LAW AND POLICE.

New Zealand Herald, Volume XXV, Issue 9132, 14 August 1888, Page 3

LAW AND POLICE.

SUPREME COURT.—Bankruptcy. Monday. [Before His Honor Mr. Justice Gillies.] Closb of Bankruptcies.—On the motion of Mr. Cave, the bankruptcies of Henry French and of Ebenezer Hadrill and Thos. Mark wick (trading as Hadrill and Markwick) were declared closed. Suiter, and Co.— regard to the bankruptcy of William John Suiter and Fredk. Lewis Protheroe (trading as Suiter and Co.), Mr. Cave moved that a day be fixed for the public examination of the bankrupts. The application was made under the Amendment Act of 1885, authorising the creditors to pass a resolution asking to have the bankrupts publicly examined. His Honor fixed the 27th inst. as the day for the examination. Fixing Costs.—ln re Hubert Oram, a bankrupt, Mr. Cave moved for an order fixing the amount to be paid by the Official Assignee out of the estate to solicitors for the debtor and the Official Assignee respectively. An affidavit had been filed by the Official Assignee. The assets had realised up to the present £1347, and a small further sum was to be obtained. The costs of the Official Assignee were fixed at £15, and those of the debtor's solicitor at £10. Orders of Discharge.—Mr. Beale applied that an order of discharge be granted to Edward Bradford, a bankrupt. There was no opposition, and the order of discharge was granted. Mr. Mahony made a similar application in regard to Hubert Oram. No opposition. Discharge granted. An application by Mr. Campbell for the discharge of Francis Dyer Rich Smale was allowed to stand over for a fortnight. Mr. Macrae applied for an order of discharge for John Leith. No opposition. Discharge granted. Mr. Macrae also applied for an order of discharge for Elizabeth Robley, which was granted.

