statute, every facility ought, in my judgment, to be afforded that creditor for examination. It is not requisite that I should do more than express my opinion that the order under appeal was right, and that the debtor under the circumstances of the case is bound to answer the questions put to him under the order for the summons. With that intimation of my opinion, I remit the case to the learned commissioner. *Ex parte SAMUEL BARTHOLOMEW SMITH. * 218 In the Matter of a Deed of Conveyance made between SAMUEL BARTHOLOMEW SMITH and his Creditors. 1864. May 25. June 8, 25. July 30. Before the Lord Chancellor Lord WESTBURY. Where an application had been made in Chambers to a judge of a Court of Law for the release from custody under a ca. sa. of a debtor who had previously to his arrest registered a deed purporting to be a deed under the Bankruptcy Act, 1861, § 192, and obtained thereon the chief registrar's certificate under § 198, and the Judge had decided that the deed was not within the provisions of the 192d section of the Bankruptcy Act, 1861: Held, that the Court of Bankruptcy had properly refused to release the debtor. The proper course in such a case is to apply to the Court out of which the judgment issued. Whether the Court of Bankruptcy would have had jurisdiction if the deed had been valid within the 192d section of the Bankruptcy Act, 1861, quære. In calculating the statutory majority of assentient creditors required under the Bankruptcy Act, 1861, § 192, to render a deed under that section binding on non-assentient creditors, secured creditors must be taken in account in the computation of the number of creditors constituting the majority. But semble that the amounts of their securities should be deducted in calculating the majority on the question of value. (a) THIS was an appeal by Samuel Bartholomew Smith from the refusal of Mr. Commissioner GOULBURN to order his discharge from custody under process issued out of the Court of Exchequer. John Venables May, the indorsee of a bill of exchange for 751. 3s. 7d., drawn by the appellant and dishonoured, brought, in the (a) See, however, as to this, the cases cited below, p. 228, note. month of July, 1863, an action on the bill against the appellant in the Court of Exchequer, and recovered judgment therein on the 17th of December, 1863. Previously thereto, however, viz., on the 12th of December, 1863, the appellant executed a trust-deed, which, with an unimportant variation, was in the form given in schedule (D) to the Bankruptcy Act, 1861, and which he procured to be registered *219 under the 192d section of that Act, obtaining the chief registrar's certificate of the fact. On the 23d of April, 1864, the appellant was arrested at the suit of May, under a writ of ca. sa. issued in the action of May v. Smith, the arresting officer being indemnified by May as to the consequences of the arrest, and disregarding the chief registrar's certificate, which was produced to him by the appellant. On the 29th of April a summons for the discharge of the appellant from custody was taken out on his behalf in the action of May v. Smith. It came on for hearing on the 30th of April, 1864, before Mr. Baron MARTIN, at Chambers; when that learned Judge, being of opinion that the appellant's secured creditors ought to have been taken into account in calculating the total number of the appellant's creditors assenting to the trust-deed, whereas it appeared that such creditors had not been so taken into account, held, that the deed did not comply with the requirements of the statute, and made no order on the summons. An application was thereupon made to Mr. Commissioner GOULBURN in bankruptcy for the debtor's discharge from custody. This application, however, was also refused, the commissioner thinking that, as the matter had been heard and decided on the merits by a superior Court of Law, he had no jurisdiction to interfere. May 25. From this refusal the present appeal was brought. * 220 *Mr. Sargood, for the appellant. The learned commissioner's ground of refusal was that he had no jurisdiction. The ground of the present appeal is, that the Court of Bankruptcy has power to vindicate its own authority. The effect of the certificate of registration as a protection is nugatory, if the Court of Bankruptcy cannot discharge a debtor from custody. The cases of Ex parte Castleton, (a) Welch v. Buck,(b) are in point, but were not brought to Mr. Baron MARTIN'S attention, the only case cited to him being that of Ex parte Godden, (c) with reference to the necessity of reckoning the secured creditors in calculating the statutory majority of assenting creditors. [THE LORD CHANCELLOR. As to that point, does it not follow, from section 192 of the Act, that creditors who have proved must deduct the value of their securities?] The question simply is, has not the Court of Bankruptcy jurisdiction to enforce its own process? I submit that it has. Mr. Reed (Mr. Talfourd Salter with him), for the respondent. -As to the mode of calculating the statutory majority of assenting creditors, the debtor ought not to be permitted to make the valuation of the securities held by his creditors. Ex parte Godden, (c) before the Lords Justices, overruled the contrary decision of the commissioner in the same case. Ex parte