CASES ARGUED AND DETERMINED IN THE QUEEN'S BENCH, IN Crinity Cerm, XVIII. VICTORIA. 1855. The Judges who usually sat in Banc in this Term, were,— A judgment creditor, H., having by leave of a Judge proceeded against a garnishee, under sect. 64 of The Common Law Procedure Act, 1854, a case was stated for the Court disclosing the following facts. Garnishee was an auctioneer. P. sent him goods for sale for ready money, not to be removed until payment. The auctioneer sold them on those terms, stated in the conditions of sale, and received part of the price from some of the purchasers: but H., who had purchased part, took them away without payment, and without the consent of the auctioneer or of P. H. refused to pay, offering to set off a debt due to him from P.; this was declined. H. having obtained judgment against P., obtained an order to attach the price of the goods remaining in the auctioneer's hands under The Common Law Procedure Act, 1854, sect. 61, which was served on the garnishee. On the same day, but after the service, P. became bankrupt. His assignees claimed the money from the garnishee, and also demanded payment from H. of the price of the goods taken away by him. Held: that the effect of sect. 62 was that the service bound the debt so as to render the judgment creditor a creditor having security for his debt, within sect. 184 of The Bankrupt Law Consolidation Act, 1849 (12 & 13 Vict. c. 106), but did not give a lien, so as to bring him within the exception in that section; and, consequently, that the judgment creditor could not prevail against the assignees. Held, also, that, if the auctioneer should sue H. in his own name ex contractu for the goods sold, H. would have a defence by a plea in the nature of set-off, or at least by way of equitable defence. Or, if the assignees sued on the contract, he would have a defence by way of mutual credit. But that the assignees might recover in trover, to which H. would have no defence. THE following case was stated for the opinion of this Court by order of a Judge, pursuant to The Common Law Procedure Act, 1852. *Simeon Pitman, builder, was indebted to the plaintiffs in this [*66 action in the sum of 1417. 15s. 6d. for goods sold and delivered, money advanced, also upon his acceptance and for interest thereon. Pitman advertised his goods to be sold by auction by Charles Tutton (an auctioneer and the defendant in this action) on the 9th day of October, 1854. The goods were accordingly sold by auction by the defendant in lots on the premises occupied by Pitman, and on behalf of Pitman, under certain conditions of sale, one of which was that all goods were to be taken away the day after the sale and the money paid before delivery." At this sale an agent of plaintiffs attended and purchased, in their names, lots amounting to 867. 98. 11d.; defendant, the auctioneer, had no knowledge that Pitman was indebted to plaintiffs. The goods realized altogether 1917. 10s. 3d., including therein. the above-mentioned sum of 86l. 98. 11d., purchased by plaintiffs, without deducting the auctioneer's charges amounting to 147. 88., and a payment for rent amounting to 15l. 108., which he had undertaken to make out of the proceeds, and which he has since paid, and a further payment of 17. Os. 5d. for property tax then due, and which he had guaranteed to pay, but has not yet paid. On the day following the sale, about 6 o'clock in the morning, before the auctioneer or any person on his behalf was present to deliver the lots, the plaintiffs sent men and conveyances and removed the goods purchased by the plaintiffs, and which had continued on the premises occupied by Pitman up to that time (no other person but Pitman being in actual charge of them), without any order from the defendant for their delivery, and without his knowledge, and without payment or *tender to any person of the price. Pitman interfered and en[*67 deavoured to prevent such removal, and protested against the same, saying that they the plaintiffs were robbing him of his goods." The defendant in this action thereupon sent an invoice of the articles purchased, and demanded immediate payment of the amount, threatening proceedings if the same were not paid to him. The defendant received in due course the purchase-money of the residue of the goods sold at the said auction. The plaintiffs brought an action, on the 13th October, in this Court against Pitman, and, on the 21st October, obtained judgment by default for the sum of 145l. 178. 