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4thly, Toing to such society, and pay out of the assets or effects all sums of tent proof money remaining due, which such person received by virtue of his be office, before any of his other debts are paid or satisfied. It seems that this provision of the legislature, in preferring the claim of friendly Friendly societies to the claim of all other creditors, is not favoured. If an societies. attorney is, from the commencement of the establishment of a friendly society, in the habit of receiving from the stewards the money of the society, whenever it amounts to a sum which they consider worth placing out at interest; and of giving them promissory notes from time to time, carrying interest; and the attorney becomes a bankrupt, and indebted to the stewards upon promissory notes payable on one month's notice, and no person has been appointed tresurer, the society is not entitled to a preference. If no treasurer has been appointed by the society, and the president and steward are chosen annually, and the bankrupt has served the office of president and steward in different years, and in the capacity of steward has received the money of the society, and money is afterwards from time to time paid to him by the stewards and clerks, by order of the society, upon promissory notes bearing interest, given by him in the name of a firm of which he is a member, to the president and stewards, the society is not entitled to a preference. A debt upon money lent by the consent of the society, upon a promissory note carrying interest, seems not to be entitled to a preference. A debt upon money lent to a member of the society, upon his security, after he ceases to be an officer of the [463]society, is not entitled to preference. And in Ex parte Stamford Friendly Society, it was held, that the preference given to friendly societies by the statute 33 Geo. 3. c. 54. s. 10, over other creditors, was confined to debts in respect of money in the hands of their officers, by virtue of their offices, and independent of contract, and therefore does not extend to money held by the treasurer, upon the security of his promissory note, payable, with interest, on demand.

Interest.

b

The interest, which is recoverable at law, has already been stated.s With respect to the proof of interest under a commission, the rule appears to be, that whenever, by the express terms of the bill or note, interest is reserved, or where there is a contract or agreement between the parties, that the debt shall carry interest, it is payable. Accord ingly it has been held, that even upon notes payable on demand, not reserving interest, the interest might be proved, where it appeared to be the known and established custom of the trade to allow it, and that it had actually been paid by the bankrupt, and accounts settled with him, in which it had been charged, and allowed between the parties. But it is reported to have been decided, that interest is not proveable upon a bill or note, unless it be expressed in the body of the note, or there is a special agreement for the payment of it. In Ex parte Hankey, and Ex parte Mills," it was held, that where by the

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custom of a trade, interest is payable on a debt, and at the regular 4thly, To time of stating the accounts, the debtor is debited for interest, and afterwards becomes a bankrupt, the interest is proveable under his may commission, notwithstanding the debt was secured by four promissory made. notes, of which only one upon the face of it was payable with in- Interest. terest, and the other three were merely notes payable on demand. It has been laid down, that if the instrument is not expressed to be payable with interest, no interest is in general proveable;" it should seem, however, from the case of Parker v. Hutchinson," that interest is in general payable upon all bills and notes payable at a day certain, but not upon those payable upon a day uncertain, or shop notes: and though that case did not arise in bankruptcy, yet, as affording evidence of the agreement of the parties, it appears to be applicable to the case of bankruptcy, and seems to render the principle of the practice, excluding the proof of interest on bills payable at a day certain, [ 464 ] questionable. A creditor by bill or note is entitled to prove the whole interest due, whatever may be the amount, though a specialty creditor can never have interest beyond the penalty contained in his security.P And we have seen that the creditor may prove the full sum for which the bill or note was given, notwithstanding he received £5 per cent. discount, though the statute enacts, that upon bills and notes payable at future time, a rebate of interest shall be deducted from the actual payinent of the dividend, to the time when the security would have been payable.

