COURT OF COMMON PLEAS.
EASTER TERM.

[Before ERLE, C. J., BYLES and SMITH, JJ.]
LYNE v. WYATT.-April 29.

Bankruptcy Act, 1861-Deed of arrangement-Unreasonable clause-Forfeiture-24 & 25 Vict. c. 134, s. 192.

or immemorial custom, but it was not part of the inci- | perly so denominated. The question is, in fact, one dents of a grant by charter. But it was equally certain for the justices, who have drawn a certain conclusion that another person could not set up in the place where from certain facts; and without taking upon myself a market had been granted that which was in effect to say that the magistrates were right, I think, neveranother market. In Mosley v. Walker (7 B. & Cr. 53), theless, that we ought not to interfere with their deBayley, J., says, it was decided in Mosley v. Chadwick, cision.-Conviction affirmed. "that the lord having a right of market in a particular place, a stranger could not lawfully set up what in reality was a different market in that place." When, therefore, this statute was passed, the law was, that a person, notwithstanding the grant of a modern market, might still continue to sell in his own shop or dwelling-house, but could not set up what was equivalent to another market; and this brings us to the question, what is meant by the term "shop?" If so, it is within the exception; but if what the seller did amounts to the setting up of another and rival market, that is not within the exception; and as it would have rendered him liable at common law to an action at the suit of the grantee of the market, so, in like manner, he will be liable to penalties under the statute. In the case before us there is no element which is conclusive of the character of the structure in question, but the magistrates, in giving the reasons for their decision, appear to sum up, very correctly and properly, the various circumstances which operated in their minds in arriving at a conclusion. First, they say the structure was not of a substantial and permanent character; secondly, that all that was done amounted to nothing more than an attempt to evade the act; thirdly, they rely upon the size and unsubstantial nature of the structure, and the short term for which they were let by the proprietor. These, as it appears to me, were the proper elements for consideration; the justices have based their decision upon those facts, and we ought not to review it. I may also say, that upon the same facts I should myself have come to the same conclusion.

Declaration on a bill of exchange. Plea, a deed of arrangement under the Bankrupt Act, 1861, containing a covenant by the creditors, parties to the deed, not to sue or impede the debtor in respect of their several debts, and that if any of them should do so, that the debtor should be discharged from all demands whatsoever of the creditor by whom he should be sued:-Held, that if the clause of forfeiture was intended to bind non-executing creditors the deed was bad, and if not binding on none.cecuting creditors, the deed was no defence to the action, the plaintiff not having executed the deed.

Declaration. The first, second, and third counts on three bills of exchange, drawn by one Stephen Escudier on, and accepted by, the defendant, and indorsed by the said Stephen Escudier to the plaintiff.

Fourth count, on a bill of exchange drawn by the defendant, and directed to the London and Westminster Bank, and delivered and payable to the said Stephen Escudier or bearer, and that the said Stephen Escudier, being the bearer of such bill, indorsed the same to the plaintiff.

Fifth count, money payable on accounts stated.

MELLOR, J.-It seems to me that every possible argument has been urged against the decision of the justices, but I am nevertheless of opinion with my Plea to the whole declaration:-That after the acBrother Blackburn. I think the obvious intention of cruing of the said cause of action in the declaration the act in question was to introduce into special acts, mentioned, and after the 11th October, 1861, and after for the erection of markets, clauses which should be the commencement of this suit, and before the plainavailable for, and adapted to, meet all circumstances tiff declared therein, the defendant being a debtor and contingencies; that it should, in fact, have such unable to meet his engagements within the meaning operation in respect of markets as the Railway Clauses of the Bankruptcy Act, 1861, a deed was made and Consolidation Act has in respect of railways. The entered into between the defendant of the first part, object of the statute was, on the one hand, to give the and certain parties, trustees therein mentioned, of the inhabitants of newly-inhabited districts the advantage third part, related to the defendant's debts and liaof markets, and, on the other hand, to protect the bilities, and his release therefrom, the same being a rights of those conferring that advantage; and it deed executed by the said trustees, and by certain creseems likely and reasonable that the Legislature, while ditors of the defendant, and by the defendant being prohibiting any one but a licensed hawker to sell such debtor, within the true intent and meaning of the within the limits of an established market, should ex- Bankruptcy Act, 1861; and which said deed, with the empt from the penalties of the act persons selling schedule threunder written, was in the words and goods in their own dwelling-houses and shops. I agree figures following, that is to say:-"This indenture, with my Brother Blackburn, that none of the reasons made the 29th day of February, 1864, between the alleged by the justices in support of their decision, said George Wyatt, the debtor, of the first part, and separately considered, would be conclusive; but taken certain trustees of the second part, and the several conjunctively, they appear to me amply sufficient. other persons whose names and seals are hereunto With respect to the word "shop," I think it must be subscribed and affixed in the schedule hereunder writtaken to mean something more than a place of sale; ten, being creditors of the said debtor in their own it seems to import a capacity for storing goods, when right, solely or in co-partnership with others, of the the goods are of such a nature as to admit of being third part. Whereas the said debtor is indebted unto stored; such, for instance, as the stock-in-trade of a his creditors in divers sums of money, and particu draper; though in the case of fish, or the like perish-larly unto the said several parties hereto of the third able articles, this capacity would be wanting; nevertheless, the fishmonger's place of business, if in other respects fulfilling the idea of a shop, would be pro

