A BANKRUPTCY MATTER.

Evening Post, Volume LXX, Issue 16, 19 July 1905, Page 5

A BANKRUPTCY MATTER.

AN IMPORTANT JUDGMENT. A case of much interest to the mercantile world was recently heard by tho Chief Justice at Blenheim. This morning His Honour delivered judgment on the matter, a. motion by the Official Assignee claiming that he was entitled to certain goods whioh belonged to the bankrupt estate of John Laird Morrison. The judgment mentions that there were two questions ariSing. The first was whether the matter was one that could be dealt with by motion in the Court of Bankruptcy. The relief asked for was against John Burns and Co., who were not creditors of the estate and who were strangers to the bankruptcy. The facts were that the Official Assignee was authorised by a meeting of Morrison's creditors to accept an offtr by a Mr. Farmar for bankrupt's interest in certain Te Puke and Pukehinau properties, subject to certain modifications set out in the resolution. Farmar obtained possession o nthese terms. The property consisted mainly of chattels and a right to certain native leases. Farmer hod claims against the bankrupt estate, but he withdrew these. Part of the property was sold, and Farmar paid to the Official Assignee a large sum of mouey, leaving about £400 still due to him, which was secured by four promissoiy notes signed by Farmar. Farmar then, for money advanced, made a bill of sale of the property to John Burns and Co., Ltd. He failed afterwards to pay the amount due under the bill of sale, and John Burns and Co., Ltd., proceeded to soil the property in exercise of their power of sale. The Official Assignee then moved the Court: (1) For an order declaring that John Burns and Co., Ltd. should account to him for the goods, chattels, and effects which were included in the bill of sale; (2) In default of that, for ar order that John Burns and Co., Ltd. should pay £400 to the Official Assignee ; (3) In default of that, that Mr. Farmar should be ordered to pay the £400. His Honour was of opinion that the Bankruptcy Court had not jurisdiction to deal with the matter. Reliance was placed on section 12 of the Bankruptcy Act of 1392, but he thought the transaction did not come under any of the subsections of section 12. What was asked foi was practically an order to enforce a cla-im that the Official Assignee thought he had on goods that had been sold. It was not to deal with the disposition of the bankrupt's estate nor with the claim that the Official Assignee had against' some person who was holding the bankrupt's estate. The property had become vested ir the Official Assignee and he had disposed of it. x The Bankruptcy Court after that had no power, in His Honour's opinion, to deal with the property. . If the Official Assignee bad any claim against v purchaser of the estate of the bankrupt, or against the purchaser's mortgage, he m*3t enforce it in an ordinary a-ction in the Supreme Court. No section in the Bankruptcy Act Was meant to give him power to enforce contracts which he might make in selling a bankrupt's effects. There was, however, a second defence to the motion : that so far as John Burns and Co., Ltd. were concerned they were mortgagees for the value of t-ho goods. It could not be contended that delivery of the goods had not been given to Mr. Farmar. The dealing \vith the Official Assignee and Burns in regard to releasing a claim, for certain flax showed that the Official Assignee recognised Farmar as in puasossion of the good®, chattels, a,nd effects that the creditors had agreed to sell to him. It was true that certain deeds had been prepared to transfer that part of tho property which required to Be transferred by deed, and the parties had been unable to come to an agreement about the draft deed. But that was of no moment, because that portion of the goods and chattels that John Burns and Co., Ltd. sold was the portion of the goods which required nothing further than delivery to perfect the title of tho purchaser; and the position of the Official Assignee was therefore this: that he had sold goods on credit and had delivered them, and had not been paid the full amount of the sale price. It was not necessary to state that the seller who sells and delivers goods has no lion on them fo-r the purchase money after delivery. His Honour was of opinion that on no ground was there any remedy against Jom* Burns and Co., Ltd., nor had the Assignee'pursued a proper remedy in attempting to make Farmar 'liable ov the promissory noto whioh he signed. If the Assignee had any remedy against Farmar on those promissory notes or for the balance of the purchase money he must proceed in the ordinaly way in the Supreme Court. The Official Assignee must pay the costs of both Farmar and John Burns and Co., Ltd.