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In Re: T. H. Marshall an Insolvent - Court Judgment

LegalCrystal Citation
Decided On
Reported in(1881)ILR7Cal421
AppellantIn Re: T. H. Marshall an Insolvent
Cases ReferredVicarino v. Hollingsworth
order and disposition of insolvent - indian insolvent act (and 12 vict., clause 21), section 23. - .....either by n as 'marshall brothers,' or by mr. boileau as 'marshall brothers, per t. boileau or per t. b.' this went on the usual course of business up to the time of (sic) insolvency.'12. these persons, therefore, from where goods were bought, were led to lieve that their goods were bought by (sic) shall brothers---not by mr. boileau or for his benefit, and mr. boileau's s(sic)nement regarding the mode of deali(sic) with the goods, shows that they were allowed to leave the premises from time to time, as the insolvent directed, with the consent of mr. boileau.13. fresh goods, were thus brought in from time to time for the purpose of the business, that is to say, that they might be used in the business, to earn funds for the business, which could be applied in payment for them, on the.....

Broughton, J.

1. The insolvent in this case had assigned his goods to Mr. Boileau prior to his insolvency, and the question is, whether they were in his own possession, order, or disposition when he became insolvent, within the meaning of the 23rd section of the Insolvent Act, 11 and 12 Vict., Clause 21. The petition of the insolvent was filed on the 31st May 1881. There is no question in this case as to the validity of the assignment, which was dated the 19th March, in favour of Mr. Boileau. It is shown to have been made more than two months before the filing of the petition, and for good consideration ; and in is shown, that the money he advanced-Rs. 9,500- was applied partly in buying out a partner, who was paid Rs. 5,000, and the balance in paying the debts of the more pressing creditors of the insolvent. It was not an assignment in contemplation of insolvency, for the insolvent swears he did not know ha was in difficulties. Mr. Boileau had no idea of it, or, as he says, he would not have paid Rs. 5,000 to a partner just retiring from an insolvent firm. Mr. Trevelyan does not seek to impeach this testimony, nor does he suggest the either the insolvent or Mr. Boileau did not fairly state the case.

2. Mr. Boileau was, under the assignment, to become the manager of to insolvent's business at a salary of Rs. 200 a month, and he immediately enter upon his functions as manager, and brought an assistant, named Mr. Depenr*** to help him with the accounts. The business was that of a builder a contractor, and the insolvent attended to the outside work, coming or occasionally to the office, where Mr. Boileau saw the customers.

3. Mr. Boileau states---and this is an accepted statement---that, in take over the management, he had in view the protection of his own interest in property, which consisted of the stock-in-trade, at the same time assisting insolvent, his brother-in-law, who, he says, would have lost credit had business been carried on in another name. The deed itself provided that Boileau should remain in possession that the property should be removed without his consent ; and that any property , sold she be replaced. Accordingly, the old name was used, the contracts, (sic) chases, letters, and so on were signed by Mr. Boileau---'Marshall and Company, per T. B.,' or 'per T. Boileau.' Mr. Boileau's durwan was, however, placed at the door, and the goods were not allowed to leave the premises for the purpose of the business without the order of Mr. Boileau given to the persons in charge of them and to the durwan, except that, on some occasions-the latest of which occurred some time before the filing of the petition-the insolvent himself was allowed to take goods when Mr. Boileau was not at the office. This happened for the most part in the early morning, before Mr. Boileau had arrived from Barrackpore, where he resided. When goods were so taken, the fact was reported to Mr. Boileau on his arrival, and he gave his sanction on this report. So the work went on for over two months, Mr. Marshall, being a practical builder, doing the outside work, and Mr. Boileau, with his staff of employes, doing the work at the office, making contracts and purchases, but in the name of ' Marshall Brothers ; ' and all the money passing through his hands. He opened an account in his own name, and made payments by his own cheques to various persons connected with the business. Mr. Allen points out that, among the payments made by Mr. Boileau on the making of the assignment, and with part of the money be advanced, was a payment to Hurrish Chandra Mitter, of Rs. 1,000 on the 19th of March, by a cheque signed 'T. Boileau,' in payment of a debt due by the insolvent to Hurrish Chandra for bricks and soorkie supplied to the business. Hurrish Chandra had, prior to the assignment, spoken to Mr. Boileau about the business, which he described as a profitable one, and advised him that he might make the advance : yet Hurrish Chandra now comes forward and claims that the stock-in-trada, which he knew was assigned to Mr. Boileau, was in the apparent ownership of the insolvent. But notice to one creditor is not notice to all.

4. A great many cases have been cited in argument, but questions arising upon this clause and the similar clauses contained in the English Bankruptcy Act depend so much upon their own actual circumstances, that it is necessary to be very careful in applying these precedents. Among the cases which have been quoted, the case of Agabeg (2 Ind. Jur., 340), decided by Mr. Justice Phear in 1867 upon the same Statute, bears perhaps the closest resemblance to this. There, Messrs. Mackenzie, Lyall and Co., having an assignment of Mr. Agabeg's furniture, put a durwan at the gate, and sent a man to make a catalogue, with a view to the disposal of the furniture by public auction ; and it was held, that the furniture, which Mr. Agabeg was allowed to she as before up to the date of his insolvency, was in his exclusive possession, and further that it was in his order and disposition.