When interest is allowed to be proved, it is never, in any case of an insolvent estate, allowed to be computed lower than the date of the commission, because it is said, the estate being a dead fund, a salvage of part to each is all that in such a general loss can be expected. And where the act of bankruptcy to which the commission relates, is ascertained, no interest is allowed after that act of bankruptcy. And in some cases of mutual credit, when both debts carry interest, the computation of interest should stop on both sides at the same time. But in the case of an estate which turns out to be solvent, and where a surplus comes to a bankrupt, creditors have a right to interest, up to the actual time of payment, without regard to the date of the commission," provided the instrument expressly entitles the holder to interest. Though the rule was formerly only to allow £4 per cent., it appears from the decision of Upton v. Lord Ferrers, that £5 per cent. is to be allowed. And this is analogous to the different statutes with regard to the rebate of interest.

Re-ex

The difference upon the re-exchange of bills protested, and re-drawn before the bankruptcy, is proveable under the commission, but if in-change. curred after the bankruptcy, it is not proveable. So the costs and charges of protesting bills incurred before the bankruptcy, may be

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4thly To proved, but not those incurred after the bankruptcy. But where exby the particular law of the country from which the bill is drawn, or be when by express stipulation the re-exchange, or costs and charges, are fixed at a particular rate, they may be proved under the commission, Re-ex- though not incurred till after the act of bankruptcy. Thus, by the law change. of Philadelphia, the drawer of a returned bill must pay its contents, with £20 per cent. advance, as liquidated damages; in this case, if he become bankrupt, the £20 per cent. may be proved under his commis sion, though the bill was not protested till after his bankruptcy.

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making claim.

Fifthly, The Time of proving and making Claim.

5thly. The From the preceding observations, it may be collected, that no unne proof and cessary delay should take place in making the proof, and we have seen that in some cases if the proof be delayed till after a dividend has been declared, though not received, it will prevent the holder from proving the whole amount of his bill uuder a commission against ano- | ther person. Formerly creditors were allowed to come in and prove their debts at any time within four months, and until distribution made, but they were not admitted after distribution actually made of any part of the estate; but now, except in case of gross laches, creditors are allowed to come in at any time, while any thing remains to be divided. And in Re Wheeler, it was decided, that a creditor coming in to prove his debt after a dividend made (provided the delay was not fraudulent, but owing to accident, or unavoidable circumstances) should be put on a footing with other creditors, before any further dividend was made. A creditor who has neglected to prove before a meeting to declare a second dividend, is, in strictness, only entitled to be paid future dividends, pari passu with the other creditors ; but it is the prac tice to permit such creditor to be paid former dividends rateably with those who have been paid, and then to direct a general distribution of the residue. Where a creditor has a reasonable cause for not having proved in time to receive a first dividend, he is, upon proving, entitled first to be placed on an equality with the other creditors who received a first dividend, but not so as to disturb a former dividend, and then to receive the future dividends rateably with the other creditors. The [466 mode of being admitted to receive in respect of former dividends, is by making an affidavit of the cause of delay, and by petition to the Chancellor, upon which an order may be obtained; and the assignees should not pay without it. We have seen, that in the case of a surety paying the debt of his principal after a commission against him, he may at any time prove under the commission, not disturbing the former dividends, and receive a dividend or dividends proportionably with the

Claim.

other creditors.1

Where a party may not be able to swear to the precise amount of his debt, secured by a bill or note, it is advisable for him to make a

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claim as a means of securing a dividend, when his proof is afterwards 5thly. The established, without the necessity of applying to the Chancellor; and time when a proper claim has been made, the dividend must be apportioned making for it, and be withheld, until the validity of the claim has been as- claim. certained.

Sixthly, The Mode and Terms of Proof, and Remedy for the

Dividend.

