IMPORTANT DECISION.

Hawke's Bay Herald, Volume XXII, Issue 7525, 27 August 1886, Page 3

IMPORTANT DECISION.

Mr P;-A T . F. Birch,' Kegistrar of the T Supreme Court, yesterday delivored judgment in the case of Carl Schmidt, a bankrupt. Mr J. Begg, . for Messrs Carlilo and M'Lean, appeared for the Assignee, and Mr Dick, for Mr Moore, represented the debtor. The following is the judgment :— . . • •' "The summons in this case is to show ■ cause why certain stock and chattels should • . not be disposed of. for the benefit of the - creditors under the bankruptcy of Carl Schmidt, on the grounds, briolly— (1) That nt the time of the bankruptcy they were the debtor's property, and were in his possession, ' order, and disposition as reputed owner. (2) That the bailment of stock and chattels No. 1574, dated 'Bth ' June,' 1886, is not bona fide, has not been duly registered, and is defective— (a) on account of the signature differing from the name in the, body ; ( b) the verifying affidavit of execution being insufficient, &mx not. in accordance with the requirements of the law ; (c) that the affidavit asserts that' the signature ' William Able 'to the deed is that of the grantor, whereas it is not so signed ; {d) that there is no attesting, witness thereto ; and (c) that the signature 'L. Mooro' is not affixed to the deed, as sworn to in the last paragraph of the affidavit, " It will bo convenient first to deal With the points raised respecting the bailment of the stock and- chattels. The Chattels and Securities' Act, 1880, provides absolutely that bills of sale shall bo registered, otherwise they shall be null and void (sec. 4J, and that bailments of stack and chattels way be registered (sec. 6). In part V. ofthoabovo Act, sections 43 and 46, tho same distinction is observable, regulations being laid down' as to instruments ' authorised or required to be registered,' tlms distinguishing between optional andcompulsory- registration." On this point ■ Mr Dick quoted tho case of James, apellant, and Owen, respondent, decided by Mr Justice Gillies; vide N.Z. Jurist ReV porto, vol. 11. , page 111. The Bills of Sale ; Act, 1867, and the Bailment of Stock and Chattels Act, 1869, were. certainly then in force, but as tho Chattels Securities Act, 1880, is but a ve'-eriactment and consolidation of .the abovo, tho same arguments apply, and his Honor's decision is clearly in point. In the case first referred to tho Agreement was for the hire of a piano, and tho Judge thus concludes : ' The contention that the agreoment in question was a bill of sale which ought to have been registered is strictly untenable.' For these reasons I am of opinion that the registration of the bailment was optional, alMiough.if duly registered under the Chattels .Securities Act, tlio protection afforded by clause 7 would havo placed the question of order and disposition beyond possibility of doubt/

Next, as to the bona fides of the entire transaction. Eble swears he lent Schmidt £100 about 18 months ago, raised by a mortgage on las (Eblc's) land atWoodville, and took the horses because Schmidt could' not pay him.' Then on the .24th May Ehlo paid Schmidt £30, which lie considered completed the purchase, and he says, ' After I had taken the horses I let Schmidt keep them over,, and ho worked them himself first ' I «<wl only worked them myself a month, drawing wood and such like, with Mr M'Kenzio at the Spit. I had no contraot, but worked by the day. Schmidt. was also there with me. I paid rent 1 for the stables to Mrs SclinnriV Schmidt says in Ilis evidence, 'I only had the horses In my possossidn so that I could work with them, but l.was not the owner, but I had to pay Eble weekly since about six or seven months ago. He took tho horses from me for a month and worked them himself, when I paid him no rent. He then said I could have them back. I took them back actfordittglyV The .property liientjongu, iii the schedule to bailnicnt No:'lsJ4. is. the same as that desc'iib'e'd in bill of sale No. 1529, when Schmidt gave the bill of sale to Eble which, was subsequently satisfied, and satisfaction registered- on 18th June. .Schmidt., also swears that he' once paid Eble back the £100,' and that he kept the £30)' and says, .'I don't owe Eble anything now ; he took the horses for what I owea. I bought the horses with the money I borrowed from Eble. When he wanted to take^the horses I gave the bill of sale.' In addition to tho £100 he gave me £30 more, took tho horses, and discharged the bill .of, sale. Ho then lot me the horses back at so much. per week, as he said ho could not make any; money of it.' Tho aale note was duly signed on the 24th of May, and purports to bo an absolute sale' for the consideration mentioned, namely, £130. Schmidt swears it was a genuine .sale, and says he told some of his creditors that ho sbid the horses. • This is very important, as bearing on, the question of publicity and notoriety, to winch I shall again refer presently. The evidence of Frederick Smith' is unimportant, it being little more than hearsay, although tending in the same direction as that above con-

