*accommodation acceptances, and had advanced him various

sums of money. In December, 1860, Cheeseman being in [*710 want of a further advance, and having then an execution in his house, applied to Reynolds for 2501. The latter declined to advance the money without security; and ultimately it was arranged, that, in consideration of the present advance of that sum, and to secure the past advances and existing liabilities, Cheeseman should execute a bill of sale of the whole of his horses, carts, household furniture, &c., to Reynolds.

The bankrupt, who was called as a witness, amongst other things, stated that the bill of sale was executed not only as a security for the advance then made, and to cover the liabilities under which Reynolds then stood on his account, but also for the purpose of staving off his other creditors; his expression being,-" My object was, that, if any of my creditors molested me, Reynolds might protect me." He, however, denied that there was any contemplation of bankruptcy at the time, but stated that he hoped to be able to go on.

The bill of sale was executed on the 8th of December, 1860, the seizure under it took place on the 9th of January, 1861, and Cheeseman was adjudicated a bankrupt on the 14th of January.

The value of the plant, &c., was about 9007. The gross proceeds of the sale were 5157., the expenses of sale and payments on account of rent, &c., amounted to 1867.,-the balance being the sum for which the verdict was taken.

On the part of the plaintiffs, it was submitted that the execution of the bill of sale was in itself an act of bankruptcy, as being a conveyance of the whole of a trader's property for an advanee of what was confessedly only a part of its value; and also that it was fraudulent and made with intent to defeat and delay the bankrupt's creditors. *Lush, Q. C., in Easter Term last, obtained a rule nisi to enter a verdict for the defendant, "on the ground that the evidence did not entitle the plaintiffs to recover."

[*711

Bovill, Q. C., G. Denman, Q. C., and Hannen, showed cause.-Formerly, it was always considered that a trader who executed an assigninent of the whole of his property, and thus put it out of his power to carry on his trade, thereby committed an act of bankruptcy. Subsequent cases, however, decided, that, where the assignment was for a present advance of their value, though it consisted of the whole of the party's goods, it was not an act of bankruptcy. Thus, in Siebert v. Spooner, 1 M. & W. 714,† Lord Abinger says: "If a man assigns the whole of his effects, not for a new consideration, but for an outstanding debt, that is an act of bankruptcy; because the very nature of the transaction prevents him from carrying on his trade." And Alderson, B., says: "If an equivalent is given, there is only a change of the nature of the property which the party has, but not a conveying of it away." In Lindon v. Sharp, 7 Scott N. R. 730, 6 M. & G. 895 (E. C. L. R. vol. 46), one M., a trader, being indebted to his bankers, and being pressed by them for security, executed a conveyance to them of certain stock and effects enumerated in a schedule annexed to the deed, with a power of sale on default in payment of 10007. on demand: the deed recited that M. was indebted to the bankers in 1000, but it contained no stipulation for fresh advances by them; C. B. N. S., VOL. XI.-27

and, though it did not in terms purport to convey all M.'s property, it appeared that the agent of the bankers who negotiated the transaction was aware that M. in reality possessed no other property: M retained possession of the effects so conveyed until a few days before a fiat in bankruptcy issued against him: *and it was held that the exe *712] cution of this deed was an act of bankruptcy. Here, the assignment was of substantially the whole of Cheeseman's property. If the defendant had at the time advanced him the whole value, according to the more recent authorities, the execution of the deed would not have been an act of bankruptcy. But the advance being of little more than a fourth part of the value, the rest of the consideration being the liability as surety, which is equivalent to a past advance (Leake . Young, 5 Ellis & B. 955 (E. C. L. R. vol. 85)),—it clearly was an act of bankruptcy. The great authority for the distinction between an assignment for a present and an assignment for a past advance, is the case of Graham v. Chapman, 12 C. B. 85, which is quite in point. There, a trader, in consideration of a past debt of 2401. and a present advance of 2007., conveyed by deed substantially the whole of his property, giving the transferree a right to seize and take all future acquired property, even though it should be purchased with the money which was alleged to be the consideration for the transfer and it was held, that, inasmuch as the trader got no equivalent for any part of the stock transferred, and such transfer necessarily defeated and delayed his creditors, though without fraud in fact, it constituted an act of bankruptcy within the statute 12 & 13 Vict. e. 106, s. 67. If part of the consideration is a past advance, however bonâ fide the transaction may be, it is an act of bankruptcy. [BYLES, J.-That will depend very much upon the amount of the present advance. ERLE, C. J.-Suppose the property is worth 5007., and the trader assigns the whole, receiving 400.?] He would get no value for the 1007. [ERLE, C. J.-The effect of the judgment in Graham v. Chapman is, that the trader in reality got no advance at all. Suppose property worth 1000l. is assigned for 9507., would that be an act *713] of *bankruptcy?] It is submitted that it would. [ERLE, C. J. -I should think not.] Here, all that the party gets for 9007. worth of goods is 250%. In Hutton v. Cruttwell, 1 Ellis & B. 15, 21 (E. C. L. R. vol. 72), Lord Campbell, speaking of Graham v. Chapman, says: "There, the deed expressly recited that it was given, not only for a further advance, but for an old unsecured debt; and Lord Chief Justice Jervis several times over points this out as the chief foundation of his judgment. He likewise remarks upon the power to take after-acquired property, which there might have prevented the trader from deriving any benefit whatever from the further advance. But that cannot apply to a case like the present, where the trader did derive the full benefit of the whole sum advanced, by its being applied at the time to satisfy the demand of an importunate creditor." In Bittlestone v. Cooke, 6 Ellis & B. 296 (E. C. L. R. vol. 88), the assignment was entirely for fresh advances. Bell v. Simpson, 2 Hurlst. & N. 410,† was the case of a sale partly for an old debt and partly for a present advance. Selling his goods is part of the ordinary business of a trader. In Pennell v. Dawson, 18 C. B. 355 (E. C. L. R. vol. 86), Jervis C. J., in his summing up (which the Court held to be correct)

