curement of an act of bankruptcy, shall not be even the instruments of carrying it into effect. But there is no case hitherto which has gone the length of saying that a creditor, who has been a party to the instrument on which the act of bankruptcy is founded, shall not be an assignee to sue for the general benefit of the creditors; and it must be observed also, that the assignees come in by the election of the other creditors, and need not necessarily be creditors themselves. How shall they then be disabled from suing in that character, because they have been parties to this transaction, which I do not consider as a fraud, because they might have acted upon the deed as a conveyance to them, and undertaken the trusts, or have considered it as an act of bankruptcy, which they do here. But as to the bankrupts, their purpose of fraud in law was complete; they intended to part with their property, and they effected it as far as they could, and but for the act of the creditors, would have done that which would have rendered them unable to carry on their business, and would have delayed the payment of the debts of those who did not come in under the deed. It only remains to consider the personal objection to the trustees suing in this action; but there are no cases which go to support that objection, and there would be great inconvenience if persons who are elected assignees, and with whose private transactions the creditors are not acquainted, should be prevented from suing for the benefit of those creditors on account of some personal act of their own. It seems to me, there is neither justice, nor reason, nor policy, in determining that such a personal objection should be available to the defendants." GROSE, J. was of opinion, that the act of bankruptcy was complete by the signing of the deed by the bankrupts; and that when the statutes concérning bankruptcy thereby began to operate against them, the personal objection which had been taken to the assignees could not prevent those statutes from taking effect, so as to deprive the creditors of the benefit which they would otherwise have under the commission. 1803. TAPPENDEN & al. versus BURGESS. 1803. TAPPENDEX & al. versus BURGESS LAWRENCE, J. "The argument for the defendants has gone a great deal upon confounding the case of a petitioning creditor with that of an assignee. The former indeed cannot be made the instrument of suing out a commission where he has been a party to the deed which constitutes the act of bankruptcy; but the same objection does not hold good with respect to the latter, and there is no question but that the action could have been supported if any other persons than the assignees had been parties to the deed, which was clearly an act of bankruptcy. For Tappenden was entitled to apply to the Chancellor by petition, in order to have the effect of the commission, and have the property conveyed to the assignees for the benefit of the creditors, for he never assented to the deed, which alone could have barred him from petitioning in order to take out a commission. And the goodness of a commission does not depend on the choice of the assignees, but upon the act of bankruptcy and the petitioning creditor's debt, which are in this case both sufficient to support it." LE BLANC, J. "Two objections have been made in this case. First, that there is no act of bankruptcy, because the deed, at the time it was executed, was agreed not to be carried into effect; and secondly, if it be so, yet the present plaintiff's cannot set it up as an act of bankruptcy. But I think the act of bankruptcy was complete, notwithstanding that circumstance, because there was a fraudulent conveyance, in which a fraud in law upon the creditors was intended by the bankrupt, and it only depended upon the creditors, and not the bankrupts, whether they would give effect to it. But as far as concerned the bankrupts, they could not have prevented it from taking full effect, and therefore with respect to them it was a complete act of bankruptcy. If the objection which applies to a petitioning creditor should be carried so far as to prevent the persons who have signed a deed of trust or letter of license from being made assignees, it would be a very easy thing for a bankrupt to prevent any others from being chosen assignees if a majority of his creditors in number and value had come in under the assignment; and then although a commission should be sued out by the other creditors, they would never have the benefit of it." Lord ELLENBOROUGH, C. J." It really brings the question to this, that the commission shall be good or bad according to the choice of the assignees." RULE TO ENTER A NONSUIT DISCHARGED. LEICESTER versus ROBE.