CASES OF THE WEEK.

PRODUCTION OF DOCUMENTS-PRIVILEGE-COMMUNICA TIONS BETWEEN SOLICITOR AND THIRD PARTY ANTE LITEM MOTAM. In a case of Wheeler v. Le Marchant, before the Court of Appeal on the 6th inst., a question arose as to the production of documents in respect of which the defendants claimed privilege. The plaintiff was a contractor, the defendants were the owners of a large estate near London. The action was brought for the specific performance of a building agreement entered into between the defendants and the plaintiff. In an affidavit made by the defendants of documents in their possession relating to the matters in question in the action, they claimed protection for certain documents which they described as confidential correspondence between their solicitors and their estate agent and surveyor. Bacon, V.C., refused to order the production of this correspondence, though the greater part of it had taken place, not only ante litem motam, but before any litigation was in contemplation between the plaintiff and the defendants. Upon the argument of the appeal it was admitted that the rule as to privilege from production had never been carried so far before, but it was contended that on principle it ought to be extended so as to include all communications made by a third party to a legal adviser for the purpose of enabling him the better to advise his client. The Court of Appeal (JESSEL, M.R., and BRETT and COTTON, L.JJ.) refused to carry the rule to this extent. And they ordered the production of the correspondence in question, except such of the letters (if any) as the defendants should state by affidavit to have been written confidentially after the dispute had arisen between them and the plaintiff, and for the purpose of obtaining information, evidence, or legal advice with reference to the litigation between the parties to the action. JESSEL, M.R., said that such documents as those in question had been held entitled to protection when they had come into existence after the litigation had been commenced, or threatened, or contemplated, and they had been obtained with a view to the litigation, but not otherwise. It did not appear to his lordship that it was necessary, either on principle or for the convenience of mankind, to extend the rule as was suggested. The protection afforded by it was one of a very limited character. It did not extend to all confidential communications obtained by a man for the protection of his life, or his honour, or his fortune. Many such documents were not entitled to the privilege, as, for instance, communications made to a medical man, or to a priest in confession, or to a friend with regard to matters of the most delicate nature upon which his advice was sought. The privilege was limited to communications made in obtaining the advice and assistance of a legal adviser, and all things reasonably necessary to the obtaining that advice and assistance were within the protection. But it had never been extended any further. The actual communications between the solicitor and the client were, of course, protected, whether the client was acting personally or by an agent, and whether the solicitor acted in person, or was represented by a clerk or subordinate who was acting in his place. So, also, evidence obtained by the solicitor after the litigation had commenced, and with a view to the litigation, was protected. Communica tions necessary to the obtaining of legal advice were protected, and they must be made to the solicitor as such. The protection was now claimed for communications to the solicitor, giving him information to enable him the better to give legal advice to his client before any litigation was in contemplation. It appeared to his lordship that this would be carrying the rule, not only beyond what any of the cases had laid down, but beyond what the necessities of mankind required.-SOLICITORS, Boxall & Boxall; Gregory, Rowcliffes,

& Co.

RAILWAY COMPANY-DEBENTURE HOLDERS-RECEIVER -WORKING EXPENSES-RENT FOR EASEMENT OVER LINE OF ANOTHER COMPANY.-In a case of The Great Eastern Railway Company v. The East London Railway Company, before the Court of Appeal on the 5th inst., a question arose as to the working expenses which the receiver of the tolls undertaking of a railway company, appointed at the instance of the holders of debenture stock of the company, was bound to pay before making any payments to the holders of debenture stock. The plaintiffs had agreed to grant to the

defendants an easement over land belonging to them for running their trains over it, and the defendants were to pay the plaintiffs a rent for this user. Jessel, M.R., held (ante, p. 95), and the Court of Appeal (JAMES, BRETT, and COTTON, L.JJ.) affirmed his decision, that the rent for the easement was part of the working expenses of the line, which the receiver was bound to pay out of the funds in his hands, before dividing anything among the holders of debenture stock. The plaintiffs had recovered judgment against the defendants for arrears of the rent, and Jessel, M.R., held that the plaintiffs were entitled to judgment for possession of their land unless the defendants should pay the arrears of the rent. In this respect, also, the decision was affirmed by the Court of Appeal.-SOLICITORS, Curwood; Wilson, Bristows, & Carpmael; Norton, Rose, & Co.

