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IT"^ If Entered according to Act of the Parlisment of Canada, iu the year one thousand eight hundred and ninety-six, by The Carswell Co. (Ltd.), in the Oflace of the Minister of Agriculture, % . ■ |i TORONTO PRINTED BY THE CARSTVELL CO. LTD. 22, 30 Adelaide St. East. T"^ .1*^' , '^.^ # if. SECOND EDITION. PREFATORY NOTE. fTlHE favour with which the first edition of -^ this little book has been received encour- ages me to hope that the present edition, in which the amendments made in the recent session have been added, and some further cases noted, will be of use. The publishers have made some changes in the typographical work which will, it is expected, make it more easy to find any particular section to which it is desired to refer. R. S. CASSELS. Toronto, 15th May, 1896. TS^ t 5- tv.7 :#4%- 7 •5, .' '• i % r •.•■I i4 TABLE OF CASES. A. PAGE Abraham v. Abraham 56 Adams v. Watson Manufacturing Co 43 Alsager v. Spalding 121 Alston V. Trollope 112 Anderson v. Glass 30 Andrews v. Bank of Toronto 123 Andrews v. Maulson DO Archer v. Severn Gl Argles V. McMath 93 Armstrong v. Hemstreet 28 Ashley v. Brown 10, 15, 98 Assignments and Preferences Act, In re 1 Atkinson v. Donby 121 Attorney -General of Ontario v. Attorney-General for the Do minion of Canada 1 B. Bailey v. Bank of Hamilton 3 Baker, Re 42 SI Baker v. Atkinson 95^ 96 Ball V. Tennant 30, 3G, 37, 50 Banks v. Robinson 16 &' vi TAl'LE OF CASES. PAGE lianner, Ex parto ^^^ Barrlwell v. Lydall ^^ Barrett, Re ^^ Barrow v. Isaacs & Son ^3 Beaty, Re 82 J3eaty v. Samuel ^1 Beemer v. Oliver 18, 27, 311 Bfll V. Ross 82 Bennett, Ex parte 123 Blain v. Peaker 31, 58 Blake v. Gale 102 Boddam, Ex parte 90 Bond, Re 28 Boustead v. Shaw 12 Bowerman v. Phillips 4, 111 Boyd V. Glass 29 Bracken, In re, Doughty v. Townson 101 Brail, In re 17 Brayley v. Ellis i), 12 Breithaupt v. Marr 4 Briggs V. Sowry 94 British Canadian Loan and Investment Co. v. Britnell 40 British North America, Bank of, v. Mallory 102 Britten v, Hughes 124 Broadbent v. Thornton 90 Brocklehurst v. Lawe 95 x5rown v. Grove 47 Buchanan v. Smith 47, 124 Buckley v. Taylor 95 Budgett V. Budgett 112 Building and Loan Association v. Palmer 20 Butcher v. Stead 30 Butterfield v. Wells 109 ; iSMio»v.. , ! .J I «^ TABLE OF CASES. Vll -■'.'■"ft". f:; ;-.-i h c. PAGE Cameron, Re, Mason v. Cameron 101 Cameron v. Cusack 15 Cameron v. Eager 40 Cameron v, Perrin 17, 30 Cameron v. Stevenson 37 Campbell v. Hally 4G, 48 Campbell v. Patterson 30 Canadian Bank of Commerce v. Wall 40 Canning, Re 45 Carey v. Barrett 123, 124 Carling Brewing and Maltiner Co. •/. Black 08 Carr v. Corfield 15 Carter v. Stone 57 Central Bank, In re, Lye's Claim 114 Chamberlen v. Clark 102 Chatfey, In re 42, 81 Clarke v. Ritchey 123 Clarkson v. Attorney-General of Canada 89 Clarkson v. Dupre 49 Clarkson v. Ellis 12, 13 Clarkson v. McMaster 12, 15, 17, 49, 50 Clarkson v. Ontario Bank 1, 18 Clarkson v. Roth well 28 Clarkson v. Severs 56 Clarkson v. Sterling 12, 13, 18 Coats V. Kelly 18 Cole V. Porteous 11, 12 Commercial Bank of Australia v. Official Assignee of Wilson . . 82 Connolly v. Coon 91 Cooling V. Noyes 124 Cooper V. Dixon 30 CoursoUes v. Fookes 17 Court V. Holland 30, 113 • • t via TABLE OF CASES. PAr.F Coyne v. Lee 10 Cross, In re 122 Culliane v. Htuart 80 I). Darvill v. Terry 30 Dauglish v. Tennent 120 Davidson v. Fraser 28 Davidson v. Ross 11 Davies v. (xillard 10 Davis V. Wiokson 53 Deacon v, Driffil 82 Dickinson, Re 44 Dobson V. Sootheran 93 Dominion Bank v. Cowan 13 Doner v. Ross 102 Doull V. Kopman 48 Dressier, Ex parte 97 Dumbrill, Re 98 E. Eacrett v. K^nt 94, 96 Eastabrook v. Scott 124 Eastman v. Bank of Montreal 81 Embury r. West 12 F. Farnham, In re . 17 Ferguson v. Kenny 47 Field V. Hart 39 Finch v. Gilray 17 Fisher, Ex parte 12, 29 Fleming, Re 61 Fleming v. Ryan 66 1 i TABLE OF CASES. IX i I'ACK Fowler v. IVrrin 124 Furnivall v. Hudfioii 40 O. Gage V. Douglas 4P, Gallard, In ro 03 Gardner, Ex parte 91 Gardner v. Brown 40 Gardner v. Kloepfer 27 Geere v. Mare 122 Gibbons v. Darvill 4j Gibbons v. McDonald 10 Gibbons v. Wilson 30 Gilbey, Ex parte I04 Gillard v. Bollert 49 Gillespie v. Alexander 90 Goulding v. Deeming , 22 2;) Graham v. Lang 90 9^ Graham v. Toms 113 Grant v. West 91 q,^ Greig v. Somerville 90 Griffith V. Brown 94 95 Gurofski v. Harris 15 H. Hagar, In re 4I Hague, In re, Traders Bank v. Murray m Hale, Ex parte 94 Hall V. Fortye 30 Hallett & Co. , In re g2 Hamilton, Bank of, v. Tamblyn 10 Harrhy v. Wall I04 Harte and Ontario Express Co., In ro 90 Harvey v. McNaughton 29, 53 Hatton, In re i .70 Hawkins, In re H^ Head, In re j<> X TABLE OF CASES. 'JP PAGE Heamau v. Seale 3 Henderson v. Macdonald 123 Hernaman, Ex parte 124 IIickonsf)n v. Parrington 1^ Hobbs V. Ontario Loan and Debenture Co 97 Hobbs Plardvvare Co. v. Kitchen 17 Holnier v. Viner 124 Hope V. Grant 14 Hopkinson v. Lovering 97 Horsfall v. Boisseau 16 Horton v. Riley 121 Hoskins, In re 94, 95 How V. Kennett 97 Howden v. Haigh 122 Howell, In re 98 Hurst, In re ... , 9 Hynian v. Cuthbertson 29 I. Ivey V. Knox 9, 11, 16 J. Jack V. Groig 15 Jardine v . Wood 112 Jenks V. Doran 50 Jennings v. Hyman 26 Jennings v. Moss 27 Jobson V. Palmer 01 Johnson v. Hope 10 Johnston v. Burns 91 Jones, Re 81 K. Kennedy, In re. Mason v. Hig^ins 94 Kerr v. Hastings 93, 97 Ker.y v. James 12, 14, 15, 50 ff TABLE OF CASES. XI PACxE Keyes v. Kirkpatrick 48 Kibble, Ex parte Ill King- V. Duncan 4 Kitching v. Jlicks 10, 17, 50 Kloepfer v. Gardner t?7 Knight V. Hunt 121 L. Labatt v. Bixel 3, IG, 54 Lamb, In re 1 00 Lane, In re 1 «> Lawson v. McGeoch 11, 12 Leicester v. Rose 121, 1 23 Lennox, Ex parte Ill Lenzberg's Policy, In re 121 Lewis V. Brown 28 Linton v. Imperial Hotel Co 94, 05, {)(> London, Bank of, v. Wallace 47 London and Westminster Loan and Discount Co. v. London and North-Western R. W. Co 95 Long V. Carter 51, 90 Long V. Hancock 9 Lovell V. Beauchamp 37 Lumsden v. Scott 50 Mc. McAllister v. Forsyth XC> McCraken, In re 91 95 McDona.f^h v. Jephson, Re 40 McDonald v. Boice m McDougall, In re 90 McEdwards v. McLean 94 McHenry, In re 123 Mclntyre v. Faubert 45 McKewan v. Sander in 121 McLean v. Garland 27 Xll TABLE OF CASES. PAGE McRae, In re 123 McRoberts v. Steinoff 12 M. Macdonald v. Balfour . . 42, 47 Macdonald v. Crombie 4 Macdonald v. Georgian Bay Lumber Co 36 Macdonald v. McCall 50 Mackenzie v. Blackburn 110 Mackintosh v. Pogose 30 MacTavi.sh v. Rogers 48, 49 Madell v. Thomas 29 Mader v. McKinnon 17 Magee v. Rankin 93, 97 Magill V. Young 97 Major V. Mackenzie 47 Martin v. Evans 42 Martin v. McAlpine 3, 54 Martin v. McMulIen 81, 99 Mason v . Hamilton 94 Mason v. Macdonald 113 Masuret v. Stewart 54 Meharg v. Lumbers 1 2, 17, 54 Merchants' Bank v. Clarke 15 Merchants" Express Co. v. Morton 54 Meriden Britannia Co. v. Braden 17, 30, 49 Meriden Silver Co. v. Lee 3, 9 IVIerritt v. Toronto 41 Metcalfe, In re. Hicks v. May 90 Midgley v. Midgley 112 Miller, Re .' 91 Miller v. Hamlin Ill Milne v. Moore 89 Milner, Ex parte 121 Mimico Sewer Pipe and Brick Manufacturing Co., In re, Pear- son's Case 63 Miixton, Kx V'arte 121 •• 1 TABLE OF CASES. XIU I.- •■ ■#■■ '. Mitchell V. McCauley ^^^J^ Molsons Bank v. Cooper 'r.\' ^"J Molson.s Bank v. Halter .,.'..."..'." i{ [q , « Moody V. Canadian Bank of Commerce. ' 'no Moorehouse v. Bostwick zf Morris v. Morris f Morrison v. Watts ...".".''.'.".'.".'. 62 71 ' 79 i n Morton v. Nihan bi, ,], 72, HI Munro v. Commercial Building and Investment" Society * .' ' ' ' .' ." H Napier, Ex parte National Bank of Australasia v. Morris f? Nelles V. Maltby -^^ Nolan V. Donnelly ^^ Norman v. Thompson [[[ ^^ o. O'Brien v. Clarkson Oliver, Ex parte ^^ Oliver v, McLaughlin ^^^ Ontario Bank v. Chaplin ^^ Ontario Bank v. Lament oV /^ Ontario Forge and Bolt Co., Inre ... ....'.'.[[ II Ormsby v. Jarvis ^^ Osier v. Muter ^^ 39 P. Pacquette, Re Palmer v. Andrews ^^ Parker, In re, Morgan v. Hill " " qI Parker v. Howe Pendlebury v. Walker. .........!.....,. ^^^ Phillips, Ex parte ^^^ Powell V. Calder '.".'.' ^^^ Prittie Trusts, Re. . . . ^' ^^ 61 XIV TABLE OF CASES. ■a R. PAGE Ilae V. Macdonald 13 Ilailton V . Wood 95 Randall v. Dopp 15 Regina v. Henry 19 Rfcgina v. Rawson 41 Rogina v. Wason 32 Ringer v. Cann 97 Roach V , McLachlan 4 Robertson v. Holland 53 Robins v . Clark 12, 15 Robinson v. Cook 11, 50, 89 Rogers and Farewell, In re 114 Ross Re 112 Ross V. Dunn 53 Rownson, In re, Field v. White . . 