. 72. See per Parke, J., Smith v. Topping, 5 B. & Ad. 678; “ the dividing point is the act of bankruptcy." These cases seem to overrule Darby v. Smith, 8 T. R. 82.]

(5) Ex parte Richardson, in re Cheshire, Buck, 480 ; Viner v. Cadell, 3 Esp. 88.

(g) Carruthers v. Payne, 5 Bingh. 270.

(h) Litt v. Cowley, 7 Taunt. 169 ; S. C. Holt, N. P. C. 328.Post.

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