FRAUDULENT PREFERENCE-FRAUDULENT TRANSFER OF GOODS-ACT OF BANKRUPTCY-SALE OF GOODS WITH INTENTION TO APPLY PROCEEDS IN VOLUNTARY PAYMENTMAKING GOOD BREACH OF TRUST-BANKRUPTCY ACT, 1869, ss. 6 (SUB-SECTION 2), 92.—In a case of Ex parte Stubbins, before the Court of Appeal on the 24th ult., the question arose whether a sale of goods by one of two co-trustees of a will to another, for the purpose of using the purchasemoney in making good a breach of trust which the vendor had committed, amounted to a fraudulent preference or to fraudulent transfer of the goods, and, therefore, an act of bankruptcy. The two trustees, G. and W., were both wool merchants. W. was the acting trustee. In November, 1878, W. told G. that he was in difficulties, and that his bankers would allow him no more credit, and he asked G. to buy some wool from him. G. said that he did not want the wool, and W. then told him that he had misapplied more than £2,000 of the trust moneys to his own purposes, and that he wanted to sell the wool in order to use the proceeds in making good the breach of trust. Ultimately, G. reluctantly consented to buy the wool, and it was agreed that he should take it at a price to be fixed by some brokers. Before the invoice was sent to him, G. paid W. £2,050, which W., with the knowledge of G., at once paid to the credit of the trust estate at a bank with which the trustees kept an account. Shortly afterwards the wool was delivered to G. Its value was ascertained to be less than the £2,050, and some more wool was subsequently delivered to G. to make up the deficency. In January, 1879, W. filed a liquidation petition. The trustee in the liquidation applied to the county court, by notice of motion against G. and W., as representing the trust estate, for a declaration that the payment of the money to the credit of the trust estate was a fraudulent preference, and as such void as against the trustee, and that the amount might be repaid by the trustees of the will, with interest, to the trustee in the liquidation. The judge (Mr. Daniel, Q.C.) treated the payment of the money by G. to W. as a loan to enable W. to make good the breach of trust, and the subsequent delivery of the goods as a repayment or satisfaction of the loan, and he declared the transfer of the goods fraudulent, and ordered G. to pay the £2,050, with interest, to the trustee. Bacon, C.J., held that there had been no fraudulent preference, and discharged the order of the county court, and this decision was affirmed by the Court of Appeal (JAMES, BRETT, and COTTON, L.JJ.). Upon the hearing of the appeal, it was contended either that the transfer of the goods was fraudulent within the meaning of sub-section 2 of section 6 of the Act, or that the payment of the money to the trust account constituted a fraudulent preference of the trust estate within section 92. JAMES, L.J. (who delivered the judgment of the court), said that the view of the county court judge could not be sustained, for it was impossible to convert transaction of sale and purchase into something which it was not in order to bring in the doctrine of voluntary preference. Nor could it be said that the delivery of the goods was a fraudulent transfer. It had never been held that a voluntary payment was of itself an actual fraud or an act of bankruptcy, though it might be impeached because it was voluntary, and it would be equally impossible to say that a sale of goods became fraudulent because there was an intention in the mind of the vendor to use the purchase-money in making a voluntary payment, and the purchaser knew that this was the motive of the vendor for making the sale. Nor could it be said that there had been a fraudulent preference of the trust estate. To render a voluntary payment void it must be a payment to a creditor,

a

or to a person in trust for a creditor, and it was impossible to hold that, if a debtor, on the eve of bankruptcy, replaced money which he had stolen, such a payment would amount to a fraudulent preference. It should be noted that the latter part of the judgment appears to be in direct conflict with an opinion expressed by Jessel, M.R., in the recent case of Ex parte the Merchant Banking Company of London (29 W. R. 363, ante, p. 295), though the point did not arise there for actual decision.-SOLICITORS, S. S. Seal; W. & J. Flower & Nussey.

BANKRUPTCY-PROTECTED TRANSACTION NOTICE OF ACT OF BANKRUPTCY-ONUS OF PROOF- BANKRUPTCY ACT, 1869, s. 35.-In a case of Ex parte Cartwright, before the Court of Appeal on the 31st ult., a question arose as to the onus of proving notice of an act of bankruptcy. The trustee in a bankruptcy sought to set aside a bill of sale which had been executed by the bar krupt, one of the grounds of the application being that there was a prior act of bankruptcy to which the title of the trustee related back, and that the grantee of the bill of sale had notice of it before he took his bill of sale. The question was raised whether the trustee was bound to prove the notice, or whether the grantee was bound to prove that he had no notice of the prior act of bankruptcy. The court (JAMES, BRETT, and COTTON, L.JJ.), following the decision of Mellish, L.J., in Ex parte Schulte (22 W. R. 462, L. R. 9 Ch. 409), held that, inasmuch as the bill of sale holder was claiming the protection of section 95 of the Bankruptcy Act, and was seeking to displace the title of the trustee to the goods, the onus was on him to prove that he had, when he acquired his security, no notice of the prior act of bankruptcy. The prior act of bankruptcy consisted in the execution by the bankrupt of a prior bill of sale, whereby he assigned all his property as security for a pre-existing debt. The solicitor who acted for the first grantee in the preparation of the first bill of sale, acted also for the second grantee in the preparation of the second bill of sale, and was his agent in inducing the grantor to execute it. And the court held that the second grantee had, through the solicitor, notice of the fact that the first bill of sale was an act of bankruptcy, and was, consequently, not entitled to the protection of section 95.-SOLICITORS, G. Castle; W. W. Aldridge.