112 Russell, Re 122 Rutter V. Everett 50 Ryan v. Clarkson 56 S. Samuel v , Fairgrieve 125 Sandford v. Porter 109 8anguinetti v. Stuckey's Banking Company 17 Segsworth v , Anderson 62 Selig V. Lion 48 Sheen, Ex parte 29 Simmons, In re 43 Slater v. Badenach 27 Slater v. Oliver 9 Smith V. Antipitzky C6 Smith V . Beal 47 Smith V. Cuff 121 Smith V . Fair 12 Smith V . Gronow 94 Smith V. Lawrence 16 Smith V. Williamson 47 TABLE OF CASES. XV <-*■ M j<, ^\ .Kt-' '' * PAGE Spencer v. Slater 2(> Stephens v. Boisseau 28 114 Stephens v. McArthur 9 jq Stewart v. Gage qq ^^^^2 Strachan v. Ruttan gg Street, Re g9 Stuart V . Thomson ^2 13 Stuart V. Tremain r^.^ Stubbins, Ex parte oq Suter V. Merchants' Bank jg Swansea Bank v. Thomas q^ T. Tailby v. Official Receiver ^a Tallman v. Smart 40 Temperance Insurance Co. V. Coombe 39 Tennant v. Gallow ^, Tennant v. Macewan on Thibaudeau v. Garland -1 -i o Thibaudeau v. Paul Vn f-r. Thirkell, Re, Perrin v. Wood . . . .....' ig Thompson, In re F-p Thompson v. Clarkson q2 Thompson v. Hudson ^24 Thornton v. McKewan qq Tillie V. Springer 81 90 Todd V. Studholme ' ^^lo Toronto, Bank of, v. Hall .0 Totten V. Bowen q Tuck V. Fyson f,* Turner v. Lucas \ 4 U. Union Bank v. Neville ^ Unitt and Prott, Re .....! 27 36 37 XVI TABLE OB^ CASES. PAGE V. Vansittart, In re 17 Vars V. Gould 47 Vt;re, Ex parte 123 Vine V. Mitchell 125 W. Wakefield Rattan Co. v. Hamilton Whip Co 36 Warnock v. Kloepfer 13, 16 Watson, In re 29 Watson V . Mason 1 24 Weese v. Banfield 122, 124 Welch V. Ellis 32 Wellbanks v. Heney 16 Wenham, In re, Hunt v. Wenham 112 Whidden v. lackson 99 White V. Hunt 97 Whiting V . Hovey 36 Whitman v. Union Bank of Halifax 26 Whitney v. Toby Wigram v . Buckley 50 Wilson V . Wallani 97 Winslow, In re, Frere v. Winslow 102 Wood V . Barker 122 Wood V. Joselin 56 Wood V . Reesor 18 Wright V. Hollingshead 39 Wyld V. Clarkson 81 Y. Yale V. Tollerton 47 Young, Re 61 Young V. Smith 95 Young V. Spiers 81 ■^im.- ? ONTARIO ASSIGNMENTS ACT .«# An Act respecting Assignments and Pre- ferences by Insolvent Persons, K. S. 0. (1887) Chapter 124. Under the British Korth America Act the Domiuion Parliament has exclusive jurisdic- tion in respect of the regulation of trade and commerce and in respect of bankruptcy and insolvency: B. N. A. Act, s. 91, clauses 2 and 21; while etich Provincial Legislature has ex- clusive jurisdiction in respect of property and civil rights in the Province: s. 92, clause 13. Soon after the Assignments Act came into force, its validity was much shaken bv the decision in Clarkson v. Ontario Bank, 15 A. R. 166, and after some years of doubt it was decided in Union Bank v. Neville, 21 O. R. 152, and In re Assignments and Preferences Act, 20 A. R. 489, that it was invalid. But these de- cisions have been overruled by the judgment of the Judicial Committee in Attorney-Gen- eral of Ontario v. Attorney-General for the C.O.I.— 2 2 SECTION h Dominion of Canada, [1894] A. C. 189, and the question has been set at rest. So long, there- fore, as there is no Dominion Insolvency Act in force, the present Act governs. TTEE MAJESTY, by and with the -^^ advice and consent of the Legisla- tive Assembly of the Province of Ontario, enacts as follows : 1. In case any person, being at the time in insolvent circumstances, or unable to pay his debts in full, or knowing him- self to be on the eve of insolvency, volun- tarily or by collusion with a creditor or creditors, gives a confession of judgment, cognovit actionem or warrant 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 wiiii intent thereby to give one or more of the creditors of any such person a preference over his other creditors, or over any one or more of such creditors, every such confession, cognovit actionem 1 ? i mi „ SECTION 1. 3 or warrant of attorney to confess judg- ment, 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 ot execution. E. S. 0. (1877) c. 118, s. 1. The use of the disjunctive is important. IMessiire is siiflScient to prevent the transac- tion from being looked upon as a voluntary one, but even with the most direct pressure the transaction, if collusive, ciumot be upheld : Martin v. McAlpine, 8 A. R. 675 ; Meriden Silver Co. v. Lee, 2 O. R. 451 ; and see the notes to the next section. This section has been strictly construed, and it is only when the transaction in ques- tion can be properly described as the giving of a confession of judgment, cognovit ac- tionem, or v/arrant of attorney to confess judg- ment, that it can be impeached, although its effect may be the same. Putting in a defence to one action and allowing a favoured credi- tor to obtain judgment by default is not con- duct that comes within the section: Heaman V. Scale, 29 Gr. 278; Labatt v. Bixel, 28 Gr. 59B; nor is withdrawing a defence under sec- tion 113 of the Division Courts Act, R. S. O. (1887) c. 51: Bailey v. Bank of Hamilton, 21 "5 i i- SF'XTIOX 1. A. K. 15(); uor is appearing aiid consenting to an order striidng out a defence: Turner V. Lucas, 1 O. K. G28; nor is waiving the right to credit and allowing judgment to be entered by default before the period of credit expires: King V. Dunean, 2J) (ir. li:>; Macdonald v. Orombie, 2 (). li. 24:i; 10 A. K. 92; 11 S. C. K. 107; LJowerniaii v. IMiillips, 15 A. K. G70. By the Creditors' Relief Act, R. S. O. (1887) c. 65, priority by execution is to a great ex- tent prevented, and a preference cannot now be easily obtained by means of an execution. In view, however, of the construction placed \)\)on the Creditors' Relief Act in Roach v. McLachlan, 19 A. R. 49G, and Breithaupt v. Marr, 20 A. R. G89, a debtor who refuses to make an assignment for the benefit of his creditors, and thus renders it impossible to bring into play the provisions of s. 9 of the Assignments and Preferences Act, may still very much prejudice the position of those creditors who are not entitled to share. It is desirable that the Creditors' Relief Act be amended so as to allow creditors whose debts are not due to share in the moneys made by the sheriff, and also to prevent subsequent execution creditors from being prejudiced by any transfer by the debtor. The princijde of the Creditors' Relief Act is thus set forth in s. 4 thereof : " In case a sheriff levies money upon an execution against the property of a debtor, he shall forthwith ,. 4 SECTION 1. 5 enter in a book to be kept in his office, open to public inspection without charge, a notice stating that such levy has been made, and llie 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 sheritl's hands at the time of the levy, or who shall deliver their w^rits or certi- ficates to the snid sheriff within one month from the entry of notice.'' The certificates referred to are certificates of indebtedness in the nature of judgments, and a summary mode of procedure for ob- taining them is provided by tlu^ Act. I?rovi- sion is also made for the distribution of divi- dend sheets and the contestation of claims, arid the payment of costs and dividends, so that under the Act there is practicallv an ad- ministration by the sherifp in favour of a limited class. 2. (1) Subject to the provisions of the third section of this Act, every gift, con- veyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securi- ties, or of shares, dividends, premiums, or bonus in any bank, company or corpora- tion, or of any other property, real or 6 SECTION 2. i personal, made by a person at a time when he is in insolvent circumstances, or is un- able 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. (2) Subject also to the said provisions of the third section of this Act every gift, conveyance, assignment or transfer, deli- very over or payment of goods, chattels or effects, or of bills, bonds, notes, or securities, or of shares, dividends, pre- miums, or bonus in any bank, company or corporation, or of any other property, real or personal, made by a person at a time V hen 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 givfe such creditor an unjust preference over his other creditors or over any one or more SECTION 2. 