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In Re: Murray, an Insolvent and Ex Parte Dwarkanath Mitter - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported in(1878)ILR3Cal59
AppellantIn Re: Murray, an Insolvent and Ex Parte Dwarkanath Mitter
Cases Referred and Hornsby v. Miller
Excerpt:
insolvency - order and disposition--insolvent act--11 and 12 vict. c. 21, section 24--goods pledged by insolvent and re-delivered to him on commission sale. - .....the proceeds in liquidation of his debt. now, as i take it, at common law, the interest of the pledge of goods ceased by his ceasing to have possession of them at least by his own consent, and the contract act does not seem to me to change this. it describes pledge as a bailment, and the natural inference is, that when the bailment comes to an end, the pledge does so likewise. we have then the goods in the hands of the insolvent discharged of the applicant's lien and subject only to the terms of the receipt, which, at the outside, only amounts to an agreement to sell the goods and apply the proceeds in liquidation of his debt; for breach of this the applicant could prove and recover a dividend.2. even if, however, the applicant wore in a position to put his claim higher, and to rely.....
Judgment:

Kennedy, J.

1. In this case I have no difficulty in determining that the Official Assignee ought not to make over the goods to the applicant, and to direct that he should defend any suit that may he brought against him. I am not so sure that the strongest ground of the assignee's claim is the reputed ownership clause, because so far as lean judge, on the facts, the insolvent was not only the reputed but the real owner. The allegation is, that the goods wore pledged to the applicant, who re-delivered them upon certain terms,--that is to say, that the insolvent should sell them; and, as I understood Mr. Appear to say, should apply the proceeds in liquidation of his debt. Now, as I take it, at common law, the interest of the pledge of goods ceased by his ceasing to have possession of them at least by his own consent, and the Contract Act does not seem to me to change this. It describes pledge as a bailment, and the natural inference is, that when the bailment comes to an end, the pledge does so likewise. We have then the goods in the hands of the insolvent discharged of the applicant's lien and subject only to the terms of the receipt, which, at the outside, only amounts to an agreement to sell the goods and apply the proceeds in liquidation of his debt; for breach of this the applicant could prove and recover a dividend.

2. Even if, however, the applicant wore in a position to put his claim higher, and to rely on his having an interest in the goods, I do not think he can escape the operation of the order and disposition clause.1 As Mr. Piffard pointed out, there is not anything to show in what way the applicant took possession of the goods; nothing to point out that publicity and notoriety of change of possession or of ownership which in Lingard v. Messiter 1 B. & C. 408 was hold so important. It is true that a well established course of trade as in Ex parte Watkins (L.R. 8 Ch. 520) will prevent the mere possession of goods inferring such reputation of ownership as to bring the goods within the statute, otherwise some most useful branches of commerce would become impossible, as for instance commission agency, leasing chattels, and possibly oven pawn broking. But the usage must be well established, Ex parte Lovering L.R. 9 Ch. 624, and above all the transaction must be clearly bond fide.

3. Now, without going into the question suggested in Ex parte Watkins (L.R. 8 Ch. 520, at p. 531), which points out the difference of position of goods in a retail shop, I. may say, that no amount of evidence would convince mo that there was a practice or custom of purchasing goods from a retail dealer and leaving them with him for commission sale; and I may further say, that I do not think that any arrangement by which in substance and effect one creditor secures a preference as to the proceeds of certain goods over the others by an arrangement which leaves the goods in the manual power of the bankrupt, can ever be upheld. The most formally drawn conveyance, by which the goods were assigned to the creditor with a provision that they were to be returned to the debtor's shop, and then sold by him and the proceeds applied in liquidation of Ins debt, would fail. Why should this transaction be supported which only differs from that by the real meaning and intention not being clearly and explicitly stated--a difference which does not tend in its favour.

4. Any other doctrine would, in truth, sweep away the whole principle of the order and disposition clause. I have not been referred to any one single case in which the property in dispute was a personal chattel in the manual possession of the bankrupt, and the claimant claimed it as a mortgagee, where such claim was allowed. The cases of Spackman v. Miller 12 C.B. N.S. 659; S.C. 9 Jur. N.S. 50 and Hornsby v. Miller 1E. & E. 192 S.C. 5 Jur. N.S. 938 are intended as complementary to each other. The one shows the result of an arrangement operating as a re-demise of mortgaged goods, and thus preventing the possession during the time being with the consent of the true owner, and the other, when the possession is consistent with the mortgage deed. I believe it to be impossible and against the spirit of the Act by any convincing device to give a lien for money advanced upon goods previously the property of the bankrupt, and returned to or permitted to remain with him. The power of so borrowing money would be much more dangerous than that of raising money by sales at an undervalue equivalent to the amount which would be advanced on pledge. Such sales would, in many cases, be strong evidence of criminal intention in the original purchaser of the goods, or at any rate would lead to speedy discovery.

1. 11 & 12 Vict. C. 21 Section 23: And be it enacted, that if any such insolvent shall, at the time of filing his petition, or at the time of filing the petition on which an adjudication of insolvency shall be made by the consent and permission of the true owner thereof, have in his possession order or disposition any goods or chattels whereof such insolvent is reputed owner, or whereof he has taken upon him the sale, alteration, or disposition as owner, the same shall be deemed to be the property of such insolvent, so as to become vested in the Official Assignee of the Court by the order made in pursuance of this Act : Provided that no assignment or transfer of any ship or vessel or any share thereof, made as a security for any debt either by way of mortgage or assignment, duly registered according to the provisions of any Act or Acts of Parliament now in force or hereafter to be passed for the registering of British vessels, shall be invalidated or affected by reason of such possession, order, or disposition of the same as aforesaid.


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