Property fraudu lently delivered. Property restored by bankrupt, which he had obtained and a contemplated appropriation does not amount to an actual transfer. But where a trader, who had obtained bills of exchange from the defendant, upon a fraudulent representation that a security given by him to the defendant (which was void) was an ample security-and on the next day (being resolved to stop payment) informed the defendant, that he had repented of what he had done, and had sent express to stop under false the bills, and would return them and three days afterpretences. wards committed an act of bankruptcy — after which he returned to the defendant all the bills (except one that had been discounted), and also two bank notes, part of the proceeds of such discount-upon which the defendant delivered back the security- and afterwards a commission issued against the trader, and his assignees then brought trover against the defendant for these bills and bank notes;-it was held, in this case, that the defendant was entitled to retain all the bills and notes so returned by the bankrupt, on the ground that the bills were originally obtained under a false pretence of giving a good security; and that since, under such circumstances, a court of equity would order the property to be restored, it would be useless for a court of law to permit that to be recovered, which could not be retained. (1) Threat or apprelegal pro hension of cess. So where a trader, under a threat, or an apprehension merely, of legal process, civil or criminal—or from the pressure and importunity of his creditor-delivers property to him, or gives him a power to receive it; the transaction in any of these cases is not considered a fraudulent preference, even though the trader knew himself to be insolvent; for the act on his part is not a voluntary act (which is implied in the PREFERENCE of one creditor to another) — but one, which proceeds from the effect of fear or apprehension. (2) And (1) Gladstone v. Hadwen, 1 M. & S. 517. (2) Thompson v. Freeman, T. R. 155. Cosser v. Gough, ibid. 156. note (c.) Hartshorn v. Slodden, 2 B. & P. 582. Ex parte Scuda more, 3 Ves. 85. Yeates v. Grove, 1 Ves. jr. 280. Holbird v. Anderson, 5 T.R. 235. Smith v. Payne, 6 T. R. 152. Crosby v. Crouch, 2 Camp. 166. 11 East, 256. De Tastet v. Carrol, 1 Star. 88. Reid v. Ayton, fraudu lently de even where a trader, in contemplation of bankruptcy, is Property intending to give a creditor a voluntary preference, but before the intention is consummated, the creditor calls and livered. demands payment of his debt, the payment in such a case has been held to be good. (1) transfer But where the transfer or delivery of property (upon the Where importunity of a creditor) does not redeem a trader from any does not present difficulty, which is the ordinary motive for such an redeem act, when really done under the pressure of a threat ; —bankrupt from any this has been held to be evidence that the transfer was not present made under such pressure, but voluntarily, and with a view difficulty. to prefer the particular creditor in contemplation of bankruptcy. Thus, where a trader, upon being pressed by a creditor for payment or security (one or other of which he said he would have) gave a bill of sale of what was ap parently the whole of his stock, and immediately afterwards left his business and home, and became a bankrupt; this transaction, notwithstanding the pressure, was held void as against the assignees. (2) -- ference. But even a voluntary transfer of property, made by a Voluntary trader in a situation of impending bankruptcy, will not be transfer good, if void, if made bona fide, and not from any motive of undue not from preference. As, in a case, where certain traders ordered motive of undue pregoods of a manufacturer to be sent to their agents to be shipped-and after the goods were delivered to such agents, (the traders having stopped payment) the manufacturer got possession of the goods, by indemnifying the agents for delivering them up to him: the traders called a meeting of their creditors, and were encouraged by the result of such meeting, as well as by legal advice, to give up all claim to the goods to the manufacturer, which they accordingly did the latter end of July, but did not commit an act of bankruptcy until the 26th of September; and the 1 Holt, N. P. Rep. 503. Arbouin v. Hanbury, ibid. 575. (1) Bayley v. Ballard, 1 Camp. (2) Thornton v. Hargreaves, 7 East, 544. Property fraudu lently delivered. Or merely contem plating that his trade must cease, -without contem plating bankruptcy. Court held that the above circumstances were evidence for a jury to find, that the goods were given up bona fide, and not from any wish to give an undue preference. (1) So, though a trader may contemplate that his trade must cease, and that he cannot pay his creditors unless they give him time, it does not necessarily follow, that he contemplates bankruptcy. Thus, where B. had purchased goods on October 8th, for the purpose of exportation; but finding that he must stop payment, and that he could not apply the goods to the purpose for which they were bought, he returned them to the seller on October 16th:on the 17th he stopped payment, but, expecting remittances from abroad more than sufficient to pay his debts, he had no doubt but that his creditors would give him