to have been a misunderstanding on the part of the secretary, for which the conduct of the appellant gave no warrant, to enter him in the company's register.

It is said that he attended meetings of the company. Perhaps he did; but he states, and his statement remains unquestioned, that it was his duty to attend the meetings of the company in his capacity of its engineer. The books of the company cannot be received as evidence that he attended those meetings in the capacity of a shareholder.

Nor can any imputation of want of promptitude be laid to his charge in his mode of dealing with the ingeniously devised plan of the secretary for making him out a shareholder. And if the secretary's action arose from misconception of facts, the whole thing ought to have terminated upon the misconception being dispelled.

If, therefore, this had been an application to the Court of Chancery anterior to the winding-up of the company, the appellant would in my judgment have been entitled to have his name removed from the register.

*

The proper mode of dealing with the whole matter as it now comes before the Court will be, counsel for the official 470 liquidator consenting, - to allow the amendment of the present notice of motion by entitling it in Chancery as well as in Bankruptcy, and making it extend to an application, under the 25th section of the Act of 1856, to remove the appellant's name from the register of shareholders, as well as an application to remove that name from the list of contributories.

Upon the notice so amended I shall declare that the appellant never became or intended to become a shareholder in the company, and direct the removal of his name as well from the register as from the list of contributories.

[355]

*471

*Ex parte HENRY RIDOUT DOWNMAN.

In the Matter of HENRY RIDOUT DOWNMAN, a Bankrupt.

1863. April 18. Before the Lord Chancellor Lord WESTBURY.

In considering the question of a bankrupt's discharge with reference to the provisions of the Bankruptcy Act, 1861, § 159, rule 3, care, and even some amount of severity, is properly brought to bear by the tribunal which has to decide the question.

The debts, the contracting of which by the bankrupt, without reasonable or probable ground of expectation of being able to pay the same, is made condemnatory by the section and rule in question, must be debts incurred by the bankrupt and within the scope of the existing proceedings in bankruptcy. In construing the words "rash and hazardous speculation" in the same section and rule, "rash" is the important word, that is to say, the speculation made condemnatory by the section and rule must be such as no reasonably prudent man would have entered into.

Circumstances under which a bankrupt was held, within the meaning of the section and rule above mentioned, neither to have contracted debts without reasonable or probable ground of expectation of being able to pay the same, nor to have been guilty of rash and hazardous speculation conducing to his insolvency, nor of unjustifiable extravagance in living.

THIS was an appeal of the bankrupt from an order of Mr. Commissioner GOULBURN suspending the appellant's order of discharge for twelve months, and refusing protection until the appellant had undergone six months' imprisonment; the ground of the order being that the Court was of opinion that the appellant could not have had, at the time his debts were contracted, any reasonable or probable ground of expectation of being able to pay the same, and that his insolvency was attributable to a long course of, and continuance in, rash and hazardous speculation, and also to unjustifiable extravagance in living.

The appellant was described as a promoter of public companies, and the unsecured debts which appeared upon his balance-sheets, and which amounted to 11417., had been incurred in respect of the promotion of a company called "The Warmley Colliery and Spelter Works Company, Limited."

*472

*This company, although eventually dissolved for insufficiency of subscriptions, was actually formed and registered,

and thereupon the appellant became entitled to two sums, amounting respectively to 5000l. and 3000l., from two gentlemen named Marsden and Jones respectively, the former the owner of a colliery, the latter of a mine, which, if the business of the company had been carried on, were to have been taken over by it; and for the assurance of which colliery and mine respectively to the company accordingly Messrs. Marsden and Jones were respectively under contract with the appellant.

The two sums of 5000l. and 3000l. were to be paid respectively in certain proportions in cash and shares of the company; and upon the dissolution of the latter, Messrs. Marsden and Jones respectively declared their contracts determined, leaving the appellant to his remedy against them by way of an action for damages, and a quantum meruit for his services in connection with the negotiation of the sales to the company, or otherwise as he might be advised.

No proceedings had been in fact taken against Messrs. Marsden and Jones, or either of them, by reason of want of assets in the bankruptcy, but they were described as responsible persons.

The appellant was arrested in May, 1862, upon a writ of execution founded on a bill of exchange, and was adjudged a bankrupt on his own petition on the 20th of the following month. His failure he attributed to the non-payment of the above-mentioned sums of 50007. and 3000l. There were entries of 1267. for liabilities, but none for personal expenditure, in the balance-sheet. On the 27th of June, 1862, the appellant applied for his release from prison, but it was refused, as it was also on *473 the 20th of the July following, unless he could find bail. The 18th of August, 15th of September, and 27th of November, 1862, were devoted to the question of his last examination, which he passed on the last-mentioned, day, and the question of his discharge was adjourned to the 26th of January, 1863. Thence it was again adjourned to the 2d of March, upon which day, after the appellant had been examined viva voce, the learned commissioner took time to consider his judgment.

