Page images
PDF
EPUB

1803. must have had judgment at law; for the covenant could not MURPHY, have been pleaded in bar to such action : a covenant in one a Bankrupt. deed cannot be pleaded in bar to a covenant in another deed,

except such deed be a defeasance of the former : Gawden v. Draper, 2 Vent. 217. Now, this covenant is not a defeasance; for every defeasance must contain proper words of defeasance, as, that the thing shall be void : Lacy v. Kynaston, 2 Salk. 575. If obligee covenants not to sue the obligor for a certain time, it does not amount to a defeasance, nor can it be pleaded as such, but is a mere covenant only, for breach of which the obligor may bring his action. Ayloffe v. Schimshire, Carth. 63. S. G.; 1 Show. 46; Comberb. 123; 2 Salk. 573; Deux v. Fefferyes, Cro. Eliz. 352; 1 Rol. Abr. 939, and Burgh v. Preston, 8 T. R. 483. And in Staines v. Planck, 8 T. R. 389, Lord KENYON thus expresses himself: “ It is very clear, that a mere contingent debt is not prove“ able under a commission; but if there be a legal debt, " tho' liable to be defeated afterwards upon a contingency, " it may be proved under the condition. For that reason it

frequently happens, that a trader who wishes to secure a

provision for his wife and family in case of his insolvency, “ on his marriage gives a bond to trustees payable imme“ diately, and then in the event of his subsequent bank

ruptcy, the bond being forfeited at law may be proved under the commission, because there is a legal debt."

Mr. Wallace, for the assignees, referred to Ex parte Henecy, in this court, Trin. 1802.(a) (This was a motion on petition, for leave to prove the amount of a bond given to trustees for the benefit of the bankrupt's wife on their intermarriage. It appeared to be an absolute bond, with a common condition for payment on a day certain, which was passed at the time of the bankruptcy : but on the back of the bond there was an endorsement in the nature of a defeasance,

(a) Er relat,

.1803.

MURPHY, a Bankrupt.

by which it was agreed, that the bond should not be payable or called in, unless the obligor should become insolvent, or until his death. The Lord CHANCELLOR referred to the cases Ex parte Hill, and Ex parte Bennet(a) as in point, to shew that such a debt as this is not proveable under the commission; that it is considered as a fraud on the bankrupt laws, and that the creditors have a right to say it was a debt that could not be enforced against the bankrupt himself before his bankruptcy, and therefore could not be proved under the commission. The defeasance here is a fraud : the effect of it is, that the wife shall never be able to compel payment from the husband during the solvency, but that when he becomes insolvent she shall be able to enforce it against his creditors; even in the case where a sum of money has been invested in the trustees, with a provision that they may lend it to the husband (being a trader) on his bond, it has been doubted whether it was not fraudulent ; though the trustees in such case may enforce payment of the money at any time they think fit. (The cause stood over to another day, when his Lordship said) that debt cannot be in effect a legal debt which cannot be enforced during the solvency of the party; and a contract to make a legal debt not enforceable till death or bankruptcy is a fraud on the bankrupt laws, as not being possible to enforce it against the debtor, except in the character of bankrupt :(6) and a judgment debt is not different from any other; the judgment is only evidence of the debt. Ex parte Winchester, if looked into, will appear different from this ; there there was no restraint on the calling in the money. The wife's own fortune(c) may be thus settled, because the husband is bound to maintain her, and when he no longer can, it is fair that she should have her own back

(a) 1 Co. Bank. Law. 232, 233.
(6) Sed Vid. Ex parte Michell, 1 Atk. 121.

(c) 2 Str. 947, Lockyer v. Savage; 8 Ves. Jun. 353, Ex parte Cooke.

1803. again.) And see Ex parte Greenaway, 1 Atk. 113; Ex parte

Michell, 1 Atk. 120, and in Goddard v. Vanderheyden, 3 MURPHY, a Bankrupt. Wils. 271, the court refers to the case Ex parte Michell, and

says,

“it is now settled, that on such a provision for a wife, " she cannot be admitted a creditor.” (See, 1 Cooke's Bank. L. 2d edit. 284, et seq.)

Lord CHANCELLOR.