JUDGMENT CREDITOR GARNISHEE ORDER AGAINST MORTGAGOR OF JUDGMENT DEBTOR-PROCEEDS OF SALE OF MORTGAGED PROPERTY-ORD. 45, RR. 2, 3-JUDGMENT ACT, 1864 (27 & 28 VICT. c. 112), s. 1.-In a case of Chatterton v. Watney, before the Court of Appeal on the 30th ult., the question was raised whether a judgment creditor of a mortgagee of land, who has obtained a garnishee order against the mortgagor, attaching all de ts owing from him to the mortgagee, acquires thereby any interest in the mortgaged property or the proceeds of sale thereof. A judg ment was recovered against a debtor who held a third mortgage upon some leasehold property. The judgment creditor then obtained a garnishee order against the mortgagor, attaching all debts owing or accruing from him to the third mortgagee. The mortgaged property was afterwards sold by the first mortgagee under his power of sale, and, after paying his own mortgage debt, and that of the second mortgagee, there remained a balance in the hands of the first mortgagee. The judgment creditor claimed a right by virtne of his garnishee order to be paid his judgment debt out of this surplus. Bacon, V.C., held (L. R. 16 Ch. D. 378) that he had no such right, and this decision was affirmed by the Court of Appeal (JESSEL, M.R., and BRETT and COTTON, L.JJ.). In support of the claim reliance was mainly placed on a passage in the judgment of James, L.J., in Ex parte Joselyne (26 W. R.645, L. R. 8 Ch. D. 330), in which he said, "The moment the order of attachment was served upon the garnishee, the property in the debt due from him was absolutely transferred from the judgment debtor to the judgment creditor." And it was said that, if the mortgage debt was transferred, the mortgage security was also transferred. JESSEL, M.R., said that, by virtue of rule 3 of order 45, the effect of the service of the garnishee order was simply to bind the attached debts in the hands of the garnishee, and to compel him to pay it to the garnishor. If there were no other statutory provision, the question might have arisen what was the effect of binding a mortgage debt. But the Judgment Act of 1864 said that no judgment should affect land until the land had been actually delivered

in execution. The interest of the third mortgagee under his mortgage was an interest in land, and it was clear that the judgment creditor could not affect that interest in the hands of the mortgagee until it had been delivered in execution. Though he could not do this directly, it was suggested that he could do it in a roundabout way by means of a garnishee order against the mortgagor. This could not be. The object of the Act of 1864 was to deprive judgment creditors of some of their rights in order to make land more easily transferable. The judgment creditor had another remedy by proceeding to obtain an equitable execution against his debtor. BRETT, L.J., said though James, L.J., in Ex parte Joselyne spoke colloquially of the property in the debt being transferred, he only meant to say the same thing. as was said in rule 3 of order 45, viz., that the debt was bound in the hands of the garnishee. COTTON, L.J., said he was quite content to rest his judgment on the construction of the garnishee rules. The effect of these rules was only to prevent the judgment debtor from receiving the debt. which was attached, and to prevent the garnishee from pay. ing it to the judgment debtor; and, if he would not pay the debt to the judgment creditor, the latter could enforce payment against him. There was nothing in the rules to affect any security for the debt which was attached; only the right of the original creditor to receive the attached debt was taken away. There was nothing to transfer a security for the attached debt to the judgment creditor, though of course, if the garnishee paid the debt, or a part of it, to him, the security would be wholly or pro tanto discharged. JESSEL, M.R., added that he agreed that the attached debt was not transferred to the garnishor.-SOLICI TORS, Peacock & Goddard; H. W. Chatterton; H. Tyrrell.