part, in the several sums of money set opposite their respective names, and being unable to pay all his creditors in full, he has agreed to execute the assignment herein contained. Now, this indenture witnesseth, that in consideration of the sum of 58. of lawful English money, by the said trustees paid unto the said debtor at or before the execution hereof, the receipt whereof

in this case is, whether the deed pleaded in bar to the plaintiff's action is a good defence to the action. This depends on whether the deed is valid, under the 192nd section of the Bankrupt Act, 1861, so as to be binding on creditors who were not parties to the deed, for the plaintiff did not execute the deed. A deed can only be operative without a release clause, by being within the provisions of the Bankruptcy Act. If the deed is within the provisions of that act, it is clearly valid without any release clause. The Bankruptcy Act would give effect to such a deed without the release clause, or any covenant not to sue. If the defect was, that there was no such clause, the deed would be good, under the 192nd section of the Bankrupt Act, 1861. The cases which have been referred to in the course of the argument of Spitzer v. Chaffers and Hidson v. Barclay, are authorities in support of the proposition, that a deed containing a clause of release, or a covenant not to sue, is a good bar to an action, and may be pleaded as such; but if the clause goes beyond a release or covenant not to sue, and creates a forfeiture of the debt, the deed is void as against creditors who are not parties to the deed. I think the present deed is bad for these reasons, and is no bar to the plaintiff's action. The deed provides that the several persons, parties thereto of the third part, being the respective creditors, do for themselves severally and respectively, and for their several executors, administrators, and partners, covenant and agree with the said debtor, that they will not at any time sue, arrest, take in execution, or otherwise

including the plaintiff, as if he was a party to and had duly executed the same; and a majority in number representing three-fourths in value of the creditors of the defendant, whose debts respectivvly amounted to 107. and upwards, in writing assented to and approved of the said deed; and the said trustees appointed by the said deed duly executed the same; and the execution of the said deed by the defendant was attested by an attorney; and 'within twenty-eight days after the execution of the said deed by the defendant, the same was produced and left (having been first duly stamped) at the office of the chief registrar in bankruptcy for the purpose of being registered; and, together with the said deed, there was delivered to the said chief registrar such affidavit and certificate as by the Bankruptcy Act, 1861, is in that behalf required; and such deed before registration bore such ordinary ad valorem stamps as in the said last-mentioned statute is provided; and immediately, on the execution of the said deed by the defendant, possession of all the property comprised therein, of which the defendant could give or order possession, was given to the said trustees; and the said deed was within twenty-eight days from and after the execution thereof by the defendant, duly registered in the Court of Bankruptcy; and notice of the filing and registration of the said deed was duly given as required by the statute; and a certificate of the filing and registration of the said deed under the hand of the chief registrar and the seal of the Court of Bankruptcy, was duly granted to the defendant; and at the time of the execution of the said deed as afore-impede or incumber the said debtor in any mansaid the plaintiff was a creditor of the defendant in ner on account of their said several debts, and that respect of the claim herein pleaded to, within the if any of them should do so, contrary to the intent meaning of the Bankruptcy Act, 1861; and all things and meaning of the deed, that then the said debtor, have been done and have happened to cause the said his executors, &c., should be declared to be acdeed to be and enure; and the same was and is a re-quitted, exonerated, and for ever discharged of and lease to the defendant of and from the said claim of the plaintiff in the introductory part of this plea mentioned.

Demurrer, and joinder in demurrer.