I am glad this discussion has taken place, for I should be sorry the question should not be considered as decided upon consideration. It is a great mistake to suppose that a debt's being proveable, depends on whether it is a legal debt. It depends on whether it be a debt in law or in equity, for sitting in cases of bankruptcy, I am to decide on equitable as well as legal debts. The question is, what is the nature of the demand which exists in this case ? it is a contingent demand for 800l. payable only if the wife shall survive the husband, and this is the only demand which can be made consistently with the agreement between the parties, provided the husband does not become bankrupt. The demand being a demand of such a nature, the settlement itself recites that it is intended to contrive what I conceive to be a fraud upon the bankrupt laws---to make that a debt in case the man becomes bankrupt, which cannot be so otherwise. The expression of Lord Kenyon, in Staines v. Planch, I conceive does not refer to such a settlement as this : all he means to say, is, that the bankrupt may make himself legally indebted for a sum, payment of which may be enforced whether he becomes a bankrupt or not, though on a subsequent contingency the money so recovered may become his own : as suppose a man on his marriage enters into an engagement by bond, to pay a certain sum to the trustees within certain time, and then the settlement recites that this is for the use

of himself until such marriage happens, and then for the 1803. use of himself for life, then for his wife, first, and other

MURPHY, sons, &c. This sort of engagement makes him liable to be a Bankrupt. sued by the trustees, whether he become bankrupt or not. But here there is an express covenant for the payment of 800l. on the contingency of the wife's surviving the husband, and then comes a clause which takes notice of the husband's being a trader, and that it is necessary to secure something in the event of his bankruptcy : for that purpose a bond is to be given payable at a day certain, but that sum is not to be recovered from him unless he becomes insolvent. As to this sum, therefore, though certainly it is a legal demand, yet on the foundation of this settlement, if an attempt were made to sue him on the bond, or to enter up judgment while he continued solvent, he would have a right to come into a court of equity and prevent it, and to have the contract, which was the ground of the bond, carried into execution by restraining proceedings on the bond. I am to take the debt as it stands on the whole of the instru. ments executed ; and the contract in the deed of settlement is, that the bond shall have no effect but in case of bankruptcy; for it is not the bond that is to operate in case of the husband dying before the wife; it is not the bond that is the security to the wife if she survives, nor to the children in case she dies before her husband. So that the whole effect of the clause is to avoid the operation of the bankrupt laws; and then the question is, whether a person can be admitted to prove as a creditor, on the foundation of an instrument contrived for the purpose of defeating the effect of the bankrupt laws, where the only ground of the claim is an instrument executed for the purpose of giving a right against creditors, which would not exist against the bankrupt if he were solvent. All the cases in England have held this to be a fraud upon the bankrupt laws which cannot be supported; por really can any thing, where the contingency VOL. I.

н

1803. is an act of bankruptcy and where the demand does not MURPHY,

arise till an act of bankruptcy committed, be proveable una Bankrupt. der it, because it did not exist before it.

The cases which have been mentioned are of a totally different description. Ex parté Winchester was a case where the debt was a debt at law, because the condition of the bond (the payment of interest) was not performed, and therefore the bond was forfeited at law, and the only right which existed in the party himself to resist the demand on the bond was that a court of equity might relieve against lapse of time, so far as it might not be to the prejudice of the party who had suffered through the lapse. Lord HARDWICKE thought this debt might be proved; there was no contrivance in this case to defeat the bankrupt laws; the interest of the bond was intended as a support for the daughter of the bankrupt during his life, and the principal as a provision for her and her issue after his death : it was a fair bond, and on breach of the condition, there was a clear right to sue ; and there was nothing but the equity arising from what I may call the practice of courts of equity that could relieve against it.

So in the case of a bond for payment of an annuity,(a) where each half-yearly payment is a separate debt : if the bond be forfeited previous to the act of bankruptcy, the creditor is admitted to prove for the value of the annuity ; because, the bond being forfeited at law, there is no equity to relieve against that forfeiture, for it cannot be relieved against without prejudice to the creditor, and he has an equity to resist the equity that would be raised against him.

I think to encourage such an application as this would be extremely improper; and I find the cases uniformly de

(a) 1 Cooke's Bankr. L. 181.2 Edit. Dougl. 501. Wylie v. Wilkes

« PreviousContinue »