COOPER V. COLEMAN.

Poverty Bay Standard, Volume X, Issue 1218, 6 December 1882, Page 2

COOPER V. COLEMAN.

(I’ER UXITKD PRESS ASSOCIATION,) I WELLINGTON, This day. i i The following are the judgments delivered ! | in the Appeal Court in the ease of Cooper v. | i Coleman : — I Judge Johnston said that in this ease it ! j seems that we are bound on the evidence to I j assume that the only object which the TrueI tees of Read’s Will could have had in purI chasing the debt due by McDonald to Cooper I was to enable them to petition for the adjudication of the latter as a bankrupt. At the time of the purchase the defendant in an action at suit of Cooper relating to the transaction respecting a former bankruptcy, in the course of which action, as it appears from Cooper’s evidence, he had spent a large sum of money, from the proceeds of which he Stig- ; gests tha.t he expected to be able to settle his ! affairs. The effect of his being made a banki rupt would be to leave it in the discretion of I the Trustees under the bankruptcy whether ' I be would go on with the action against the I j petitioners or not, and to deprive the bank- I i nipt of his “ dnminus litis.” If the Trustees ,of Read’s Will had other claims against | C ooper which would avail for the purposes of i making him a bankrupt they had no need to | purchase a stranger’s debt for that purpose. i It would seem, therefore, in making that pur- ! ch ase they could only have been actuated by a ! desire to get rid of Cooper’s action against | them, or at least to create embarrassment in i the prosecution of it, or to get a control I over it through the Trustee to be appointed ■ the question that arises on this state of facts is whether a person in Cooper’s position ' ought to be adjudicated a bankrupt under [ such circumstances, on a petition founded on • a debt assigned to a petitioner for the exj press purpose. In the case of Ex parte Griffin I in re Adams, 48 L.F. Bank 107, L.R,. 12, I C. H.D.W. 480, it was decided that the Court I will refuse to adjudicate a man a bankrupt i when a debt has been bought for an inequi- ! table purpose, as, for instance, to compel the I debtor to abandon legal proceedings, or when a debt has been purchased in order to take proceedings iu bankruptcy. There is no i doubt that the facts of that case show a more i clear and determined fraud than exists in the i present one, but the ground taken in the I judgment of Cotton, L. J., was that proceedings in bankruptcy were not taken to obtain ■ judg:nent|of the debt, which was purchased in order to take proceedings in bankruptcy, j which is precisely applicable to the present | case, and-lames, L.J., added, I think that ! what after Lord Justice Cotton has said in j which I entirely agree, people will probably I think twice before they buy debts for the I purpose of taking bankruptcy proceedings. I In the case of ex parte Harper in re Pooley, i L.R. 20, C.H.D.W. 685, the case of ex parte , Griffen was approved and acted on. It is true that that case was one of very gross fraud, but Holker, L.J., used language hi i his judgment which can very well be applied ;to this present ease. He said : It appears to : me it is gross abuse of the bankruptcy law for persons to buy debts which are due by i other people for no other purpose than that | of enabling them to carry choice of a trusj tee in bankruptcy, or to place any body in ! a position of control witli reference to the j bankrupt’s affairs. His Honor further I stated that he thought it desirable that the I decision in ex parte Griffen should be more i generally known than it is. Having arrived at the conclusion that the adjudication of this case was fraud on the bankrupt law, I need not consider the other questions which were raised. The appeal allowed and the petition for adjudication dismissed with costs, j Gillies, J., concurred witli thia judgment. ■ Williams, J,, in this case said 1 think it ; clear from the evidence that the debt was ’ was purchased by the respondents ill order to I enable them to take proceedings in bank- ! I ruptoy against the appellant, and so to stifle j j an action which was pending against them at I j the suit of the appellant. The petition was ' i clearly net only one of several' motives, but i I the sole motive of the respondents in acting ! | as Hwy did now, as was stated by Knight- ! Brace, L.J., in ex parte Uplill, L.R. 1, Ch. i I V. 7, where the legal requisites are s’.own to exist, it requires a strong case to warrant the annulling of the adjudication on : lie ground of collateral motive. The question here strictly is not one of annulling an an adjudication already made, but as to whether adjudication ought to have been i Mr.ide in the first instance. lam not sure - that the distinction is a substantial one, and ' ! conclude that the principle enunciated by 11 night Bruoe, J., applies to the present . : ie. There can be no doubt, liowever, of : the power and duty of tiie Court to refuse to make an adjudication where tile proceed.lugs are an abuse of the process of the Court or are inequitable, A judgment of my own, c-.r parte Mackay, was relied on by the res- ! poudent iu support of the contrary view. | .'■l that was meant to bo decided in that case was that on the 35th sectiou of “ The > ( Debtors’ aud Creditors’Act, 1876,” the word I “may” must be read “shall," and that ' therefore the Court, when the legal requisites | '.j an application were proved, could not re- I fuse to make the adjudication on the grounds ! of mere convenience or expediency. The ! ■ present case bears a strong analogy to the case of another partner taking bankruptcy , proceedings against another partner for the ■ sole purpose of compelling a dissolution of the partnership. Under such circumstances it has been held over and over again that the j C >urt will refuse to make an adjudication. I In a case still more nearly approaching the | present is ix parte Kemp, ,1. Mount, and De ! Gex, 657, There the bankruptcy was ani nulled on the ground that the petitioning • creditor to whom a bora fide debt was ; unquestionably owing by the debtor was acting merely as the instrument of anole.ra creditor for the sole purpose of i of si .pping a suit in chancery which had been brought against the latter by the bankrupt. The more modern cases cited in the judgment of my brother Johnston, carries , cut the same principle, and shew that if a : debt be purchased for the purpose of found- , iug a petition for adjudication upon it, aud j tiie petition lie presented not to recover the debt but for the purpose outside the law of I bankruptcy, the Court will not make an adi judication. For these reasons I think the I appeal should be allowed with costs.