VALIDITY OF BAILMENTS.

King Country Chronicle, Volume VII, Issue 602, 13 September 1913, Page 5

VALIDITY OF BAILMENTS.

A TE KUITI CASE.

EFFECT OF BANKRUPTCY

In the Auckland Supreme Court on Wednesday afternoon judgment wan delivered by his Honor Mr Justice Cooper upon a law print which was argued recently 83. a preliminary to the trial of the case, Booth, Macdonald and Co , Ltd., v. the Official Assignee in Bankruptcy of the property of F. J. Hallmond, a bankrupt. Dr Bamford appeared for the plaintiff company and Mr Mays for defendant.

The circumstances are interesting, particularly as the case involves a point frequently raised in connection with commercial transactions the validity of bailment; when the bailee becomes bankrupt. Messrs Booth, Macdonald and Co. provided Hallmond with agricultural implements on three separate occasions, and in each case a hire-pur-chase agreement was made in the ordinary way. On May 2ud, 1913, Htslimond was adjudicated a bankrupt on his own petition, and the official assignee, who took charge of the estate, also took possession cf the implements mentioned in the bailments, regarding those ss portion of the bankrupt's property. Booth, Mnedonald and Co. demanded thfir return in terms of the bailments, but the official assignee refused "this request. The plaintiffs (Messr3 Booth, Macdonald ar.d Co.) allege that the implements at the time of the bankruptcy were r.ot in any senso the property of the bankrupt, and they claim damages for their wrongful detention and conversion. The ground upon which the plaintiff claims that the order and disposition clause in the Bankruptcy Act does not apply is that, it alleges, there is a well-fcnoivn usage or custom that agricultural implements are let to farmers on the hire-purchase system. The bailments, however, had not been registered, and the pi-pliminary point of law which had to be decided was whether the non-registration of the documents had not made the n void against defendant, in terms 01 the Chattels Transfer Act, 1908; so that the properly which was the subject of the action became, therefore, a part of the bankrupt's estate. After quoting authorities, and examining the terms of (he bailment* vey closely, his Honor summed up as follows:—"If vhe plaintiff company can prove the existence of usage or custom of hire-purchase affecting agricultural implements, which would excluds the doctrine of reputed ownership under section 61 of the Bankruptcy Act, 1908, the fact that the instruments referred to have not been registered will not prevent it establishing its alleged cause of action." Costs, amounting to £lO 10s, were allowed the plaintiff company. This means that the trial will go on, the non-registrat.cn of the documents not having put the plaintiff company out of court. The action will probably ba heard during the nest civil sttings of the Supreme Court, and a great deal of evidence will be cal'i-.d. The judgment will decide the point of whether goods held by a bankrupt under the hire-purchase system at the time of his bankruptcy becoma part of the bankrupt estate, or revert to the hirers.