J. C. Cairns' Bankruptcy : Proof of Debt.—Mr. Button appeared in support of a motion for admission of proof of debt of the Land Mortgage Company against the estate of J. Cooper Cairns, and Mr. Then. Cooper appeared with Mr. Cave for the Official Assignee. This was an appeal to the Court from a decision of the Official Assignee, who declined to receive a proof of debt of the Mortgage Co. against the estate. Mr. Button, in opening the argument, said the question (he Court had to decide was whether the mortgagee, after selling the property mortgaged and buying it himself, was entitled to prove against til's estate for the balance. An affidavit by Andrew Hannah, clerk to Messrs. Whitaker and Russell, deposed to the sale of the property m question by Messrs. Arthur and Buddie by order of the Registrar, and it brought £327. The Official Assignee refused to receive the proof of debt of the company, on the ground that the properly had not been valued as secured property, but lie (Mr. Button) contended the mortgagee was untitled to prove for the balance of his iebt. The joint affidavit of Mr. Lawson, Official Assignee, and Mr. Cave, solicitor, gave evidence, as to the bankruptcy of J. G. Cairns. The bankrupt had various real estate properties, including amongst others two of 19 acres and 15 acres respectively, in Titirangi, mortgaged to the Mortgage Company for L'llOOand £800 respectively. In the bankrupt's statement the company was returned is a creditor for £2055. The Official Assignee received from the company a proof >1 debt for £17<i8, balance and interest .liter realising the mortgage. Prior to this the Assignee had never received any intimation from the mortgagees that they intended to realise, anil by reason of this omission the creditors were debarred j irotu the right to pay the company 'he value of the securities, and taking over the property into the estate. He rejected the proof of debt, and had given noticc accordingly. The reason for such rejection was that he verily believed that the properties were of greater value than £327, and had the company had them valued at : hat price they would have paid it, and taken over the property, and it would now be unfair to the other creditors to allow the com puny to prove- for the balance the\ claimed. Mr. Cooper asked if iris friend's ■bent was prepared now to hand over he property for £327? Mr. Button replied that they were prepared to give up the property on payment of he debt and costs, but not for the amount at which they purchased it. He submitted they were in the same position as if a stranger had purchased the property. They purchased under the power the law gave them, and obtained a title from the Registrar, but the Assignee could now take the property on payment ot the debt. The principle was the same, and the fact that they were the purchasers made no difference, except that they were enabled to give up the property, which they could not do had it been bought by a stranger. Mr. Cooper said if his friend admitted that they ad valued the property at the mortgage value, it would shorten the case. His Honor asked, did the Land Transfer Act place the mortgagee in am better position than if there was no bank ruptcy ? If the mortgagee realised on hi:security, he could not recover any balance or deficiency. Mr. Button said he waaware that was the old dictum, but it was contra to the ruling in the case of Rudge v. Richen (L. R. 8, Common Pleas, p. 358), quoted in " Cootes on Mortgages," latest edition. This was the latest authority. His Honor said that was a common law case and was decided by common law, but Mr. Button contended that it was an equitable plea that was put in, and was struck out by Baron Bramwell as a dishonest plea, whose judgment was sustained by the decision of three other judges which he quoted. His Honor said that a mortgagee must sue on his covenant lirst, or if he realised on the mortgage, he forfeited the right to sue on his covenant. That was the practice. Mr. Button quoted in re Brodie exparte Peak ("2 Chancery Appeals, p. 453"), to show that they were entitled to sue, unless the property realised the amount of the mortgage and interest. In reply to his Honor, Mr. Button said that it was sold after the bankruptcy, but he contended the Bankruptcy Act did not apply, as the debt did not arise until after the sale, and he referred to the authority above quoted in support of his contention. His Honor said that did not apply under their Bankruptcy Act. Mr. Button said their Bankruptcy Act did not apply, as there was no measurable debt until after the sale, and he submitted the company was entitled to come on the estate as creditors for the balance of the debt, as there was no property to value. Mr. Cooper contended that the right of the mortgagee to sue after realising the property did not exist, and urged that the case of Rudge and Rickens did not apply under New Zealand laws. These were not affected by the Land Transfer Act. Under the conveyancing law the mortgage passed the estate, but under the Land Transfer Act, the legal estate did not pass, and it was only a pledge, so that the rules which regulated mortgagor and mortgagees i still existed. He submitted that the judgment in Rudge and Rickens did not do away with the old recognised authorities. It was a decision given on an ex jxtrte claim, not a considered judgment, and the plea was struck out summarily by the exercise of the power of the Court. He submitted that the law was that the mortgagee, having taken his remedy, and sold his security, could not sue for the balance. In support of his contention he quoted the case of Lochhardt v. Hardy, and other rulings based on the same principle. Mr. Button suggested that His Honor should reserve judgment on this point and hear the other. His Honor assented, stating that where there was such a conflict of authorities he could not give a ruling without consideration. Mr. Cooper then proceeded to argue the second question, as to the applicability of the New Zealand bankruptcy laws. He read the Official Assignee's reasons for refusing the proof of debt of the Land Mortgage Company, and said they were willing now to allow the £327, the property realised as its value, and allow him his proof of debt, or he could have proved for the whole amount of his debt, and value his security, but it was never contemplated by the Act that he should sell his securities, buy them in himself, and then come in as an unsecured creditor to prove for the balance. Mr. Button, in reply, was proceeding to quote a Victorian case, but His Honor said he must confine himself to the Bankruptcy Act. The creditor could not after the bankruptcy change his position from that of a secured to an unsecured creditor by realising on his (security. Mr. Button said that being the decision of his Honor, he could proceed no further, but both Mr.

Cooper and himself would like his decibion on the other point, as it was one of great importance. His Honor said that it was not necessary to deal with that now. That was a matter which should be argued in the Supreme Court, and any decision in the Bankruptcy Court would be of little value. He was clear that, under the Bankruptcy Act that at the time of the bankruptcy, that the Land Mortgage Company was a secured creditor, and this gave the option to the Official Assignee to take over the property at the price the mortgagee valued it at. It was true that under the Act creditors had four months within which they could prove ; but it also provided that it was their duty to put in tneir proofs of debt as soon as practicable after the adjudication, and state particulars of the securities, and the value the mortgagee estimates them at. If the mortgagee put the Court out of power by selling the securities, he did not put himself in any better position to come in as an unsecured creditor. He held, therefore, that the claim for admission of this proof of debt was wrongly put in, and could not be allowed. The Official Assignee's decision must be upheld, and the appeal dismissed. Costs £7 7s were allowed on the application of Mr. Cooper.