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2d. Who ting him to prove under this statute, because he being the person pri may prove marily liable to pay such bill or note cannot be considered as a person 3. Where giving credit on such securities within the meaning of that statute. But a person who has indorsed a bill at the request of another may fairly be considered as giving credit within the meaning of the statute, which enables" any person who shall give credit upon such securities to any "person or persons who shall become bankrupts upon a good and valu"able consideration for any sum or sums of money, or other matter or "thing whatsoever, which shall not be due at the time of the bankrupt"cy," to prove such bill or note. The question is whether such an accommodation indorser can be considered as a person giving credit on such securities for "money or other matter, or thing," within the meaning of the statute. Now we have seen that in the case of cross bills, the acceptance on one side is deemed a sufficient consideration for the acceptance on the other, to enable a party, liable to pay his own acceptance, to prove the acceptance of the other party under the commission of those who have become bankrupt, and that where there has not been an exchange of bills, yet if a bill or note, payable at all events, has been given by way of indemnity it may be proved; and we have seen, that [450] when a bill has been taken up by an indorser for valuable consideration, although after the act of bankruptcy, he may prove under the commission. If the acceptance of a cross bill, or the holding of a bill or note, by way of indemnity, is to be deemed a sufficient consideration to enable the party to prove the bill or note in his possession, it must be on the ground that his liability on that paper, which he himself is bound to take up, is a good and valuable consideration for "other matter or thing" besides money, within the meaning of the statute 7 Geo. 1. c. 81. The decision in Howle v. Baxter, 3 East, 177, is only sustainable upon this ground, for in that case the plaintiff had neither advanced money or credit in the way of trade before the bankruptcy, and was merely an accommodation party, who had afterwards paid the bill. It is true that the words in the preamble of the 7 Geo. 1. c. 32. afford only a presumption of an intention in the legislature to assist those merchants and traders who were obliged to sell their goods on trust or credit, and take bills and notes in payment for thein. But the preamble cannot control the express enacting words, "for money, or for other matter, or thing whatsoever. There appears to be no substantial difference in this respect between a transaction where in consideration of a party's indorsing a bill he receives another bill or note by way of indemnity, which it is admitted he may prove, and a transaction, in which a drawer or indorser hands over a bill or note in his possession to the same party and obtains his indorsement by way of giving credit to the instrument, without giving such cross security. In the latter case, according to the decision in Howle v. Baxter, 3 East, 177, the principle of which appears to over-rule the cases of Howis v. Wiggins, and Brooks v. Rogers, the transaction implies that in consideration of the accommodating party

Ante, 443, &c.

Ante, 443, &c. u Ante, 447.

* In 1 Co. B. L. 188, it is observed, that there is a legislative construction of this very act in 5 Geo. 2. c. 30. s. 22. which, without conceiving a doubt, takes it for granted that the statute is not merely confined to securities for goods sold and delivered in the course of trade, but that it ex

tends generally to all personal securities for a valuable consideration, where the time of payment is certain though postponed to a future day, and several cases are collected to prove this position. But it is observable that the section alluded to, only meztions securities for their money payable at a future day, by which they are enabled to prove their debts, and consequently the words of the statute are less general thas are supposed.

becoming so, the party accommodated gives to him all the beneficial in- 2d. Who terest which a bona fide indorsee can have, and when he has actually may prove. been obliged to pay the bill, though after the bankruptcy, he is entitled 3. Where to prove. This question, however, is of considerable difficulty and can- security. not be considered as fully settled.

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of holder's

Fourthly, We have seen that a surety or party to an accommodation [451] bill, having no absolute counter security, cannot, in some cases, come 4. Benefit in as a creditor directly, in his own right, if he has not paid till after the bankruptcy of the principal. Yet if the creditor has proved the whole debt before he called upon the surety, the court will direct that he shall stand as a trustee for the surety, and will allow the latter (or, in case he too has become a bankrupt, and his estate has paid dividends on account of the principal, will allow his assignees) to have the benefit of the principal creditor's proof, and to receive dividends upon it, but so as that no more shall be paid than 208. in the pound upon the whole debt.