7 of them, shall, as agamst 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 credi- tors of the debtor or over any one or more of them, it shall in and with respect to any action or proceeding which, within sixty days thereafter, is brought, had or taken to impeach or set aside such trans- action, 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 credi- tors of the debtor or over any one or more of them, it shall, if the debtor within 8 SECTION 2. sixty days after the transaction makes an assignment for tiie 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 vohnitarily or under pressure. This composite section was in the session of 1891, by 54 Y. c. 20, substituted for section 2 of R. S. O. (1887) c. 124. That section was as follows: ^' Every gift, convej'ance, assignment or transfer, 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 personal, made by a person at a time when he is in in- solvent circumstances, or is unable to pay his debts in full, or knows that he is on the eve of insolvency, with intent to defeat, delay, or prejudice his creditors, or to give to any one or more of them a preference over his other creditors, or over any one, or more of them, or which has such effect, shall, as against them, be utterly void.'^ Before the year 1885, vhen this section was passed, it was necessary, in order to have a transaction set aside as a preference, to SECTION 2. 9 show not only an intent by the debtor to give a preference but also a concurrence in that in- tent on the part of the creditor, and, by what was known as the doctrine of pressure, if it were show^n that the debtor was not acting purely voluntarily but under some influence or threat, exercised or made in good faith by the creditor, or under fear of penal consequences, any presumption of such intent was rebutted. The result was that only the plainest cases of fraudulent preference could be successfully attacked, for almost any request or demand by the creditor was sufficient to prevent the transaction from being regarded as a purely voluntarv one: r»ravlev v. Ellis, 1 O. R. 119; 9 A. R. 565; Totteii v. Bowon, S A. R. 602 ; Tn re Hurst, 6 l\ R. 829; Whitney v. Toby, 6 O. R. 51; Hlater v. Oliver, 7 O. R. 15S; Meri- den Silver Co. v. Lee, 2 O. R. 451; Powell v. Calder, 8 O. R. 505; Ivey v. Knox, 8 O. R. 635; Long V. Hancock, 12 A. R. 187; 12 S. C. R. 532 ; and see Stephens v. Mc Arthur, 19 S., 0. R. 446; Molsons Bank v. Halter, 18 S. C. R. 88. And it was also settled that the bona fide belief of the debtor that by giving security and get- ting an extension he would pull through nega- tived anv inference of intent: Long v. Han- cook, 12 B. C. R. 532. After some difference of opinion it was for a time settled that under the amendment of the year 1885 it was only necessary, in order to have a transaction set aside, to show that it was entered into while the debtor was 10 SECTION 2. 2^ in insolvent circumstances, and that by means of it the creditor obtained a preference. In Johnson v. Hope, 17 A. R. 10, and Ashley v. Brown, 17 A. R. 500; the Court of Appeal held, however, that knowledge by the creditor, at the time of entering into the transaction, of the insolvent condition of the debtor must also be proved, and that dealings in good faith with an embarrassed debtor were not within the mischief of the Act. This weakening of the construction of the section was shortly afterwards carried still further by the Su- preme Court of Canada, who held that the Ontario Act (and the Manitoba Act of similar import) applied onh^ to voluntary preferences, {Hid that pressure was still effectual to rebut any presumption of fraudulent intent: Mol- sons Bank v. Halter, 18 S. C. R. 88; Gibbons V. McDonald, 20 S. C. R. o87; even if there was actual knowledge of the insolvent condi- tion of the debtor: Stephens v. McArthur, 19 S. C. R. 446; Hickerson v. Parrington, 18 A. R. 635; Davies v. Gillard, 21 O. R. 431; 19 A. R. 432; so that the law was practically brought back to what it was before the year 1885. The construction of the present more com- plicated section has not yet been satisfac- torily settled, but it is doubtful if it effects any marked change in the law. It certainly leaves transactions entered into before the sixty days' limit as little open to attack as under the former section, and as far as clause 2 is concerned the use of the adjective " nn- SECTION 2. 11 jijst," may perhaps make an attack even lesi^ likely to succeed than before; though it has been said that there is no practical difference between the expressions " unjust preference " and " preference " : Ivey v. Knox, 8 O. R. 635 ; Robinson v. Cook, 6 O. R. 590; and see David- son V. Ross, 24 Gr. 22. In this clause also tn/n suctions entered into " for a creditor " are included, but, except in this respect, the clause carries the rights of creditors no further. In Cole V. Porteous, 19 A. R. Ill, Osier, J.A., in a Division Court appeal, held that a preferential security given by an insolvent debtor to his creditor could not be supported if attacked within sixty days. In Lawson v. McGeoch, 20 A. R. 464, however, the other Judges of the Court of Appeal took a different view: Hagarty, C.J.O., and Burton, J.A., held that the presumption of intent spoken of was a rebuttable presumption, and that the secured creditor's good faith and want of knowledge of the insolvent condition of the debtor were sufficient to rebut the presumption. Mac- lennan, J.A., held that the presumption could not be rebutted by showing pressure. The result of this decision seems to be that in cases within the clauses a limited shifting of the onus of proof has been effected. But it is at least doubtful if even this is not going too far. The clauses say that under the circum- stances stated the transaction shall be pre- sumed to have been made with intent. But 12 SECTION 2. before the clauses were passed, to render a security impeachable, concurrence in the in- tent had to be shown, and nothing is said as to a presumption of concurrence. See, how- ever, Meharg v. Lumbers, 23 A. R. 51, and Clarkson v. Ellis, Divisional Court, 15th May, 1896. An interpleader issue is a " proceeding '* v/ithin sub-section (a): Cole v. Porteous, 19 A. 11. 111. If a definite, clearly proved agreement to give security is entered into before the sixty days, the transaction is taken out of the clauses in question: Lawson v. McGeoch, 20 A. R. 464 ; Embury v. West, 15 A. R. 357 ; Clarkson v. Sterling, 15 A. R. 234; Goulding V. Deeming, 15 O. R. 201 ; McRoberts v. Stein- off, 11 O. R. 369; Smith v. Fair, 11 A. R. 755; Kerrv v. James, 21 A. R. 338 ; Braylev v. Ellis, 1 O. R. 119; Robins v. Clark, 45 U. C. R. 362; Stuart V. Thomson, 23 O. R. 503; Boustead v. Rhaw, 27 Gr. 280. This dangerous doctrine of relation back needs to be kept within strict limits. A mere general promise will not be enough, nor can the advantage be gained if taking security is d(^11berately postponed in order to avoid pos- sible injury to the debtor's credit: Ex parte Fisher, *L. R. 7 Ch. 636; or if registration is postponed for that purpose: Clarkson v. Mc- Master, 25 S. C. R. 96. In Morris v. Morris, [1895] A. C. 625, however, non-registration of a chattel mortgage because of the money tft "• SECTION 2. 13 J lender's dislike to appear publicly in that capacity was held not to be a badge of fraud. Now that taking possession under an un- registered chattel mortgage is of no avail there is little danger of non-registration of such an instrument, and by 59 V. c. 34, an attempt has been made to do away with agree- ments for bills of sale and chattel mortgages. An assignee for the benefit of creditors is not in terms entitled to take advantage of the Act, but, assuming that as representative of the creditors he can do so, its scope is limited, and antecedent agreements for secur- itv by anv other mode than a bill of sale or chattel mortgage may still be set up as a de- fence. See Clarkson v. Ellis, Divisional Court, 15th May, 1896. '' Insolvent circumstances," and " unable to pay his debts in full," are co extensive ex- pressions, and what has to be shown is not a state of insolvency in the strict legal or com- mercial av^ceptation of the term, but the debtor's inability to pay his way and meet the demands of his creditors, and his want of means to pay them in full out of his assets realized upon a sale for cash or its equivalent: Warnock v. Kloepfer, 15 A. R. 324; 18 S. C. R. 701; Clarkson v. Sterling, 15 A. R. 2G4; Dominion Bank v. Cowan, 14 O. R. 465; Rae V. Macdonald, 13 O. R. 352. See, however, Stuart V. Thomson, 23 O. R. 503, at p. 512. Knowledge of the insolvent condition may be implied if knowledge is shown of circum- 14 SECTION % y% stances fiom which ordinary men of business would conclude that the debtor was unable to meet his liabilities: National Bank of Austral- asia V. Morris, [1892] A. C. 287. In Hope V. Grant, 20 O. R. G23, it was held that the accommodation indorser of a note not due was not a creditor of the maker, and that security given to him could not be attacked. It was thereupon enacted by 55 V. c. 25, that " whei'e the word ' creditor ' occurs in the ninth line of subsection 2 of section 2, of the Act rispecting Assignments and Preferences by Insolvent Persons, as the said Act is amended by the Act passed in the 54th year of Her Majesty's reign chaptered 20, and in the second and third lines of clause (a) of said sub- section and in the second and third lines of clause (b) of said subsection, the same shall be deemed to include any surety and the in- dorser of any promissory note or bill of ex- change, who would upon payment by him of the debt, promissory note or bill of exchange, in respect of which such suretyship was entered into or such indorsement given be- come a creditor of the person giving the preference within the meaning of said subsec- tion 2.'' But a person who takes or agrees to receive security contemporaneously with giving his indorsement is not within the sec- tion : Kerry v. James, 21 A. R. 338. The right of attack is limited to creditors, or to an assignee for the benefit of creditors, SECTION 2. 