IMAGE EVALUATION TEST TARGET (MT-3) ^ 1.0 !t>^ 1^ I.I 124 lii ■ 2.2 ■ti 13/, MB ■IWu Iml^^s L25 llliu 11.6 1 Photographic Sciences Corporation 23 WKT MAIN STMIT WIBSTIR,N.Y. 14SM (71*)t72-4S03 CIHM/ICMH Microfiche Series. CIHM/iCIVIH Collection de microfiches. Canadian Institute for Historical Microreproductions / Institut Canadian de microreproductions historiques Technical and Bibliographic Notes/Notes techniques et bibliographiques The Institute has attempted to obtain the best original copy available for filming. Features of this copy which may be bibliographically unique, which may alter any of the images in the reproduction, or which may significantly change the usual method of filming, are checked below. D D D n Coloured covers/ Couverture de couleur Covers damaged/ Couverture endommag^e Covers restored and/or laminated/ Couverture restaur6e et/ou pellicul6e Cover title missing/ Le litre de couverture manque □ Coloured maps/ Cartes g6ographiques en couleur □ Coloured ink (i.e. other than blue or black)/ Encre de couleur (i.e. autre que bieue ou nosre) □ Coloured plates and/or illustrations/ Planches et/ou illustrations en couleur D D D D Bound with other material/ Reiid avec d'autres documents Tight binding may causa shadows or distortion along interior margin/ La reliure serrie peut causer de I'ombre ou de la distortion le long de la marge intdrieure Blank leaves adder* during restoration may appear within the text. Whenever possible, these have been omitted from filming/ II se peut que certaines pages blanches ajouties lors d'une restauration apparaissent dans le texte, mais, lorsque cela 6tait possible, ces pages n'ont pas 6t6 filmies. Additional comments:/ Commentaires supplimentaires: L'Institut a microfilm^ le meilleur exemplaire qu'il lui a M possible de se procurer. Les details de cet exemplaire qui sont peut-dtre uniques du point de vuo bibliographique, qui peuvent modifier une image reproduite, ou qui peuvent exiger une modification dans la m^thnde normale de filmage sont indiqu^s ci-dessous. I I Coloured pages/ D Pages de couleur Pages damaged/ Pages endommagies Pages restored and/oi Pages restaurdes et/ou pellicuides Pages discoloured, stained or foxe Pages ddcolor^es, tachet6es ou piqu6es Pages detached/ Pages d6tach6es ShoV(/through> Transparence Quality of prir Qualitd indgale de {'impression Includes supplementary materii Comprend du materiel supplementaire Only edition available/ Seule Edition disponible I — I Pages damaged/ I — I Pages restored and/or laminated/ I — ^'1 Pages discoloured, stained or foxed/ I I Pages detached/ [TT* Shov/through/ r~^ Quality of print varies/ I I Includes supplementary material/ I — I Only edition available/ Pages whcMy or partially obscured by errata slips, tissues, ate , have been refilmed to ensure the ^est possible image/ Les pages totalement ou partieliement obscurcies par un feuillet d'errata, une pelurs, etc., ont 6td filmdes i nouveau de fagon d obtenir la meilleure image possible. This item is filmed at the reduction ratio checked below/ Ce document est film6 au taux de reduction indiqu6 ci-dessous. 10X 14X 18X 22X 26X 30X 12X 1«X 20X 24X 28X 32X The copy filmed here has been reproduced thanks to the generosity of: University of Toronto Library L'exemplaire film6 fut reproduit grice A la g6n4rosit6 de: University of Toronto Library The images appearing here are the best quality possible considering the condition and legibility of the original copy and in keeping with the filming contract specifications. Las images suivantes ont 6t6 reproduites avec (e plus grand soin, compte tesiu de la condition at de la nettet6 de l'exemplaire film6. at en conformity avec les conditions du contrat de filmage. Original copies in printed paper covers are filmed beginning with the front cover and ending on the last page with a printed or iilustratfid impres- sion, or the back cover when appropriate. All other original copies are filmed beginning on the first page with a printed or illustrated impres- sion, and ending on the last page with a printed or illustrated impression. The last recorded frame on each microfiche shall contain the symbol —»> (meaning "CON- TINUED"), or the symbol ^ (meaning "END"), whichever applies. Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les exemplaires originaux dont la couverture en papier est impr'mde sont fiimis en commenpant par le premier piat et en terminant soit par la dernidre page qui comporte une empreinte d'impression ou d'illustration, soit par le second plat, selon le cas. Tous les auties exemplaires originaux sont film6s en commenpant par la premidre page qui comporte une empreinte d'impression ou d'illi ^tration et en terminant par la dernidre page qui comporte une telle empreinte. Un des symboles suivants apparaitra sur la dernidre image de cheque microfiche, selon le cas: le symbols —^ signifie "A SUIVRE", M symbole V signifie "FIN ". Les cartes, planches, tableaux, etc., peuvent dtre filmAs d des taux de reduction diff6rents. Lorsque le document est trop grand pour dtre reproduit en un seul clich6, il est filmd d partir de Tangle supirieur gauche, de gauche d droite, e* de haut en bas, en prenant le nombre d'images n6cessaire. Les diagrammes suivants illustrent la mdthode. 2 3 1 2 3 4 5 6 < I * f ' t ( _J^jttjJBiB^5siEa:.-2'-" ■ -:-'Sja»)^i .^.^,,„ »,.^.. ^:-,^fm^>mr^!^-''vsfmm ^Assignments AND PREFERENCES UNDER THE LAWS OF THE PROVINCE OF ONTARIO. COMPILED BY A R T H U R C?^^^ o M AS-TUR Ml TCyRONTO. PUBLISHED BY DAVID BLACKLEY, TORONTO. Entered according to Act of Parliament, in the Office of the Minister of Agriculture. TORONTO : W. 8. Johnston & Co'y. Printers and Binders. ■ / , / 1 1« » al»0l:^il l mfi t *i.Mff^ ^y ii^^ajUHKH ; . • » DAVID BLACKLEY Assignee and Accountant 80 Bay Street, 1^ King St. W., Toronto,: Hamilton. Tf will hP noticed that I have the exceptional advantage of having an It will t)y oticea tnat 4 ^ ^^^ Hamilton, so that estates may he dea?t with with equal facility from either point, and creditors' meetings held In which evei citj"^ may be most convenient. , i, _■■ ■(■ * » ■ ,',,;«•. .»'* < I ., . •••t •■?.*•!' PREFACE. Feeling that merchants intrusting their business to an assignee would find satisfaction in the use of a book containing a short and clear statement of the law relating to assignments and preferences, by which they might not only be advised of their own rights but have the means of judging whether the assignee is acting strictly in accordance with legal requirements and in the interest of the estate intrusted to his care, I have re- quested Mr. A. C. McMaster, Barrister-at-law of the legal firm of McMaster, Scott & Geary, to prepare the following work which I am confident will be found accurate and of considerable service to those requiring to use it. DAVID BLACKLEY. Toronto, 5th of April, 1895. ^iMii ASSIGNMENTS AND PREFERENCES. Under the Laws of Ontario. Chapter 1. THe Assignment. ** 2. Duties of Assignee, etc. ** 8. Rights and Powers of Creditors. " 4. Preferences. ** 5. Recovery of Debts CHAPTER 1. the assignment. When the phrase Assignment for Benefit of Creditors, or Assignment under the Statute is used, the assignment referred i to is one presumed to be made in accordance with the provisions of Sec. 4 of Cap. 124 R.S.O. 1887, which section is m the following words : — " Section 4. Every assignment made under this Act for the general benefit of creditors shall be valid and sufficient if it is in the words following, that is to say ; • " All my personal property which may be seized and sold under execution, and all my real estate, credits and effects " or if it is in words to the like effect ; and an assignment so expressed shall vest in the assignee all the real and' personal estate, rights, property, credits and effects, whether vested or contingent, belonging at the time of the assignment to the assignor, except such as are by law exempt from seizure or sale under execution; subject however, as regards lands, to the provisions of the Registry Law as to the registration of the assignment. 