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The mode of proof of bills of exchange is governed by the general 6thly. The rules affecting proof under a commission in other cases, and conse- mode quently it will be here only necessary to consider the peculiarities in the proof, and case of bills. The ordinary proof is by oath of the creditor." When which adit is upon the bill or note, the form of the disposition varies according mitted. to the mode in which the creditor obtained the bill or note. Under a commission against the party from whom the creditor immediately received the bill or note, the deposition states, that the bankrupt is indebted to the deponent upon the consideration for the instrument, and alleges that no security has been obtained, except the bill or note; but when the bill or note has not been received from the bankrupt himself by the creditor, the deposition states, that he is indebted on the instrument, and then shows the means and consideration by which the deponent became the holder. And where bills have been deposited by way of pledge, the proof is upon the original debt, and the deposition concludes by stating the delivery of the bills as a security, the particulars of which, if numerous, may be stated in a schedule. Where several persons, whether general partners or otherwise, are the holders of the instrument, they must all be named as creditors in the deposition; but it is sufficient, if the deposition be made by one only of the [467] partners. If a bill has been lost, the proof must be admitted upon an indemnity. A creditor is obliged, at the time of proving his debt, to state in his deposition, whether he has a security or not; and every security must be produced at the time when he proves, and the commissioners will mark it as having been exhibited."

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In general, if a party insist upon proving under a commission, he must deliver up the security for the benefit of the creditors, or must apply to the commissioners to have the pledge sold, and to be admitted a creditor for the residue." And where a debtor, by way of collateral security, delivers a bill of exchange or promissory note, without his name appearing upon the paper, this is to be considered as a pledge, and not as an absolute transfer of the bill; and the creditor will not be allowed to prove under the commission against such debtor, and also to retain the securities, but must either give them up or obtain an order for the sale of them, and then prove for the deficiency. Where a creditor, by a debt partly proveable and partly not, under a commission of bankruptcy, has a general pledge, he may apply it to the debt not

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6thly. The proveable under the commission. If a security is deposited by a of debtor to indemnify his creditor for a balance then due, together with proof, and such further sums of money as shall be due to him for money to be which ad- advanced and paid for the debtor, either by bill accepted or to be accepted, and the debtor become a bankrupt, and the creditor, after the bankruptcy, pay various acceptances, he may apply the security, in the first place, to reduce the demand not proveable, on account of its not having been paid till after the bankruptcy." If a security is deposited by a drawer to indemnify the acceptor, who pays part of his acceptances before the bankruptcy of the drawer, and part after such bankruptcy, the acceptor may apply the security to reduce the demand paid after the bankruptcy."

But where the bankrupt did not merely deposit the bills or notes as a pledge, but indorsed them to the creditor, he has a right to retain the security and proceed against the other parties, and also to prove his whole debt at the same time under the commission, provided he has [468] not received part, or no dividend, under a commission against another estate has been declared, before he comes to prove, so that he do not receive more than 20s. in the pound upon his whole debt."

Proceeding Formerly a creditor, who had proceeded at law, might also prove his at law, and debt under the commission against the same party, renouncing any proving al- benefit under the commission so as to afford him an opportunity of

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preventing, as far as he could, the very remedy he had chosen, from being defeated by the rest of the creditors, discharging the person of the bankrupt by signing his certificate without his concurrence or control; and a party might also make a claim and still proceed at law. By the statute 49 Geo. 3. c. 121. s. 14, directs that a creditor, who has brought an action against a bankrupt, shall not be permitted to prove, or make a claim, without relinquishing such action, and that the proving, or claiming, a debt under a commission, shall be deemed an election by such creditor to take the benefit of the commission with respect to the debt so proved or claimed. This statute, however, does not affect the right of a person not being the petitioning creditor, to prove one debt under a commission, and to proceed at law for another. And in Ex parte Govesnor, Lord Eldon said, that if a creditor has a note for one sum and a bond for another, as the remedies and the relief under those securities are different, he may prove one debt and hold the bankrupt in execution for the other. But an entire demand cannot be split, and if there be a demand upon several notes of secu rities given in respect of the same transaction, it seems that the creditor cannot adopt there double remedies.

66

Reducing It sometimes happens, after a creditor has made his proof, that and expun- either from the disclosure of facts not before known or understood, it ging preof. appears that it ought not to have been admitted, or at least not to the extent; or that, from a change of circumstances, the state of the debt

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