COMPANY-WINDING UP-LANDLORD DISTRESS FOR RENT-VOLUNTARY WINDING UP-OMISSION TO APPOINT LIQUIDATOR SUBSEQUENT ORDER FOR COMPULSORY WINDING UP — COMMENCEMENT OF WINDING UP-COMPANIES ACT, 1862, ss. 84, 85, 87, 130, 163-JUDICATURE ACT, 1875, s. 10-BANKRUPTCY ACT, 1869, s. 34.-On the 30th ult., the Court of Appeal (Jessel, M.R., and Brett and Cotton, L.JJ.), reversed the decision of Malins, V.C., in Thomas v. The Patent Lionite Manufacturing Company (29 W. R. 349). The question was whether the landlord of a company in liquidation should be allowed to enforce a dis-tress for rent accrued due before the commencement of the liquidation. On the 30th of July, 1880, the company passed an extraordinary resolution to wind up voluntarily, but did not appoint any liquidator. On the 5th of August the landlord levied a distress for a quarter's rent due on the 24th of June. On the same day the action was brought by debenture holders, to whom the company had mortgaged substantially the whole of their property, to realize their security. On the 6th of August a receiver was appointed in the action, and on the same day, on the application of the company, an injunction was granted to restrain the landlord from proceeding with the distress. On the 9th of August the company appointed liquidators. On the 18th of August a petition for winding up the company was presented by a creditor, and on the 8th of September a compulsory windingup order was made, which in no way referred to the voluntary winding up or the proceedings under it. An official liquidator was appointed by the court. Afterwards the landlord applied in the action for an order that the receiver should pay him the amount of the quarter's rent. Malins, V.C., was of opinion that the voluntary winding up was not effective until the liquidators were appointed, and that the compulsory winding up did not date back to the passing of the resolution. Consequently, when the distress was levied, there was no process of winding up going on, and nothing to prevent the landlord from distraining. An order was accordingly made that the receiver should pay the quarter's rent to the landlord. The Court of Appeal held that the voluntary winding up came into operation on the passing of the extraordinary resolution, notwithstanding the non-appointment of a liquidator, and that, though the compulsory winding up superseded it as from the date of the winding-up order, it did not supersede or render invalid the proceedings which had been meanwhile taken in the voluntary winding up. The distress was not put in force until after the commencement of the winding up, and there was no special ground for interfering with the operation of section 163, which made the distress void.

JESSEL, M.R., said that he could not understand how the Court of Appeal had ever been able to come to the conclusion that sections 85 and 87 of the Act enabled the court to escape from the plain words of section 163, which make void any distress put in force after the commencement of a winding up. But it was well settled by several decisions that this was so, and the effect of the decisions was this, that, notwithstanding section 163, the court had a judicial discretion to allow a landlord to put in force a distress, and that the discretion ought to be exercised in the landlord's favour whenever he could not prove in the winding up, but that, as a general rule, it ought not when he could prove. In the present case the landlord was entitied to prove in the winding up, and his lordship thought there were no special grounds for allowing him to enforce his distress. Upon the hearing of the appeal it was contended that the landlord was & secured creditor by reason of his right of distress, and that the effect of section 10 of the Judicature Act of 1875 is to import into the winding up of companies section 34 of the Bankruptcy Act, 1869, which enables the landlord of a bankrupt to distrain after the commencement of the bankruptcy for a year's rent. The COURT, however, held that section 10 had not this effect. JESSEL, M.R., said that section 10 dealt with the respective rights of secured and unsecured creditors, and the right to levy a distress did not make the landlord a secured creditor. Section 10 did not import into winding up the rules of bankruptcy which give a preference to some debts; it applied to creditors who would get a dividend, not to persons who would be paid in full. COTTON, L.J., said that the point was really decided by In re The Withernsea Brick Works (29 W. R. 178, L. R. 16 Ch. D. 337, ante, p. 135). If section 10 had the effect suggested, it would have repealed pro tanto sections 87 and 163 of the Companies Act, and this construction ought not to be adopted unless the words were clear. When it spoke of "secured and unsecured creditors," it meant those creditors who, at the commencement of the winding up, were secured or unsecured, and the landlord was not a secured creditor at that time merely because he had a right to levy a distress which he had not enforced. And when the section said that the bankruptcy rules as to debts proveable should prevail in winding up, it did not mean that a creditor who, in bankruptcy, would have had another right in addition to his right of proof was to have that additional right also in a winding up.-SOLICITORS, Poole, Hughes, & Poole; Chapple, Welch, & Chapple.

COMPANY-VOLUNTARY WINDING UP-APPLICATION BY CREDITOR FOR COMPULSORY ORDER-PREJUDICE BY VOLUNTARY WINDING UP-COMPANIES ACT, 1862, s. 145.-In the case of Re Pelham Publishing Company, before the Master of the Rolls on the 26th ult., the company had passed resolutions for a voluntary winding up, and a creditor now petitioned for a compulsory order. The petition did not mention the voluntary winding up, merely stating "it was alleged" such a winding up had taken place, and it also did not show that the petitioner was prejudiced by the voluntary winding up. According to the evidence in support of the petition, there was no allegation of any personal misconduct against the voluntary liquidator, and the only evidence upon which the petitioner relied was that he had been induced to supply the company with paper by reason of the misrepresentations of the directors, and also that the liquidator had sold some furniture and paper, which had a short time previously cost over £100, for £25 to one of the contributories, and that the same contributory had the next day sold the furniture for £30. There was no evidence that the sale was at an undervalue. JESSEL, M.R., was of opinion that the petition should have mentioned the voluntary winding up, and also that it should have contained allegations showing that the petitioner was prejudiced by such winding up. If those allegations had been omitted by a slip he should have allowed an amendment, but, apart from the technical ground, the petitioner had shown no reason for his interfering with the voluntary winding up. The liquidator appeared to have acted with diligence, and there were really no allegations of personal misconduct against him. The total assets were not stated to be more than about £300, and it was quite plain, if he set the machinery of the court in motion, the only result would be that after some time there would be an application to him for a stay of proceedings, and an apportionment of the