4S v., c. 19, S. 4." ^''■■^ttffi'-i The assignment may be in the words given in the above section, or in words to the like effect, but an assignment con fined in terms to personal property only is not within the Act. (Blain V. Peaker, 18 O.R., 109.) And it appears that if the assignment omits any part of the debtor's property in such a way or to such an extent that the intention to reserve a part of his estate is apyjarent, it will not be within the Act. McLean V. Garland, 13 S. C. R. 386. The more recent authorities are not yet reported. A safe form of assignment under the Act is as follows : — •'This indentut^e made the day of in the year of our Lord one thousand eight hundred and ninety in pursuance of the Revised Statutes of Ontario, 1887, chap. 124, being im act respecting assignments and preferences by insolvent persons. Between the Debtor, of the First Part, the Assignee, of the Second Part, And the several Firms, Persons and Corporations who are Creditors of the said Debtor, hereinafter called the Creditors, of the Third Part. WheKeas the said Debtor has heretofore carried on busi- ness at as and being unable to pay Creditors in full has agreed to CDnvey and assign to the said Assignee all estate, real and personal, for the purpose of paying and satisfying the claims of Creditors rateably and proportionately, and without preference or priority. flouu this indenture uiitnesseth, that in consideration of the premises and of the sum of One Dollar the said Debtor doth hereby grant and assign to the said Assignee, his heirs, executors, administrators c-nd assigns, all personal property which may be seized and sold under execu- tion, and all real estate credits and effects TO HAVE AND TO HOLD the Same unto the said Assignee, his heirs, executors, administrators and assigns, respectively, accordmg to the tenure of the same. Upon tKust that the said Assignee, his heirs, executors, administrators and assigns, shall sell and convey the real and 6 W*J«», ■It, ' .'T'^^i ■:'l.f»>jBa\'^^?Ta'ir«ii'nr-».*; personal estnte and convert the same into money and collect and call in the debts, dues and demands of the said Debtor. And it is het» It appears that a mere covenant of indemnity as to which there had been no breach at the time of the assii^^nmcnt, and so no cause of action at that time, woukl not pass unless the Assiijnee did some act to shew an election to take the benetit of it; or, if it did pass, would be a mere legal interest and would not prevent the debtor suing as equitably entitled in the absence of active interference on the part of the Assignee. See Ball V. Tennant, 21 A.R., (102. As to after acquired i)roperty, and as to rights to the benefit of contracts, see Herbert V. Sayer, 5, Q.B. 9()5, Gibson V. Carruthers, 8 M. & W., 321. Bu/ does not include, goods exempt from execution under R.S.O., 1887, Cap, 64, Sections 2 and 3 which are as follows : — Sub-Sec. 1. The bed bedding and bedsteads (including a cradle) in ordinary use by the debtor and his family. " Sub-Sec. 2. The necessary and ordinary wearing apparel of the debtor and his family : Sub-Sec. 3. One cookmg stove, with pipes and furnishings, one other heating stove, with pipes, one crane and its append- ages, one pair of andirons, one set of Cv oking utensils, one pair of tongs and shovel, one coal scuttle, one lamp, one table, six chairs, one washstand with furnishings, six towels, one looking glass, one hair brush, one comb, one bureau, one clothes press, one clock, one carpet, one cupboard, one broom, twelve knives, twelve forks, twelve plates, twelve tea spoons, twelve saucers one sugar basin, one milk jug, one tea pot, twelve spoons, two pails, one wash tub, one scrubbing brush, one blacking brush, one wash board, three smoothing irons, all spinning wheels and weaving looms in domestic use, one sewing machine and attachments in domestic use, thirty volumes of books, one axe, one saw, one gun, six traps, and such fishing nets and seines as are in common use, the articles in this sub-division enumerated not exceeding in value the sum of S150." (5.5.4) All necessary fuel, meat, fish, flour and vegetables, actually provided for family use, not more than sufficient for the orainary consumption of the debtor and his family for thirty days, and not exceeding in value the sum of S40. (5.5.5) One cow, six sheep, four hogs, and twelve hens, in all not exceeding the value of $75, and food therefor for thirty days, and one dog. (5.5.6) Tools and implements of or chattels ordinarily used in the debtor's occupation, to the value of $100. 9 (S.S.7) Bees reared and kept in hives to the extent of fifteen hives. S2C. 3. The debtor may in lieu of tools and implements of or chattels ordinarily used in his occupation referred to in sub-division 6 of section 2 of this Act, elect to receive the pro- ceeds (^f the sale thereof up to $100, in which case the officer executinjr the writ shall pay the net proceeds of such sale if the same shall not exceed SlOO, or, if the same shall exceed $100, shall pay that sum to the debtor in satisfaction of the debtor's rij^ht to exemption under said sub-division 6, and the sum to which a debtor shall be entitled hereunder shall be exempt from attachment or seizure at the instance of a creditor. Sjc. 4. The chattels so exempt from seizure as against a debtor, s'.iall, after his death, be exempt from the claims of credit )rs of the deceased, and the widow shall be entitled to retain the exempted goods for the benertt of herself and the family of the debtor, or, if there is no widow, the family of the debtor, shall be entitled to the exempted goods and the goods so exempt shall not be liable to seizure under attachment against the debtor as an absconding debtor. Sec. 5. The debtor, his widow or family, or, in the case of infants, their guardian, may select out of any larger number the several chattels exemjjt irom seizure. Sec. 6. Nothing herein contained shall exempt any article enumerated in sub-divisions 3, 4, 5, 6 and 7 of section 2 of this Act from seizure in satisfaction of a debt contracted for the identical article. The assignment also includes lands, but subject to the provisions of the Registry Laws. Hence it is necessary to register the Assignment with the Registrar of Deeds for the proper County or Registration Division, otherwise a bona fide purchaser for value might gain priority over the Assignee. Section 3, SS. I, amongst other things, provides as follows : ''Nothing in the preceding section shall apply " (i.e., as avoid- ing the assignment etc.) " to any assignment made to the Sheriff of the County in which the debtor resides or carries on business, or to another assignee, resident within the Province of Ontario, with the consent of the creditors as hereinafter provided, for the purpose of paying rateably and propor- tionately, and without preference or priority, all the creditors of the debtor their just debts." The purpose should be the rateable payment of all 10 ^ BaiiJiiittftBiiwii iii'iicm :«f3(»»»«i>?S^4>»t*»'? liabilities generally, and if this be the purpose or intent, an accidental omission of creditors names trom the schedule would not invalidate nor take the assignment out of the Statute. See McLean V. Garland, 13 S.C.R., 886 nor, it seems, would accidental omission of some property. The assignee mavbe given authoritv to run the business for a time so as to sell as a going concern. See Slater V. Ba- denach, 10 S.C.R., 296, and cases there referred to. SS. 2 reads : *' Every assignment for the general benefit of creditors which is not void under section 2 of this Act, but is not made to the Sheriflf, nor to any other person with the prescribed consent of creditors, shall be void as against a subsequent assignment which is in con- formity with this Act, and shall be subject in other respects to the provisions of this Act until and unless a subsequent assignment is executed in accordance with this Act." The consent of creditors, in case of an assignment other than to the Sheriff is prescribed by S.S.5. " The debtor may, in the first place, with the consent of a majority of the creditors having claims of $100 and upwards, computed according to the provisions of Sec. 19, make a general assignment for the benefit of his creditors to some person other than the Sheriff, and residing in this Province." This consent may be obtained subsequently to the time of the assignment, and in practice the usual course is to have the assignment ratified, and the assignee confirmed in his position, at the first creditors' meeting. In Anderson V. Glass, 16 O.R., 592, the meaning and effect of the above sub-section is discussed, and it seems that an assignment made under this Act, executed without the con- sent of the requisite number of creditors, has the same effect as if it were so executed, unless and until superseded by an assign- ment executed with that consent, or made to a Sheriff, and a Sheriff who seizes goods the subject of an assignment defective for want of consent only, is not justified in refusing to give them up to the assignee under it, there being no subsequent assignment to supersede it under the Statute. Section 9 of the Statute provides, that '' An assign- ment for the general benefit of creditors under this Act 11 M r-it'ff^U I shall take precedence of all iudgments and oi* all execu- tions not completely executed, by payment, subject to the lien, if any, of an execution creditor for his costs, Avhere there is but one execution in the Siieriff' s hands, or to the lien, if any, of the creditor, for his costs, who has the first execution