Manner of proof. Securities must be produced. Appeal to the Chancellor. Every security that a creditor has for his debt must be produced at the time of his proving, when the commissioners mark them as having been exhibited; and if he has a judgment, an office copy of it must be exhibited. (1) If the commissioners improperly admit, or reject, a proof -the proper course is, to petition the Lord Chancellor to have the proof admitted, or expunged. (2) Judgment creditors not preferred to the rest; SECTION V. Of Judgment Creditors. A judgment creditor is not entitled to receive more than a rateable part of his debt (3), except in respect of an execution, or extent, served and levied by seizure upon the property of the bankrupt before (4) the bankruptcy. And no creditor, though for a valuable consideration, who even sues out execution upon any judgment obtained by default, where the confession, or nil dicit, shall avail himself of such execution judgment by default to the prejudice of other fair creditors, but shall be paid or confes- rateably with such creditors. nor an execution creditor, sion. Order of the Court of Chan cery. of An Order of the Court of Chancery for the payment money may be proved under a commission, and as a debt proveable, will be barred by the certificate. (5) But money due upon a judgment for mesne profits, or a (1) C. B. L. 129. Ex parte Williamson, 1 Atk. 83. (2) Clarke v. Capron, 2 Ves. 666. (3) See Section 108. withstanding subsequent trading and bankruptcy, although execution is not issued. But this observation of that learned judge was intended to apply only to the Irish bankrupt act (the 11 & 12 G. 3. c. 8. s. 5.) and was not meant to extend to the Bankrupt law of England. (5) Ex parte Parker, 3 Ves. 554. Wall v. Atkinson, 2 Rose, 196. In the matter of M'Williams, 1 Scho. & Lef. 174. creditors. commis judgment in an action for damages on a tort-where the ver- Judgment dict is after (1) the bankruptcy of the defendant - or where the verdict is even before, but the judgment is not signed Judgment signed till after the act of bankruptcy, and after the issuing of the after act commission (2) — is not in either of such cases proveable. of bankA verdict, indeed, is only prima facie evidence of a debt, ruptcy. which the creditors of the bankrupt are at liberty to (3) impeach, and into the circumstances of which, if impeached, the commissioners, as we have before seen (4), are bound to enquire. Where the plaintiff, however, in an action of Before trespass (having obtained a verdict) signed final judgment com before the commission issued, though after the act of bankruptcy, the Court of King's Bench have lately decided, that the judgment was proveable, as being a debt bonâ fide contracted between the act of bankruptcy and the issuing of the commission, within the meaning of the 46 G. 3. c. 135. s. 2. —and, consequently, within the meaning, also, of the forty-seventh section of the new statute, which adopts that clause of the former act. (5) And in a still more recent After comcase, though the judgment was not actually signed till three mission. days after the commission issued, it was held, nevertheless, to relate back to the first day of the term in which it was signed and this being before the issuing of the commission, the judgment was held to be proveable. (6) Where a creditor is entitled to prove in respect of any Costs. judgment, decree, or order, he may now also prove for the costs, though the costs were not taxed at the time of the bankruptcy. (7) Assignees may pay off mort gages before forfeiture. After forfeiture, mortgage must be sold, and proof made for the residue. sold. SECTION VI. Of Creditors having a Mortgage, or equitable Lien. When a creditor has a mortgage from the bankrupt, or any property pledged by him upon condition or power of redemption at a future day, the assignees may, by the seventieth section of the new statute, before the time limited for the performance of such condition, make tender or payment of money or other performance, according to such condition, as fully as the bankrupt might have done; and may afterwards sell and dispose of the mortgaged premises for the benefit of the creditors. But if the mortgage is forfeited, and the creditor apprehends it is not equal to the payment of his debt, he must then apply to the commissioners to have the mortgage sold, and be admitted to prove for the residue. Or he may, if he chooses, file a bill against the assignees for a foreclosureand that, even before the execution of the bargain and sale to the assignees by the commissioners. (1) Mode of In order to have the mortgage sold, a special application proceed- to the Lord Chancellor was formerly necessary (2); but ing when mortgage this may be done now under the general order (3)-by which the commissioners are directed to have