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trine of relation is carried to a very great length; for there every act of a merchant, for ten days precedent to the act of bankruptcy, is presumed to be fraudulent, and is therefore void k. But with us the law stands upon a more reasonable footing : for, as these acts of bankruptcy may sometimes be secret to all but a few, and it would be prejudicial to trade to carry this notion to it's utmost length, it is provided by itafute 19 Geo. II. c. 32. that 110 money paid by a bankrupt to a bona fide or real creditor, in a course of trade, even after an act of bankruptcy done, shall be liable to be refunded (28). Nor, by statute 1 Jac. I. c. 15. shall any debtor of a bankrupt, that pays him his debt, without knowing of his bankruptcy, be liable to account for it again (29). The intention of this re
k Sp. L. b. 29. c. 16.
an extent will bind the property of the bankrupt, if it is issued before the actual assignment of the commissioners; which asiignment, by changing the property, defeats the subsequent process of the crown. When therefore it is apprehended the bankrupt is indebted to the crown, the commissioners execute immediately a provisional asügn. ment, by which means the crown will be entitled to no more than an equal share with the other creditors. If the extent and the asignment bear date on the same day, the extent shall be preferred. Park. Rep. 126. Green, 126.
(28) This statute extends it's protection to the creditor of the bankrupt in two instances only, viz, when he has received pay. ment, without notice of the bankruptcy, either for goods sold, or for a bill of exchange, which in the usual course of trade the bankrupt is liable to pay. And it has been determined, that a creditor was compellable to refund, who had given further time to the bank. rupt when a bill became due, at his request, and upon a promise to pay interest, and who afterwards received the amount of it with interest, without any notice that the debtor had committed an act of bankruptcy ; for the court held this to be the payment of a loan, and not of a bill, 2 T.R.648. So also a creditor has been obliged to refund money paid by a trader, after a secret act of bankruptcy, for the carriage of goods. 5 T. R. 197.
(29) If a debtor pays the debt to a trader, with the knowledge of an act of bankruptcy committed by him, if afterwards a commillion illues, he may be compelled to pay it over again to the af
lative power being only to reach fraudulent transactions, and
The allignees may pursue any legal method of recovering this property fo vested in them, by their own authority ; bụt cannot commence a fuit in equity, nor compound any debts owing to the bankrupt, nor refer any matters to arbitration, without the consent of the creditors, or the major part of them in value (30), at a meeting to be held in pursuance of notice in the gazette'.
When they have got in all the effects they can reasonably [ 87 hope for, and reduced them to ready money, the allignees must, after four and within twelve months after the commisfion illued, give one and twenty days notice to the creditors of a meeting for a dividend or distribution (31); at which time they must produce their accounts, and verify them upon oath, , if required (32). And then the commissioners shall direct a dividend to be made, at so much in the pound, to all creditors who have before proved, or shall then prove, their debts. This dividend must be made equally, and in a ratable proportion, to all the creditors, according to the quantity of their debts; 19 regard being had to the quality of them. Mortgages indeed,
Stat. 5 Geo. II. c. 30.
signees; as where a banker pays a trader's drafts, after knowledge
(30) In all meetings of creditors under the statute, the deter-
(31) The notice is to be given by an advertisement in the London Gazette.
(32) At a meeting for the first dividend, the assignees are seldom required by the commissioners or creditors to verify their accounts upon oath, but the dividend is ordered upon their admission that they have recovered property to a certain amount ; but upon making a final dividend, the oath of the aflignees cannot be dispensed with.
for which the creditor has a real security in his own hands, are entirely safe; for the commission of bankrupt reaches only the equity of redemption. So are also personal debts, where the creditor has a chattel in his hands, as a pledge or pawn for the payment, or has taken the debtor's lands or goods in execution (33). And, upon the equity of the statute 8 Ann.
in Finch. Rep. 466.
(33) When a creditor proves his debt, he states in his deposition either that he has received no security, or what the security is.
