DISTRICT COURT.

Nelson Evening Mail, Volume XVI, Issue 97, 25 April 1881, Page 2

DISTRICT COURT.

[Before Hiß Honor Judge Bboad,] The following reserved judgment vraß delivered this morning:— Trustee in. Bankruptcy of J. B. Martin v. Griffiths. The plaintiff! sues the defendant for JE2OO damages for conversion of certain chattels. The defendant denies the conversion, and alleges that the goods were his own property by virtue of a duly registered Bill of Sale. It appears that the bankrupt, Major Martin, is a retired officer of the Indian AiUiy in receipt of a pension of £152 a year. He removed to Blenheim in 1579, where he procured employment as a draughtsman and iv & school, the emoluments from these sources bringing his total income up to £3*20 a year or thereabouts. Finding himself embarrassed, owing apparently to his having lived beyond hia means, he applied iv October, 1879, to the defendant to make him advances. This was arranged, security being taken in (he shape of orders to receive the pension and other moneys as they accrued due. Major Martin furnished Griilicbs with a statement of his affairs, from which the latter concluded, not unreasonably, that with care and prudeuCe he might tide over hta difficulties. A sort of general account appears to have been Opened in Griffith's books, in which he credited Martin With all BUttte received from him, and debited him with all advances made and interest thereon. This went on for some montha until Griffiths had reason to believe that Martin was uot going on either prudently or carefully, but was getting deeper into debt, and that hia statement of his affairs did not accurately repres&nt hia liabilities. In May, 1880, he owed Griffiths £73, and shortly before that a bill for £22, . given to one Carter, becaftie diie, find Martin w&s pressed for payment. He applied to Griffiths for a further advance but this was at first refused upon the ground that Griffiths wanted further security. Eventually Martin agreed to give Griffiths a biil of sale ovti 1 hi* boti3eiiold furniture., and this instrument was executed on tho 27til May and duly registered. The bill of sale fecitfes thrtt h wjis tei sGcu're tiie sum of £73 already advanced— a further sum of £22 then advanced—and future advances. [His Honor here read the terms of the bill o,f sale in exienso] The &li was the amount diie to barter, and ibis Griffiths made himself at once respoiislbie fo* atid has paid. From the statements furnished at this time, Griffiths had reason to believe that Martin might atill tide over his difficulties. In July he advanced a further sum of £42 on Martin's accoiiiit to pa> a"ti account Cff #ell Bros. On the tjiii August Martin filed 'fais declaration of insolvency, and the interim Trustee took possession of the furniture, but it was taken out of his possession by Griffiths, who claimed it under the bill of sale, and sold. That is the injury complained of, the Trustee alleging that tb& giving the bill of sale was an act of bankruptcy within the ifldaning oi Sub-section 2 of Section 20 of " the Debtors and Creditors Act, ]876," and that it was a " fraudulent preference " under Section 64 of the Act, and is therefore! Void as against him. It appears to me that: the real question is, what wta [he fhotife of Martin ifl giving tlii* Bill of Sale P was ha actuated' by a desire to prefer GriflUhs over the other creditors, or by the desire of inducing him to continue making him advanoes, or by the pressure of Griffiths ? In either of tlieeo latter views it was not a fraudulent preference (Ex parte Topham re Walker, L.K., 8 eh., A pp. 614). In that eaie the Lords Justices refdrred with appiotal to the judgment of Baoon C.J. in ex parte Black burne L.R. 12 Eg. 364, in which he stated the true Construction of See. 52 of tho English Bankruptcy Act of 1869, and that olauae, save for tho proviso at the end, is identical with tho 64th section of our Own Act. In that case hi* Lordship said-"**' Tho only condition presented by the Statute is that the debtoi* be unable to pay his debts at they became due from his own moneys, and this be it observed is applicable to debtors generally whether in trade or not. But then it adds another qualification or condition which is the vary life or essence of the enactment, the payment so mad* must in order to be void, be made "in favor of any creditor with a view of giving such creditor a preference over the other creditors." So that unless it can be mads clearly apparent and to the satisfaction of the Court which has to decide, that tho debtor's sole motive | was to prefer the creditor paid to the other creditors, tho payment cannot bo impeached •van although it bo obviously in favor of a creditor. The aot of the debtor is alone to be considered — the object and purpose for which the payment is made can alone be enquired into — and although it is perfectly legitimate, and iv all cases requisite, that all the attending oircumstances should he carefully investigated) yet if the act done can be properly referred to some other motive or reason than that of giving the creditor paid a preference ov«r the other or edit or a, then I conceive neither the Statute, nor any principle of law or policy, will justify a Court of Law in holding that the payment is fradulent or void." Now it is clear to me that Martin's motive was either to secure fresh advances from Griffiths^ or he yielded to pressure, it is not necessary to decide which, in either oaae it was not a fraudulent preference. Thera was a bonafide demand for security and ionaflde negotiations as to what the security should be, and the debtor did not oontomplato immediate bankruptcy. See eat part* Craven, L.R. G oh. »pp. 70. The consideration for tho conveyance Wiß a valuable ons, and the bill itself was in good faitb. It appears some few articles of moderate value were taken away by GrifEthi, although not included in the bill of sale — (I »ns not able upon the evidence beforo me to estimate their value properly) — and some articles whioh b»--lon god to Griffiths have been retained by the Trustee. Griffiths states that some of tho arfioles have not been sold, and he is trilling to return them. With these articles I do not intend to deal at all, as this action was undoubtedly brought to try the validity of the bill of sale ; that was the real question at issue, and upon that defendant is entitled to judgment. From what has been said above, it will be manifest that I do not consider tbo giving of tho bill of sale under the ciroumstanous to have been an act of bankruptcy within the meaning of sub-seotion 2 of section 26. Judgment for defendant with costs, £12 Bs.