sidered. Mi- Moore, who prepared the bailment, testifies that ho saw both, Schmidt and Eble sign it, and that the agreement was come to in his office when the sum of £30 was paid, he (Mr Moore) deducting .part of it for- his costs, and Ebel says, ' I gave him (Schmidt) nothing back.' I omitted to state that the interpreter explained that the name Eble is equivalent to Abel • put into English ' as he says. The admitted fact of the bailment being lodged in the Supremo Court office cannot, in my opinion, tend > to mislead on account of its informality, nor can I a«ree with Mr Begg that searchers wonld be led to take no notice of the document. The effect would ho rather the other way, and in, this connection I feel bonnd to take notice of the

fact that tho bailment was published both in the Weekly Advertiser and in the Mercantile and Bankruptcy Gazette. > These circumstances, taken, together .with the fact that some of the creditors were in-

formed of the salo, 1 take it, go a long way towards establishing .notoriety of sale, 'that the creditors were in no way deceived about the reputed ownership, and that no fraud was disclosed which might lead to fictitious credit being given. " I am of opinion that the question of bona Jidcs is satisfactorily established, taking the evidence in its entirety, and that it has not been shown that the bankrupt was the reputed owner at tho time of the filing of his petition (1 Barnewell Creswell's reports, 312, Lingard v. Messiter)., With regard to the case of Lingham v.. Biggs (digest of cases 1865 to 1875, 1920), on which Mr Begg relies, unfortunately I haVe been unable to obtain the full report, and cannot, therefore, form any • idea of the nature of the evidence winch may have ruled the decision. Considering the nature of the evidence given (and, as Mr Begg pertinently remarks, there are no outside witnesses), I am not called upon to say on whom the onus of proof and bona fides lies, Mr Dick arguing that the party attacking the bailment incurs the responsibility, and Mr Begg, quoting New Zealand Law Reports, vol. 111., 1885, re Tnrnbull, as to antecedent debts. It

matters little on whom tho onus lies so long as the facts are disclosed in evidence, as they undoubtedly are in the present caso. !

" I cannot find that the reference to 'M'Askie's Law of Bills of Sale' is at all in point in the present case, as it refers only to bills of sale, and the definition given of 'apparent possession' is with regard 'only to similar instruments, but at page . 92 of the same authority we read, 1 The question is, is the' possession of the goods likely to enable the debtor to obtain false credit?' I have already answered this question in the negative in the present instance.

"Ill the 'Law of Bankruptcy,' Yates, Lee, and Wace, 385, there is a remarkable ease where ' A son left his chest of plate with his father for safe custody, but kept the key. The father sent the chest to be kept by his banker, -and, on being told that he had overdrawn his account, pointed to this chest and to another in which wevo

his deeds, and which was also in custody of his banker, and said, " You have plenty of security there." The father afterwards executed a trust deed for the benefit of

his creditors, and it was held that the plate was riot in his order and disposition with the consent of the son.' And again at page 394 of the same authority : 'In order to determine whether the bankrupt is the reputed owner of goods in his possession it is not necessary to make any investigation into the actual state of knowledge or belief, either of all creditors or of particular creditors, and still less of the outside world, who are no creditors at all, as to tho position of particular goods. 1 It would be easy .to quote other analogous cases from this book.

"Section 81 of the Bankruptcy Act, •1883, also treatsof propertyin the order and disposition of the bankrupt as reputed owner, and leaves it discretionary with tho Court to make an order as to its disposal. "The important nature of this case, and the wide field over which I have travelled in considering the arguments adduced, have necessitated my entering into details in this judgment at some length, but I could not otherwise well attempt to make clear the view I havo taken of the entire case and the conclusions arrived at.

" The summons must bo dismissed, with costs £3 35."

Notice of appeal was given by Mr Begg.