If he has a security and wishes to prove and receive a dj. vidend, he must deliver up the security for the benefit of the creditors, unless it is a joint security from the bankrupt and another person, and then he may receive a dividend upon the whole due at the time of the deposition, and may have recourse to the co-furety besides ; provided he does not receive more than 205. in the pound for the whole debt. But every security, which the creditor has in his possession, must be exhi. bited to the commissioners when he proves his debt. If a creditor, having received the whole of his debt, from a surety or from ano. ther party upon a bill of exchange, Mould afterwards conceal this circumstance and take a dividend under a bankrupt's estate, it would be a fraud which I am sure would be punished, as it ought to þe, in the most exemplary manner. I particularly mention this from having had occasion to observe the great number of debts proved under commillions of bankrupt, where there were solvent parties, who from the nature of the transaction ought to have been first called upon to discharge the debt; and this fraud may be more easily practised, from the commissioners and assignees having no opportunity of examining these creditors afterwards upon oath, unless a special meeting is held for the purpose. It can only therefore be recommended to the aflignees, to make diligent inquiry into the conduct of these creditors with regard to such debts, and when they discover such a fraud to be attempted or practised, to bring the offender to the shame and punishment he fo justly deserves.
If a creditor proves an aggregate debt, and states more than one security; for instance, two or more bills or notes ; if he receives the value of any one of them in full, so much at the time of the dividend must be deducted from the amount of the debt proved.
0.14. (which directs, that, upon all executions of goods being
are debts of record, and therefore at other times have a priority) od recen
and also bonds and obligations by deed or special instrument,
(which are called debts by specialty, and are usually the next • มาลี
in order) these are all put on a level with debts by mere simple - CITAS contract, and all paid pari pasuo, Nay, so far is this matter
carried, that, by the express provision of the statutes P, debts
yar fis ards one
n 1 Atk. 103, 104.
p Stat. 7 Geo. I. c. 31.
ed, as is an
number a Here serei
Cooke, 195. Where a creditor has a mortgage or pledge, which
(34) Lord Bathurst chancellor declared expressly, that this pro-
Yet a landlord may distrain for all the rent due, even after a provisional or absolute assignment, while the goods continue upon the premises. 1 Atk. 103.
portion(35). And insurances, and obligations upon bottomry or respondentia, bona fide made by the bankrupt, though forfeited after the commission is awarded, shall be looked upon in the same light as debts contracted before any act of bankruptcy'(36).
WITHIN eighteen months after the commillion iflued, a second and final dividend fall be made, unless all the effects were exhausted by the first: (37). And if any surplus remains, after selling his estates and paying every creditor his full debt, it shall be restored to the bankrupt! This is a case which sometimes happen to men in trade, who involuntarily, or at least unwarily, commit acts of bankruptcy, by absconding and the like, while their effects are more than suficient to pay their creditors. And, if any suspicious or malevolent creditor will take the advantage of such acts, and sue out a com. mission, the bankrupt has 110 remedy, but must quietly submit to the effects of his own imprudence; except that, upon fatis
Stat. 1} Eliz. c.7.
Stat. 19 Geo. II. c. 32. 3 Stat. 5 Geo. II. c. 30.
(35) The whole of such a debt muß be proved, and if it is not payable when a dividend is declared, the discount for the tiine which is then to run, must be deducted from the whole fum, and the creditor shall be allowed a dividend upon the remainder.
(36) Where an obligor in a bottomry or respondentia bond, or an underwriter, becomes a bankrupt, the obligee and the assured Mall be permitted to claim; and after the contingency happens upon which the bond is due, or upon the loss of the ship, or other event against which the insurance is made, they shall be admitted to prove, as if these events had happened before the bankruptcy. 19 Gio. II. c. 32.
(37) If a creditor has not proved before a second dividend, it is now the practice of the commiflioners, to receive the proof of bis debi, without an order from the chancellor, and to admit him to be paid equally with the rest of the creditors, if there is sufficient property left in the hands of the assignees, and then to direct an equal distribution of the residue. Cocke , 89.