15 and the Act is thus narrower than the statute of Elizabeth : Oliver v. McLaughlin, 24 O. R. 41. A man who has a pending claim for dam- ages for tort cannot attack a transaction en- tered into before his claim is ascertained by judgment: Ashley v. Brown, 17 A. R. 500 ; Cameron v. Cu^^ck, 17 A. R. 489; Gurofski v. Harris, 27 O. R. 201. And an attack can be made only when the person preferred is a creditor. If it is only in respect of the impeached transaction that the person becomes a creditor at all the security cannot be set aside: Kerry v. James, 21 A. R. '\HS; Robins v. Clark, 45 U. C. R. 362. Secu- rity given to a co-trustee to secure the repay- ment of misapplied trust funds cannot be set aside: Molsons Bank v. Halter, 18 S. C. R. 88. The effect of the transaction is not evidence of the intent: Randall v. Dopp, 22 O. R. 422; Carr v. Corfield, 20 O. R. 218. The intent is a question of fact, upon which the finding of the Judge at the trial is in general conclusive: Randall v. Dopp, 22 O. R. 422; Clarkson v. Mc- Master, 22 A. R. 138; but the evidence of the parties to the impeached transaction should b** acted upon with caution: Morton v. Nihan, 5 A. R. 20; Merchants' Bank v. Clarke, 18 Gr. 504; though if believed it is sufficient: Jack V. Greig, 27 Gr. 6. Book debts are a species of property that vome within the Act, and an assignment of 16 SECTION ii. .s book debts, if it is a preference, may be set aside: Warnock v. Kloepfer, 15 A. R. 324; 18 8. O. K. 701; Labatt v. Bixel, 28 Gr. 593, and such an assignment does not require regis- tration under the Bills of hsale Act: Thibau- deau V. Paul, 20 O. K. 385. Book debts that may hereafter accrue due, or property that may hereafter be acquired, niav be assii?ned as security: Tailbv v. Official Keceiver, 13 App. ('as. 52:»; Horsfall v. Bois- seau, 21 A. K. (103; Banks v. Robinson, 15 O. R. 018; AA'ellbanks v. Heney, 11) O. R. 541); Coyne V. Lve, 14 A. R. 503; Re Thirkell, l>errin v. AVood, 21 Gr. 492; Suter v. Merchants' Bank, 2i Gr. 305; Kitching v. Hicks, O. R. 739; IMcAllister v. Forsyth, 12 S. C. R. 1. An assignment of insurance policies may be set aside: Ivey v. Knox, 8 O. R. 035. A lease bv a debtor to his creditor, the debt being paid by the rent, is not a preference: Smith V. Lawrence, 27 C. L. J. 110; nor is the taking of possession by a chattel mortgagee under a mortgage void a^ against creditors owing to non-compliance with the technical re- qrrlrments of the Chattel Mortgage Act: Bank of Hamilton v. Tamblyn, 10 O. R. 247; nor is supplying materials under an agreement that the property in them is not to pass : Wellbanks V. Heney, 19 O. R. 549; nor is payment by the debtor to a creditor for the express purpose of reviving a statute-barred debt: In re Lane, 23 i c I SECTION 2. 17 1\ f Q. B. D. 74. See, however. Finch v. Gilray, 16 A. R. 484, as to the impossibility of reviving to the prejudice of creditors the title to real estate. ]f there are two mortgages on the same property, and the first is set aside as a prefer- ence, this enures to the benefit of the second mortgagee, subject to tlie payment of the costs of the action: CoursoHes v. Fookes, 16 O. R. 691; Sanguinetti v. Stuckev's Banking Com- pany, [1895] ICh. 176; In re Farnham, [1895] 2 Ch. 799. One partner may take in his own name security for a partnership debt: ITobbs Hard- ware Co. V. Kitchen, 17 O. R. ^63. '' Void " in Acts of this kind means ^' void- able" : Meriden Britannia Company v. Braden, 21 A. R. 352; and it w^ould seem that a good title can be conferred by a person who holds under what is under the Act a void title: In re Vansittart, [1893]' 2 Q. B. 377; In re Brail, [1893] 2 Q.. B. 381; though in Cameron v. Per- rin, 14 A. R. 565, it is suggested that the word- ing of the Act is definite enough to avoid even inter partes a. fraudulent transaction. And see Clarkson v. McMaster, 25 S. C. R. 96; Meharg V. Lumbers, 23 A. R. 51, at p. 60. A security may be upheld in part and set aside in part: Mader v. McKinnon, 21 S. C. R. 645; Kitching v. Hicks, 6 O. R. 739. But in Cameron v. Perrin, 14 A. R. 565, where there was a sale of goods and a mortgage was given 18 SECTION 2 iijion these goods and other goods with the intent, as far as the other goods were con- cerned, to protect them from creditors, the mortgage was set aside in toto, and all the goods were held to be subject to an execution against the purchaser. A creditor who has knowingly accepted the benefit of a transaction cannot afterwards im- peach it; he cannot take the benefit of the consideration for a transfi v and then set the transfer aside: Beemer v. Oliver, 10 A. R. 656; Wood V. Reesor, 22 A. R. 57. The amending Act of 1891 contained a pro- vision that it should not affect any pending action, suit, or proceeding. This provision was inserted ex majore cautelA, for such an jnnendment is not retroactive: Ornisby v. Jar- vis, 22 O. R. 11; Coats v. Kelly, 15 A. R. 81; Clarkson v. Ontario Bank, 15 A. R. 166; Clark- son V. Sterling, 15 A. R. 234. In addition to the civil right of attack upon fraudulent preferences given by this section, the aid of the criminal law may be invoked by defrauded creditors. The Criminal Code, a. 368, provides that " every one is guilty of an indictable offence and liable to a fine of $800 and to one year's imprisonment who, (a) with intent to defraud his creditors, or any of them, (1) makes, or causes to be made, any gift, con- veyance, assignment, sale, transfer or delivery of his property; (2) removes, conceals or dis- i: SECTION 2, 19 pofees of any of his property; or (b) with the intent that any one sliall so defraud his credi- tors, or any one of them, receives any such property." In Regina v. Henry, 21 C). R. ll:j, it was held that creditors wliose claiins are not due may take advantage of this section, and this jMOvision may thnsi be of great use in cases where civil proceedings cannot be advantage- ously taken. Section oC9 of the Criminal Code, which provides that " every one is guilty of an indict- able otTence and liable to ten years' imprison- ment who, with intent to defraud his creditors or any of them, destroys, alters, mutilates or falsifies any of his books, papers, w^ritings or securities, or makes, or is privy to the umking of, any false or fraudulent entry in any book of account or other document," might also be sometimes invoked with advantage. 3. (1) Nothing in the preceding section shall apply to any assignment made to the sheriff of the coimty in which the debtor resides or carries on business, or to another assignee, resident within the Pro- vince of Ontario, with the consent of the creditors as hereinafter provided, for the purpose of paying ratably and proportion- ately and without preference or priority 20 SECTION 8. all the creditors of the debtor their just debts ; nor to any bo7ia fide sale or pay- ment made in the ordinary course of trade or calling to innocent purchasers or par- ties; nor to any payment of money to a creditor, nor to any bona fide giit, convey- ance, assignment,, transfer or delivery over of any goods, securities or property of any kind, as above mentioned, which is made in consideration of any present actual bona fide payment in money, or by way of security for any present actual bona fide advance of money, or which is made in consideration of any present actual bo7ia fide sale or delivery of goods or other property ; provided that the money paid, or the goods or other property sold or delivered bear a fair jind reasonable rela- tive value to the consideration therefor. (a) In case of a valid sale of goods, securities or property, and payment or transfer of the consideration or part there- of by the purchaser to a creditor of the vendor, under circumstances which would i I SECTION 8. 