remaining assets amongst the different solicitors in part payment of their costs. He need not say he did not look upon such a result with satisfaction, and he was anxious to avoid it if possible. The petitioner alleged that he had been induced to sell the company's goods by certain misrepresentations, but if that were so it was no reason for disturbing the voluntary winding up, although it might be a good ground for an action against the directors. The only case attempted to be made was in reference to the sale of the furniture and paper. It was not, however, proved that the sale was at an undervalue, and from his own experience he should very much doubt if it was, as office furniture, when sold, very frequently bore a very small relation to the price originally paid for it. The petitioner had not shown that there was any want of efficient supervision in the winding up, or any ground for any special investigation. In his opinion there was no reason for disturbing the voluntary winding up, and he should therefore dismiss the petition, and the petitioner must pay the company their costs.SOLICITORS, Munns & Longden; Langton & Son.

WILL-MARRIED WOMAN-REAL ESTATE-LAPSE-ISSUE SURVIVING-CURTESY-WILLS ACT (1 VICT. c. 26), s. 33.— In a case of Eager v. Furnivall, before the Master of the Rolls on demurrer on the 4th inst., an important and novel point was argued as to whether a husband was entitled to his curtesy under the following circumstances:-By his will a testator gave a certain freehold estate to his daughter in fee for her separate use. The daughter died before the testator intestate, but leaving issue and her husband her surviving. By section 33 of the Wills Act it is provided that, "where any person, being a child of the testator, to whom any real or personal estate shall be devised or bequeathed for any estate or interest not determinable at or before the death of such person, shall die in the lifetime of the testator leaving issue, and any such issue shall be living at the time of the death of the testator, such devise or bequest shall not lapse, but shall take effect as if the death of such person had happened immediately after the death of the testator, unless a contrary intention shall appear by the will." JESSEL, M.R., was of opinion under the above circumstances, and by reason of the operation of the above section, that the husband was entitled to his curtesy in respect of the freehold property devised to his wife.-SOLICITORS, Blanco White; W. H. Herbert; Russell, Sons, & Co.

WILL-GIFT UPON CONDITION-CELEBRATION OF DIVINE SERVICE-BREACH OF CONDITION-GIFT OVER.-In a case of Governors of Bethlehem and Bridewell Hospitals v. Ironmongers' Company, also before the Master of the Rolls on the 4th inst,, the question was argued whether the plaintiffs were entitled to certain property in consequence of the breach of a condition under which the income had been previously applied. By his will, dated the 10th of February, 1803, Sir Robert Geffery bequeathed a sum of £400 to the defendants upon trust to invest the same in the purchase of lands, to be settled for an allowance to some person to read and celebrate Divine service in the parish church of St. Dionis Backchurch, twice every day in the week, yearly and every year for ever, except Sunday and certain other holy days, at the hours and times then and theretofore used in the said church according to the rubric and liturgy of the Church of England; and the testator declared that the rents and profits of the lands to be purchased should be paid by the defendants to the minister or curate of the parish of St. Dionis who should read and celebrate Divine service in manner aforesaid. The will contained a proviso that, in case there should be any failure or neglect in reading of prayers in the parish church for more than three days together, then that the rents and profits of the said premises to be purchased should go and be paid to the plaintiffs for ever. The defendants had paid the income representing the bequest to the rector of St. Dionis until the parish church was pulled down in 1877, when a union of St. Dionis with certain other benefices was effected. It was contended by the plaintiffs that the condition had been broken, inasmuch as there had been a failure to read prayers for several years. JESSEL, M.R., was of opinion that the proviso might be read in two ways, either by reference to the previous part of the will, so that the reading of prayers must be in manner previ ously pointed out, or literally, when the reading of any prayers would satisfy the proviso. Reading the proviso,

however, in either way, he was of opinion that there had been a breach, as it was proved that between 1831 and 1854 there had been no services except cn Sundays and certain holy days. He should, therefore, hold that the plaintiffs had become entitled to the bequest, and order payment of the future income to them after the costs of all parties as between solicitor and client had been provided for.-SOLICITORS, Still & Son; S. Adams Beck; H. J. Godden.

COMPANY-WINDING UP-LANDLORD-LEAVE TO DISTRAIN FOR RENT-RENT ACCRUED DUE PARTLY BEFORE AND PARTLY AFTER COMMENCEMENT OF WINDING UP-APPORTIONMENT-COMPANIES ACT, 1862, ss. 84, 85, 87, 163.In a case of In re The South Kensington Co-Operative Stores, before Fry, J., on the 2nd inst., a question arose as to giving leave to the landlord of a company in liquidation to distrain for rent. The petition for winding up the company was presented on the 27th of November, the winding-up order was made on the 10th of December. A quarter's rent of the premises occupied by the company accrued due on the 25th of December, and in respect of this rent the landlord asked leave to distrain. FRY, J., held that the rent must be apportioned with reference to the date of the presentation of the petition, which was the commencement of the winding up, and that for the apportioned part of the quarter's rent, down to the 27th of November, the landlord must prove in the liquidation, but that for the apportioned part, from the 27th of November to the 25th of December, he was entitled to be paid in full, and must be allowed to distrain unless the payment was made.-SOLICITORS, Still & Son; Bridges & Co.