in the Sheriff's hands." A judgment for alimony, in spite of the words " all judg- ments " used in the Act, is not within this section. See Abraham V. Abraham, 19 O.R., 256. The first execution creditor's lien extends to the entire costs of the action, and is not limited to the costs of his execu- tion as was contended. See Regan V. Clarkson, 16 A.R., 311. The words ** in the Sheriff's hands " excluded executions in the Division Court from the benefit of this section, being in the bailiff's hands, out this is provided for by the Division Court Act ; so that where the defendent in an action in that Court "' makes an assignment for general benefit of his creditors " the bailiff will, until his fees and disbursements upon the writ of execution are fully paid and satisfied, have a lien therefor upon so much of tne goods as will reasonably satisfy the same, but in the event of a dispute as to the proper amount of said fees and disbursemer-cS, the amount claimed therefor may be paid into Court urtil the proper amount shall be certified by the Judge, and on such payment into Court the said lien shall cease and determine. Garnishee proceedings in the Division Court are not super- seded by Section 9, and the Garnishee must pay the primary creditor who obtains judgment, not the assignee, the words "** all judgments " in this section meaning all judgments against the debtor. Wood V. Joslin, 18 A.R., 59. See Clarkson V. Severs, 17, O.R., as to the meaning of '* executed by payn jnt," being executed by payment to the Sheriff. The assignee is the proper person to distribute funds realized in a Mortgage action where creditors had not proved their claims before the Master at the date of assignment. Carter V. Stone, 20 O.R., 340. No advantag^e shall be taken or gained by any cre- ditor of any mistake, defect or imperfection in any assignment under this Act for the general benefit of credi- 12 ^^ 'lymt mF i mvW£>itaBidhi tors if the same can be amended or corrected, and if there be any mistake, defect or imperfection therein, the same shall be amended by any Judge of the High Court or of the County Court aforesaid, on application of any creditor of the assignor, or of the assignee, on such notice being given to other parties concerned as the Judge shall think reasonable, and the amendments, when made, shall have relation back to the date of the assignment. That the assignment only extends to personal property is not such a mistake as can be corrected under above section. See Blain V. Peaker, 18 O.R., 109. See McLean V. Garland as to omission of creditors' names. An Assignment under this Act is not rendered voidable by reason of non-filing with Clerk of County Court See section 15, which is as follows : — ** Sec. 15. The omission to publish or register as a foresaid, or any irregularity in the publication or registra- tion, shall not invalidate the assignment." See also section 12, which takes it out of Act respecting mortgages and sales of personal property, but the filing of the assignment and publication of the notice is enforced by penalty. See Chapter as to assignee's duties. CHAPTER 2. DUTIES OF ASSIGNEE, ETC. An assignment, as we have already seen in the preceding chapter, may be made to a Sheriff of the County in which the debtor resides, or to a private individual, with the requisite consent of creditors, but S3c. 3, S.S. 6 limits the right to act as assignee as follows : — Sec. 3, S.S.6 No person other than a permanent and bona fide resident of this Province, shall have power to act as assignee under an assignment within the provi- sions of this Act, nor shall any such assignee have power to appoint a deputy, or to delegate his duties as assignee to any person who is not a permanent and bona fide resident of this Province ; and no charge shall be made or 13 ■....,^.«»«-^^^>«.».««ij« recoverable against the assignor, or his estate, for any services or other expenses ot any such assignee, deputy or delegate of any assignee, who is not a permanent and bona fide resident of this Province. (a). The property and assets of any such estate shall not be removed out of the Province without the order of the County Court Judge of the County in which the assignment is registered, and the proceeds of the sale, and all moneys received on account of any estate, shall be deposited by the assignee in one of the incorporated banks within this Province, and shall not be withdrawn or removed without the order of such County Court Judge, except in payment of dividends and other charges incidental to the winding up of the estate, and any assignee or other person acting in his stead, or on his behalf, violating the provisions of this section, shall be liable to a penalty of $500, which may be recovered summarily before a Judge of the High Court or of the County Court of the County in which the assignment is by the said Act required to be registered, and one-half of the said penalty shall go to the person suing therefor, and the other half shall belong to the estate of the assignor ; but in default of payment of the said penalty, and all costs which may be incurred in any action or proceeding for the recovery thereof, such assignee or other person may be imprisoned for any period not exceeding thirty days, and shall be disqualified from acting as assignee of any estate while such default continues." It is the duty of the assignee, having received an assign- ment, to register a copy of it, within five days, in the office of the Clerk of the County Court of the County in which the assignor resides, and also, as soon as conveniently may be, to publish at least once in the Ontario Gazette, ana in a news- paper having a general circulation in the County in which the 14 ffl)^:y^!^4 property assigned is situated a notice of such assignment not less than twice." As we have seen before, the omission to so record the assignment does not invalidate it, as in the ease of a chattel mortgage or bill of sale, but, under section 12, renders the assignee liable to a penalty. The provisions of Section 12 are as follows : — "Sec. 12. S.S.I. No assignment made for the general benefit of creditors under this Act shall be within the operation of the Act respecting mortgages and sales of personal property, but a notice of the assignment shall, as soon as conveniently may be, be published at least once in the Ontario Gazette, and in one newspaper at least having a general circulation in the County in which the property assigned is situate, not less than twlc^ S.S.2. A Counterpart or copy of every such assign- ment shall also within tive days from the execution thereof, be registered (together with an affidavit of a witness thereto of the due execution of the assignment, or of the due execution of the assignment of which the copy filed purports to be a copy) in the office of the Clerk of the County Court of the Counfy, or union of Counties, where the assignor, if a resident in Ontario, resides at the time of the execution thereof ; or, if he is not a resident, tlien in the office of the Clerk of the County Court of the County, or union of counties, where the personal property so assigned is, or v/here the principal part thereof (in case the same includes property in more Counties than one) is at the time of the execution of the assignment, and such Clerks shall file all such instruments presented to them respectively, for that purpose, and shall endorse thereon the time of receiving the same in their respective offices, and the same shall be kept there for the inspection of all persons interested therein. The said Clerks, re- spectively, shall number and enter such assignments, and 15 I r ■H ^.^■w>,fa^!^^m^flt^*i be entitled to the same fees for services, in the same manner, as if such assignments had been registered under the Act respecting Mortgages and Sales of personal property. S.S.3. In provisional judicial districts and territorial districts and in the temporary judicial district of Nipissing, the counterpart or copy of the assignment shall be filed in the same offices and within the same time, respectively, as mortgages and other instruments are directed to be filed in such districts, under the provisions of the Act respect- ing Mortgages and Sales of personal property, and the Clerk shall perform the same duties, and have the same fees as Clerks acting under the preceding sub-section." Under the above sub-section, the time in which the counter- part or copy of the assignment should be registered is extended to the time required by the Act respecting Mortgages and sales of personal property for chattel Mortgages in provisional judicial districts, that is to say, ten days ; and the places of registration are respectively as follows ; Algoma, Clerk of the District Court at Sault Ste. Marie, under R.S.O., 1887, Ca;. 