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123, the case was this :-A., debt to be due to him. Ag

1817. shortly before his bankruptcy, respects the bankrupt and himdrew a bill; and having pro- self, there may be the strongest

ARBOUIN cured it to be discounted, gave moral and honourable reason

HANBURY B. (a creditor) au order to re- for such preference. But this and Another ceive the amount, which he is not suficient. There are, directed C., who discounted in fact, three parties concerned the bill, to transmit to B., by in the transaction;—the banka carrier. Ao act of bank- rupt, the favoured creditor, ruptcy was committed on the

and the remaining creditors.17th of May; the money ar- The fraud is against the last rived in London on the 18th; party; and the two former and, on the 19th, it was re- shall not consult their honour ceived by B.'s porter. Lord El- or feeling from a stock which lenborough ruled that, whilst belongs in common to the the money remained in the whole. Thus, in Martin v. hands of the carrier, the pro- Perotress, 4 Burr. 2477, where perty remained unaltered, and a trader made an absolute sale therefore the assignees were of goods, but at prime cost, it entitled to it. lo Rust v. was held to be a fraudulent Cooper, Cowp. 629, where a sale ; perhaps a fraudulent repretended sale was made of a turn of goods, which, having part of a trader's goods to a come into the stock of the particular creditor, a bill of bankrupt, were equitably diparcels made out, and the visible amongst his whole cregoods delivered before an act ditors. So, where the bankof bankruptcy committed, it rupt indorsed and sent a prowas held fraudulent and void. missory note, by the post, to a Mere, it will be observed, was creditor, in contemplation of the jus disponendi, because the bankruptcy, the assignees were transfer was before the bank- held entitled to the note. ruptcy: but the equitable right Alderson v. Temple, 2235. of disposition in preference

But where the preference was gone, because made un- is consequential, that is to say, der a state of affairs indicative is not directly intended by of insolvency. The good con- the bankrupt, but only incisideration, as respects the in- dentally becomes such, in dividual creditor preferred, is this case, as the free will of vothing. He is presumed to the bankrupt is wanting, it be a bona fide creditor, and the will not be held a fraudulent

1817. preference. Thus, in Harman deposited the bonds with bima

v. Fisher, above cited, Lord as a collateral security for his ARBOUIN Mansfield said, that if a pre- stock, which they promised to

ference were only consequen- replace: they then deposited HANBURY and Another

tial, the case might be differ- the parcel amongst securities ent; as if a payment were belonging to other persons who made, or an act done by a tra. dealt with them, but did not der, in pursuance of a private give any information of the agreement. As in the follow

circumstances to the customer, ing case :- A., whilst he was until the evening before their solvent and resident at Cal. bankruptcy, when they sent cutta, directed B. at Bombay, him the parcel with the bonds, to transmit certain proceeds to saying, they must stop payC. in England, who acted as ment next morning; Lord the agent of A., under a power Ellenborough, in this case, of attorney, and was in the held, that the customer could habit of accepting bills for him. not retain the bonds against The proceeds were remitted by the assignees of the bankrupts; B. to C. after an act of bank- and the Court of King's Bench ruptcy committed by A. But afterwards confirmed his di. Lord Ellenborough held, that rection. Wilson v. Balfour, as the remittance was made in 2 Campb. 599. The reason of pursuance of an order given by this case is evident upon the 1. whilst he was solvent, and principles above stated. For, without fraud, C. was entitled as a claim of the highest deto retain the amount for his gree upon the part of the cre. balance. Jamieson v. Hodson, ditor could not justify such 1 Starkie, 150.

preference ; so neither, à for. But in a case where bankers tiori, would the strongest had fraudulently sold

sold out honourable obligation of the stock which belonged to a trader. He could not amend customer, but stood in their his own fraud at the expence names, and applied the pro- of his general creditors. But, ceeds to their own use, and where a trader obtained bills whilst they remained solvent of exchange from the defendwrapped up certain bonds be- ant upon a fraudulent reprelonging to them in an envelope, sentation, that a security given inscribed with the customer's by him to the defendant (which name, and enclosed a memo. was void) was an ample secu. randum, stating that they had rity, and on the next day,

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having resolved to stop pay- tors, but declined to benefit 1817.
ment, informed the defendant the creditors by means of such
that he had repented of what fraud.

ARBOUIN he had done, and had sent ex- Where a trader, knowing

HANBURY press to stop the bills, and himself to be insolvent, called

and Another would return them; and; three upon his creditor, and informdays after, committed an act ed him of it, and the creditor of bankruptcy: after which, he thereupon said that he must be returned to the defendant all paid his debt, which was accord. the bills (except one which ingly done, and the trader had been discounted) and also immediately afterwards betwo bank notes, part of the came a bankrupt; this transproceeds of such discount; the action was held to be void. defendant delivered back the The Court of C. P. very justly security, and afterwards a concluding, that the circumcommission issued against the stance of the trader calling trader, and the and the assignees

upon his creditor, and disclosbrought an action of trover ing to him his situation, and against the defendant for the then acceding to his request of bill and bank notes: It was

payment, afforded

strong held in this case, by K. B. that grounds to infer a fraudulent the defendant was entitled to preference. Singleton v. Howretain them, as the bills were ell, 2 Bos. and Pull. 283. originally obtained under a In this case, indeed, it was false pretence of giving a good evident, that a preference was security; and, under such cir- intended by the trader; and cumstances, a court of equity the demand of the creditor was would order the property to

a mere pretext in order to be restored; and, therefore, it make out the circumstance of would be useless for a court compulsion. of law to permit that to be re

