SUPREME COURT.

Otago Witness, Issue 1921, 11 December 1890, Page 30

SUPREME COURT.

IN CHAMBERS. Fbiday, Decembeb 5.

(Before his Honor Mr Justice Williams.) IN THE MATTEE OP THE BANKRUPTCY ACT AND ITS AMENDMENTS AND IN BE SAMDEL JACOBS. This was a summons by mortgagee company to prove in the estate of Samuel Jacobs (a bankrupt) without valuing Jacobs' one-fourth undivided share in a piece of land, held by him as tenant in common along with three other solvent persons, Jacobs having given a mortgage over this land to secure a debt of his own and also a debt of his co-tenants.

Mr W. D. Stewart appeared in support of the summons, and Mr F. R. Chapman to oppose. After argument, His Honor gave judgment as follows :—

Jacobs had an undivided quarter interest as tenant in common in fee of a piece of land. What the co-tenants of Jacobs did with their shares is really immaterial. What Jacobs did with his share was that be mortgaged it to the company to secure what was in effect a separate debt of his own, and also a joint debt of himielf and three other persons. Under these circumstances, if Jacobs and the other three persons had been partners, and the joint debt bad been a partnership debt, and all the members of the partnership had become bankrupt, the position would have been this : that Jaoobs had pledged his separate estate to secure a separate liability, and also to secure a joint partnership liability. Then if the creditor had wished to prove he could -have, no doubt, proved bis joint debt against the joint estate of the partnership, and have secured a dividend from the joint estate without valuing his security. If, however, he bad wished to prove in respect of his separate debt against the separate estate of Jacobs, he would have to value that security which Jacqbt had given him over his separate estate. A fortiori in the present case, where there has been no bankruptcy of the other persons who are jointly Indebted, must the creditor, If he seeks to prove in respect of Jaoobi' liability against the estate of Jacobs value the security which formed part of that estate ? At has been stated by Sir George Jessel, the test is, would the security, if given up, augment the estate against which it Is sought to prove ? Applying that test here, there is no doubt it would do so. I think, therefore, tha*; the company must value the undivided one-fourth share of Jacobs in the land In question before it can prove against his estate for the debt. The order, therefore, will be tbat the company be admitted to prove on valuing Jacobs' one-fourth share, the company to pay costs (£3 3s). Order accordingly.