125, Sec. 21 ; Haliburton, Clerk of the Division Court at Minden, under R.S.O., 1887, Cap. 6, Sec. 23; Manitoulin, Deputy Clerk of Manitoulin, Gore Bay, 54 V., c. 21 ; Muskoka, C:lerk of the Division Court at Bracebridge, R.S.O., 1887, Cap. 125, Sec, 22 ; 51 v., cap. 13, Sec. 12 ; Nipissing, Clerk of Division Court at North Bay, 51 V., Cap. 18 ; Parry Sound, Clerk of Division Court at Parry Sound, R.S.O., 1887, Cap. 125, Sec. 22; 51 v.. Cap. 13, Sec. 12; Rainy River, Clerk of Division Court at Rat Portage, R.S.O., 1887, Cap. 125, Sec. 21 ; Thunder Bay, Clerk of District Court at Port Arthur, R.S.O., 1887, Cap. 125, Sec. 21. The notice required by Section 12 to be inserted in . the Gazette and local paper is a mere notice of the fact of an assignment having been made, but it is usual for the assignee to include in such notice a notice to the creditors to file proofs of their claims with him before a certain date, and that after that date he will proceed to distribute the estate without regard to any claims of which he shall not then have had notice. A good form of such notice is as follows : 16 m ■ t.^ them of the date of the creditors' incetin;j^, as provided by the following section : ** Sec. 16. It shall be the duty of the assignee to immediately inform himself, by reference to the debtor and his records of account, of the names and residences of the debtor's creditors, and within five days from the date of assignment to convene a meeting of the creditors tor the appointment of inspectors and the giving of directions with reference to the disposal of the estate, by mailing pre-paid and registered to every creditor known to him, a circular calling a meeting of creditors, to be held an his ofhce, or other convenient place to be named in the notices, not later than twelve days after the mailing of such notice, and by advertisement in the Ontario Gazette ; and all other meetings to be held shall be called in like manner." Under Section 17 the assignee may be required to call a special meeting, as provided in sub-section one. (S.S.I). In case of a request in writing signed by a majority of the creditors having claims duly proved of $100 and upwards, computed according to the provisions of Section 19 of this Act, it shall be the duty of the assignee within two days after receiving such request, to call a meeting of the creditors at a time not later than twelve days after the assignee receives the request. In case of default the assignee shall be liable to a penalty of $25 for every day after the expiration of the time limited for the calling of the meeting until the meeting is called. (S.S.2). in case a sufficient number of creditors do not attend the meeting mentioned in section 16 of this 20 l uM Act, or fail to give directions witli reference to the dis- posal of the estate, the Judge of the County Court may give all necessary directions in that behalf." '* Sec. 21. Upon the expiration of one month from the first meeting of creditors, or as soon as may be after the expiration of such period, and afterwards from time to time at intervals of not more than three months, the assignee shall prepare and keep, constantly accessible to the creditors, accounts and statements of his doings as such assignee, and of the position of the estate ; and iie shall declare dividends of the estate whenever the amount of money in his hands will justify a division thereof, and also whenever he is required by the inspectors." As a general rule, trustees are not obli£,red to prepare copies of accounts for parties interested, but only to have their accounts ready, and to afford all facilities for their inspection ; though, where a creditor lives at a distance from where the trust affairs are being carried on, it would be the duty of the trustee to give all reasonable information by letter, and, if requested, ]but at the expense of the creditor, even to prepare and transmit accounts and statements. See Sanford V. Porter 16 A.R., on this point, and also on the creditors' right to tax the bill of costs rendered by the assignee's solicitors ; although the assignee is entitled, as appears from in re- Lamb, 17 C.P,, 173, to choose his own solicitor. " Sec. 22. So soon as a dividend sheet is prepared, notice thereof shall be given by letter posted to each creditor, enclosing an abstract of receipts and disburse- ments, shewing what interest has been received by him for moneys in his hands, together with a copy of the dividend sheet, noting thereon the claims objected to, and stating whether any reservation has or has not been made therefor ; and after the expiry of eight days from the day of mailing such notice, abstract and dividend sheet as aforesaid, dividends on all claims not objected to within that period shall be paid. 21 Sec. 2). Tlie law of set-off shall apply to all claims inaJe against the estate, and also to all actions instituted by the 'assignee for the recovery of debts due to the assignor, in the same manner and to the same extent as if the assignor were plaintiff or defendant, as the case may be, except in so far as any claim for set-off shall be affect- ed by the provisions of this or any other Act respecting frauds or fraudulent preferences." 'I'hc l:i\v of set-off would not permit a debt due by an individu;d |)artner to l)e set-off a»(ainst a claim by a ]mrtnership estate, for the debt must be ])ayable and owing to a person in the same capacity ; so a debt owing to a person as trustee C(ni!d not be set off against a debt owing by him in his private capacity. vSce Graham W Toms, 25 G.R., 184, and Moody V. Canadian liank of Commerce. The assignee, when distributing the estate, will of course do so pro rata, except as to certain claims known as privileged or preferential claims, which, apart from the priority for costs provided for by section " 9 " are chief! v as follows : (1st.) Rent. R.S.O., 1887, Cap. 148, Sec. 28, (S.S.4.) "In case of an assignment for the general benefit of ( ""ditors the ])refcrential lien of the landlord for rent is restricted to the arrears of rent due during the period of one year last ])revious to the execution of such assignment, and irom thence so long as the assignee shall retain the premises leased." Under this section the landlord has not got a preferential claim strictly so-called, as many persons suppose, but merely a lien on the goods of the insolvent debtor, it there are any, so that if the goods had been removed from the premises prior to the execution of the assignment, the landlord would stand in no better p isition than any other creditor. See Linton V. The Montreal Motel Co., K) A.R., 837 ; and in re-McCraken, 4 A.R., 18^). (2ndly.) Wages. R.S.O., 1887, Cap. 127, Sec. 1. " Whenever an assignment is made of any real or personal property for the general benefit of creditors, the assignee shall pay in ])riority to the claims of the ordinary or general creditors of the person making the same, the wages or salary of all per- sons in the employment of such person at the time of the n ^'**' Tym i l' makin<^ of such assi^iu:"'cnt, or within one inonlli before the makin.LC thereof, not cxceedini^ three month's wai^a^s or sahirv, and such persons shall be entitled to r;'.rik as ordinary or general creditors for the residue, if any, of their claims."' All wages or salary are to come under diis section, whetlicr the employment in respect of which the same shall be payal;le be by the day, by the week, by the job or piece, or olhciwisc. Section 5 makes special provision as to partnership and individual debts, as follows : " Sec. 5. If any assignor or assignors executing an assignment under this Act for the general benefit of his or their creditors, owes or owe debts, both individually and as a member of a co-partnership, or as a member of two different co-partnerships, the claims shall rank first upon the estate by which the debts they represent were con- tracted, and shall only rank upon the other after all the creditors of that other have been paid in full/' See Bank of Toronto V. Hall, 6 O.K.. ()44 ; McDonogh V. Jefiferson, 16 A.R., 107, and Kenyon V. Hamilton. But creditors of a partnership a member of whicli su!)se- quently carries on the business alone are entitled to rank ecjually with the creditorsof that member in the winding ui)of his estate. It is the duty of the assignee to contest any claim which he believes is being improperly or fraudulently preferred against the estate ot his assignor, and provision is made by sub-section 5 of section 20 for such a case. *' (S.S.5). At any time after the assignee receives from any person claiming to be entitled to rank on the estate, proof of his claim, notice of contestation of the claim may be served by the assignee upon the claimant. Within thirty days after the receipt of the notice, or such further time as a Judge of the County Court of the