Morgan (d) is consistent with it, and so is Ex parte Spyer. (e) [THE LORD CHANCELLOR. I never said that a debtor might, in calculating the statutory majority, put his own value *on property comprised in the securities of secured credit- *221 ors. I meant to say that where creditors, having a security, executed a deed for a specified amount, they must do so on the same footing as that on which they would be admitted to prove in bankruptcy. The point in Ex parte Morgan was, whether, when a creditor assents, describing his debt and not deducting his security, he would not be as though he had proved in bankruptcy without deducting his securities. If he rates his security too low, so much the worse for him. If he rates his security too high, so much the better for the other creditors. I never intended in Ex parte Morgan to express any thing at variance with Ex parte Godden. Secured and unsecured creditors must be included.] At all events, secured creditors must be reckoned in number in the calculation of the statutory majority. (a) 31 L. J. (N. S.) Bank. 71. (d) 1 De G., J. & S. 288. On the question of jurisdiction, I submit that the Court of Bankruptcy has none in the present case. The Court of Law whence the process issued was the proper tribunal to apply to. Re Harewood. (a) He also referred to the Bankrupt Law Consolidation Act, 1849, §§ 112, 113. Mr. Sargood, in reply, as to the question of jurisdiction, cited List's Case, (b) and Plomer v. Macdonough, (c) and argued that Ex parte Castleton (d) recognized the jurisdiction of the Court of Bankruptcy. Reference was also made to the Bankruptcy Act, 1861, § 198; the General Order in Bankruptcy of May 22d, 1862; King v. Randall. (e) * 222 *THE LORD CHANCELLOR. I am not satisfied as to my jurisdiction in this matter. Although I should be glad to give an opinion on the other point, any opinion which I might express would be an obiter opinion only and not an authority, and therefore I abstain from expressing such opinion, unless the parties are agreed to abide by my decision. I can quite understand why Mr. Baron MARTIN entertained the question; the word "such” in the opening of the 198th section of the Act introducing by reference all the antecedent conditions contained in the 192d section. Mr. Reed consented to submit to the jurisdiction of the Court. The Lord Chancellor remarked that the extent to which he had intended to go in the various cases was this, that a secured creditor, bound by or assenting to a deed, was to be treated as a creditor in bankruptcy holding security; but that his Lordship had given no opinion whether, in the computation of the number of creditors by the debtor, the debtor might omit a secured creditor on the debtor's own estimate of the value of the security. Mr. Sargood was then heard as to the question of the mode in which the secured and unsecured creditors were to be reckoned in (a) 7 L. T. (N. S.) 171. (b) 2 V. & B. 373. (c) 1 De G. & S. 232. (d) 31 L. J. (N. S.) Bank. 71. computing the statutory majority. His argument was to the following effect: The legislature contemplated that the computation should be the act of the debtor. The order of 22d of May, 1862, only supplies an omission in the Act itself. The object of the tabular statement given in that order* must be something, and may * 223 be said to be for proof. But proof cannot be the object of the order, because creditors cannot be bound by their debtor's estimate of their debts. But the debtor is the person to render the account, and if he renders an erroneous account, he files it at his own peril. No doubt creditors are largely interested who assent to a deed of this nature; and the principle in the view of the legislature was to give to those who have an interest a power of controlling the subject of the interest. But creditors fully secured have no interest. The remarks of Lord Justice TURNER in Ex parte Godden have been misunderstood. His Lordship says, "There is, as it seems to me, another objection which is fatal to this deed. I think it has not the assent of the necessary proportion in value of the creditors; for, according to the best opinion which I can form upon the point, I think that, in reckoning the proportion of assenting creditors under this section, the debts due to secured as well as unsecured creditors must be taken into account;" but then his Lordship gives as his reason for this his opinion, "otherwise creditors imperfectly secured would be left at the mercy of the unsecured creditors." That must mean that creditors to the extent to which they are unsecured, being affected by the acts of any majority, are entitled to be heard, and ought not to be struck out of the computation. Creditors, therefore, partially secured, must be reckoned; but it does not, therefore, follow that creditors wholly secured must be; and I submit that they should not be, and that a fully secured creditor is not a creditor within the meaning of the Act. The question of the distinction between partially and fully secured creditors has never yet been discussed in any of the decided cases. Judgment reserved, with an order by consent to discharge the debtor on his finding two * sureties to the amount of the detainer, that he would surrender himself to the process of the Court if recommitted. |