gives an exposition of what was meant by his judgment in Graham v. Chapman. [WILLES, J.-Pennell v. Dawson went down for a new trial, and was tried before me at the sittings after Trinity Term, 1856, when there was a verdict for the defendants; and that verdict was not disturbed.] The true test is, whether the assignment tends to defeat and delay creditors, not whether it stops the trade. In Smith v. Cannan, 2 Ellis & B. 35, G., a farmer, conveyed all his farming stock and goods to S. by bill of sale, by way of security for about 900l., with a power of sale. The property comprised in the bill of sale was of about the value of 28007., and there was a trust for G. of the surplus of the property comprehended in the bill of sale, which was the whole of G.'s property, with the exception of two shares [*714 in a joint stock bank, of the value of 177. 10s. each. S. seized and sold enough of the stock to pay the amount secured; and the trade of the bank was not affected by giving it. In trover by G.'s assignees against S., issues being joined on pleas of not guilty and not possessed, and the Judge at Nisi Prius having ruled that these facts were evidence on which the jury might find a verdict for the plaintiff,-it was held by the Exchequer Chamber, on a bill of exceptions, that the necessary consequence of an assignment of what is substantially all the trader's property, is, to delay his creditors, and that the existence of a resulting trust, and of a substantial surplus, does not prevent its having that effect; and that a conveyance necessarily delaying a trader's creditors is an act of bankruptcy, though it has not the effect of stopping his trade; and that a transaction, being itself an act of bankruptcy, is not protected, though made with a party who has no notice of the circumstances making it an act of bankruptcy; and consequently that the facts in that case were evidence on which the jury might find for the plaintiffs, and the direction was therefore right. [BYLES, J.-For anything that appears on the notes in this case, the 250l. would be enough to satisfy the whole of Cheeseman's creditors.] This subject is very elaborately discussed in a very able judgment delivered by Mr. Commissioner Hill in the Court of Bankruptcy at Bristol in a case of Ex parte Cottrell, 1 Law Times N. S. 465. There, the alleged bankrupt, being indebted to his brother-in-law in the sum of 507, asked for a second loan to the same amount, which was granted upon the security of a bill of sale executed on the 1st of December, 1859, and given to secure 1007. By this instrument the alleged bankrupt assigned all *his property to the creditor, with the exception of certain horns of the value of about 157., and his book-debts of the [*715 value of 21. or 31.; the property assigned amounting, according to the estimate of the alleged bankrupt himself, to the value of 4007. The assignment was upon trust, that, in case of default made in payment of the said sum of 100l. and interest on demand in writing, the creditor might immediately take possession and make sale of the property assigned, and, after payment of his debt, with interest and expenses, should pay over the surplus to the assignor. On the 20th of December, the creditor took possession under the bill of sale. The learned Commissioner, in giving judgment, says: "I find no ground. for impeaching the bill of sale as fraudulent in fact. On the contrary, it appears to me that both parties contemplated at the time that the advance would enable the trader to continue his trading. But the