County in which the assignment is registered may on application allow, an action shall b^ brou;;iht by the claimant against the assignee to establish the claim, and a copy of the writ in the action served on the assignee ; and in default of such action being brought and writ 23 Sti^jiMi't^MKiiMf.' served within tlu time aforesaid, the claim to rank on the estate shall be forever barred. (a) The not'ce by the assignee shall contain the name and place of business of one of the solicitors of the Supreme Court of Judicature for Ontario, upon whom service of the writ may be made ; and service upon such solicitor shall be deemed sufficient service of the writ/' The folIo\vini( is a form of the notice of contestation required as abov j : ••In the tnattct* of an Act respecting Assignments and Preferences by Insolvent persons, being R.S.O., 1887, Cap. 124, and In the matter of the Amending, Acts, and In the matter of the estate of To You arc hereby notified, pursuant to the provisions of the above Acts, and under the authority and direction of the creditors and inspectors of this estate, that I dispute your ri^ht to rank on the estate, of the above named Insolvent for $ the amount of your claim filed with me, or for any part thereof (or for $ being a part of your claim hied with me.) And you are hereby further notified that unless within thirty days after the receipt by you of this notice, or within such further time as may be allowed on application to the proper Judge in that behalf, an action is brought against me to establish your claim, and within the same time a copy of the writ or process is served upon me, or my solicitor herem named, your claim to rank upon the estate shall be forever barred. And you are hereby farther notified, that service of any writ or proc(^ss to enforce your said claim, may be made upon my solicitor, Dated at the day of A.D., 180 ." S2ction 20 requires all claims against an estate to be veri- fied by affidavit and vouchers, and makes provision for the barring of any claims which are not proved satisfactorily within a reasonable time after notice of the assignment. *' Sec. 20. (S.S.I). Every person claiming to be entitled to rank on the estate assigned shall furnish to the 24 I, assignee particulars of his claim proved by affidavit and such vouchers as the nature of the case admits of. (S.S.2). In case a person claiming to be entitled to rank on the estate assigned does not within a reasonable time after receiving notice of the assignment and of the name and address of the assignee, furnish to the assignee satisfactory proofs of his claim as provided by this and the preceding sections of this Act, the Judge of the County Court of the County wherein the debtor at the time of making the assignment resided, or carried on business, may, upon a summary application by the assignee, or by any other person interested in the debtor's estate (of which application at least three days' notice shall be ^iven to the person alleged to have made default in proving a claim as aforesaid), order that unless the claim be proved to the satisfaction of the Judge within a time to be limited by the order, the person so making default shall no longer be deemed a creditor of the estate assign- ed, and shall be wholly barred of any right to share in the proceeds thereof ; and if the claim is not so proved within the time so limited, or within such further time as the said Judge may by subsequent order allow, the same shall be wholly barred, and the assio:nee shall be at liberty to dis- tribute the proceeds of the estate as if no such claim existed, but without prejudice to the liability of the debtor therefor. (S.S.3). The preceding sub -section is not 'intended to interfere with the protection afforded to assignees by section 36 of the Act respecting Trustees and Executors, and the Administrators of Estates/'' By section 7 it is prDvided as follows: ''Sec. 7. (S.S.I). Save as provided in the next succeeding subsection, the assignee shall have an exclusive right of suing for the rescission of agreements, deeds and 25 !i' instruments or other transactions made or entered into in fraud of creditors, or made or entered into in violation of this Act. For the cases in whicli a creditor is entitled to sue, see the chapter on the rit^^hts of creditors. An assij^nce may compromise any action which he has br(ui:^dit, or adjust any claim, in j^^ood faith, and no creditor will thereafter be j^ermittcd to assert the right which has been settled by the assi.^-ncc. The remuneration of the assignee is provided for as follows in Section 11. *' (S.S.I). The assignee shall receive such remuneration as shall be voted to him by the creditors at any meeting called for the purpose after the first dividend sheet has been prepared, or by the inspectors, in case of the creditors failing to provide therefor, subject to the review of the County Court of the County in which the assignment is regii>tered, or the Judge thereof, if complained of by the assignee or any of the creditors. (S.S.2). In case no remuneration is voted to the assi,^nee by the creditors or the inspectors, the amount shall be fixed by the said Judge.'' The assignee's fee is ^Lccne'\'illy about five per cent., that being the renumeration of ordinary trustees, and it is to be presumed that the Judge on being applied to to settle the amount of the assignee's remuneration, would be governed by that allowed an ordinary trustee. Under Section 6 an assignee may be removed and another appointed, as follows : — " Sec. 6, (S.S. 1) — A majority in number and value of the creditors who have proved claims to the amount of $100 or upwards, may at their discretion substitute for the sheritf or for an assignee under an assignment to which S.S. 2 of Sec. 3 of this Act applies, a person residing in the ^ County in which the debtor resided, or carried on business at the time of the assignment. An assignee may 2G T^f*^ also be removed, and another assignee may be substituted, or an additional assignee may be appointed by a Judge of the High Court or of the County Court where the assigment is registered. (S.S. 2) — When a new assignee is appointed the estate shall forthwith vest in him without a conveyance or transfer. The new assignee may register an affidavit of his appointment in the office in which the original assignment was filed. Such affidavit may also be registered under the Registry Act. The registration of the affidavit under the Registry Act shall have the same etfect as the registration of a conveyance." A special case of unfitness for his position would require to be made out in order to induce the Court to remove an assignee, but a majority of the creditors may, as appears from the above section, rem ive the assignee in their sole discretion withcuit any cause assigned and appoint another in his place, in whom the ])roperty will, by the mere ai)p(Mntment, vest under the above sections without any conveyance or transfer, but the assignee, in order to avoid the risk of the former assignee dealing with the {)roperty, must record the affidavit nrc vidcd for in S.S. 2, as to personalty, with the County Court Clerk, and as to realty, in the Registry Office. It should, however, be noted that although tlie creditors are unlimited as to their right to remove an assignee, yet they can only a])point in his place some person residing in the County in which the debtor resided or carried on business at the time of the assignment ; whereas, if the assignee is removed by the Court, on cause shown, tlic Court may in its discretion appoint any person in the Province as trustee of the estate. U •27 CHAPTER 3. "**«-. { RIGHTS AND POWERS OF CREDITORS. We have seen in the preceding chapter that creditors may under section 6 of this Act change the assignee if they are dis- satisfied with the person to whom the debtor has assigned his estate. If however, the creditors have confidence in the person to whom the assignment has been made, they will proceed to file their claims with him as required by the notice to creditors, and will see that they are duly verified by affidavit so as to entitle them to vote at the creditors' meeting. They may also, in case it is inconvenient to attend the meeting in person, appoint a representative by proxy, in writing, under section 18, ' which provides as follows :— '* Sec. 18. At any meeting of creditors the creditors may vote in person, or by proxy auttiorized in writing, but no creditor whose vote is disputed shall be entitled to vote until he has filed with the assignee an affidavit in proof of his claim stating the amount and nature thereof /' It will be seen from the above that a Statutory Declaration is not sufficient proof of claim, the Act requiring an Affidavit, which may be in the following form :— 28 AFFIDAVIT OF CLAIM. of the in the County of I, of [a] The above named "Claimant, or a partner in the a'^ove named (Claimant's firm or the duly authorized agent of the above named Claimant." fb] "No securi- ty w hatever for the said claim, or any part thereof, or the loll'jwing security, that is to say, xxxx which is of the value of f." In the ttiattei* oi an Act respecting Assign- ments and Preferences by Insolvent personi--, R.S.O., 1887, Cap. 124, and Amending Acts, and In the Matter of of the of in the County of Debtor, and of of Claimant, of the in the County of , make oath and say : — (a) 1. I am 2. The above named debtor is justly and truly indebted to the said claimant in the sum of S 3. The particulars of the said indebtedness are set out in the Statement hereto annexed marked "A." (b) 4 The claimant holds P Sworn before me at the of in the of this day of A.D. 189 . This Affiidavit should be sworn before a Notary Public, or Commissioner authorized to take Affidavits, or before a Justice of the Peace in Ontario. If taken before a Commissioner outside of the Province of Ontario, he must be one authorized •to take Affidavits for use in Ontario. 