SUPREME COURT.

Dominion, Volume 4, Issue 940, 6 October 1910, Page 8

SUPREME COURT.

FRAUDULENT PREFERENCE. BANKRUPTCY CASE. ./' Mr. Justice Cooper gave judgment yesterday in a case arising out of the bankruptcy of Frank Futcher, stock-dealer. Tho case had come before his Honour on appeal from the/District Court, Pahiatua.; The Official Assignee of the property -of . Frank Futcher moved the .District Court to declare certain jjayments alleged; to- have been'made to Auraham and Williams by the. bankrupt within three months of the • bankruptcy, void on the ground that they' amounted to a ! fraudulent preference. The following were tho payments and' the dates alleged:-*-•65',65.,9d. on June 2, 1908;. JSISB '4s:/6d.' on Juno 5, 1908; ,£145 on June 15,-1908; .£245 Is. _ 6d. on luuo 22, 1908 ; ,£2 ; on August: 10, 1908; ,£3O on August 18, 1908; and .£IOO on August 24, 1908; .total, ,£Bl5 12s. 9d. The Court dismissed the motion, with respect 'to '-all : the payments with the exception of the last payment of ■£100, which was alleged to. be' in respect of 'certain : bullocks and drays which -the respondents claimed to have received, and subsequently sold to a man named Bur-ling;-In respect-of ...these bullocks, the Court ordered that the respondents' (Abraham and 'Willihms,'Ltd.) to the. Official Assignee' for all moneys received by them on account of these bullocks and drays,, and that-|ahy : payment made to the respondents on account'thereof be declared fraudulent and void; The Official Assignee'appealed irom'this judgment in respect '.of the' items ,£5 6s. 9d., £158 4s. 6d.,. and' i£245-Is. 6d,, on the ground that the Official Assignee, had proved that, each of th&e payments was.a-frau-dulent'.-preference, and;in respect of .the, .£30,0n .the ground tliat the'property, in -this .'sum of- money 'had - tested .in; the. Official ; Assignee before it was received by the respondents. Other grounds ' of appeal' were, abandoned at the hearing. The' grounds''on; -which' the first' three of . these items 'w;erei attached as fraudulent preferences were that the respondents 'had knowledge that the debtor was in. an absolutely insolvent; condition prior to -andat the time these - moneys .-were received , by. them, and that the dominant motive of. the debtor'.was to. prefer'the respondents -to' his other creditors. .

■ :His Honour,, in his. judgment, held that the respondents. did not • know that ,the debtor was . insolvent until after,' June 5,: and that the. Official Assignee l.had failed to prove that .the. payments madfe'on. June 2 and 5 were fraudulent preferences. He thoi&ht also that the monoy was received by- the respondents- in good faith. The payment of the sum.of : ,£245'15. ; 6d. on June 22 stood on altogether a different footing. .The respondents 'knew .t'haty.the; debtor , was'about to be made a bankrupt, and the debtor knew, also,-for almost immediately afterwards, he .left: the district to avoid bankruptcy proceedings by Dalgetv and Co. oThe respondents' manager, had toldvther debtor to';:cut down his .account, but such a remark; on the. eve of bankruptcy could jurt said :.to have : had .ariy'real influence on' the , debtor's mind, v The payment was, in effect,' - a voluntary payment,, and -the ;. dominant .motive/was to prefer tho. creditor:.! It was-, therefore' a. fraudulent ' :: The other -item,in dispute- was the pay-, ment of a sum of iC3O to the-respondents': solicitors. The:debt6r 'ha:d : :. contracted, to purchase a property , some' time ,-prior'>to /the month of June, • 1008. He obtained from the respondents the sum of ,£3O in order .to.-pay a'deposit'upon the purchase. The transaction fell through, and on, June 2.the debtor gave to; the respondents'-an 'order to, receive .this, money./, The. order jjto# presented before ;• f any . Set.',- 0f... bankruptcy was ■ committed;. but .itywas not paid' until . August 18, .1908. His Honour thought the. order 1 amounted to, an equit'able ' assignment,, on the .£30,/' and', that jit bad not vested in .the Official /Assignee; The/appeal ro-as dismissed,'so/far' as it related, to th<\ payments of the sums •of i£s 65.'9 d.; cE188; 4s;' 6d., and,£3o, and: allowed .in reference to'; the stim'; of 4245 Is. . Cd., i whichhis . Honour', ordered the respondents.to pay to; the Official Assignee. At- thtf hearing,. Mr. Skerrett, K.C., arid Mrlj/Logan appeared for the Official "As-, sig'nee !and Messrs./Myers arid Smith - for the: respondents;: ;.. . ■ ••-/ ~