21 I render void such a payment or transfer by the debtor personally and directly, the payment or transfer, even though valid as respects the purchaser, shall be void as respects the creditor to whom the same is made. 48 V. c. 26, s. 3, (1) ; 50 V. c. 19, ss. 1, 2. (2) Every assignment for the general benefit of creditors, which is not void under section 2 of this Act, but is not made to the sheriff, nor to any other person with the prescribed consent of creditors, shall be void as against a sub- sequent assignment which is in conformity wdth this Act, and shall be subject in other respects to the provisions of this Act until and unless a subsequent assign- ment is executed in accordance wath this Act. (a) Every assignment hereafter execu- ted for the general benefit of creditors, whether the assignment is or is not ex- pressed to be made under or in pursuance 22. SECTION 3. of the Act respecting Assignments and Preferences by Insolvent Persons, and whether the debtor has or has not included all his real estate and personal estate, shall vest the estate, whether real or per- sonal or part real and part personal, thereb)^ assigned in the assignee therein named for the general benefit of creditors, and such assignment and the property thereby assigned shall be subject to all the provisions of the said Act and the Acts amending the same, and the pro- visions of the said Act and amending Acts shall apply to the assignee named there- under : 58 V. c. 23, s. 5. (3) In case a payment has been made which is void under this Act, and any valuable security was given up in con- sideration of the payment, the creditor shall be entitled to have the security restored, or its value made good to him before, or as a condition of, the return of the payment. 50 V. c. 19, s. 3. i SECTION 3. 2a (4) Nothing herein contained is to affect the Act respecting wages, or to prevent a debtor providing for payment of wages due by him in accordance with the pro- visions of the said Act. Nor shall any- thing herein contained affect any payment of money to a creditor, where such credi- tor by reason or on account of such pay- ment, has lost or been deprived of, or has in good faith given up, any valid security which he held for the payment of the debt so paid, unless the value of the security is restored to the creditor, nor to the sub- stitution in good faith of one security for another security for the same debt so far as the debtor's estate is not thereby less- ened in value to the other creditors. Nor shall anything herein contained invalidate a security given to a creditor for a pre- existing debt where by reason or on account of the giving of the security, an advance in money is miie to the debtor by the credi- tor, in the bona fide belief that the advance will enable the debtor to continue his trade 24 SECTION 8. or business, and to pay his debts in full. 48 V. c. 26, s. 3, (2) ; 49 V. c. 25, s. 1 ; 54 V. c. 20, s. 2. (5) The debtor may in the first place with the consent of a majority of his creditors having claims of $100 and upwards computed according to the pro- visions of section 19, make a general assignment for the benefit of his creditors, to some person other than the sheriff and residing in this Province. 48 V. c. 26, s. 3, (4); SOY. c. 19, s. 4. (6) No person other than a permanent and ho7ia fide resident of this Province shall have power to act as assignee under an assignment within the provisions 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 recoverable against the assignor or his estate for any services or other I I I SECTION 3. 25 expenses of any such assignee, deputy or delegate of any assignee who is not a per- manent and bona fide resident of this Province as aforesaid. ' 52 V. c. 21, s. 1. (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 th^ 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 I !h 11 26 SECTION 3. 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. 52 V. c. 21, s. 2. Clause (1) of this section is an amplifica- tion of the saving exception of R. S. O. (1877) c. 118, s. 2, and the decisions under that sec- tion would to some extent afford a guide to the construction of the present section. An assignment to be protected must be made in good faith for the general benefit of creditors, and any attempt to impose unreasonable terms upon the creditors or to retain a benefit for the debtor against their will, would render it in- valid: Whitman v. Union Bank of Halifax, 1(> S. C. R. 410; Spencer v. Slater, 4 Q. B. D. 13; Jennings v. Hyman, 11 O. R. 65. The acci- dental omission of a creditor's name from a schedule of creditors referred to in an assign- I SECTION 3. 27 { nient will not invalidate the assignment, nor deprive the omitted creditor of his ri^ht to share: McLean v. Garland, 13 S. C. R. 366. The assignee may within reasonable limits be empowered to carry on the business of the debtor if it can be better disposed of as a going concern, and to sell on credit: O'Brien v. Clarkson, 10 A. R. 603; Jennings v. Moss, 10 A. R. 696; Slater v. Badenach, 10 H. C. R. 296; Ontario Bank v. Lamont, 6 O. R. 147; but it was well even in the so-called ^^ common law " assignments not to include too definite directions as to the t»*ustee's duties, and it is certainly advisable^ to now follow the statu- tory directions and the statutory directions only. A creditor who accepts payment of a divi- dend cannot attack (he assignment . Beemer v. Oliver, 10 A. R. 656; nor can a creditor do so who attends a meeting of creditors, assents to his own appointment as inspector, and acts as such: Gardner v. Kloepfer, 7 O. R. 603; but after an unsuccessful attack he mav come in under the assignment and rank for his claim: Kloepfer v. Gardner, 10 O. R. 415: 14 A. R. 60; 15 S. C. R. 390. An assignment under the Act is voluntary in the sense that it is optional on the part of the assignor whether to make it or not, but once made its effect cannot be controlled: Re TTnitt and Prott, 23 O. R. 78. A sale in good faith of a business as a whole to a creditor who cancels his ^iebt a» 28 SECTION ?. part of the price is valid, the section not being limited to sales over the counter: Clarkson v. Itothwell, per JU)jd, C. (unreported, but noted 11 C. L. T. (37); and in the absence of mala fides there is nothing- to prevent a creditor from bviying |i:oods from his debtor and deductin.i^ his debt from the purchase money: Lewis v. Brown, 10 A. R. 039; and it would seem that a mortgagee can retain as against an assignee surplus proceeds of sale in satisfaction of an unsecured debt: Stephens v. Boisseau, 23 A. R. 230. Under the Act as originally passed a pay- ment of money to a creditor was, under certain circumstances, void as against an assignee, but the prohibitive provisions were afterwards struck out, so that now money may be paid to a creditor nt any time. It would seem, too, that under sub section 1 payment '^ in kind " to an '^ innocent " creditor would be protected: Re Bond, 16 N. S. W. Rep. (Bkcy.) 74. It has been held that handing to a credi- tor the unaccepted cheque of a third person who at the time has funds at his credit to meet it is a payment of money within the meaning of this section: Armstrong v. Hem- street, 22 O. R. 336; but this case has been overruled by Davidson v. Frr^ser, Court of Appeal, 12th ]\Iay, 1896. Where a debtor, at his brother's instance, sells his stock to a bona fide purchaser and pays the proceeds to the holder of his notes en- SECTION 3 29 (iorsed by liis brother, that is also a payment that cannot be impeached: Harvey v. Mc- Kaughton, 10 A. II. GIG. So the substitution of the purchaser's notes for the vendor's notes in the hands, of a banker is also a payment: Building and Loan Association v. Palmer, 12 O. K. 1. Where the creditor made an advance equal to the amount of his claim upon the faith of the debtor's statement that this advance would enable him to pay oil all his other creditors, security taken for the old indebt- edness and the new advance was upheld : Hyman v. Cuthbertson, 10 O. K. 413; but the smallness