29 '■*^. t Tlie foll()\vin<( is a sufficient form of Proxy PROXY. Vs'c, the above named Claimants, hereby authorize and cmjxAvcr to represent us at ail meet- in.i^.s of creditors of the estate of and to vote and act for us at such meetings in respect to our claim in tlie above affidavit set out, and in all respects to represent us as if we were })resent and acting in the premises. Dated at this day of A.l). 18:) . Signed in tiic ])rcscncc cf Having duly ])roved his claim in this manner, the creditor, or lii^; representative, will be entitled to vote, as provided in the following Section, Xr. 19: — " Sec. 19. (S.S.I). Subject to the provisions of section 6, all questions dis:iissed at meetings of creditors shall be decided by the majority of votes, and for such purpose the votes of creditors shall be calculated as follows : ■ ' For every claim of or over $100, and not exceeding $ 200, 1 vote 200, " '' " 500, 2 votes 500, " •* *' 1,000, 3 votes For every additional $1,000, or fraction thereof, 1 vote. (S.S.2). No person shall be entitled to vote on a claim acquired after the assignment unless the entire claim is acquired, but this shall not apply to persons acquiring notes, bills, or other securities upon which they are liable. (S.S.3 ). In case of a tie, the assignee, or if there are two assignees, then the assignee appointed by thfe 30 itr-'»rf^-'*i'"-^' '■■■■ . ^- .j,.,^. ■-.-„-..,■--_:» ^^ 1 creditors, or by the Judge if none lias been appointed by the creditors, shall have a casting vote. (S.S.4). Every creditor in his proof of claim shall state whether he holds any security for his claim, or v.ny part thereof ; and if such security" is on the estate of the debtor, or on the estate of a third party for whom such debtor is only secondarily liable, he shall put a specified value thereon, and the assignee under the authority of ihe creditors may either consent to the right of the creditor to rank for the claim after deducting such valuation, or he may require from the creditor an assignment of the security at an advance of ten per cent upon the specified value, to be paid out of the estate as soon as the assignee has realized such security ; and in such case the difference between the value at which the security is retained and ihe amount of the gross claim of the creditor shall be the amount for which he shall rank and vote in respect of the estate/' (S.S.5). If a creditor holds a claim based upon negotiable instruments upon which the debtor is only indirectly or secondarily liable, and which is not mature or exigible, such creditor shall be considered to hold security within the meaning of this section, and shall put a value on the liability of the party primarily liable thereon as being his security for the payment thereof ; but after the maturity of such liability, and its non-payment, he shall be entitled to amend and re-value his claim. Formerly, a creditor, as long as he did not ultiniatcly obtain more than one hundred cents on the dollar of his claim, might retain his security and still rank on the estate of the debtor for the whole debt. This was considered to work unfairly to the other creditors, and, under the present section, if the creditor desires to retain his security without valuing it, he must forego his right to share in the estate. This provision is not unfair, as the creditor is entitled to place his own value 81 : i *^r on his security, and tlie assij^^nee must pay ten per cent, over that value if lie desires to acquire the security ; and it has been held that the assij^nee must act without delay if he intends to take over the securitv, as otherwise the creditor will be entitled to consider himself the absolute purchaser of it, and that his, so to speak, statutory offer to sell had been refused. See Bell V. Ross, 11 A.R., 458. The security of a third person for the debtor need not be valued, and such j^uarantor could not, and cannot now, rank on the estate as a creditor until he has actually paid the debt, so as to, in effect, substitute himseif for the original creditor, and formerly such a guarantor, not having made a payment, was not considered a creditor so as to debar him from taking a Vcdid security from an insolvent debtor, even though it were clearly apparent that he would ultimately be called ui)on for a payment under his guarantee. This anomaly has now been remedied by 55 Vic, Cap. 25. The personal guarantee of an individual member of a firm is in the same position as a stranger's, and therefore need not be valued. See re- Jones, 2 A.R., 626. It appears that if a creditor were to obtain from a debtor customers' notes, payable, say, to bearer, or otherwise, so that the debtor did not endorse them, it would be very doubtful, reading sub-sections 4 and 5 together, whether the creditor would be compelled to value them or not. Sub-section 2 of Section 7 provides, that, " If at any time a creditor desires to cause any proceeding to be taken which, in his opinion, would be for the benefit of the estate, and the trustee under the authority of the creditors or inspectors refuses or neglects to take such proceedings, after being duly required so to do, the creditor shall have the right to obtain an order of the Judge authorizing him to take the proceedings in the name of the trustee, but at his own expense and risk, upon such terms and conditions as to indemnity to the assignee, as the Judge may prescribe, and thereupon any benefit derived from the proceedings shall belong exclusively to the creditor instituting the same for his benefit, 32 ^.r ■■'•"~™" -^™'- '■ -■'■'-■--■ -^'-- -■' ^' '-■■ ii II II ■ ii I rt I' igi USdOilHaMkil but if, before such order is granted, the assignee shall signify to the Judge his readiness to institute the proceedings for the benefit of the creditors, the order shall prescribe the time within which he shall do so, and in that case the advantage derived from the proceedings, if instituted within such time, shall appertain to the estate." This is a qualification of the first sub-section of section 7 which, as we saw in the preceding chapter, provided that the assignee should have the sole and exclusive right of suing for th*^ rescission of agreements, deeds and instruments or other transactions, made or entered into in fraud of creditors or in violation of the Act. If a creditor had begun proceedings before the assignment to set aside a fraudulent transaction, they would not abate by reason of the assignment, but the assignee should be joinea as a party plaintiff, or else an order should be obtained allowing the creditor to sue for his own benefit. See Gage V. Douglas, 14 P.R., 126. It should be remembered that no person can be joined as a plaintiff in an action without his consent, and the assignee's consent in writing should therefore be obtained. Section 8 provides, that '* If the person to whom any gift conveyance, assignment, transfer, delivery or payment as in section 2 of this Act is mentioned, has been made shall have sold or disposed of the property which was the'subject of such gift, convey- ance, assignment, transfer, delivery or payment, or any part thereof, the moneys or other proceeds realized therefor, may be seized or recovered in any action under the last preceding section as fully and efifectually as the property if still remaining in the possession or control of such person could have been seized or recovered." See Harvey V* McNaughton, 10 A.R., 616, and Ross V. Dunn, 16A.R., 552. Also see Masuret V. Stewart, 22 O.R.. 290, in which money arising from a feigned sale which was fraudulent and void against creditors was at the time of the 88 i 1 cornnicnccment of the action in the hands of a nominal pur- chaser, and