5. But Mr. Boileau in the present instance, by the action I have already scribed, did a great deal more than Messrs. Mackenzie, Lyall & Co., did in be case of Mr. Agabeg's furniture.

6. There has been, moreover, a recent decision of the Lords Justices upon the instruction of the like section of the English Bankrupt Act (32 and 33 ct., c. 71, Section 15) which seems to me to throw some doubt upon the decision Agabeg's case (2 Ind. Jur., 340). In the case of Ex parte National Guardian (sic)suranoe Company, In re Francis (L. R., 10 Ch. Div., 408), a man was in (sic)ndly possession of a house and furniture which the bankrupt was allowed enjoys ; he was put there to get the goods out of the defendant's order and position, so as to avoid the effects '(sic)lis bankruptcy. 'The only question,' (sic) Lord Justice James, 'is, whether possession was taken by the true owner the goods with the intention of as(sic)rting his rights; ' and Lord Justice. Thesiger added, 'the debtor had, as in Vicarino v. Hollingsworth (20 L. T., N. S., 362), the use of goods, but it was subject to the control of the man who was put in possession, and who was there to sea that the use was in accordance with the rights of the bill-of-sale holder.'

7. These cases, however, are very different from a case like the present, in which the property consists not of furniture which remains the same, but of goods to be used in the business, and daily altered in quantity and character.

8. It appears to me that the goods were in the possession of Mr. Boileau and are prima facie his, unless it can be shown that they were in the order and disposition of the insolvent, for the Insolvent Act, like the more recent Bankruptcy Acts, uses the expression possession, order or disposition, unlike the Act of James the 1st, which uses the words possession, order, and disposition.

9. The principle upon which this section ought to be applied is very clearly stated in another recent case, Ex parte Wingfield, In re Florence (L. R., 10 Ch. Div., 591), by Lord Justice James: 'This section (32 and 33 Vic, Clause 71, Section 16) must he read however, as the similar provision in the Bankruptcy Statutes from the time of James the 1st has always been read, with some attention to common sense. It has always been construed as meaning this: that if goods are in a man's possession, order or disposition, under such circumstances as to enable him by means of them to obtain false credit, then the owner of the goods who has permitted him to obtain that false credit is to suffer the penalty of losing his goods for the benefit of those who have given the credit. But if no such credit has been given, then the maxim applies 'cess ante ratione cessat ipsa lex.'

10. Applying this principle to the case before me, I find that Mr. Boileau stated in the course of his examination, 'I sent notice to the debtors, I believe, on the 30th of May. The notice was written in the solicitor's office, &c.;' But this subject was not pursued, and it is not shown that the notice was ever issued. Mr. Boileau continued : 'Mr. Leslie (his solicitor) suggested that I should give notice. I said it would be tantamount to shutting him up, as ha depended upon the debtors for work---they were his customers. It was not to keep his customers from this knowledge, but simply that it might harm him individually. I expected his customers would withdraw their custom from him, because it would evidence that he was obliged to borrow money ; beside people are generally very touchy about their bills being handed over to other; I did not wish to injure his credit.'

11. Accordingly, when a debt due from one of the large customers Mr. Ezra---had to be realized, it was realized by the insolvent personally, an the money was handed over to Mr. Boileau by him. This was on the very eve the insolvency. The assignment was equally kept secret from the dealers i materials which had to be brought to carry on the works. Mr. Marshall himse says : 'I purchased timber, bricks, and chunam for the business in the name a 'Marshall Brothers,' and any orders sent for materials were signed either by n as 'Marshall Brothers,' or by Mr. Boileau as 'Marshall Brothers, per T. Boileau or per T. B.' This went on the usual course of business up to the time of (sic) insolvency.'

12. These persons, therefore, from where goods were bought, were led to lieve that their goods were bought by (sic) shall Brothers---not by Mr. Boileau or for his benefit, and Mr. Boileau's s(sic)nement regarding the mode of deali(sic) with the goods, shows that they were allowed to leave the premises from time to time, as the insolvent directed, with the consent of Mr. Boileau.

13. Fresh goods, were thus brought in from time to time for the purpose of the business, that is to say, that they might be used in the business, to earn funds for the business, which could be applied in payment for them, on the faith of the credit of Mr. Marshall, and not of Mr. Boileau.

14. It appears tome that the property was in the order and disposition of the insolvent, and that it would be unjust to apply the proceeds of these goods to satisfy the assignment to Mr. Boileau, which he himself says was kept secret.

15. It is agreed that the costs of both parties shall be paid out of the proceeds of the goods.

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