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Where the bankrupt has accepted bills for goods which he has purchased, this does not divest the right of the vendor to stop the goods in transitu upon the bankruptcy of the vendee.'

6. Effect

of bankruptcy, &c.

2d. The


2dly. With respect to the property of others in the hands of a bankrupt, it is frequently affected by his bankruptcy, either in the case of property of liens, or of his being reputed owner. A banker has a lien for the gene-[482 ] ral balance due to him upon bills or notes in his hands paid in generally." So a person has a lien upon all property placed in his possession as a consideration for his acceptance of a bill, which he is liable to pay after the bankruptcy of the owner who made the deposit. Property in the possession of a bankrupt, though he be not the real owner, will pass to his assignees, on the ground of his being reputed owner under the stat. 21 James 1. c. 19. s. 10, 11.

In the case of the bankruptcy of a factor or banker, bills remitted to them, and entered short while unpaid, and bills paid in generally, to be received, and not discounted or treated as cash, and bills sent for a particular purpose, are not affected by the bankruptcy of the factor or banker, and the property in them is not altered, and, they or the proceeds received by the assignees, must be returned by them to the principal, subject to such lien as the factor or banker may have thereon;

Lickbarrow v. Mason, 2 T. R. 63. Solomons v. Nissen, 2 T. R. 674. Hodgson v. Loy, 7T. R. 440. Kinlock v. Craig, 3 T. R. 119. Cullen, 266. 1 Mont. 265.

" Jordan v. Le Fevre, 1 Esp. Rep. 66. Davis v. Boucher, 5 T. R. 488.

Hammonds v. Barcley, 2 East, 227.

y Ante, 122. Zinck v. Walker, 2 Bla. Rep. 1154. Brown v. Kewley, 2 Bos. & Pul. 528. Bolton v. Richard, 6 T. R. 139. 5 T. R. 215. 494. 1 East, 547. 550. Paley P. & A. 71. Ex parte Waring and others, 19 Ves. 345.


Ex parte Sargeant, 1 Rose, 135. Ex parte Sellers, 18 Ves. 229. S. P. proceeds of short bills were ordered to be returned, unless upon inquiry, it should appear that with the knowledge of the party depositing them, or from the habits of dealing between the parties, they were to be considered as cash; the onus of proving which lies in the assignees of the bankrupt banker. Per the Lord Chancellor. It is quite clear that short bills in the possession of bankers, are to be considered as still remaining in the possession of the parties by their agents to be specifically returned; and if these bills were written short, the petitioner could have compelled Kensington and Co. so to settle with Burrough, as not to break in upon his claim. That they were not written short, amounts to nothing, unless there be a concurrence manifested at the time, or to be inferred from the habits of dealing between the parties, that they were to be considered as cash; if they were there with the petitioner's knowledge as cash, and the drawing or entitled to draw upon them as having that credit in cash, he would thereby be precluded from recurring to them specifi

cally; but it is upon them to prove that to be the case, and the petitioner is therefore entitled, unless they have been carried to his credit as cash, with his knowledge or


Ex parte Pease and others, in the matter of Boldero, 1 Rose, 232. 19 Ves. 25. Bills remitted by a country bank, to their banker in London, remaining at his bankruptcy in his hands undue or unapplied, according to the authority given, or afterwards coming to the hands of the assignees, and the proceeds received, restored, and paid to the remitters, taking up the acceptances on their account, and subject to the banker's lien for any balance by the contract, remaining the property of the remitters, in the hands of the banker, as agent for a particular purpose, namely, to hold until due, and receive the proceeds, then first forming an item in the cash account. The circumstance of the bill being written short, is only evidence of a trust proved in this instance by express declaration, or other evidence equivalent. Entries in bankers books not proved to have been communicated to the customer, not evidence against but may be for him. The statute 21 Jac. 1. c. 19. s. 11, not applicable to bills in the hands of a banker written short, or sent for a particular purpose, the trust accounting for the possession being considered as goods in the hands of a factor with the single distinction that he cannot pledge; but if the bills are dealt with before bankruptcy, the money cannot be followed, as if dealt with afterwards may. S. P. Ex parte Waring and others, 19 Ves. 345.

Ex parte Rowton, 17 Ves. 426. 1 Rose,

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ruptcy, &c.