lie was ordered to pay it into Court for distribution ainon^^st tliose |)roperly entitled. Tiie words "fraudulent and void as af^^ainst creditors" have been extended In' 55 \'ic., Cap 20, Sec. 2, so as to include simple contract creditors suin<^ on behalf of themselves and otlier creditors, and to the assii,mee under the Statute, who can now attack securities which do not comply with the require- ments of Chapter H7 of 57 Victr)ria. Prior to this extension, such an action could only be brouj^dit Ijy an execution creditor. It has been recently held in Talhnan V. Smart, 15 O.R , p. (]<>!, that this extension would not be sufficient to entitle an assit,mee to attack a chattel mort<:^aj^a\ on the .i,^round that it had not been renewed in accordance with the requirements of the Statute, and therefore apparently only extends to enable a simple contract creditor suinj]^ as above, or an assij^nee, to attack a security which has not, in the first instance, complied with the requirements of the Act. CHAPTER 4. PREFERENCES. Advantages <^ained by one creditor over others by means of collusive f)roceedings are sous^ht to be put an end to by section 1 of the Statute under consideration. The following are the words of the section : — " "Sec. I. In case any person, being at the time in insolvent circumstances, or unable to pay his debts in full, or knowing himself to be on the eve of insolvency, voluntarily or by collusion with a creditor or creditors, gives a confession of judgment cognovit actionem or warrent of attorney to confess judgment with intent, in giving such confession, cognovit actionem or warrant of attorney to confess judgment, to defeat or delay his creditors wholly or in part, or with intent thereby to give one or more of the creditors of any such person a preference over his 34 other creditors, or over any one or more of such creditors, every such confession, cognovit actionem or warrent of attorney to confess judgment shall be deemed and taken to be null and void as against the creditors of the party giving the same, and shall be invalid and ineffectual to support any judgment or writ of execution." For an instance of such an advanta^^e, see Herman V. S^alc, 29 Grant 278. Since the Creditor's' ReHef Act came into force but little advanta^^e can be <(ained under ordinary circumstances by confessions of jud^i^ment or other collusive proccedini^s, as under. that Statute all execution creditors are to share equally. Sec. 4 of the said Act, being Cap. Go R.S.O., 1887, is as follows : — *'Sec. 4. (S.S.I). In case a sheriff levies money upon an execution against the property of a debtor, he shall forthwith enter in a book to be kept in his office, open to public inspec- tion without charge, a notice stating that such levy has been made, and the amount thereof ; and the money shall thereafter be distributed ratably, amongst all execution creditors and other creditors whose writs, or certificates given under this Act, were in the sheriff's hands at the time of the levy, or who shall deliver their writs or certificates to the said sheriff within one month from the entry of notice ; subject, however to the pro- visions hereinafter contained as to the retention of dividends in the case of contested claims, and to the payment of the costs of the creditor under whose writ the amount was made. (S.S.2). The notice shall state the day upon which it was entered, and may be in form A given in the schedule hereto. (S.S.3). Where proceedings are taken by the sheriff or other officer for relief under any provisions relating to in- terpleader, those creditors only who are parties thereto and who agree to contribute pro rata (in proportion to the amount of their executions or certificates) to the expense of contesting any adverse claim, shall be entitled to share in any benefit which may be derived from the contestation of such claim so far as may be necessary to satisfy their executions or certificates. The Court or Judge may direct that one creditor shall have the carriage of the interpleader proceedings on 35 1 ; bcli.ilf fif all creditors interested, and the costs thereof, as between solicitor and ( lient shall be a first char<^^c upon the nH)nevs or ^^oods which may be found by the proceeuingr to be n|»i»licable upon the executions or certificates. (S.S.I). In case the sheriff shall, subsequently to the entry « f the notice, but within the month, levy a further amount from the jirojicrty of a debtor, the same shall be dealt with as if such amount had been levied prior to the entry of the notice, but if after the month a further amount is levied a new notice shall be entered ; and the distribution to be made of the amount so levied and of the further amount levied within a month of the entry of the last mentioned notice shall be governed by the entry thereof in accordance with the fore<(oing provisions of this section ; and so on from time to time." It is far more likely now that creditors will endeavor to obtain a preference by the means intended to be covered by the followini,^ sections: "Sec. 2. (S-S.i). Subject to the provi.sions of the 3rd. section of this Act, every gift, conveyance, assii^nment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property real Or personal made by a per- son at a time when he is in insolvent circumstances, or is unable to pay his debts in full, or knows that he is on the eve of insolvency, with intent to defeat, hinder, delay or prejudice his creditors, or any one or more of them, shall as against the creditor or creditors injured, delayed or prejudiced be utterly void. (S.S.2). Subject also to the said provisions of the 3rd. Section of this Act, every gift, conveyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other 36 P ti u o ir h s d iBH MH property real or personal, made by a person at a time when he is in insolvent circumstances, or is unable to pay his debts in full, or knows that he is on the eve of insolvency, to or for a creditor with intent to give such creditor an unjust preference over his other creditors, or over any one or more of them, shall as against the creditor or creditors injured, delayed prejudiced or postponed be utterly void. (a) Subject to the provisions of Section 3 aforesaid, if such transaction with or for a creditor has the effect of giving that creditor a preference over the other creditors of the debtor, or over any one or more of them, it shall in or with respect to any action or proceeding which within 60 days thereafter, is brought, had or taken to impeach or set aside such transaction be presumed to have been made with the intent aforesaid, and to be an unjust preference within the meaning hereof, whether the same be made volun- tarily or under pressure. (b) Subject to the provisions of Section 3 aforesaid if such transaction with or for a creditor has the effect of giving that creditor a preference over the other creditors of the debtor, or over any one or more of them, it shall, if the debtor within 60 days after the transaction makes an assignment for the benefit of his creditors, be presumed to have been made with the intent aforesaid, and to be an unjust preference within the meaning hereof, whether the same be made voluntarily or under pressure." 87 I r T^^-mf The first Statute to be referred to in relation to fraudulent conveyances or jjreferences is, of course, 13 Eliz. (although now practically superseded by our present, so to speak, broader, and, more extensive Act). 13 E'iz. affected all property real and [)ersonal which was subject to execution, and as the con- stant tendency of the law has been to increase the classes of property so exijL^iblc, the Statute of Elizabeth has consequently cx;)anded also. Under this Statute it was held that if an adequate valuable consideration was driven it mattered nothing tliough all parties entered into the transaction for the very purpose of dcfcatinij^ the creditors of the Grantor. See Dalglcish V. .McCarthy, 19 G.R., 578. Our lci,nshitui'c, probably induced by this decision, enacted a Statute dcalinj.