And a court of equity on a bill filed for that purpose, and on the surety's bringing the money into court, has ordered the creditor to go before the commissioners, and prove his debt for the benefit of the surety, and stayed his proceeding at law against the surety till he had done so. An accommodation acceptor is entitled to the same benefit of proof. And where the surety, previous to the proof by the creditor under the commission against the principal, had lodged the amount of the debt with a banker in trust for the creditor, the surety has been permitted to retake the money for the purpose of enabling the creditor to prove against the principal. Where, however, a banker having money of the bankrupt's in his hands, paid it after notice of the act of bankruptcy, though to creditors whose debts were antecedent, and who would have been entitled to prove under the commission, yet he will not be permitted to stand in the place of those creditors so paid, and to receive dividends thereon with the other creditors.5


In Ex parte Mathews, it was held, that if the drawer of a bill [ 452] up and pay the whole bill, after the indorser has proved it under the commission against the acceptor, the drawer has an equitable right

y Cullen, 131, 132. 1 Mont. 154, 155. But see Lord Ellenborough's observations in Buckler v. Buttivant, 3 East, 82. * Ante, 448, &c.

See the observations of Lord Eldon in Ex parte Rushforth, 10 Ves. 420.

bEx parte Ryswiche, 2 P. W. 88. Ex parte Marshall, 1 Atk. 129. Ex parte Atkinson, Cooke, 210. Cullen, 156.-1 Mont. 135. 158, 9.

e Waight v. Simpson, 6 Ves. 734. Ex parte Atkinson, Cooke, 210. Beardmore v. Cruttenden, Cooke, 211. Cullen, 156. 1 Mont. 135. 159. Ex parte Rushforth, 10 Ves. 412. 414.

d Philips v. Smith, Cooke, 211. Cullen, 156. Mr. Cullen, in his work, p. 156, n. 55, says, "Is this to be considered as established, that sureties, having merely conditional securities, and not paying till after the bankruptcy, may come in place of the creditor, and receive dividends? Are they to be so favoured beyond all

other creditors, and without relief to the
bankrupt? For such sureties may still,
after receiving under the commission, re-
cover the residue of their debt against the
bankrupt afterwards, they not being bar-
red by his "certificate." The statute

49 Geo. 3. c. 121. s. 8. precludes a surety
who can prove, as there pointed out, from
suing the bankrupt when he has obtained
his certificate, and in effect, prevents
him from receiving a greater dividend
than any other creditor, see post, 454.
The argument, therefore, in Paley v.
Field, 14 Ves. 437, 438, is no longer ma-

• See Lord Eldon's observations in Ex
parte Rushforth, 10 Ves. 417. Ex parte
Turner, 3 Ves. 243.

Ex parte Atkinson, Cooke, 219.-1
Mont. 135.

8 Hankey v. Vernon. 3 Bro. 313. Cul-
len, 158, 9.

h 6 Ves. 285. 734. 1 Mont. 147.

3d. Who to the benefit of the proof made by the indorser. If the payment by may prove the surety be after the bankruptcy of the principal, and before the 4. Benefit creditor has proved the debt, it cannot be proved either by the creditor of holder's or by the surety. The creditor cannot, in such case, prove, because