from all actions, suits, debts, and demands whatsoever of the creditor or creditors by whom he should be so sued, arrested, attached, taken in execution, or otherwise impeded or incumbered; and that this clause J. Brown, Q. C., in support of the demurrer. The might be pleaded in bar to any action as effectually as deed is no bar to this action; it may be binding on a release under the hands and seals of such creditors. the creditors who were parties to it, but it cannot be respectively might be. There can be no doubt what binding on the creditors who did not assent to it. is the intention of this provision; it clearly means, The plaintiff never executed the deed. The clause is that if any creditor brings an action to recover his unreasonable, and if the clause had said that it was to claim, he shall forfeit such claim. Then, it appears to bind non-subscribing creditors, the deed would have me, that if non-subscribing creditors are to be bound been bad. But by the very terms of the deed, the by this deed by reason of the statutory enactment, the proviso is only to bind those creditors who executed case is within the authority of Dell v. King, where it the deed. The covenant not to sue only applies to was held, that a clause in a composition deed procreditors who executed the deed. The Court has ex-viding, that "if any of the creditors should break or pressly held, that a clause which affects to bind sub-contravene a covenant not to sue contained in that scribing creditors does not bind non-subscribing creditors. Such a clause has been expressly held to be unreasonable. [He cited Legg v. Cheesebrough and Another (5 C. B., N. S., 741); Macnaught and Another v. Russell (1 H. & Norm. 611); Dell v. King (10 Jur., N. S., 427); Eyre v. Archer (Íd. 802); The Ipstone Park Iron Ore Company v. Pattinson (Id. 427); and Hidson v. Barclay (Id. 751).

deed, that then the said debtor should be absolutely released from the debts of such creditor;" and it was held, that such a clause vitiated the whole deed, though the deed was properly executed under the act; and I certainly think it would be unjust and unreasonable that a certain creditor should be debarred from bringing an action to recover his debt, because a majority of the creditors chose to enter into such a covenant. It is said that the deed is valid, on the authority of Legg v. Cheesebrough. That was the case of a deed of arrangement, under the Bankrupt Act of 1849; and there was a covenant not to sue, and a clause to the effect, that if any creditor, by whom or on whose behalf the deed should have been actualy executed, should act contrary to such covenant, tha in such case the debtor should be absolutely discharged from all claim, and the deed was held to be no bar. the plaintiff not having executed it. It is perfectly clear that a deed containing a release, and a prov.so that the debt shall be forfeited on a breach of the ERLE, C. J.-The question raised for our decision covenant not to sue, is valid if it is only to apply to

Sykes, in support of the plea.-The deed is perfectly valid; it is for the benefit of all the creditors. The clause is not unreasonable, and is, therefore, binding on this plaintiff, though he was not a party to the deed. The clause objected to is only, in fact, a release. The deed, under sect. 192, is to bind all creditors, if the provisions of the act of Parliament are complied with. [He cited Clapham v. Atkinson (4 B. & S. 722); Wells v. Hacon (33 L. J., Q. B., 204); Spitzer v. Chaffers (14 C. B., N. S., 685); and Garrod v. Simpson (3 H. & C. 395.]

Brown, Q. C., in reply.

SMITH, J.-I am of the same opinion. The case of The counsel for the defendants, at the trial, called Legg v. Cheesebrough is an authority, that as the plain- the attention of the learned judge to the case of Smith tiff was not a party to the deed, this clause has no v. Timms (7 Jur., N. S., 1015); but the learned baron operation. The defendant must shew that the clause left the case to the jury as follows: he said, "The operates as against non-executing as well as executing question I propose to leave is, whether in taking into creditors; but if this be so, then the case of Dell v. consideration that Rushworth possessed the property King is an authority that such a clause if binding you have heard of, did the property comprised in the non-executing creditors is unreasonable, and there-bill of sale substantially comprise all the property of fore would vitiate the whole deed. I therefore think the plea is no defence to the action.-Judgment for the defendant.

A trader having transferred by bill of sale all his stock-jury, to be determined by them according to the cir

and bought carts and horses with the product of the
sale, and such goods, by the terms of the bill of sale,
were immediately to become the property of the de-
fendant. Now, whether this bill savours of moral
fraud or no, it certainly is a fraud upon the bankrupt
law. The real state of the law is well set out in the
case of Graham v. Chapman (12 C. B., N. S., 852).
Smith v. Timms purports to follow Pennell v. Reynolds
(11 C. B., N. S., 709). See also Ex parte Wensley (1
De G., J., & S. 273); Goodrick v. Taylor (10 Jur., N. S., |
414); Wedge v. Newlyn (4 B. & Ad. 831); Ex parte
Bailey (22 L. J., Bank., 45); Worsley v. De Mattos
(1 Burr. 467); and Wilson v. Day (2 Burr. 827).