-Thursday, Nov. 24. cense. Addi 4 CREDITOR signs a deed to give his debtor time for payment Letter of liof the whole of his debt, upon having security for purt, and se- tional security veral other creditors are thereby induced to sign the deed; but to ereditor, how void. at the same time he secretly obtains the security of a third person for so much as stands in the trust deed on the personal security of the debtor alone: Held, that this is a fraud upon the other creditors, and the additional security is void. Semble. The case of Feise v. Randall* can only be supported on the ground that no fraud was understood to have been effected on the creditors. versus ROSE. THIS was an action in assumpsit upon a special agree. LEICESTER ment. Nothing turned upon the form of the action, but the substance of the declaration was shortly as follows; A certain deed of trust had been prepared, dated the 5th of August, 1801, whereby, after reciting that IV. Thompson and E. Leadbeater, being unable to pay all their creditors the whole of their debts, had proposed to pay them by instalments, that is to say, one-eighth in one month, oneeighth in three months,one-eighth in six months,one-eighth in 12 months, two-eighths in 18 months, and the remaining two-eighths in two years; it was therefore agreed that the 1st, 2d, 3d, and 4th instalments should be secured by the promissory notes of Thomson and Leadbeater, one moiety thereof to be made payable to and be endorsed by Messrs.— and Shaw, and the other moiety to Messrs. B. F. and Co. those houses having agreed to become security, and the two last instalments by the promissory notes of Thompson 1803. versus RUSE. and Leadbeater only. That at the time of the making of the LEICESTER agreement after-mentioned, Thompson and Leadbeater were indebted to the plaintiff in 17651. and by an agreement an the sd of September, 1801, reciting the trust deed, &c. and that the plaintiff having been applied to to execute it, had refused, conceiving they had a security; the defendant, in order to induce the plaintiff to sign the trust deed, undertook and promised that he would within six weeks give sufficient security, to the satisfaction of the plaintiff, to secure the latter instalments agreed in the indenture to be paid by the notes of Thompson and Leadbeater only. That the plaintiff, relying upon this promise, executed the trust deed accordingly; and the breach was, that the defendant did not within six weeks. give, nor yet had procured, to the satisfaction of the plaintiff, or in any other manner, security for the two last instalments, or either of them. This cause was tried before Lord ELLENBOROUGH, C. J. at the sittings for London after the last term, when the plaintiff proved his case. J. Thompson proved, that he applied to the plaintiff to sign the deed of composition, which he refused unless he could get the two other instalments secured also. The other creditors would not sign until he did. Afterwards he signed, and then three other houses at Liverpool, who had refused to sign unless he did, signed the deed. When the instalment became due for which Rose, the defendant, had agreed to procure security, the note of Thompson and Leadbeater was not paid, and Rose refused to take it up or give security. Upon these facts his lordship directed a nonsuit, on the ground of fraud being practised upon the creditors, and leave was given to move to set it aside and enter a verdict. Accordingly a rule to shew cause was obtained by ERSKINE On the 10th Nov, who cited Feise v. Randall* to shew that when the collateral security leaves the insol. vent in the same condition, the case does not come within 6 Term Rep. 146. the rule adopted in Cockshott v. Bennet, and the other cases relied upon by the defendant. GARROW, GIBBS, and LAWES, for the defendant. "The case is shortly this. Thompson and Leadbeater enter into an agreement with their creditors that their debts shall be paid by six instalments: The four first are to be secured by certain houses in trade, who are to be supplied with the funds by T. and L. but with respect to the two last instalments, the body of the creditors are to be contented with the single security of the debtors. The plaintiff desires to get more; he says all applications to him will be vain unless they give him other security; which he obtains. This case therefore goes beyond all other cases; for they proceed upon the ground, that other creditors would probably be induced to sign on the faith of the signature of the party obtaining the additional security. Here it is not left to conjecture, but it is expressly stated that the other creditors could not be induced to sign without the plaintiff agreed. This was held out as an inducement to him to do so, and in consequence of his (Leceister's) signature the other houses immediately signed the deed. There is no sense in the distinction attempted to be raised, that the funds are to come out of other hands, and that therefore the situation of the insolvent is no worse; for in almost all cases of insolvency the funds are made up out of the benevolence of the insolvent's friends. The true principle is, that a greater advantage shall not be obtained by one creditor than by another. When any person has been induced to enter into an agreement as security for another, and the representations made to him are false, the agreement is void. Jackson v. Duchaire. If in a case of this kind one man gets more than the others, it is a fraud upon them; for, had they known it, they would have become competitors with him in endeavouring to obtain that additional security. All the other creditors suppose that the bank 1803. LEICESTER versus ROSE |