2d. The


6. Effect and this has been so held, notwithstanding that the banker according to of bank- custom enter the bills as cash in his customers accounts, charging interest for the time they have to run, provided the balance of the cash property of account at the time of the bankruptcy, be in favour of the customer." In a late case it was held, that a customer paying bills, not due, into his bankers in the country, whose practice it was to credit their cus tomers for the amount of such bills, if approved, as cash (charging interest,) is entitled to recover back such bills in specie from the bank[484]ers becoming bankrupt; the balance of his cash account, independent of such bills, being in his favour at the time of the bankruptcy; and if payment be afterwards received upon such bills by the assignees, they are liable to refund it to the customer in an action for money had and received; and Lord Ellenborough observed, that "every man who pays bills not due into the hands of the banker, places them there, as in the hands of his agent, to obtain payment of them when due. If the banker discount the bill, or advance money upon the credit of it, that alters the case; he then acquires the entire property in it, or has a lien on it pro tanto for his advance. The only difference between the practice stated of London and country bankers in this respect is, that the former, if overdrawn, has a lien on the bill deposited with him, though not indorsed; whereas the country banker, who always takes the bill indorsed, has not only a lien upon it, if his account be overdrawn, but has also his legal remedy upon the bill by the indorsement; but neither of them can have any lien on such bills until their account be overdrawn: and here the balance of the cash account at the time of the bankruptcy was in favour of the plaintiffs."

15. S. C. Short bills remitted by a coun-
try bank, to their banker in London,
standing at the bankruptcy of the latter
entered short in the usual way, not being
due. Ordered, on petition in the bank-
ruptcy, to be delivered up by the assig-
nees to the country bank, who not being
creditors when the petition was presented,
the cash balance being against them, had
since become so, turning it in their favour
by taking up the bankrupt's acceptances
on their account. The order was made
without requiring the petition to be amend-
ed by stating that fact; but upon consent
of the crown holding an extent for accept-
ances of the bankrupt, on account of du-
ties reserved and remitted specifically by
the country bank.

Ex parte Buchanan, in the matter of
Kensington, 1 Rose, 280. An order was
made upon the provisional assignee to de-
liver up short bills in the hands of bank-
ers at the time of their bankruptcy, the
estate being indemnified against their out-
standing acceptances on account of the

Ex parte The Burton Bank, &c. 2 Rose, 162. These were petitions presented in the bankruptcy of Messrs. Whitehead, Howard, and Co. bankers in London, by their correspondents in the country, for the purpose of having certain short bills of the petitioners, which were in the possession of the bankrupts at the time of the bankruptcy, delivered up, indemnifying the bankrupts estate against its liability for the

petitioners. The right was considered so indisputable that the following orders were taken by consent.

Ex parte Harford. The provisional signee to retain the cash balances, and the cash received, and on the short bills paid, and also a sufficient number of short bills unpaid to cover the amount of Whitehead and Co's. acceptances, and he is to deliver over to Harford and Co. the residue of the said bills, notes, and securities. It is further understood, that the cash and notes retained are to be given up as Harford and Co. produce the acceptances cancelled.

Ex parte The Burton Bank. The provisional assignee consents, that all bills, &c. shall be delivered up upon the pet tioner leaving such sum as together with the cash balance, equals the acceptance outstanding.

Note. An extent had been issued on the part of the crown; but there was enough to satisfy it without resorting to the short bills, nor were they scheduled among the property seized under it. See Ex parte Rowton, 1 Rose, 15.

Ex parte Waring and others, 19 Ves


* Giles v. Perkins, 9 East, 12. Paley P. & A. 71.

a Giles v. Perkins, 9 East, 12.

See also Ex parte Pease and others, 19 Ves. 25. 45. Ante, 482. Ex parte Waring, 19 Ves. 349. Ex parte Buchanan. id. 201. 1 Rose Bank, C. 232. 243. 251.



2d. The property of

So in the case Ex parte Sayers, where A., abroad, commissions B. 6. Effect in London, to send him foreign coin, with particular directions as to of the manner and time of sending it; and remits bills, which B. dis- ruptcy, &c. counts, and the coin required not being to be had in England, sends two remittances not equal to the amount of A's. bills to Lisbon for the others. purpose of procuring it; with directions, if it cannot be had, to return the bills. The coin not being to be had, bills nearly to the amount of the remittance to Lisbon, not indorsed by the correspondent there, are returned, and B., in the interval, becoming bankrupt, are received by his assignees; A. was held to have a right to those bills upon the particular circumstances, the Lord Chancellor expressing much doubt, whether such right would exist in the case of remittance to buy goods in the way of trade.


And on the same principle, in Hassall v. Smithers, it was held that a remittance in bills and notes for a specific purpose, viz. to answer ac ceptances, received by the administrator, in consequence of the death of the party to whom it was remitted, was not general assets, the specific purpose operating as a lien, which would also be the effect upon a bankruptcy.

But if the holder of bills deliver them to a banker, expressly on the [ 485 ] terms of discount, or if, by the course of dealing between the customer and banker, bills received by the latter are understood by both parties as cash minus the discount, and the customer is at liberty to draw on account thereof, beyond the amount of cash in the hands of the banker, then, in the event of the bankruptcy of the banker, the assignees are entitled to the bills. So where a person having three bills

€ 5 Ves. 169. d 12 Ves. 119. • Ante, 122. Campb. 301.


