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Poverty Bay Standard, Volume IX, Issue 932, 6 April 1881, Page 2

We notice lately that a new crop of insolvent estates are springing up in our midst; and we trust they will be, in bucolic language, “ the last of the season.” The more valuable of these estates are energetically competed for, by the professional trustees and accountants in bankruptcy; and as one of our eminent judges has recently delivered his opinion as to what the responsibilities of a creditors’ trustee really comprehend, we draw attention to the fact. His Honor Judge Johnston holds that with regard to instituting proceedings in bankruptcy, a creditors’ trustee,,who, in the course of winding-up an estate, raises an action and loses it, is personally liable to pay the costs on both sides of the action which he has lost. This appears to be a decision which involves infliction of some degree of hardship upon creditors' trustees in cases in which the estates which they were wkiding up had practically no assets, so that the trustees would require to pay the heavy costs nf the lost legal action out of their own pockets. But, said Mr. Justice Johnston, I feel bound to say, as regards the question of conjectural hardship, that I think it does not exist, because no wise or prudent person in the position of trustee of a bankruptcy case without assets would proceed to bring on an action without receiving the sanction of the creditors, or an indemnity from them in such a manner that he would feel that he was safe in proceeding. So far from its being a hardship on him if he chooses volun-

tarily to undertake such a proceeding, I.think that it would be a very much greater hardship if defendants were 1 exposed to the chances of having to I meet complaints made in respect of the bankrupt's estate without assets at the will of the person who accepted the trusteeship. It seems to me almost ! a monstrous thing to suggest that bej cause a number of persons chopse *0 I have a particular person to be trustee I of an estate in which they have an inj terest, but which estate is in itself of ino value or of next to no value, that such an individual should be able to sue whom he chose, knowing that he ran no risk, but that he might put any number of persons to any amount of expense or trouble. Mr. Justice Williams also said that it would really be monstrous to suppose that a person, because he happens to be a trustee of a worthless estate, can bring actions against whom he pleases, and if he happens to be defeated, that he should not be. personally liable to the defendants for the costs.

We notice, not only in the foregoing, but throughout their Honors’ utterances, no reservation is made ; and it may, hence, be assumed that in all cases where a trustee loses a suit at law the costs must come out of his own pocket. This is, obviously, not correct. What we take to be inferred is that in the case of worthless estates, where there are positively no assets, or where it would be highly imprudent to embark in litigation with no funds in hand to pay costs in case of failure, then the trustee becomes personally liable. But, possibly, under all circumstances the safest plan is to secure indemnity through the sanction of the creditors.