be unable to carry on his business. My Brother Martin left it to the jury to say whether the property comprised in the bill of sale substantially comprised all the property available for the purpose of enabling the bankrupt to carry on his trade, and did the defendant know that putting in force the bill of sale would have that effect? I see no objection to that way of leaving the case to the jury. By the 12 & 13 Vict. c. 106, s. 67, "if any trader, liable to become bankrupt, shall make, or cause to be made, any fraudulent gifts, delivery, or transfer of any of his goods or chattels, with intent to defeat or delay his creditor, he shall be deemed to have thereby committed an act of bankruptcy." In Field and Wills, contra.-The case of Smith v. this case there was a transfer of goods. The necessary Timms is conclusive. According to that decision the effect of that transfer was to defeat and delay the question for the jury was, whether the exception from creditors. Every man is held to intend that which is the bill of sale of Rushworth's property was substantial the natural consequence of his actions; and it was the or colourable only, and there was no evidence that it natural consequence of this transfer to defeat and dewas; even if there was any evidence, the verdict was lay the creditors; then, there is a transfer with intent wrong. In the case of Smith v. Timms, the Court had to defeat and delay creditors. The remaining question the power to draw inferences of fact. And the only is, was it fraudulent? It is contended, on the part of difference that can be found, on the closest examina- the defendant, that this word is important, and that tion, between that case and the present is, that in that the Court should be careful to attach an exact meancase the jury was not asked whether the necessary ing to it. Now, all the authorities agree that it is not consequence of the bill of sale was to defeat and delay necessary to find moral fraud; but the question is, creditors. But if that question had been put, it must whether the tendency is to defeat and delay creditors, have been answered in the affirmative. Therefore, and to prevent an equal division of the bankrupt's what is the value of the distinction reduced to? In property. In the case of Wilson v. Day, Lord Mans the case of Smith v. Timms the proportion of excepted field laid it down, that it was not necessary the deed property was far less favourable to the defendant than should be fraudulent between the parties, "but it is here. Further, the view taken on behalf of the plain-made to prefer A. B. to the bankrupt's other creditors." tiff dispenses altogether with any consideration of the word "fraudulent" in the statute. To satify the language of the act, there must either be moral fraud, or something which by law is ipso facto fraudulent. The transaction cannot be fraudulent merely because it tends to defeat and delay creditors, for if so, the word "fraudulent" is superfluous. [Pollock, C. B.-This is the first act of Parliament on the subject in which the word is used.] Fraudulent preference is equivalent to fraudulent gift. [They referred to Wilson v. Day (2 Burr. 827); Smith v. Cannan (2 El. & Bl. 35); and Worsley v. De Mattos (1 Burr. 467).]

POLLOCK, C. B.-I am of opinion that this rule must be discharged. It is only necessary to say, that the case of Smith v. Cannan establishes, that where a trader in insolvent circumstances conveys away so much of his property as prevents his carrying on his business, he thereby commits an act of bankruptcy. The man in the present case was insolvent to his own knowledge, and was well aware that if he disposed of his property by this bill of sale he could not carry on his business. It was not, then, necessary for the jury to see that there was fraud in this transaction, for it contained in itself elements which made it an act of bankruptcy, irrespective of fraud. Therefore, it is no objection to the verdict that the jury were not asked to say whether the transaction was fraudulent, which they would have taken in a moral sense. As for the promise that the vendee would not act upon the bill of sale, it was void ab initio; and it makes no difference that he would not have acted on it but for circumstances which occurred subsequently.

He says also, "The deed is an act of bankruptcy in itself; it defeats the whole bankrupt law." This view has since been followed in numerous cases, by numerous judges, including Parke, B.

MARTIN, B.--I think, not only that the verdict for the plaintiff was right, but that if it had been for the defendant, I might have been charged with misdirec tion. The case of Ex parte Wensley, and other cases in bankruptcy, go fully this length. The question was, whether this was an act of bankruptcy. The man's circumstances were, that he had carts and horses which he let for hire as a coal agent, and had also some property in mortgage. He knew the assignment of his goods would stop his business. The view urged for the defendant was, that if the property reserved bears a fair proportion to that conveyed, there is no fraud. But that is a fallacious view, for the property reserved in this case was not available, and the doctrine cannot be properly applied with respect to it. On a proper construction of the law, this was a fraudulent transfer. With regard to the case of Smith v. Timms, I believe that all the Court meant to lay down in that case was, that in the absence of any finding of the jury, they would not take upon themselves to draw inferences of fraud.-Rule discharged.

CROWN CASES RESERVED.
COURT OF CRIMINAL

EASTER TERM.

APPEAL.

PIGOTT, B.—In this case the whole of the property [Coram ERLE, C. J., CHANNELL, B., and BLACKBURN,

was not conveyed away, nor the whole with a colourable exception, which amounts to the same thing. But the whole of the stock-in-trade was conveyed away, and all the stock-in-trade which might be hereafter acquired; the equity of redemption in land and the book debts being reserved. The question is, whether the conveyance of a part of the property is, under these circumstances, an act of bankruptcy? Now, the defendant and the insolvent were both aware, that if the bill of sale were put in force, the insolvent would

MELLOR, and SMITH, JJ.]
REG. v. MORRIS LEVI.-May 6.

Bankruptcy-Evidence.

The 223rd section of the Bankrupt-law Consolidation Ad, 1849, which makes the Gazette containing the adverti ment of the bankruptcy conclusive evidence of the validity of the adjudication, applies to all cases against the bankrupt, both criminal as well as civil.

Case reserved by Martin, B., at the last Warwick