SUPREME COURT.

Lyttelton Times, Volume LXXVI, Issue 9604, 23 December 1891, Page 3

SUPREME COURT.

IN BANKBX7PTCY. Tuesday, Dec. 22. (Before His Honor Mr Justice Denniston.) DAYS FIXED. His Honor fixed the days for the following bankrupts to apply for their discharge George Maule (in person), Joe Dicks (Mr Harper for Mr Euasell), and John Mann (Mr Horper for Mr WymiWilliams). ' BE GUSTAVE ADOLPH LINDEMANN. On the application of Mr Meares, his Honor made an order declaring the public examination of the bankrupt closed. BE JOHN MANN, AND EE THE PEOOP OF DEBT OP SAMUEL QABFOETH. Argument was resumed on the appeal of Samuel Garfofth, a creditor, against the decision of the Official Assignee, that he should, in proving against the estate, value the security of an insurance policy on the bankrupt’s life, which policy had been transferred to him previous to the bankruptcy. Mr Harper appeared for the Official Assignee, and Mr Deacon for Mr Garforth. Mr Harper submitted that Mr Garforth should value bis security, as, he held, in the possession of the policy, a security which would go to augment the estate if given up. The security was worth at the present time a certain sum, and if it were transferred to the Official Assignee, that sum would be obtained for it, and added to the estate.

Mr Deacon submitted that, as the sections of the Bankruptcy Act with reference to fraudulent preference did notapply to assignments' of life insurance policies, the sections with regard to proof of debt did not apply either. The Bankruptcy Act was only meant to regulate the distribution of the debtor’s property which was divisible amongst the creditors, and a life insurance policy, to the extent to which it was protected by the Life Insurance Policies Act, was not so divisible.

His Honor said that the case presented some difficulties, but he had, since the last occasion on which it was discussed, looked into all the cases bearing on the subject, la doing so he had considered the points suggested by Mr Harper, and, although he could not profess to be absolutely satisfied on the matter, yet he was satisfied that further consideration would not alter the conclusion he had come to. The bankrupt had given a creditor security against a policy of insurance on his own life, which policy was admittedly within the protection of the “ Life Insurance Policies Act, 1884." The creditor had, in effect, claimed not to treat such mortgage of the policy as a security which he was bound to value under the Bankruptcy Act, and the application of the Official Assignee was against that position; It was not certain that this was absolutely the proper way of raising the point, because there was nothingintbe Act to compel the creditor to value; but the form in which the matter Lad been brought before the Court, was most probably as convenient a way as any other of settling it. By subsection 4, of section 61, of the Bankruptcy Act a secured creditor was defined to be “ any creditor holding any mortgage, charge, lien, or security on the property of the debtor.” The question was, therefore, whether this security over the policy could properly be called a charge on the property of the debtor. Property was defined in the section of the Act as widely as could well be, but he thought that property in this section—the 16 th—and in the other sections of the Act, must be held to mean property, subject to the Act, over which the Assignee had control, and which would pass to the Assignee under section 56 of the Act. Clearly a policy of insurance, to the extent to which it was protected by the Life Insurance Policies Act, would not be subject to the Bankruptcy Act, and would not pass to the Official Assignee. It, therefore, could not be called the property of the bankrupt under section 61, sub-section 1 of the Bankruptcy Act, so as to make a creditor holding a charge upon it a secured creditor. That was supported by the reasoning on which the judgments as to what property was to bo valued were based in the leading cases on the subject. In ex parte the West Hiding Union Banking Company in re Turner (L.R. zix., C.D. 105) Sir George Jessel had laid down the principle which had always been acted upon, and had said that a man was not allowed to prove against a bankrupt’s estate, and to retain a security which, if given up, would go to augment the estate against which he proved. If the result of not valuing the security were that the creditor could be called upon to transfer it, then the estate would be benefited by a security over the property of a third person. A security over the property of a third parson, however, if given up, would not add to the value of the estate, and hence need not be given up, and what applied to that case applied to this. The difficulty had occurred to him (his Honor), that where there were two mortgages on a property, if the non-valuation, of his security by the first mortgagee were to result in that security being cancelled, the second mortgage would acquire an improper value—would, in fact, become a first mortgage. He thought, however, that the proper way of looking at it was this : the creditor, by not valuing his security, simply could not avail himself of it as against the bankrupt’s property. He did not, however, feel called on to decide the point in this case. Ho felt pretty confident that the result of the protection of the Life Insurance Policies Act was to exclude the policies—to the extent to which they came within it—from the bankruptcy laws altogether, and that a security on such a policy must bo treated on the same priampleo as if it were a security over the property of a third party. He thought that Mr Deacon’s contention was correct, and that the security must -be Allowed.

Mr Garforth’s appeal was allowed with £5 6a costs. The Court then rose.

(Tub Pbbbs Association.’! DUNEDIN, Dec. 22, The cases of Batchelor v. Gore, in which the plaintiff sought to recover .£125 for medical attendance, and the cross action. Gore v. Batchelor, in which .£SOO damages were claimed for improper aad negligent treatment, were concluded to-night. The jury, after retiring for an hour, gave a three-fourths verdict for Dr Batchelor for the full amount claimed by him.