SUPREME COURT, DUNEDIN. (IN BANKRUPTCY.)

Cromwell Argus, Volume 2, Issue 79, 16 May 1871, Page 6

SUPREME COURT, DUNEDIN. (IN BANKRUPTCY.)

Monday, Bth May, 1871

The position of the business affairs of Mr ■John T. Chaplin, coach-proprietor, of Dunedin—(Cobb & Co.)—has attracted much attention from business men. The following important decision of his Honor Judge Chapman will therefore, we presume, be read with interest. It discloses a somewhat peculiar state of the Law of Bankruptcy :

"I have," said his Honor, "looked over this deed, and it appears to me to be a complete assignment of all the effects of John Thomas Chaplin, real and personal, to Job Wain, for the benefit of all his creditors, without any distinction. I have been asked to declare this deed of no effect, and to declare it to be an act of bankruptcy, on two principal grounds—first, that, owing to the very large debt of the opposing creditor, it is manifestly impossible that the deed can at any time be duly executed, even if the whole four months be allowed to elapse. At present I cannot anticipate any such impossibility, or even any improbability. The opposing creditors'debt is large—l think £16,000; but they hold considerable security. That security may be rendered available within the time, and may so reduce their debt as to render it quite possible for the signatures of the other creditors to amount to a sufficient sum to render the deed good. 1 think, so far, under that objection the application is premature. Then, as to the other point—whether it is, in the words of the Act, vexatious and frivolous for the purpose of delay and not bondftd-i with a view to an arrangement beneficial to hiscreditors. "Undoubtedly the object of the deed is to prevent the judgment creditor availing himself of his judgment. Seeing that there was a judgment against him which, if fully execut without reference to the security, would have exhausted the whole of his property, the effect would have been to take that property out of the hands of all the insolvent's other creditorsNow, he had two courses before him, either of which was proper under the circumstances of tho case, if he desired to protect all his creditors. He could, first, have filed a declaration of insolvency, which would have effectually stopped execution without leave of the Court ; or, he could execute and file a deed for the benefit of all his creditors. That, for the proBeat, has all the effect of a declaration of insolvency. It may hereafter never ripen to a deed having that effect; but for the present, at all events, and during the time allowed by the Act, it has that power. Now, Ido not see on the face of the evidence, or the face of the deed, anything voxatkma or frivolous in that proceeding ; nor can 1 see anything that militates against the bond fid&s of the transaction. No doubt the object is to defeat the judgment of the creditor ; but that is perfectly lawful and perfectly proper where the defeating of the judgment creditor ia purely beneficial to the whole of the rest of the creditors. It seems to me that this is si that tho whole of the creditors may avail thonmlvos of the deed, and that the effect is to secure the whole of the insolvent's property for the whole of lu3 creditors, without distincti hi ai 1 vr.hhout favor to anyone. The applioati .;, thereb;:-, must bs refund.''