* * *

more difficult question of fraud by intendment of law remains to be considered. The 67th section of the Bankrupt Law Consolidation Act, 1849, declares that a trader making a deed with intent to defeat or delay his creditors shall be deemed to have thereby committed an act of bankruptcy, a provision of long standing, drawn from prior Acts of Parliament. As the law holds every man to have intended the necessary and even the natural consequences of his own act, a trader will be held to have intended to defeat or delay his creditors, whatever may have been the actual state of his mind on the subject, if the deed which he has executed leads naturally to such a consequence. The case of Graham v. Chapman, 12 C. B. 85 (E. C. L. R. vol. 74), establishes the doctrine that the assignment of a trader's whole, or what is substantially the whole of his property, though for a good consideration, is an act of bankruptcy, if an antecedent debt form any portion of such consideration. *I state *716] that Graham v. Chapman established this doctrine, on the authority of Hutton v. Cruttwell, 1 Ellis & B. 15 (E. C. L. R. vol. 72), where Lord Campbell, in delivering the judgment of the Court of Queen's Bench, said,-'We are referred to Graham v. Chapman as an authority to prove that a clause authorizing the assignee in a bill of sale to enter and sell after-acquired property is necessarily an act of bankruptcy. On referring to the case we do not find any such doctrine laid down in it. There, the deed expressly recited that it was given, not only for a further advance, but for an old unsecured debt, and Jervis, C. J., several times over points this out as the chief foundation of his judgment.' Unless, then, these cases must be taken to have been overruled, the execution of this deed was clearly an act of bankruptcy." He then proceeds to observe upon Young v. Waud, 8 Exch. 221,† Hale v. Allnutt, 18 C. B. 505 (E. C. L. R. vol. 86), Bittlestone v. Cooke, 6 Ellis & B. 296 (E. C. L. R. vol. 88), and Bell v. Simpson, 2 Hurlst. & N. 410;† and concludes by saying: "It is with no slight diffidence that I select my guide among these conflicting decisions. But, the selection being forced upon me, I adhere to the doctrine, that, where, as in this case, part of the consideration consists of an antecedent debt, the assignor does not receive an equivalent for the assignment, and consequently that the act of bankruptcy is proved." The conclusion drawn in that case from the conflicting authorities is, it is submitted, manifestly the correct one.

Lush, Q. C., Tompson Chitty, and Lumley Smith, in support of the rule. If the bill of sale be given for present or future advances, Hutton v. Cruttwell, 1 Ellis & B. 15 (E. C. L. R. vol. 72), and Bittlestone v. Cooke, 6 Ellis & B. 296 (E. C. L. R. vol. 88), show that it is good. The question, then, is, did Cheeseman receive an equivalent for the assignment? He received 250%, which, under his then circum

stances, was a material assistance to him, and was obviously *717] *advanced for the purpose of enabling him to go on. At the time the assignment was given, it was a security only for the 2501 then advanced. Until some further payment should be made by Reynolds in respect of the liabilities he was under on Cheeseman's account, the latter might at any time have discharged his liability under the deed by repaying the 250. and interest. The case is, therefore, altogether distinguishable from Leake v. Young, 5 Ellis & B. 955 (E. C.

L. R. vol. 85), where the assignment was made solely in consideration of existing liabilities, and from Graham . Chapman, where the deed. was given in consideration of a pre-existing debt as well as of a present advance. [WILLIAMS, J.-If the deed is given as a security for a liability from which a debt may accrue, I must confess I do not see why it the less operates to defeat and delay creditors, than if it were a security for a past debt.] In Bittlestone v. Cooke, 6 Ellis & B. 296 (E. C. L. R. vol. 88), B., a trader, by bill of sale conveyed all his stock, and all the stock that should during the continuance of the security become his, with a power of sale, to C., as a security for money to be ad anced by C. The bill of sale was drawn up as a security for an existing debt as well as for fresh advances; but this was a mistake, the whole consideration being fresh advances not to exceed a certain sum. C. made the advances; the property in fact was about three tines the value of the advances. B. was at this time in reality insolvent; but the Court (which had power to draw inferences of fact) drew the inference that the advances were bonâ fide asked for and made with a view to keep the business going, and in the belief that they would enable B. to get over his difficulties. Afterwards C. took possession of the goods. B. being declared a bankrupt, his assignees brought trover against C., contending that the transaction in question was itself an act of *bankruptcy. On a case stating these facts, in [*718 which the Court had power to draw inferences of fact,-it was held, that the transaction must be viewed as if the bill of sale had been drawn, as it was intended to be, entirely as a security for fresh advances: and that the effect of pledging the whole of the trader's property for such advances was not necessarily to delay his creditors, as the advances, even if bearing a small proportion to the value of the property pledged, might be of more advantage to the trader and his creditors than the property itself; and, consequently, that the bill of sale in this case, being in fact bonâ fide, was not in point of law fraudulent, nor an act of bankruptcy. [BYLES, J.-The assignor there kept the value, whatever the result.] Lord Campbell in that case says: "I think that a conveyance by a trader of goods with a view to obtain future advances is not necessarily as a matter of law an act of bankruptcy, though the whole of the trader's stock, present and future, is included in the conveyance. If the conveyance be bonâ fide with a view to obtain advances for the purpose of carrying on the trade, I think it is not an act of bankruptcy. It is unnecessary to enter into the reasons which lead me to think that this is the law; for Hutton v. Cruttwell, 1 Ellis & B. 15 (E. C. L. R. vol. 72), is an express decision in this Court that such a conveyance is not necessarily an act of bankruptcy; and there is no authority against it." Then, dealing with the facts, his lordship says: "The property pledged was worth 60007., and the limit of the advance actually stipulated for only 18007.; and the sum actually obtained was far below the value of the goods. Now, I agree that a conveyance of this sort is invalid unless there be an equivalent; but I cannot say that the advantage obtained for the trader and his creditors by these advances was not a full equivalent for the pledge. In *times of pressure, an advance in ready money of a very small [*719 amount may very often enable a trader to avoid stopping payment, and so enable him to pay all his creditors 20s. in the pound. I