he cannot swear to an existing debt, and the surety cannot prove, because his payment is after the bankruptcy. It is therefore in general advisable for an accommodation party to compel the holder of the bill to prove before he pays the amount. When such proof has been made, and in consequence of the party proving, having afterwards received his debt from the surety, such proof has been expunged, it may, in some cases, at the instance of the surety, be reinstated for his benefit. But the creditor cannot be turned into a trustee for the surety, to the prejudice of any right the former may have against the principal debtor's estate, on a future and distinct demand; and in such case, the surety will only be allowed such part of the dividend as will remain, after allowing out of it to the creditor, as much as will make up the proportion which he would have received, upon the residue of the debt proved beyond the debt to the surety, if this debt had been expunged. Thus, in the case of Ex parte Turner," the petitioner had lent his name by acceptance and indorsement for the accommodation of the bankrupt, who discounted the bills so accepted and indorsed with Snaith and Co. After the bankruptcy, upon the application of Snaith and Co., the petitioner paid the full value of those bills, amounting to £815. 158. to them. They were creditors of the bankrupt to a much larger amount, and they proved their whole demand, including the amount of the bills received from the petitioner. The petitioner prayed that Snaith and Co. might assign to him the dividends due upon the proofs, in respect of the bills which he had paid. The Lord Chancelfor observing that Snaith and Co. could not be turned into trustees to the prejudice of any right they might have, made the order, that Snaith and Co. should take out of the dividend upon the £815. 158. so much as would make up the proportion, which they would have received upon the residue of the debt proved beyond the £815. 158. if that debt of £815. 158. had been expunged, and the rest of the divi [453 dend upon the £815. 158. belonged to the petitioner; and that the dividend should remain in the hands of the assignees, till it shall appear what proportion Snaith and Co. are entitled to. But in the case of Ex parte Rushforth" this doctrine was qualified, and it was held that bankers who had proved their whole demand against the principal be yond the amount of their claim on the surety, who had guaranteed advances to that extent, were bound upon payment to them by the surety of their whole demand on him to give him the whole benefit of their proof to that extent against the principal, on the ground that it was not competent to such bankers to go on giving an enlarged credit to such principal without the concurrence of their surety, so as to preju dice his equitable right to the benefit of their proof. So, in the case of Paley v. Field, it was held that a surety for indemnity to a limited amount, having paid to the extent of his engagement, is entitled to dividends upon proof by the creditor under the bankruptcy of the prin

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cipal debtor; subject to a deduction of the proportion of the dividend 2d. Who upon the residue of the debt proved beyond that for which the surety may prove. was engaged, supposing that expunged. And the Master of the Rolls 4. Benefit said, "If, in consequence of those ulterior advances, the bankers are proof. to keep dividends of which they would otherwise be trustees for the plaintiff, does not he contribute in effect to indemnify them for a loss, "against which it is expressly provided that he shall not be called upon "to indemnify them, viz. a loss occasioned by their advancing more "than the sum of £1500? It is clear then as between these parties "that sum is to be considered as the amount of the debt. The law, resulting from that view of the facts, is not a subject of controversy between the parties; for it is agreed upon that statement, the plaintiff is entitled to the equity he seeks by his bill, to consider them as "trustees for him of whatever dividends they draw from the bankrupt's estate on account of this sum of £1500." It was, however, held in the same case, that the surety is not entitled to the benefit of the proof made by the creditor against other estates upon a distinct security, with which the plaintiff had nothing to do.



prove un

Fifthly, Many of the difficulties with respect to the proof by a surety, 5. When a who has no cross paper or counter security to indemnify him, are re-surety moved by the Statute 49 Geo. 3. c. 121. s. 8., which enacts, "That person liain all cases of commissions of bankruptcy already issued, under may "which no dividend has yet been made, or under which the creditors, der 49 Geo. "who have not proved, can receive a dividend equally in proportion 3. c. 121. to their respective debts without disturbing any dividend already s. 8.P "made; and in all cases of commissions of bankrupts hereafter to be [454] "issued, where, at the time of issuing the commission, any person shall "be surety for, or be liable for any debt of the bankrupt, it shall be "lawful for such surety or person liable, if he shall have paid the debt, "or any part thereof in discharge of the whole debt, although he may have paid the same after the commission shall have issued, and the "creditor shall have proved his debt under the commission, to s'and in the place of the creditor as to dividends upon such proof; and "when the creditor shall not have proved under the commission, it "shall be lawful for such surety or person liable, to prove his demand in respect of such payment as a debt under the commission, not disturbing the dividends, and to receive a dividend or dividends "proportionably with the other creditors, taking the benefit of such commission, notwithstanding such person may have become surety or liable for the debt of the bankrupt after an act of bankruptcy had "been committed by such bankrupt; provided that such person had "not, at the time when he became such surety, or when he so became liable for the debt of such bankrupt, notice of any act of bankruptcy "by such bankrupt committed, or that he was insolvent, or had stop"ped payment; provided always that the issuing a commission of bankrupt, although such commission shall afterwards be superseded, shall be deemed such notice. And every person against whom any such

P See Bayl. 198, n. 1.