Carstairs v. Bates, 3

Carstairs and others, assignees of Kensington, v. Bates, 3 Campb. 301. Where bankers discount a bill of exchange for


customer, giving him credit for the amount of the bill, and debiting him with the discount, the bill becomes the property of the bankers, and upon their bankruptcy their assignees may maintain an action upon it, although there be no balance due to them from the customer. Per Lord Ellenborough. "Is it meant seriously to contest the right of the assignees to recover in this action? The bankers were the purchasers of this bill. They did not receive it as the agents of Allport. The whole property and interest in the bill vested in themselves, and they stood all risks from the moment of the discount. If the bill had been afterwards stolen or burnt, theirs would have been the loss. In Giles v. Perkins, the bankers were mere depositories, with a lien when the account was overdrawn. The customer there drew on the credit of the bills desposited. Here Allport might have drawn out the amount of the bill, deducting the discount as actual cash, in the same manner as if he had dishonoured the bill with a third person, and then paid in the amount în bank notes. The disCHITTY ON BILLS.

count makes the bankers complete pur-
chasers of the bill. The transaction was
completed; they had no lien but the
thing itself; the bills was as much theirs
as any chattel they possessed. This very
distinction was taken in the case cited;
for it was there said, if the banker dis-
count the bill, or advance money on the
credit of it, that alters the case; he then
acquires the entire property in it, or has
a lien on it pro tanto for his advance."
Verdict for plaintiff.

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So in Paley P. & A. 72, it is laid down
thus: But in order to prevent the effect
of the bankrupt laws from attaching
negotiable securities in the hands of a
bankrupt agent, there must be a specific
appropriation of them, as by lodging of
bill for bill, or by the desposit of several
in one entire transaction, to answer a
particular purpose; for if they are paid
in from time to time, upon a general
running account, they become the effects.
of the person to whom they are so paid,
and are not reclaimable. The doctrine is
thus generally stated by Lord Hardwicke:

If bills are sent by a correspondent to
a merchant here to be received, and the
money to be applied to a particular use,
and the merchant becomes bankrupt be-
fore the money is received on the bills,
the correspondent has a special lien in
respect of those bills, and the money shall
not be divided amongst the creditors at.
3 I

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of ruptcy, &c.

6. Effect of exchange, applied to a country banker with whom he had no pro bank-vious dealings, to give for them a bill on London of the same amor 2d. The and the bill given by the banker was afterwards dishonoured, held, tu property of this was a complete exchange of securities, and that trover would t others. lie for the three bills of exchange; and it was also held, that if t exchange had not been complete, still that the banker having become bankrupt, and the three bil's having come to the possession of his a [486] signees, must be considered as goods and chattels in the order and de possession of the bankrupt at the time of his bankruptcy, within th above-mentioned statute 21 James 1. c. 19.


Insolvent A party to a bill or note who has become insolvent may be discharge from liability by the operation of an insolvent act. In a late ca where after the 1st day of July, 1809, mentioned in the Insolve Debtors Act, 49 Geo. 3. c. 115, a promissory note was given for a antecedent debt, it was decided that as against the payee, the mai would have been discharged under this act, but that he was not & against a person to whom the note was subsequently indorsed.

large. But where bills are sent on a
general account between the correspon-
dent and the merchant, and as an item
in the account, it is otherwise.'” Bent
c. Puller, 5 T. R. 494


Hornblower Prowd, 2 B. & A

Sharp e. Iffgrave, 3 Bos. & Pul S
Lord Kinniard r. Barrow, & T. R. 49.
A Lucas r. Winton, 2 Campb 442.


N. B. Throughout the Forms the parts in Italics though usually inserted may and in general should be omitted, as will appear from the notes to each part.



In the King's Bench, (or "Common Pleas," or "Exchequer.")

A. B. of gentleman, maketh oath and saith, that C. D. is justly and truly indebted to this deponent in the sum of £50.

On promissory note, payee against ma

On a promissory note made by the said C. D. payable to this depo- ker. nent on demand, (or "at a certain day now past.")

And this deponent further saith, that no tender or offer hath been made to pay the said sum of £50, or any part thereof, in any note or notes of the Governor and Company of the Bank of England, expressed to be payable on demand.

Sworn, &c.

On a promissory note, bearing date the A. D.

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made by the said C. D., and whereby the said C. D. pro- in another mised to pay, two months after the date thereof, to this deponent, or order, the sum of £50, for value received.


In the sum of £50, as indorsee of a promissory note made by the said C. D. and for the payment of the sum of £50 to one E. F. or order, at against maa certain day now past, and by him indorsed to this deponent.


To this deponent, as the indorsee of a promissory note, bearing date, [488] &c. made by one E. F. and whereby the said E. F. promised to pay, Indorsee two months after the date thereof, the sum of £50, to the said C. D. against inor order, and the said C. D. indorsed the same note to this deponent.


On a bill of exchange drawn by one E. F. upon, and accepted by the On a bill of said C. D. and for the payment of the sum of £50 to this deponent, at exchange, a certain day now past.

As to the affidavit to hold to bail, see ante, 348 to 350.

payee against acceptor.

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