^ with fraudulent conveyances and preferences, which was first consolidated m C.S. U.C., Cap. 26, then in R.S.O., IS77, Cap. 18, and again, with certain amendments, in Sections 1 6V 2 of R.S.O., 1887, Cap. 124. The section in question as it appears in R.S.O., 1887, Cap. 124, is as follows : V Every gift, conveyance, assignment or transfer or delivery over or payment of goods, chattels or effects, or of bills, bonds, notes, securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property, real or i)ersonal, made by a person at a time when he is m insolvent circumstances, or is unable to pay his debts in full, or knows that he is on the eve of insolvency, with intent to defeat, dehiy or prejudice his creditors, or to give to any one or mure of them a ])reference over his other creditors, or over any oiie or more of them, or which has such effect, shall, as against them, be utterly void. " Before this section was passed in 1885 it was necessary to show, in order to have a transaction voided as a preference, not only that the debtor intended to prefer the creditor to the detriment of hi? other creditors, but also that the creditor so pieferred was, so to speak, a party to the fraud, colluding with the debtor, and any presumption of such collusion was held to be rebutted if the debtor acted in any way under what was called pressure; e.g., if he made the transfer in view jf the creditor's threat to take proceedings, or in view oi an intimation that his purchases would not otherwise be shipped, or, in fact, unless his act was absolutely voluntary, or as the phrase was, ex mero motu. As to this, see Meriden V. Lee, 2 O.K., 451 ; Davidson V. Ross, 24 G.R., ()4; Brayley V. Ellis, 9 A.R,, 5G5 ; Long V. } Handcock, 12 A.R., 137 38 ■ For a time after the passing of the Statute of 1885, which was subsequently R.S.O., 124, it was held that it was only necessary to show two things ; (1) That the debtor was in- solvent when the transaction took place ; (2) That the creditor by means of the transaction gained a preference ; and that the transaction must thereupon be avoided. But this was soon departed from, and in Johnson V. Hope, 17 A.R., 10, the Court of Appeal decided that the knowledge by the creditor at the time of the transaction of the debtor's insolvency must be proved. Then followed Gibbons V. Macdonald, 18 A.R., 159, and Molson's Bank V. Halter, 18 S.C. R., 188, reinstating the doctrine of pressure, and Chief Justice Armour in Davies V. Gillard, 21 O.K., 431, and 19 A.R., 432, said, these cases seem in their logical result to have effect- ually repealed R.S.O., 1887, Cap. 124, Sec. 2, except as to cases which have never yet arisen, and he there declined to set aside a mortgage on the sole ground, that it was given under pressure, although all parties knew that the mortgagor was msolvent and that the necessary effect of the mortgage would be to prejudice and delay the creditors of the mortgagor, and to give the mortgagee a preference over the other creditors. Immediately after the case last referred to, 5^4 Vic, Cap. 20 was passed, amending Cap. 124. Sections 1 & 2 are given above as amended by this Act. An interesting article on the probable effect of this amendment will be found in 11 C.I.T, at page 61. It seems that, apart from S.S. (a) and (b) a^-iecting transactions within the 60 days limit, there are only two changes requiring notice. (1) The word " preference " is qualified by the word "unjust," which instead of strengthening the clause would appear almost to weaken it. (2) The section is made to extend not only to transfers to a creditor, but to transfers made for a creditor, meaning, probably, at the instance of a creditor with the intent to give him a preference, and being directed against such cases as Gibbons V. Wilson, 17 A.R.I., where a debtor, at the instance of his creditor, mortgaged his stock to a third person, the money being paid to the creditor. It is now, there- fore, more than doubtful, in case of such a mortgage or sale, even though the mortgage money, or purchase money, were handed to the debtor, and then by him to the creditor, whether the transaction could be supported as a mere payment of money if the two payments are in fact one transaction, the creditor in 89 i ^- any degree keeping -thfe debtor under his contrx)! atlke^time. The effect of sections (a) and ■(b) is probably only to shifit tkec onns of proof as to the validity of the transaction in questioa i onto the person seeking to support it ; the presumption which^i these sections give rise to being rebuttable, or, at any rate^:, being rebuttable in all cases except those sought to be suppprt-.- ed on the ground of the doctnne of pressure solely. See Lawson V. McGoech. 20 A.JI., .464. And it was held in thev: above case, that a mortgage given within sixty days, and > having the effect of preferrng the creditor, was not open t^s, alters, mutilates or " falsifies any of his oooks, papers, writings or securities, or "makes, or is privy to the making of, any false or fraudulent •• entry in any book of account or other document." It will be seen that both these sections extend to third persons who are parties to fraudulent transactions either by receiving the property or by conniving at or making false entries in the books, etc. Section 368 is a re-enactment of the former Statute, and the decision in Reg. V. Henry, 21 O.R. 113, that a creditor whose debt is not due might take advantage of the former Statute, would apply to the present one. It is to be noticed that section 369 increases the punishment for the offences therein referred to to ten years ; a very considerable increase, the former punishment having been only six months. CHAPTER 5. RECOVERY OF DEBTS. In Ontario all proceedings for the recovery of debts can with great facility be conducted in Toronto. In all cases in the High Court and County Court, actions can b3 commenced and carried on there, and execution can thereupon issue to any Sheriff ih the Province. There are three courts having juris- diction in such cases, the High Court, the County Court and the Division Court. The jurisdiction of the Division Court is limited to cases where the debt is not over $100, except where it is ascertained by the signature of the defendant, as in the case of an accepted draft or a promissory note, in which case the jurisdiction would be increased to $200 ; the jurisdiction of the County Court is similarly limited to $200 and $400 ; and actions for larger demands must be brought in the High Court. It will be found much more satisfactory to take proceedings in the High Court where that can be done, as in that case the plaintiff is enabled to recover from his debtor the amount of his solicitor's charges as well as the mere disbursements. In the Division Court the jurisdiction is to some extent limited to 42 < M the residence of 'the defendent, but if the claim be over 8100 and payable by, the contract of the parties at a particular place action may be brought in the court holden for the Division in which the place of payment is situated, and the defendant can- not then have it removed to his place of residence or to any other Court without giving notice of his intention to object to the jurisdiction, and shewing a bona fide defence to the action, within eight days. It should be noted that in case an assignee disputes a creditor's claim to be entitled to recover on an estate, the action for a declaration of the right to rank must be brought in the High Court, as it is an action for equitable relief. See Whidden V. Jackson, 18 A. R., 439. In very few cases where the claim is a mere money demand is it found necessary to go down to trial, provided the writ of summons issued be properly endorsed, as the practice gives great facility for obtaming speedy judgment in case of dispute on serving notice of a motion for that purpose and proving the claim by affidavits ; and in case the deiendant files an affidavit contradicting that of the plaintiff, the motion may be enlarged for the purpose of cross-examining him upon his affidavit, and the plamtiff may then s^bsequehtly move for judgment upon the admissions obtained on such cross-examination. When judgment is pbtai'fted,- it may be enforced by issuing execution against the goods and lands of the judgment debtor, and, if thought advisable,, the creditor may examine the judg- ment debtor upon oath as to the means which he had at the time of contracting the debt, as to his subsequent disposition of them, and as to what means he now has to enable him to pay the same. Since the recent Statute relating to executions, by which it is provided that they shall remain in force for three years without the expense of renewing them, it is often satis- factory, in view of the small expense of obtaining judgment, to take judgment for the purpose of issuing the execution, and keep it in the Sheriff's hands, so that in case it is at any sub- sequent time discovered that the defendant is possessed of property which might not have been known to the judgment creaitor at the time he obtained his judgment, it may be seized without delay. It often happens that within a few years after a judgment has been obtained the judgment debtor will be found to have gone into business, thinking that his creditors have abandoned all intention of proceeding further against him, and the creditor who then has an execution can make his debt. 48 In case the creditor's claim amounts to 8100 or more, and . the debtor can be shewn to be abot^ to leave the province with intent to defraud his creditors,- he. .may be-arrestedasw4m absconding debtor. I