the mortgage sold, either before them, or by public auction, previously causing due notice to be given in the London Gazette, and in such other of the public papers as they shall think fit, of the time and place of sale. The proceeds of the sale (4) are to be applied - first, in payment of the expenses attending the sale, and then in payment of what is due to (1) Bainbridge v. Pinhorn, 1 Buck. 155. (2) Ex parte Howell, 7 Vin. 101. Ex parte Coming, 9 Ves. 115. Ex parte Wetherell, 11 Ves. 598. Ex parte Haigh, ibid. 403. Ex parte Twogood, 19 Ves. 231 (3) Lord Loughborough, 8th March, 1794. (4) As to the rules for conducting the sale of the bankrupt's property, whether under the general, or a special, order, see post, "Assignees." the mortgagee for principal, interest, and costs; and in case Mortthe proceeds are not sufficient for that purpose, the mortgages. gagee may be admitted a creditor for the deficiency. But Interest. he can only prove for interest up to the date of the com mission. (1) mortgage The commissioners have jurisdiction, under this order, As to to take an account of the expenses attending the sale of the taking the mortgaged premises, and to tax the costs of all parties. (2) account. And where it is merely a question of convenience, it will be left to the assignees to choose, whether the mortgage accounts shall be taken before the commissioners, or the Master. (3) securities may be All personal securities, which are merely pledged or de- Personal posited by the bankrupt with the creditor, may (we have seen (4)) as well as mortgages, be directed by a special also sold. order to be sold before the commissioners (5); but in this case the assignees are alone entitled to insist upon the sale. (6) not bound Where there is a second mortgagee, who does not Second claim under the commission, but rests upon his security mortgagee -whether it be a legal or an equitable mortgage- neither to join in the commissioners, nor the Lord Chancellor, have power to sale. compel him to join in the sale obtained by a prior mortgagee. (7) But where a second mortgagee elects to aban- But if he don his security and come in under the commission, under proves, he the impression that the first mortgagee will not receive right to sufficient by the sale of the estate to pay off his mortgage, plus from but upon a sale there turns out to be a surplus, the it. second mortgagee in this case will not be allowed to withdraw his proof, and be remitted to his mortgage. (8) When Where the second mortgagee will not consent to join in a sale, the (5) Ex parte Hillier, C.B. L. 123. (6) Ex parte Troughton, C. B.L. 124. Ex parte Gardner, ibid. (7) Ex parte Jackson, 5 Ves.357. Ex parte Topham, 1 Mad. 38. (8) Ex parte Downes, 1 Rose,96. 18 Ves. 290. waves his any sur second mortgagee Mortgages. refuses to join in the sale. When mortgagee entitled to tion. better plan seems to be for the assignees to request the commissioners to call before them both mortgagees, and examine them as to the amount of the principal and interest due on their respective mortgages. The assignees may then advertise the estate for sale, subject to the two mortgages; and if more is bid for it than what is due on both, the assignees, or the purchaser, can in that case redeem them. If there is no advance, both mortgagees will then be left to their usual remedy, and the assignees will have no further interest in the premises. (1) A mortgagee has a right to have the estate sold in the same plight, as it was in at the time of the bankruptcy. an injunc- Therefore, where the bankrupt (before assignees were chosen) was proceeding to cut underwood which he had mortgaged, the Lord Chancellor, upon the application of the mortgagee, granted an injunction to restrain him from so doing. (2) Where wishes to Where a mortgagee wishes to bid at the sale as a purmortgagee chaser of the property mortgaged, it is usual for him to bid at sale. apply by petition for leave to do so (3), undertaking to make good the deficiency between the sum bid and the price to be fixed by the Master, in case the latter should not approve of the bidding. (4) But though it is the prac tice for the mortgagee to apply to the Court, it has been doubted whether such an application is absolutely necessary; as it is always competent to him to purchase from the mortgagor the equity of redemption, and the bankruptcy does not seem to make any difference. (5) If, indeed, the mortgagee has a power of sale given him by the mortgage, he is then considered in the light of a trustee, who is in general disabled from purchasing for himself (6); but, in Bankruptcy, he may wave his special (1) 2 Christ. B. L. 523. (2) Hampton v. Hodges, 8 Ves. 105. (3) Ex parte Ducane, Buck. 18. (5) Ex parte Hammond, Buck. 464.; and see Sugden, Law V. & P. 572. (6) Downes v. Grayebrooke, 3 Mer. 206. |