of the new advance is strong evi- dence that the true object was to secure the old debt: Ex parte Fisher, L. R. 7 Ch. G3G; and it is not an advance to pay otf other claims at the debtor's request, taking sectirity for the amount so paid and for the original debt: Boyd v. Glass, 8 A. R, G:]2; and the true nature and not the form of the transac- tion must be looked at: In re Watson, 25 Q. B. D. 27; Madell y. Thomas, [1891] 1 Q. B. 230. The new advance may be made in goods: Ex parte Sheen, 1 Ch. D. 5G0; Goulding v. Deeming, 15 O. R. 201. Security given to a person who makes an actual advance of money to an insolvent is valid, even though the insolvent pays the money to a favoured creditor, for the lender is not concerned with what the borrower does 30 SECTION 3 with the proceeds of the loan: Campbell v. ]»attem)D, 21 t^. C. R. (>45; Gibbons v. Wil- son, 17 A. K. 1; (>)nrt v. Holland, 4 O. K. 688; Ex i)arte Stubbins, 17 Ch. D. 58; Darvill v. Terrv, (J II. & N. 807. And see Meriden Brit- annia Co. v. Braden, 21 A. R. 352. '' Bona fide," or *^ in good faith,'' means without notice that any fraud or fraudulent preference is intended: Butcher v. Stead, L. R. 7 H. L. 839; and good faith on the part of the purchaser is sufficient; it is not necessary that both parties should act in good faith: isracldntosh v. Pogose, [1895] 1 Ch. 505. ^' Fair and reasonable relative value " is a (juestion of fact in each case: Cameron v. Perrin, 14 A. R. 505. An assignment to a person other than the sheriff and without the consent of creditors is valid, but will be superseded by a subsequent assignment executed with su(*h consent: Anderson v. Glass, 16 O. R. 592; and the con- s(^nt of the creditors need not be obtained at the time the assignment is made, but may be obtained subsequently: Hall v. Fortye, 17 O. R. 435. Apart from the Act, without the assent, or at least the knowledge, of a credi- tor, an assignment was revocable: Cooper v. Dixon, 10 A. R. 50; but where an assignment has been acted upon by the creditors it is not open to the objection, even if made by an execution creditor, that no creditor executed It: Ball V. Tennant, 25 O. R. 50. SECTION a. 31 f An assignment confined in terms to per- sonal property only was held not to be within the Act: Blain v. Peaker, 18 O. R. 109; and the principle of this case was carried further in subsequent cases in which it was held that excepting from the assignment the assignor's book debts to even a small amount took it out of the Act. This was perliaps not giving full effect to clause 2 of this section; but however that may be clause 2 (a) was added by 58 V. c. 23, to overcome this diffi- culty, and to prevent advantage being taken of this non-statutory form of assignment. The Act respecting Wages is R. S. O. (1887) c. 127. It provides (section 1) that '^ whenever an assignment is made of any real or personal property for the general benefit of creditors, the assignee shall pay in priority to the claims of the ordinary or general creditors of the person making the same, the wages or salary of all persons in the employment of such per- son at the time of the making of such assign- ment, or within one month before the making thereof, not exceeding three months' wages or salary, and ^uch persons shall be entitled to rank as ordinary or general creditors for the residue, if any, of their claims," and (sec- tion 4) the Act is to apply to wages or salary " whether the employment in respect of which the same shall be payable, be, by the day, by the week, by the job or piece or otherwise." Under the Insolvent Act of 1875 (section 91) " clerks and other persons in the employ of 82 SECTJON 'S. ^ \l ihv insolvont " were given priority t ) a cer- tain extent, but the decisions placed a narrow construction on tlie words, lender tlie simi- lar j)rovisions of the Windinj^-up Act [K. S. O. c. 121). 8. 50 (2)] it has recently been In^ld that an auditor is not entitled to priority: In re Ontario Forj^e and Bolt Co., 27 O. R.'2:U); but the provisions of the \V;ij»es Act are much wider. See Welch v. Ellis, 22 A. R. 255. The limitation as to the time of employment must, however, be strictly observed : Ex parte Napier, 3 Puf?sley 134. Clauses {(]) and (Oj i wrre added by 52 V. c, 21, and do not applv to any assignment ex- ecuted before the 2:?rd of March, 1889. It is to be feared that th(^ provisions of clause (6a) are not very generally observed, and it might be well to test the validity of the sec- tion, in so far as it imposi^a a criminal liability for its breach, by proceedings against some of the offenders. See Regina v. Wason, 17 A. R. 221. Where an assignment is made to a person r(-sident in this province, but the estate is managed and w^ound up by that person^s part- ner, resident in Montreal, commission cannot be recovered by the assignee: Tennant r. Macewan, Robertson, J., 7th April, 1896. 4. Every assignment made under this Act, for the general benefit of creditors SECTION 4. 88 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 assign- ment 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. 48 V. c. 26, s. 4. The form of assignment in common use is as follows : This indenture, made the day of in the year of our Lord one thousand eight hundred and ninety pursuant to the Revised Statutes of Ontario, 1887, chapter one hundred and twenty-four, intituled an Act respecting Assignments and Preferences by Insolvent Persons, and under every other Law C.A.A. — 3 84 SECTION 4. nnd Statute applicable to Assignments and Conveyances of Ileal and Personal Propertj. Between the " Debtor," of the first part, the " Assignee," of the second part, and the several linns, persons and cor- porations who are creditors of the Debtor, hereinafter called the " Creditors," of the third part. \Vherea8 the Debtor hath heretofore car- ried on business at as and being Viuable to pay his creditors in full, hath agreed to convey and assign to the Assignee all his estate, real and personal, for the purpose of paying and satisfying the claims of his credi- tors ratably and proportionately, and without preference or priority. Now this indenture witnesseth that in c< nsideration of the premises and of the sura of one dollar, the Debtor doth hereby grant and assign to the Assignee, his heirs, execu- tors, administrators and assigns, all his per- sonal property which may be seized and sold under execution, and all his real estate, credits nnd effects. To have and to hold the same unto the Assignee, his heirs, executors, administrators and assigns, respectively, according to the tenure of the same. Upon trust that the Assignee, his heirs, executors, administrators and assigns, shall sell and convey the real and personal estate and convert the same into money, and collect SECTION 4. 35 and call in the debts, dues and demands of the debtor. And it is hereby declared that the assignee, his heirs, executors, administrators and assigns, shall stand possessed of the moneys derived from the sale of the real and personal estate, and the moneys collected and called in and all other moneys which the Assignee, his heirs, executors, administrators and assigns shall receive for or on account of the premises hereinbefore assigned, upon trust, in the first place, to pay the costs of and incidental to the preparation and execution of these pre- sents; secondly, to deduct and retain such remuneration as shall be voted or fixed for the Assignee under the provisions of the said Act; and, thirdly, to pay the debts and liabilities of the Debtor to the Creditors, re- spectively, ratably and proportionately and without preference or priority, and the sur- plus, after payment of all claims, costs, charges and expenses in full, to hand over to the Debtor. The Debtor appoints the Assignee, his heirs, executors, administrators and assigns, his lawful attorney irrevocable in his name to do all matters and things, make, sign, seal and execute all deeds, documents and papers necessary to more fully perfect in him the title to the lands, premises, goods and chat- tels, debts, dues and demands hereby assigned or intended so to be, and to do all other acts, S6 SECTION 4. in fitters and things necessary to enable the Assignee to carry into effect these presents. And it is hereby declared that if it shall be in the interest of the Creditors so to do the Assignee may sell the book debts or any por- tion thereof either by public auction or private contract. And the Creditors hereby assent to this assignment. In witness whereof, etc. Such a statutory assignment would have no extra, territorial effect : Macdonald v. Geor- gian Bay Lumber Co., 2 S. C. R. 3G4, nor will it pass an interest in the funds of a benefit society; which creditors cannot get at in in- vitum:' Re IJnitt and Prott, 23 O. R. 78; nor the benefit of a covenant to indemnify the assignor against payment of a mortgage: Ball V. Tennant, 21 A. R. G02. A company incorporated under the Joint Stock Companies^ Letters Patent Act may make an assignment, and this may be done under the authority of the directors without consultation with the shareholders: Whiting V. Hovey, 13 A. R. 7; 14 S. C. R. 515; and where an assignment has been made by a company with the approval of the majority of its creditors the court will, in the exercise of its discretion, refuse to make a winding-up order: Wakefield Rattan Co. v. Hamilton Whip Co., 24 O. R. 107. An assignment may be made by a firm, but one partner cannot s i SECTION 4. 