4d. On the 24th October an order in the action Holmes v. Pitman was obtained ex parte, on an affidavit of plaintiffs' attorney, under and pursuant to the provisions of the 61st section of the Common Law Procedure Act, 1854 (17 & 18 Vict. c. 125), of which the following is a copy. "In the Queen's Bench. William Holmes and John Whittle, judgment-creditors, against Simeon Pitman, judgment-debtor, Charles Tutton, garnishee. Upon hearing the attorneys or agents for the judgmentcreditors, and upon reading the affidavit of Joseph Kilvert Bartrum, I do order that all debts due and owing (or accruing due) from the abovenamed garnishee to the above-named judgment-debtor be attached to answer a judgment recovered against the above-named judgmentdebtor, on the 21st day of October, 1854, by the above-named judgmentcreditors. I further order that the above-named garnishee, his attorney or agent, attend me at my Chambers, in Rolls Garden, Chancery Lane, London, on Saturday the 28th day of October instant, at 11 of the clock in the forenoon, to show cause why *he should not pay the *68] judgment-creditors the debt due from him to the judgment-debtor, or so much thereof as may be sufficient to satisfy the said judgment debt. Dated the 24th day of October, 1854. CHARLES CROMPTON.” This order was served on the defendant on the 25th October, 1854. On the 25th October (but at a time subsequent to the service of the order on the defendant) Pitman signed a declaration of insolvency, under The Bankrupt Law Consolidation Act, 1849 (12 & 13 Vict. c. 106), which was filed on the 26th October in the Bristol Bankruptcy Court: and, upon this, he was duly adjudicated a bankrupt on 26th October, and immediately surrendered to the proceedings. An official assignee was then duly appointed by the Commissioner. Notice of the bankruptcy and adjudication was served on defendant Tutton on the 26th October. The adjudication was advertised in the London Gazette of the 27th October. On the return of the summons on the 28th October Mr. Baron Martin, without entering into the merits of the question, declined to make an order on defendant Tutton to pay the amount of judgment debt to plaintiffs, as did also Mr. Justice Erle upon an adjourned summons. No order on defendant Tutton, for payment, has therefore been made; but an order was made, pursuant to sect. 61, that plaintiffs should proceed against the defendant in this action, as garnishee, by writ, which was accordingly issued by plaintiffs against the defendant as such garnishee on 18th November, 1854. Subsequently to Pitman's adjudication of bankruptcy, and before the choice of his assignees, the following letter was sent to the plaintiffs, by the official assignee under the bankruptcy, claiming the 867. 98. 11d. for the goods purchased at the auction sale as a debt due to the bankrupt's estate. *69] *Re Simeon Pitman, a bankrupt. By the books and statements of the above bankrupt you appear to be indebted to this estate in the sum of 867. 98. 11d., which I request may be paid to me at my office on or before the 11th instant." (Signed by the official assignee.) The defendant still retains the balance of the proceeds of the sale except the sum of 861. 98. 11d. before stated. Upon this state of facts the following questions have arisen and are submitted for the judgment of this Court. 1. Did the service of the ex parte order of attachment on the defendant, the garnishee, effectually vest the debt due from him to Pitman, or any and what part thereof, in the plaintiffs, so as to prevent the same from passing to Pitman's assignees on his bankruptcy on the 26th October? 2. If the Court should be of opinion that the plaintiffs have no right to recover the debt from Tutton, have they, under the circumstances, a right to set off the purchase-money of the goods purchased by them at the auction sale against the debt due from Pitman to them? 3. Are the plaintiffs now liable to the defendant for the 867. 98. 11d.? Or has that amount, in consequence of the application of the official assignee, become due to the estate, and so rendered capable of being set off against the debt due to the plaintiffs from Pitman ? Judgment is to be entered for the plaintiffs for such sum (if any) as the Court may adjudge, with costs. Or, if the Court decides in favour of the defendant, then judgment of non pros is to be entered for the defendant with costs. The case was argued in last Easter Term. (a) [*70 *Phinn, for the execution-creditor.-The Common Law Procedure Act, 1854, sect. 61, authorizes a Judge to order the attachment in the hands of a garnishee of any debt due to a judgment-debtor; and, by sect. 62, "Service of an order that debts due or accruing to the judgment-debtor shall be attached, on notice thereof to the garnishee, in such manner as the Judge shall direct, shall bind such debts in his hands." Sects. 