This he delivered on the 9th of March, 1863, in the terms set out below (a) (whence and from the judgment * of *474

(a) "The bankrupt asks for an order of discharge. He is not so much opposed by the assignee who opposed him in the first instance; but the case has been left in the hands of the Court. This is the bankrupt's third failure. Under

the Lord Chancellor the other material facts of the case will appear), and made the order now under appeal.

Mr. Bacon, for the appellant, who, notwithstanding the commissioner's refusal of protection, was still at large, read the commissioner's judgment, and commented on the terms of the Bankruptcy Act, 1861, §§ 158, 159. (a) He contended that the appellant's

his first failure the debts were 17007., and there were no assets. Under the second insolvency the debts were 3500l., with a similar result as to assets; and under the present failure the debts are 12007., and the bankrupt does not produce a single shilling for his creditors. The bankrupt, it appears, has resided at Boulogne, a place much frequented by persons of his description; at the Upper Mall, Hammersmith; at Notting-hill; at Willesdon, near Barnes, Surrey, and other places; his offices being in Copthall buildings, and in Size-lane. Although the bankrupt has twice before failed, he does not seem to have been by any means chary in his expenditure. The outlay is stated at 6007. per year. When the case came before me I asked the bankrupt to state what reasonable or probable expectation he had of being able to pay his present debts; but the only explanation given was, that he made certain contracts, and that he expected them to be fulfilled, thus hoping to be enabled to pay his creditors. The bankrupt having, in right of his wife, a separate income of 500l. per year, was enabled to keep up a certain appearance in the world, and people were deluded into giving him credit upon the supposition that he was a man of property the fact being, that his wife's income could never be available in any way for the payment of the creditors. It is not to be endured that men like the bankrupt, who are constantly making their appearance in this Court, should be allowed to defy their creditors. I cannot do less than suspend the order of discharge for twelve months, and I shall not allow protection until the bankrupt has suffered six months' imprisonment."

(a) These, so far as they are material, are respectively as follow:

"158. After the bankrupt has passed his last examination, unless an order of discharge shall have been previously made as hereinbefore provided, the Court shall appoint a sitting for the purpose of considering the question of granting the bankrupt such order. Fourteen days' notice of such sitting shall be given in the London Gazette, and such newspapers as the Court shall direct. The assignees or any creditor who has proved may be heard against such discharge.

64

159. In granting orders of discharge the following rules shall be observed:

"3. If... there shall be made, or shall appear to the Court to exist, objections to the granting of an immediate discharge, the Court shall proceed to consider the conduct of the bankrupt before and after adjudication, and the manner and circumstances in and under which his debts have been contracted; and if the Court shall be of opinion that the bankrupt has . . . or that he could not have had at the time when any of his debts were contracted, any reasonable or probable ground of expectation of being able to pay the same,

or, whether

conduct did not deserve the censure passed upon it by the commissioner, that his claims against Messrs. Marsden and Jones were independent of, and did not fall with, the collapse of the company; and that upon the whole case he was entitled to his discharge.

* Mr. Roxburgh, for the assignee, left the case in the *475 hands of the Court.

THE LORD CHANCELLOR. The learned commissioner is much to be commended for the strict examination which he has made of this case, especially as there was no opposing creditor before him. I think he was right in referring to the bankrupt's position at the time when he incurred these debts, and that his reference in this respect was correct under the 159th section of the statute.

Still it is incumbent upon the Court, with regard to that statute, to look only to debts which actually appear to have been incurred by the bankrupt and which come within the reach of the present insolvency.

The learned commissioner charges the bankrupt in the first place with contracting these debts without any reasonable or probable ground of expectation of being able to pay them. But the only transactions in which the bankrupt appears to have been engaged during the period of time in which the debts were contracted were transactions relating to the purchase of two large. concerns, one a colliery, the other a mine. What may have been the prudence of these transactions may be considered hereafter, but certainly they appear to have been bona fide contracts. They seem to have been likely to afford the bankrupt a considerable sum of money. Supposing, therefore, that these were bona fide transactions and not deserving the name of rash and hazardous speculations, and supposing the debts specified in the balance-sheet to have been incurred only or chiefly by reason of these transactions, trader or not, that his insolvency is attributable to rash and hazardous speculation, or unjustifiable extravagance in living, . . . the Court may refuse an order of discharge, or may suspend the same from taking effect for such time as the Court may think fit, or may grant an order of discharge subject to any condition or conditions touching any salary, pay, emoluments, profits, wages, earnings, or income which may afterwards become due to the bankrupt, and touching afteracquired property of the bankrupt, or may sentence the bankrupt to be imprisoned for any period of time not exceeding one year from the date of such sentence."

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