9 In Laxton v. Peat, 2 Campb. 186, Lord Ellenborough considered an accommodation acceptor as in the nature of a surety for the drawer.

A surety who is not able to pay in time to avail himself of this clause, may, it is apprehended, still avail himself of the right of compelling the holder to prove CHITTY ON BILLS.

for his benefit, see ante, 443. 449, &c. sed

This means not compelling the cre-
ditors to refund any part of the dividends
received. A point was made in 12 East,
664, but not determined. 1 Sch. & Lef.


Means a general insolvency, &c. 1
Campb. 492, in notes.
3 F

2d. Who may prove

surety may

commission of bankrupt has been, or shall be awarded, and who has obtained, or shall obtain his certificate, shall be discharged of all de"mands at the suit of every such person having so paid, or being hereprove un-"by enabled to prove as aforesaid, or to stand in the place of such creder 49 Geo. ❝ ditor as aforesaid, in regard to his debt in respect of such suretyship "or liability in like manner, to all intents and purposes," as if such "person had been a creditor before the bankruptcy of the bankrupt, for the whole of the debt in respect of which he was surety, or was so lia

3. c. 121.

"ble as aforesaid."

Upon this statute it has been decided that an accommodation acceptor is a person liable for the debt of the bankrupt drawer, and may [455]prove under his commission, and if an acceptance for the accommoda tion of the drawer of a bill be given before, and renewed after he has committed an act of bankruptcy, such renewal is a continuation of the same suretyship; and therefore if a commission of bankruptcy be issued against the drawer, and the accommodation acceptor afterwards pay the bill, he will be entitled to prove the amount under such commission; though, before the renewal of the acceptance he had notice of such act of bankruptcy having been committed.y Nor will the case be varied in principle, by the circumstance of the holder of the first bill having, before the renewal, given time to the drawer; or by that of an additional name, as that of an indorser having been lent upon the second bill.z

And it has been decided, that if an accommodation acceptor having paid the bill, afterwards sues the drawer as for money paid, and having obtained judgment, assigns the judgment debt to a third person, such assignee of the debt may prove the original debt under the commission against the drawer, and the judgment debt, though greater than the original debt, will be barred by a certificate. So where a bill after proof under a commission against the acceptor, was paid by the

a Under these words it has been held that the bankrupt, if sued, must nevertheless plead his certificate, and cannot give it in evidence under the general issue. Stedman v. Martinnant, 12 East, 664.

* Ex parte Yonge, 3 Ves. & Bea. 40, and see next note.

y Stedman v. Martinnant, 13 East, 127. 12 East, 664. S. C. On the 5th of January, 1807, the plaintiff accepted a bill for the accommodation of the defendant the drawer, which became due on the 19th March, when it was dishonoured. On the 18th March, 1807, a docket was struck against the defendant, and on the 21st, a commission of bankrupt was issued, which was superseded on the 15th of April. A meeting of the defendant's creditors was then held when time was given to him to pay his debts by instalments. On the 9th of June, 1807, the plaintiff accepted a second bill for the defendant, in order to take up the former one, for the same sum with the addition of interest and stamp; and the indorsement of a third person was lent as an additional security, which was required by the holders of the former bill. On the 6th of August,

1807, a valid commission
was issued
against the defendant, founded on an act
of bankruptcy committed in the preceding
March. The second bill became due on
the 12th of September, 1807, when the
plaintiff paid it. The first dividend under
the commission was declared and made on
the 6th of August, 1808. On the 4th of
September, 1809, the defendant obtained
his certificate. In an action for money
paid, and the bankruptcy and certificate
pleaded, a verdict was found for the
plaintiff, subject to the opinion of the
court, as to whether the certificate was a
discharge. The court (Le Blance, J. ab-
sente) held, that the second acceptance
was a continuation of the same suretyship
which was created by the first, and that
as such suretyship commenced before any
act of bankruptcy committed, and con-
sequently before the plaintiff could have
any notice of such act, the plaintiff
might, by 49 Geo. 3. c. 121. s. 8. have
proved his demand under the commission,
and therefore the certificate was a bar.
Postea to the defendant.

z Id. ibid. Bayl. 200.

Ex parte Lloyd, 1 Rose, 4.

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