63, 64, and 65 enable the garnishee to pay the money into Court, and provide means for enforcing the payment if he disputes his liability. The first question in this case, and it is the most important both to the parties and the public, is what is the effect of the bankruptcy of the judgment-debtor after the debt is bound in the hands: of the garnishee? In other words, is the binding, in sect. 62, effectual against the assignees of the judgment-debtor as well as against himself? The effect, it is submitted, is to create an equitable lien: and, if there be an equitable lien, it will prevail against the assignees; Burn v. Carvalho, 1 A. & E. 883 (E. C. L. R. vol. 28).(6) It will be said that the word "bind" is used in the 16th section of the Statute of Frauds (29 C. 2, c. 3), to describe the effect on the property in the debtor's goods of the delivery of a writ of execution to the sheriff, and that the effect of such a delivery to the sheriff is not to transfer any property in the goods; Giles v. Grover, 1 Cl. & F. 72; S. C. 9 Bing. 128 (E. C. L. R. vol. 23). (c) [WIGHTMAN, J., referred to Samuel v. Duke, 3 M. & W. 622.† CROMPTON, J., referred to Balme v. Hutton, (a) Tuesday, May 1st. Before Lord Campbell, C. J., Wightman, Erle, and Crompton, Js. (b) In Exch. Ch., affirming the judgment of K. B. in Carvalho v. Burn, 4 B. & Ad. 382 (E. C. L R. vol. 24). (c) In Dom. Proc., affirming the judgment of the Exch. Ch. in Giles v. Grover, 1 Y. & J. 232,† which (formally) affirmed the judgment of Exch. See Rex v. Giles, 8 Price, 293. VOL. V.-5 2 Cr. & M. 262.†](a) The Common Law Procedure Act, *1854, *71] sect. 62, can hardly be construed as declaring that the service of the order on the garnishee shall be equivalent to the delivery of a writ to the sheriff. But, if it did, the effect would be that the debt is bound as against the judgment-debtor and all claiming under him. The assignees of an insolvent debtor claim under him, so that his goods are bound as against them; Woodland v. Fuller, 11 A. & E. 859 (E. C. L. R. vol. 39); and so would the assignees of a bankrupt were it not for the express provisions in the Bankrupt Law Consolidation Act, 1849 (12 & 13 Vict. c. 106), sect. 184, which cannot apply to forms of pro cedure unknown at the time of that Act. As to the second question, an auctioneer may in general sue in his own name; Williams v. Millington, 1 H. Bl. 81 ;(6) but justice requires that his right should be subject to a set-off of any debt due from his principal; Coppin v. Craig, 7 Taunt. 243 (E. C. L. R. vol. 2), Jarvis v. Chapple, 2 Chit. Rep. 387 (E. C. L. R. vol. 18.) These cases were shaken by Isberg v. Bowden, 8 Exch. 852;† but it is sufficient now if such a set-off would give rise to an equitable defence. Bramwell, contrà.—It is material for the first question to look at the state of the law before The Common Law Procedure Act, 1854, received the Royal assent. The assignees of a bankrupt took, in general, by relation to the act of bankruptcy, all that the trader at that time had, and no more. This provision, which is much older than The Bankrupt Law Consolidation Act, 1849, is embodied in it; sect. 141. But, though this was the general rule, there were exceptions introduced at different times in favour of persons who are permitted in *several *72] cases to have the benefit of transactions which took place after the act of bankruptcy. These are now found in sect. 133. The policy of those exceptions was to protect bona fide transactions without notice of an act of bankruptcy. But there is another class of exceptions from the general rule that the rights of the assignees are the same as those of the bankrupt at the time of the act of bankruptcy; under which class rights, which were good as against the bankrupt, are not good as against the assignees. Those are now contained in sect. 184. "No creditor having security for his debt, or having made any attachment in London or in any other place, by virtue of any custom there used, of the goods and chattels of the bankrupt, shall receive upon any such security or attachment more than a rateable part of such debt, except. in respect of any execution or extent served and levied by seizure and sale upon or any mortgage of or lien upon any part of the property of such bankrupt before the date of the fiat or the filing of a petition for adjudication of bankruptcy." A judgment-creditor of a (a) In Exch. Ch., reversing the judgment of Exch. in Balme v. Hutton, 2 Cr. & J. 19.† See Balme v. Hutton, 2 Y. & J. 101.† (b) See Robinson v. Rutter, 4 E. & B. 954 (E. C. L. R. vol. 82). |