COMPANY-WINDING UP-DISCRETION OF COURT-No ASSETS COMPANIES ACT, 1862, s. 79.—In a case of In re The Gurrington Slate Quarries, FRY, J., on the 1st ins., declined to make an order for the winding up of a company, on the ground that it would cause unnecessary expense, and that there were no assets to meet the expense. The whole of the company's assets had been mortgaged to trustees on behalf of debenture holders, and the trustees had taken possession of the assets. The petitioner was a debenture holder who had recovered judgment against the company in respect of interest due on his debentures. The petition was accordingly dismissed with costs.-SOLICITORS, Smith, Fawdon, & Low; John Raven; W. H. Roberts.

VOLUNTARY GIFT-HUSBAND AND WIFE-DECLARATION OF TRUST.-In an action of In re Breton, Breton v. Woollven, before Vice-Chancel or Hall on the 2nd inst., one of the questions for decision was as to the effect of a gift by a husband to his wife of certain furniture and plate. Major Breton, who died on June 7, 1880, had in April, 1868, signed and handed to his wife a document in the following terms:"This is to certify that there being now at Messrs. Maple & Co.'s, 145, Tottenham-court-road, one hundred pounds' worth of furniture belonging to me, I give the same to my dear wife, Agnes A. Breton, absolutely and unreservedly, for her own use and benefit;" and, on June 1 in the same year, he had written to his wife as follows:-"My dearest Wife,I this day make you a present of the plate, &c., now at Mappin & Webb's, and which they are taking care of for me, for your sole use and benefit. The sum I paid for it is £59 78. 10d." Immediately afterwards Major Breton and his wife went to reside in a house at Dulwich Villa, Forest Hill, to which the furniture, plate, &c., to which the above documents referred, were removed. Other goods of the same nature were also bought and placed there, and on June 18, 1868, Major Breton wrote and harded to his wife the following letter:-"My dearest Wife,-Having previously made over to you for your sole use and benefit a certain amount of furniture, plate, &c., I now present you with everything, furniture, linen, &c., plate, china, and glass, and all jewellery now belonging to me at No. 1, Dulwich Villas, Devonshire-road, Forest Hill. All this to be yours and yours only from this date, June 18, 1868. This gift from your ever affectionate husband, Frederick Breton." Major Breton and his wife afterwards changed their residence, and the furniture, &c., was removed to their new house, and was there at the time of Major Breton's death. He had always spoken of and treated the property as being his wife's, and she now claimed it as her own, on the ground |

that her husband had, by the above documents and his conduct constituted himself a trustee thereof for her; but the executors of his will contended that it formed part of his personal estate bequeathed upon trust to themselves. There was no evidence in support of 'Mrs. Breton's claim, except that given by herself, which, however, was not contradicted. HALL, V.C., said that he was reluctantly compelled by the monstrous state of the law to hold that the furniture, plate, &c., had not become Mrs. Breton's property. The gift could not be supported as a declaration of trust by her husband in her favour, for the words of the documents were those of an immediate gift. When an intending donor makes a mistake as to the proper mode of carrying out his intention, the court cannot impute to him an intention to adopt a correct method, and, for the purpose of guaging the validity of such a gift as the present, there was no practical distinction between the cases of a wife and a stranger.-SOLICITORS for all parties, Clarke & Calkin.

CASES BEFORE THE BANKRUPTCY
REGISTRARS.

(Before Mr. REGISTRAR HAZLITT, acting as Chief Judge.) March 9.-Ex parte Findlay, Re Collie.

F. & Co., being creditors of A. C. and W. C., bankrupts, for the sum of £5,000, in respect of the fraudulent misappropriation of funds, were allowed to prove against the joint and separate estates of the bankrupts for the amount, and subsequently, in pursuance of an order of the court, F. & Co. elected to receive dividends from the separate estates.

From these estates F. & Co. received twenty shillings in the pound upon their debt; but the joint estate paid a dividend of le. 6d. only in the pound to the creditors.

Held, that F. & Co. were not entitled to any interest upon their debt until the joint creditors had received twenty shillings in the pound.

Statement of facts submitted for the opinion of the court by Thomas Dunlop Findlay and James Findlay, formerly trading as T. D. Findlay & Co., of Glasgow, merchants, and Mr. John Young, the trustee of the property of the bankrupts.

