DECLARED VOID

Dominion, Volume 15, Issue 15, 12 October 1921, Page 8

DECLARED VOID

i A BANKRUPT’S PAYMENTS.

Mr. Justice Salmond yesterday gave judgment on a motion in which the Official Assignee in Bankruptcy of the estate of Thomas Williamson Piggott Hardy sought to set aside certain transactions antecedent to the bankruptcy between the ■(debtor and one of his creditors. Wright, Stephenson and Co., Ltd. The case had been heard in the Supreme Court at. Masterton. The transactions were: (1) Tho giving of certain securities to that company, namely, a mortgage of land and ■ a stock mortgage, on April 15, 1921; and (2) the making of certain payments by the bankrupt to tho company within the period of three months’before the bankruptcy. The securities were attacked on. the ground that the giving of them constituted an act of bankruptcy, and also the payments as being fraudulent preferences. For about two and a half years the del>tor carried on business os a. dealer in live stock. He commenced with a capital of only .£2OO, but had been enabled to carry on an extensive business with the financial assistance of \v right, Stephenson end Co- The slump which overtook the live Hock market in the months of February and March. 1921, caug it him with heavy commitments in the wav of forward and speculative contracts tor the purchase of slock, and reduced him to insolvency. According, to a statement prepared on April 9, in coniunction with the local manager <n Wright Stephenson and Co., his liabuitles" exclusive of the mortgages on his land for unpaid purchase amounted to close on .£6OOO. Wright, Stephenson, and Co. (£3162) was the largest. creditor, and on April 15 the debtor gave this firm, without tho knowledge of the others, a third mortgage over his land and a chattel mortgage over Ins present and future live stock and plant, to secure his existing indebtedness to the company together with further advances On the discovery of this transaction bv the other creditors he was forced by them into bankruptcy, and filed his petition accordingly on May 10, lees than one month after the date ot tho securities. The assets were estimated at A’MOO.. His Honour thought that tho Official Assignee’s contention that both the land mortoage and ths stock mortgage were void both as to tho past and future advances a,s being acts of bankruptcy, was well founded. He held that the company must execute a discharge of the land mortgage accordingly. Regarding the payments which were attached as fraudulent preferences, His Honour decided that the company could not successfully claim to bo “a payee in good faith and tor valuable consideration, within tho meaning of ‘ 9 to) of tho Bankruptcy Act. Ho did not hold that the company was awaro of the bankrupt’s position as early ns February /. i e before tho period within which a fraudulent preference must lie found; but by the end' of February, at the latest ■he thought that the company knew enough to preclude it from retaining any moneys received thereafter His Honour concluded: "There must, therefore, be a declaration that all payments made bv tho bankrupt to Wright Stephenson and Co. in March, April, and May, 19’1 are void as fraudulent preferences, and’ that all moneys so received must be accounted for by that company to the Official Assignee in bankruptcy. Wright, Stephenson and Co. must pay to the Official Assignee costs of these proceedings."