time, which they, however, refused, and a commission issued against him the 2d November;- It was held, that under these facts the jury were warranted in finding, that the re-delivery of the goods to the seller was not made in contemplation of Or in con- bankruptcy. (2) So also, where a preference is given by a templation of an intrader, in contemplation of an intended deed of composition,tended though it would have been fraudulent as against the credideed of tors under that deed, if it had been carried into effect-yet, composition. as a commission of bankruptcy did not issue until four months afterwards, this was held to be not a preference in contemplation of bankruptcy; for no commission was, in fact, contemplated at the time the preference was given. (3) Property And where a merchant in London received bills of exgiven up by agree change from his correspondent at Amsterdam, to whom he ment, at a was indebted beyond the amount of the bills; and after meeting of creditors. stopping payment, called a meeting of his creditors on the 7th January, when it was agreed that the bills should be delivered to an agent in London of the creditors at Amsterdam, in order to receive the money and hold it for the (1) Dixon v. Baldwin, 5 East, 175. (2) Fidgeon v. Sharp, 1 Marsh, 196. 5 Taunt. 539. (5) Wheelwright v. Jackson, 5 Taunt. 109. in transitu persons who might be ultimately entitled to it the bills, Stoppage however, had been previously delivered by the merchant to such agent, for the use and on the account of the creditor at Amsterdam, and the agent received payment of the bills, as they respectively became due: the act of bankruptcy was not committed till October following, when a commission issued against the merchant:- under these circumstances, Lord Ellenborough held, that the assignees could not maintain an action against the agent for the amount of the bills; as they were deposited with him for the use and benefit of the creditor, and the bankrupt might, at the time of the deposit, have himself directly returned them to Amsterdam.(1) SECTION VII. Of the Effect of the Assignment upon Goods in transitu, —— and herein of the Right of Stoppage. The assignment of the commissioners does not pass any property to the assignees in goods consigned to the bankrupt, which may be stopped in transitu,—whether such goods are consigned to the bankrupt himself, or whether he obtains possession of them in their transit to the hands of the regular consignee. The right of stoppage in transitu is a privilege, which Nature of the law affords to every vendor who has not been paid for the right of stoppage goods, in order to protect himself against the insolvency of in transitu. the vendee. Though forming part of the general law of merchants (2), it seems with us in England to have been first established in the Court of Chancery, as a kind of 89. (1) Graff v. Greffulhe, 1 Camp. (2) 6 Robins's Adm. Rep. 325. In Russia and in France, if a seller can merely identify the property, though it may be in the actual pos session of an insolvent vendee, he G G 18. 1. 19. in transitu. be exer cised, Stoppage equitable lien (1); and to have been afterwards adopted by the courts of common law, for the purposes of substantial justice, and to prevent the debts of one man being paid with the effects of another. (2) But, from whatever source it sprung, it is a right now universally recognized in all cases between an unpaid vendor of goods and the vendee; so much so, indeed, that Lord Hardwicke once observed in a matter of this kind, that if the assignor could get his goods back again by any means, provided he did not steal Can only them, he would not blame him. (3) As between the vendor and vendee, however, the right does not (strictly speaking) exist, unless the vendee prove insolvent; for if a vendor, vendee from misinformation, or excess of caution, assumes this proves insolvent. privilege during the vendee's solvency, he assumes a right which does not belong to him; and the vendee would, in such case, be entitled not only to the delivery of the goods; but also to indemnity from the vendor for the expenses incurred in obtaining possession (4) of them. But it is not necessary, that the vendee should be actually insolvent at the time the goods are stopped; for if he proves to be so before the ordinary time, when they would have reached their destination, the vendor will in that case have been justified in the exercise of this right, and to the benefit of his own provisional (5) caution. when In the multifarious changes of ownership, however, which merchandise is occasionally subject to in its transit from one trader to another, questions of difficulty will frequently occur between the consignor and third persons,—when the consignee assigns for a valuable consideration the bill of lading (1) Wiseman v. Vandeput, 2 Vern. 203. Snee v. Prescott, 1 Atk. 245. D'Aquila v. Lambert, Amb. 399. 2 Eden. Rep. 75. (2) 7 T.R. 445. (3) Snee v. Prescott, 1 Atk. 250. Lord Kenyon said, (3 T. R. 467.) that the doctrine of stopping goods in transitu was bottomed on Snee v. Prescott, on which all the other cases were founded; but the right was recognized in Wiseman v. Vawdeput, 2 Vern. 205., long before the case of Snee v. Prescott occurred. (4) Per Sir W. Scott, 6 Rob. Adm. Rep., case of The Constantia ; and see Ellis v. Hunt, 3 T. R. 469. (5) Ibid. |