37 i *, 1 assign the firm assets without the consent of his co-partner, and in practice it is always advisable to have such an assignment exe- cuted by one of the partners in the firm name, and also by all the partners in their indi- vidual names: Nolan v. Donnelly, 4 O. R. 440; Kelles V. Maltby, 5 O. R. 2G3; Cameron v. Stevenson, 12 C. P. 389. An assignment made by a firm in which there is an infant partner will not pass the infant's interest: Powell v. Calder, 8 O. R. 505; and see Lovell v. Beau- champ, [1894] A. C. GOT. An assignment executed in their individual names, by partners in a firm, purporting to assign ^^ all their estate,-' etc., conveys the separate estate of each partner, as well as the partnership estate: Nelles v. Maltby, 5 O. R. 263; Ball v. Tennant, 25 O. R. 50; 21 A. R. 602. The words ^^ exempt from seizure or sale under execution " refer to the exemptions under R. S. O. (1887) c. 64: Re Unitt and Prott, 23 O. R. 78, the provisions of which are as follows: "2. The following chattels are hereby de- clared exempt from seizure under any writ, in respect of which this Province has legisla- tive authority, issued out of any Court what- ever in this Province, namely: (1) The bed, bedding and bedsteads (in- cluding a cradle), in ordinary use by the debtor and his family; S8 SEOTI')N 4 (2) The necessary and ordinary wearing apparel of tlie debtor and his family; (3j One cooking stove with pipes and fur- nishings, one other heating stove with pipes, one crane and its appendages, one pair of and- irons, one set of cooking 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 cup- board, one broom, twelve knives, twelve forks, twelve plates, twelve teacups, twelve saucers, one sugar basin, one milk jug, one teapot, twelve spoons, two pails, one washtub, one scrubbing brush, one blacking brush, one w«nshboard, three smoothing irons, all spin- ning wheels and weaving looms in domestic use, one sewing machine and attachments in domestic use, thirty vohiraes of booivs, one axe, one saw, one gun, six traps, and such fishing nets and seines as are in common use, the articles in this subdivision enumerated, not exceeding in value the sum of $150; (4) All necessary fuel, meat, fish, flour and vegetables, actually provided for family use, not more than sufficient for the ordinary con- sumption of the debtor and his family for thirty days, and not exceeding in value the sum of ?40 ; (5) One cow, six sheep, four hogs, and twelve hens, in all not exceeding the value of *< 5» SECTKJN 4. 89 $75, and food therefor for thirty days, and one dog; (G) Tools and implements of or chattels oidinarily used in the debtor's occupation, to the value of $100; (7) Bees reared and kept in hives to the extent of fifteen hives. 3. The debtor may in lieu of tools and im- plements of or chattels ordinarily used in his occupation referred to in subdivision G of sec- tion 2 of this Act, elect to receive the pro- ceeds of the sale thereof up to $100, in which case the officer executing the writ shall pay the net proceeds of such sale if the same shall not exceed $100, or, if the same shall exceed $100, shall pay that sum to the debtor in satis- faction of the debtor's right to exemption under said subdivision 6, and the sum to which a debtor shall be entitled hereunder shall be i'>empt from attachment or seizure at the in- stance of a creditor." The debtor can do what he likes with these exemptions or their proceeds: Temperance Insurance Co. v. Coombe, 28 C. L. J. 88; Field V. Hart, 22 A. R. 449; and a judgment creditor cannot attach money payable in respect of insurance upon them: Osier v. Muter, 19 A. R. 94. As to chattels " ordinarily used " in the debtor's occupation, see Wright v. Hol- lingshead, 23 A. R. 1. Rights of action vest in the assignee. If, however, an action by the debtor is pending 40 SECTION 4. JS at the time of the assignment, the action abates and must be revived. If it is not re- vived tlie defendant should move for an order that it be revived or dismissed: Cameron v. Eager, G P. Tl. 117. If the action is revived b}' the assignee he becomes liable for the costs. An assignee is not examinable as a transferee of a judgment debtor: British Can- adian Loan and Investment Co. v. Britnell, 13 P. R. 310; but employees of the assignor can be examined: Canadian Banli of Commerce v. Wall, 11 C. L. T. Occ. N. 201. Composition agreements sometimes con- tain a provision that on default in payment a named person may execute an assignment for the benefit of creditors as attornev for the debtor. This would appear to be proper: Fur- nivall V. Hudson, [1893] 1 Ch. 335. If a man purchases land which is subject to a mortgage and then makes an assignment for the benefit of his creditors the equity of re- demption passes to the assignee free from any claim for dower of the assignor's wife: Gard- ner V. Brown, 19 O. R. 202. If, however, the land is unincumbered, or if the incumbrance has been created by the assignor, the inchoate right of dower of his wife is not affected by the assignment for the benefit of creditors, and a release of dower should be obtained. The assignee or his agent cannot sell the stock-in-trade of the estate bv auction in a « municipality where there is a by-law against 1/ SECTION 4. 41 J f persons acting as auctioneers without license: Regina v. Rawson, 22 O. R. 4G7. And see Merritt v. Toronto , 22 A. R. 205. If the assigning de?..tor owns any lands or any interest in any lands the assignment should at once be registered in the registry office of the division in which the lands are situate. If not, the debtor may, notwith- standing the assignment, convey the lands or his interest to a bona fide purchaser, who may thus gain priority over the assignee. 5. If any assignor or assignors execut- ing 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-partnersbip, or as a member of two different co-partnerships, the claims shall rank first upon the estate by which the debts they represent were contracted, and shall only rank upon the other after all the creditors of that other have been paid in full. 48 V. c. 26, s. 5. The rule of distribution laid down is that adopted in the administration of estates in insolvency, and under certain circumstances in their administration by the Court of Chan- 42 SECTION 5. eery. The subject is fully discussed in Rob- sou's Law of Bankruptcy, 7tli ed., p. 690, et seq., p. 717, et seq. And see Bank of Toronto V. Hall, 6 O. 11. 644, 653; Martin v. Evans, (» O. R. 238; Re McDonagli v. Jephson, 16 A. R. 107. Under a similar provision in the old In- solvent Acts it has been held that the doctrine ot " double proof " applies where the joint and separate estates are being^ concurrently administered, so that a creditor holding a note made by the firm and indorsed by a part- ner can rank against only one estate: In re Chaffev, 30 U. C. R. 64. See also Re Baker, 3 Ch. *^Ch. 499 ; Ontario Bank v. Chaplin, 20 S. C. R. 152. A solvent partner may prove against the estate of an insolvent partner for the amount paid by the former in excess of his share: In re Head, [1894] 1 Q. B. 638; and as to proof between partners, see Robson's Law of Bank- ruptcy, 7th ed., p. 731, et seq. The section does not apply unless there is an administration of separate estate and joint estate, so that creditors having claims against an assignor as a partner in a former firm are entitled to rank pari passu with his subse- quent creditors: Macdonald v. Balfour, 20 A. R. 404; Moorehouse v. Bostwick, 11 A. R. 76. But where goods are sold to a person who afterwards forms a partnership and brings the goods in as part of the partnership stock the ,^ T SECTION 5. 