The bankrupts, Messrs. A. & W. Collie, suspended payment on the 15th of June, 1875, and on the 30th of June, 1875, filed in the London Bankruptcy Court a petition for liquidation of their affairs, but at the first meeting of creditors held thereunder no resolutions were come to, and the said proceedings fell through.

On the 4th of August, 1875, a petition in bankruptcy was presented against the above-named bankrupts, and on the 19th of August, 1875, adjudication was made.

Mr. John Young was, on the 6th of September, 1875, appointed trustee of the property of the above-named bankrupts. Alexander Collie, in addition to being a member of the firm of Alexander Collie & Co., was also a partner in the firm of N. Alexander, Son, & Co., who were adjudicated bankrupts on the 8th of September, 1875. T. D. Findlay & Co., by affidavits sworn on the 31st of March, 1876, sought to prove against the joint estate of the bankrupte, Alexander Collie & Co., for the sum of £5,000, and also against the separate estate of the said Alexander Collie for the like sum, and against the separate estate of William Collie for the like sum; for that, by reason of the misappropriation by the said bankrupts, Alexander Collie and William Collie, of 20,000 pieces of certain Manchester goods known as 39-inch 8lbs. Grey Shirtings, Best China Quality, purchased by them in October, 1871, in the joint accounts of T. D. Findlay & Co. and the bankrupts, the said T. D. Findlay & Co. were obliged to pay, and did pay, two bills of exchange for £1,500 each, dated the 10th of March, 1875, and due the 13th of July, 1875, and two other bills of exchange for £1,000 each, dated 20th of April, 1875, and due the 23rd of October, 1875, all which four bills were drawn by the bankrupts upon, and accepted by, T. D. Findlay & Co., and paid by them at maturity, but ought to have been provided for and paid by the bankrupts out of the proceeds of the sale of the said goods, whereof they were trustees for such purpose.

Mr. John Young, the trustee, on the 17th of May, 1876, by notice in writing, rejected the proofs of the said T. D. Findlay & Co. on the separate estates of Alexander Collie and William Collie, on the ground that T. D. Findlay & Co.'s right of proof was against the joint estate of the bank

rupts only, and not against the separate estates of the bankrupts or either of them.

T. D. Findlay & Co. thereupon applied to this court by motion to reverse the decision of the trustee rejecting their proofs against the separate estates. Such application came before Mr. Registrar Murray, sitting as Chief Judge, on the 26th of July, 1876, when, after hearing counsel on both sides, Mr. Registrar Murray ordered that the decision of the trustee rejecting the claims against the separate estates should be reversed, and that the said proofs should be admitted for the sum of £5,000 against the separate estates of Alexander Collie and William Collie, in addition to the proofs for £5,000 against the joint estate; T. D. Findlay & Co. not to be entitled to receive dividends upon such proofs from both the joint and separate estates, but before receipt of any dividends upon such proofs to elect whether to receive dividends from the joint estate or to receive dividends from the separate estates.

Pursuant to such order T. D. Findlay & Co. did on the 22nd of February, 1877, elect to receive dividends from the separate estates on their proofs for £5,000 instead of from the joint estate. T. D. Findlay & Co. on the 23rd of February, 1877, received a dividend of five shillings in the pound on their said proof for £5,000 from the separate estate of the said Alexander Collie, and on the 23rd of February, 1877, a dividend of five shillings in the pound on their proof for £5,000 from the separate estate of the said William Collie, such dividends having been declared on the 9th of May, 1876.

Mr. Young on the 19th of June, 1880, declared a second and final dividend of 93. 3d. in the pound on the separate estate of Alexander Collie, and on the same day declared a second and final dividend of 78. 11d. in the pound on the separate estate of William Collie, but, as such last-mentioned dividends, with the dividends already paid to the said T. D. Findlay & Co., exceeded the total amount of the proofs, Mr. Young paid, on the 5th of July, 1880, to the said T. D. Findlay & Co. a farther dividend of five shillings in the pound from the estate of the said Alexander Collie, and a further dividend of five shillings in the pound from the estate of the said William Collie, making with the previous dividends the sum of £5,000, the amount of the said four bills, or 20s. in the pound.

The said T. D. Findlay & Co. received the said lastmentioned 5s. in the pound from the estate of Alexander Collie, and the said last-mentioned 5s. in the pound from the estate of Wm. Collie by arrangement with the trustee, without prejudice to their rights to receive interest upon the said £5,000 if they should be entitled to any interest.

The dividend declared upon the joint estate amounts to only 18. 6d. in the pound, and it is impossible for the joint creditors to be paid 20s. in the pound, even if the surplus of the separate estates is carried over to the joint estate without paying Messrs. Findlay & Co. interest on their claim.

T. D. Findlay & Co. claim to be entitled to receive dividends from both separate estates until they have been paid 20s. in the pound, and interest thereon at £4 per cent. from the times when they paid the said bills until final payment to them.

