IMPORTANT LEGAL DECISION UPON FRAUDULENT PREFERENCE.

Westport Times, Volume V, Issue 794, 28 March 1871, Page 3

IMPORTANT LEGAL DECISION UPON FRAUDULENT PREFERENCE.

Lord Justices Jatnes and Hellish delivered an important judgment in an .'appeal from the decision of Yice-Cban-'cello'f Stnart by the official liquidator of the Birmingham Patent File Company (Limited), who had overdrawn their account to the extent of several '•thousand pounds at the bank, to whom, on pressure for payment, they assigned ;m equitable mortgage of nearly all their property; a transaction which, in the subsequent winding-up proceedings, excluded a number of unsecured creditors from any benefit in the assets. Their lordships held that the directors had authority, in the absence of anything to the contrary in the Articles of Association, to make such a mortgage, and by so doing they were not guilty of any fraudulent preference, or of any intention to delay or defeat the other creditors ; if the latter were preferred under circumstances to show that something undue or fraudulent was intended, they clearly came under the Act. But if an arrangement were made by a company with their bankers to enable them to carry on their business, that was not an arrangement to de-ay or defeat creditors, but clearly a legilimate transaction, providing that it was not done without pressure, and that the winding-Up was not in contemplation at the time.