1834.

Ex parte POWNALL.

In the matter

of POWNALL.

clear case.

Fletcher's case, I Dea. & Ch. 90, 317, was a deviation from the general rule, and under very special circumstances. The point which there induced the Court to interfere was fraud, which was not sufficiently noticed by the reporters at page 90, though it was at page 317.

This is not a case in which the Court will interfere, and I very much doubt our jurisdiction so to do in a case like the present.

Mr. E. Chitty, as amicus curia, referred to ex parte Ainsworth, 2 Gl. & J. 89, where Lord Eldon refused, there not being a clear defect in the requisites on the face of the proceedings.

Application refused.

Court of Bankruptcy.

Second

Ex parte SIR C. MARSHALL and another, Sheriffs

of Middlesex. In the matter of FOX.

Subdivision IN this case, which is reported Mont. & Bli. 242., a

Court.

Nov. 30, 1833. Where the bankrupt had given an indemnity bond, and

the amount of

damage was not

ascertained when the fiat issued, there is no debt proveable.

claim was ordered to be entered by the Court of Review. When the creditor applied to the commissioner to mature his claim into a proof, the question was, on the 23d of November, referred to and argued before a Subdivision Court, consisting of Mr. Commissioner Merivale, Mr. Commissioner Fonblanque, and Mr. Commissioner Holroyd, and on this day the commissioners delivered their judgments seriatim.

MR. COMMISSIONER MERIVALE:

The case on which we have to decide arises out of an application to prove, under the 56th section of the

statute 6 Geo. 4. c. 16., on the happening of an event, which, while it rested in contingency, was held by us incapable of proof according to the true construction of the act. Upon a petition to the Court of Review, in nature of an appeal from our decision, it seems to have been considered, that although then incapable of being proved, the demand was of such a nature that it might subsequently become the subject of proof; and it was on that ground ordered to be received as a claim, without prejudice to the ultimate right to prove upon the happening of the contingency. That event has since taken place; the proof has been tendered; and, after hearing what has been alleged by way of cause shown against its being admitted, the commissioners thought it due to the superior court, in consideration of the doubt thus raised, to take time to re-examine the authorities upon which their former judgment was founded, with reference especially to the now altered state of circumstances. That duty has been performed; and we are now prepared to give the reasons for which we individually think ourselves bound to decide agreeably to our first impression.

The Commissioner then stated the circumstances of the case as they are to be found in the report, Mont. & Bli. 242; and proceeded as follows:

The Sheriff's petition came on to be heard shortly after it was presented; and it appears from the report already referred to, that the case mainly relied upon in support of it was that of ex parte Myers, Mont. & Bli. 229., then recently decided by the same Court, to the effect "that a a debt on a guarantee, which had not become absolute before the bankruptcy, is a debt proveable under the 56th section ;" and by comparing the words of the section with those of section 53, relating to bottomry and respondentia bonds, it was likewise contended, that the words used

1833.

Ex parte MARSHALL and another. In the matter

of

Fox.

1833.

Ex parte MARSHALL

In the matter

of Fox.

in the beginning of the section were intended, "not to limit, but to extend, the right given by the subsequent part of the clause, by admitting a proof even before the and another. contingency had happened," involving, it was insisted, the necessity of ordering a dividend to be retained until it should be ascertained to what extent the claimant was damnified. To this opinion it should seem that the Court was also inclined, in ordering the claim to be entered for 1,000l. (the amount of the verdict and costs), reserving a dividend; and the reasons assigned for making such order were (in the language of the report) to the effect following:- The Chief Judge saying, "It is quite clear that on the face of this petition the Court cannot now determine the question of proof, for the bond was not forfeited before the fiat; and at the time of tendering the proof the amount of the verdict had not been paid; but inasmuch as the damage is inchoate it is but a fair protection that a claim should be entered."

Now, the only remark on this decision which I think it necessary at present to make is, that, if the reasoning on which it is founded be correctly reported, the result would be, that in all cases of liability depending on remote and uncertain events, the funds which ought, but for such liability, to be distributed among the body of creditors, would be required to be locked up, to an amount proportioned to the nature of the liability, for an indefinite period—a consequence wholly at variance with the present spirit of the bankrupt laws, never (as we say) contemplated by the legislature, and fraught with mischief, of which the present case affords a striking illustration, inasmuch as the claim ordered to be entered was for 1,000l., (and it might as well have been for 2,000l., the whole penalty of the bond,) when the whole amount to which the sheriff has turned out in the

event to be damnified, and which he now seeks to prove, is 6007., and it was then wholly uncertain whether he would ever be damnified to the extent of one farthing.

With regard to the supposed analogy, dwelt upon by one of the learned Judges (Sir G. Rose), to the case of an executor, who would, he conceives, be restrained from distributing the assets while such a bond remains in existence, I apprehend that it is met by the contrary doctrine laid down so long ago as in Harrison's case, 5 Co. 28 b., to the effect" that a debt due by bond shall be paid before a statute made to perform covenants, when none are, or perhaps ever will be, broken;" a doctrine fully recognised in many subsequent cases, as in Hawkins v. Day, Amb. 160, where it was held by Lord Hardwicke, that "the payment by an executor of a simple contract debt before a breach of condition of a bond entered into by his testator was good, and no devastavit in case of a deficiency of assets." And in the more recent case of Simmons v. Bolland, 3 Mer. 547, where Sir W. Grant, on a bill by a residuary legatee for the transfer of a fund retained by the executor for the purpose of protecting himself against any future demand in respect of covenants entered into by the testator, ordered (there being no existing breach of such covenants) that the fund be transferred as prayed, on the plaintiff's giving a sufficient indemnity; but which indemnity would clearly not have been requisite but for the distinction taken by Lord Hardwicke (in the case last before cited) between simple contract debts and legacies.

Then, with respect to the other position assumed by the same learned Judge (Sir G. Rose), "that the present case is not to be looked at as that of a

1833.

Ex parte MARSHALL and another. In the matter

of

Fox.

1833.

In the matter

of

Fox.

mere indemnity bond, since, in consideration of the bond, the sheriff parted with the goods which he Ex parte MARSHALL might have retained, and therefore that it may be and another. difficult to say that, independent of the bond, he would not be entitled to prove for the value," it appears to me not well founded, inasmuch as the goods were not those of the sheriff, but were claimed by the assignees as part of the bankrupt's estate, and would therefore never have been taken by them as a consideration for the bond, or by way of purchase. So also, on the part of the sheriff, it was not the goods (for they were not his own), but the risk he incurred in parting with them, for which he consented to accept the bond as an equivalent; and, setting aside the question of debt or no debt, this risk was utterly incapable of being made the subject of valuation. Again, and supposing even that the goods could be considered to have been parted with by the sheriff in consideration of the bond, they were so parted with, not to Fox only, but to For and Frasi jointly; and would, on that account alone, be incapable of becoming the subject of proof under Fox's separate commission.

I have thought it necessary to say thus much by way of comment on this decision, because it is difficult to imagine how the order made by the learned Judges can be supported, except upon a principle wholly at variance with that which has been already adverted to as the result of all the authorities; namely, that in order to establish a proof under this 56th sect. there must be a debt contracted, and actually existing at the time of the bankruptcy; an allegation which cannot, I apprehend, be sustained with respect to a demand of the nature of that in question.