The trustee contends that T. D. Findlay & Co. are not entitled to interest at all on their said proofs for £5,000, and that, even if entitled to interest at all, that they are not so entitled until the joint creditors have received 20s. in the pound. It is agreed that the file of proceedings may be referred to by either party, and the evidence used on the application of T. D. Findlay & Co. to reverse the decision of the trustee in rejecting their proofs against the separate estates may be used by either party on the argument herein.

The court is to be at liberty to draw inferences of fact. The questions for the opinion of the court are:Are Messrs. Findlay & Co. entitled to be paid any and what interest, and for what period in respect of their claim? If so, are they entitled to be paid such interest before the joint creditors receive 20s. in the pound?

By whom, and in what manner the costs of and incidental to this motion are to be paid?

Stirling (R. Horton Smith, Q.C., with him), for Messrs. Findlay & Co.-We are entitled to retain the benefit of our proofs until our debt is completely extinguished by the

payment of interest: Warrant Finance Company's case (L. R. 4 Ch. 643); Same case, No. 2 (L. R. 5 Ch. 88). Those cases are precisely applicable to the present. The ground upon which proof was allowed against the separate estates was that a fraud had been committed by the bankrupts: Ex parte Adamson (26 W. R. 193, L. R. 8 Ch. D. 807). Under the rule laid down by Lord Justice Giffard four per cent. is the amount of interest usually allowed. He also cited Phosphate Servage Company v. Hartmont (L. R. 5 Ch. D. 394).

J. Linklater, for the trustee.-The debt of Messrs. Findlay is not an interest-bearing debt, and the two cases of Warrant Finance Company have no application in bankruptcy. There is no decree in this case by which interest is given to Messrs. Findlay, and the 36th section does not apply. Rule 76 provides that interest may be allowed under certain circumstances, but only to the date of the order of adjudication. Under rule 137 interest is allowable if a surplus becomes payable to the bankrupt, which is not the case here. Even supposing the debt bears interest, it is only up to the date of the order of adjudication: Ex parte Minchin (2 Glyn & J. 287), Ex parte Wood (2 M. D. & D. 283, 5 Jur. 1115); Ex parte Clarke (4 Ves. 677), Ex parte Reeve (9 Ves. 588). Separate creditors are not entitled to be paid interest on their debts subsequent to the adjudication until the joint creditors have received twenty shillings in the pound: 2 Lindley on Partnership, ed. 1878, p. 1195. In the present case it is impossible for the joint creditors to get twenty shillings in the pound, or anything approaching it: Ex parte Chandler (9 Ves. 35). The Warrant Finance Company's cases were discussed before Lord Hatherley in Ebbw Vale Company (L. R. 5 Ch. 112), and his lordship held that the judgment of Lord Justice Giffard was not intended to lay down any rule, but was simply a declaration of what was the law. Stirling, in reply.

Mr. REGISTRAR HAZLITT.-This case seems to be a very simple one, and has to be decided according to the rules and statutes in bankruptcy, and, with all respect, I do not think the cases of The Warrant Finance Company apply. My learned colleague, Mr. Registrar Murray, has allowed Messrs. Findlay to prove against the separate estates of the bankrupts for £5,000, for a debt which has been indicated as being contracted by the fraud of Messrs. Collie. My learned colleague allowed the proof itself, but nothing is said about interest, and I must presume he did not think it was necessary to say anything. Messrs. Findlay have received the £5,000 out of the separate estates, but at present the joint estate has paid only one shilling and sixpence in the pound, and the creditors do not seem likely to get anything further, so far as I can see. The state of circumstances to which the rules apply does not arise in the present case; and the whole principle of the Act itself and the rules is the same. I think Messrs. Findlay & Co. are not entitled to any interest until the joint creditors of the bankrupts have received twenty shillings in the pound, and they must pay the costs of the motion.

Solicitors for Messrs. Findlay & Co., Murray, Hutchins, & Co.

Solicitors for the trustee, Travers-Smith & Braithwaite.

The old police-court at Bow-street was used for magisterial cases for the last time on Saturday.

At Pembrokeshire Quarter Sessions, held on Tuesday, 5th inst., the chairman stated that the controversy which that court, in common with numerous other courts throughout the country had with the Treasury, whether under the Prisons Act of 1877 imperial or local taxation was liable for the cost of conveying prisoners to gaol, would shortly be settled by an appeal, in which Sir Hardinge Giffard would argue against the Treasury.

The following are the dates and places arranged for holding the Spring Assizes on the Midland Circuit, wherein prisoners only will be tried :-At Aylesbury, on Tuesday, April 26, for the combined counties of Buckingham, Bedford, and Northampton; at Lincolu, on Saturday, April 30, for the counties of Lincoln and Nottingham; at Derby, on Friday, May 6, for the counties of Leicester, Rutland, and Derby; and at Warwick, on Thursday, May 12, for the county of Warwick.