2. But where a trader gives covered which could not be such a preference under # retained. Gladstone v. Had. threat or apprehension of legal wen, 1 M. and S. 517. The process, civil or criminal, or distinction of this case from from the pressure and importhe former is evident. The tuuity of his creditors, or ik trader only returned what he any case which derogates from had no right to possess. He his free will, and does not did not amend his own fraud justify the suspicion of colluat the expence of the credi- sion; in such case, the trans


1817. action is valid; the law, hold. And though the defendant in

ing the creditor to have used this case had taken no steps to ARBOUIN only his fair right in outstrip- secure himself in case he was

ping others, and the trader not called upon, yet the bankrupt HANBURY

to have given a voluntary pre acting from mistake was unand Another

ference, but to have consulted der the same apprehensions of his immediate personal safety. legal process, as if the defend

. Thompson v. Freeman, 1 T. R. ant had actually threatened 155. Cosser v. Gough, 1 T. R. her; so that her executing the 15. Ex parte Scudamore, 3 Ves. warrant of attorney was not a 85. Yeates v. Grove, 1 Ve. voluntary act, but the effect of sey, juu. 280.

Holberd v. fear, however groundless that Anderson, 5 T. R. 235. Smith might be.” But where the v. Payne, 6 T. R. 152.

De acceptor of a bill of exchange, Tastet v. Carroll, 1 Starkie, two days before the expiration 88.

of the time for which the bill 3. The question, as we have was originally drawn, called said in all these cases, will be, upon the indorser, and inWas the free will of the bank- formed him privately that he rupt left to him or not?--If was insolvent; the indorser the transfer be voluntary, insisted on being paid the bankruptcy, of course, being amount of the bill, offering at in contemplation, it cannot the same time to become secu. stand; but if the preference rity to the creditors for so be given to a creditor, under much as the estate should pro

apprehension, however duce; whereupon the acceptor groundless, of legal process (as paid it, and four days after this is a sufficient indication became bankrupt; and it also that the act is not fraudulent), appeared that the bill had such preference will be valid ; been altered so as to make it for, per Lord Mansfield, in fall due before this transac. Thompson v. Freeman, 1 T. R. tion, but without the defend155.-“ A bankrupt, when in ant's knowledge: the Court contemplation of his bank- of C. P. held, that this was ruptcy, cannot, by his volun- sufficient proof of fraudulent tary act, favour any one cre- preference to defeat the payditor; but if under fear of le- ment of the bill. Singleton v. gal process he give a prefer- Butler, 2 B. and P. 283. But ence, it is evidence that he where a creditor, in contemdoes not do it voluntarily. plation of bankruptcy, and


without solicitation, sent three changes the complexion of

1817. checks into the hands of his things both in civil and crimiclerk, to be delivered to a cre- nal cases. “Thus, (per Heath, ARBOUIN ditor at the counting house of Just.) if thieves, under pretence the latter ; but before they of legal process, persuade those HANBURY

and Another were delivered the creditor within the house to open the called

upon the trader, and de. door, and then rush in and manded payment of his debt, rob the house, it is nevertheLord Ellenborough held, that less burglary, for the law will though there was an intention supply the breaking, because of giving a voluntary prefer- the device by which they enence, that intention not hav. tered was in fraudem been consummated, the But it is not sufficient to impayment stood good. “The peach a payment, that the intermediate demand,says his debtor voluntarily pay his creLordship, “takes it out of the ditor, unless at the time he so cases hitherto decided upon pay him he has an act of bankthis subject.” Bayley v. Bal- ruptcy in contemplation. If lard, i Campb. Rep. 416. See a father advance portions to likewise 1 Starkie, 150, and his children, such advance is Alley v. Hotson, 4 Campb. 325. voluntary, but not fraudulent,

But if a debtor, at the in- unless in contemplation of stance of his creditor, gives bankruptcy. Id. ibid. goods out of his shop, in part So, where a trader delivered payment of a bond not then

a quantity of goods to the de. due, and shortly afterwards fendant, who was under ac. become bankrupt, the mere ceptances for such trader paycircumstance of the bond not able at a future day, which debeing due will not alone vi. livery of goods was, clearly, tiate the part payment, on the not voluntary by the trader, ground of fraudulent prefer- but made in consequence of

Hartshorn v. Slodden, the urgency of the defendant 2 B. and P. 582. For a bank- to be indemnified in case of the rupt, as we have already said, non-payment of the accepthas the disposition of bis pro- ances; the transaction being perty till the moment when he bona fide, and not colourable, commits an act of bankruptcy; was held not to be such a volun. and unless he dispose of it in tary preference on the part of fraudem legis, his transfer will the trader (who afterwards bebe good. Fraud, indeed, came bankrupt) as would ren.


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