43 A vendor cannot rank against the partnership: In re Simmons, 20 L. C. Jur. 29G. 6. (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 sheriff or for an assignee under an assignment to which sub-section 2 of section 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 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 assignment is registered. 48 V. c. 26, s. 6 ; 53 V. c. ;>4. (2) Where a new assignee is appointed the estate shall forthwith vest in him without a conveyance or transfer. The new assignee may register an afhdavit of his appointment in the office in which the 44 SECTION 6. original assignment was filed, such an affidavit may also be registered under the Eegistry Act. The registration of the affidavit under the Eegistry Act shall have the same effect as the registration of a conveyance. 49 V. c. 25, s. 4. Before the amendment made in 1890 an «i,ssinor: Robinson v. Cook, 6 O. R. 590; Lumsden V. Scott, 4 O. R. 323; Kerry v. James, 21 A. R. 838; Ball v. Tennant, 21 A. R. 602; Kitchino- V. Hicks, 6 O. R. 739; Thibaudeau v. Paul, 20 O. R. 385; but in Clarkson v. McMaster, 25 H. C. R. 90, the assignee's higher status as representative of the creditors seems to be re- cognized, and apparently an assignee under this Act nnist be held to have the same rights as an assignee under the Insolvent Act: Re litnrett, 5 A. R. 200. This being so it would seem to be no long(^r law that an assignee for the benefit of creditors is bound by an assign- ment of book debts made by his assignor, and d es not obtain priority over the holder of the assignment of the book debts by the making of the assignment for the benefit of creditors, or even by the giving of notice to the debtors, tjs held in Thibaudeau v. Paul, 20 O. R. 385. See Jenks v. Doran, 5 A. R. 558, and Rutter v. Everett, [1895] 2 Cn. 872. See also Wig- ram v. Buckley, [1894] 3 Ch. 483. Apart from the Act, making an assignment does not deprive creditors of the rir;ht to attack a fraudulent transaction: Macdonald V. McCall, 12 A. R. 593; 13 S. C. R. 247; Kitching v. Hicks, C O. R. 739. V If an agent purchases goods for his princi- pal with money supplied by the latter there is a trust impressed upon the goods in the principars favour enforceable against the SECTION 7. 51 1' rgent's assignee for the benefit of creditors: Lonf,^ V. Carter, 2,3 A. R. 121. 8. If the person to whom any gift, con- veyance, assignment, transfer, dehvery 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, conveyance, assign- ment, transfer, (^ ^livery or payment, or any part thereof, the moneys or other proceeds realized therefor, may be seized or recovered in any actions under the last preceding section as fully and effectually as the property if still remaining in the possession or control of such person could have been seized or recovered. 48 V. c. 26, s. 8. (1) In case of a gift, conveyance, assign- ment or transfer of any property, real or personal, which in law is invalid against creditors, if the person to whom the gift, conveyance, assignment or transfer was made shall have sold or disposed of the 52 SECTION 8. property or any part thereof, the money or other proceeds reahzed therefor by such person may be seized or recovered in any action by a person who would be entitled to seize and recover the property if it had remained in the possession or control of the debtor or of the person to whom the gift, conveyance, transfer, de- livery or payment was made, and such right to seize and recover shall belong, not only to an assignee for the general benefit of the creditors of the said debtor, but shall exist in favour of all creditors of such debtor in case there is no such assignment. (2) Where there has been no assign- ment for the benefit of creditors, and the proceeds realized as aforesaid are of a character to be seizable under execution, they may be seized^under the execution of any creditor issued against the debtor, and shall be distributable amongst the creditors under The Creditors' Relief Act SECTION 8. 53 ^ and the Acts amending the same or other- wise. (3) Where there has been no assign- ment for the benefit of creditors, and whether the proceeds reahzed aforesaid are or are not of a character to be seized und^ " execution, an action may be brought therefor by a creditor (whether an execu- tion creditor or not) , on behalf of himself and all other creditors, or such other pro- ceedings may be taken as may be neces- sary to render the said proceeds available to the general benefit of the creditors. (4) The preceding section shall not apply as against innocent purchasers of the property. Subsections (1), (2), (3), and (4), were added by 58 V. e. 23. The result of the authorities seems to be that apart from the provisions of the oripnal section, the proceeds of the fraudulently acquired property could not be followed if they were not ear-marked: Ross V. Dunn, IG A. R. 552; Robertson v. Holland, 16 O. R. rj!^; Harvev v. McNaupjhton, 10 A. R. GIG; STuart v. Tremain, 3 O. R. 190; Davis 64 SECTIOX 8. V. Wickson, 1 O. K. 3G9. Some of the earlier eases at first sight appear to support a differ- ent view. In Martin v. McAlpine, 8 A. R. G75, a creditor who obtained the proceeds of goods sold by the sheriff under his collusive judg- rient, was ordered to pay over the proceeds to another creditor, who successfully attacked tlie collusive judgment. Spragge, C.J.O., who delivered the judgment of ihe Court, puts this rij^ht of payment upon the ground that the njoneys were wrongfully received by the de- fcndant from the sheriff, and were really the moneys of the i)laintiff, and he refers to Mer- chants Express Co. v. Morton, 1.5 Gr. 274, as an example of the well-known principle that if the Court can trace money or property, how- ever obtained from the party really entitled to it, into any other shape, it will intervene to secure it for the true owner, or party en- tilled. In Labait v. Bixel, 28 Gr. 593, an as- signment of book debts was set aside and the defendant was ordered to account for the moneys collected by him, but in Tennant v. Callow, 25 O. R. 56, Rose, J., states that this Av'as probably on the ground that the moneys were collected after the commencement of the action, and it was in that case held that where an insolvent debtor conveyed propertj^ to a creditor, who sold it, and paid his own claim and some other claims, and gave the balance to the debtor, another creditor had no remedy against the creditor thus paid. Masuret v. Stewart, 22 O. R. 290, where a creditor obtained judgment for the proceeds of the sale against SECTION 8. 55 i^ Hie grantee, who had sold the fraudulently transferred property, is also there referred to as a ease standing upon its own special facts, and an examination of the case will show that the transaction was really a mere collusive (.re, and that the defendant was really a ligureliead. If in an action by the assignee a security is set aside as preferential the preferred credi- tor must account for moneys received under the security: Meharg v. Lumbers, 2:? A. K. 51. The present amending sections are no doubt intended to give creditors the right the assignee had under the original section; but they are certainly not happily expressed and need judicial interpretation. 9. An assignment for the general bene- fit of creditors under this Act shall take precedence of all attachments, all judg- ments and of all executions not com- pletely executed by payment, subject to the lien, if any, of an execution creditor for his costs where there is but one execu- tion in the sheriff's hands, or to the lien, if any, of the creditor for his costs who has the first execution in the sheriff's 56 SECTION 9. hands. 48 V. c. 2G, s. 9: 49 V. c. 25, s. 2; 59 V. c. 31, s. 2. This section was amended in the session of 189C by the insertion of the words " all attachments," 59 V. c. 31, s. 2. Before this it was held that attachment proceedings were not affected by an assignment for the benefit of creditors: Wood v. Joselin, 18 A. R. 59; In re Thompson, 17 P. R. 109. Mechanics' liens are not affected by an as- signment for the benefit of creditors: 59 V. c. ;J5, s. 12. A judgment for alimony is not affected by the section: Abraham v. Abraham, 19 O. R. 256; 18 A. R. 436. The first execution creditor has a lien for the whole costs of the action for which he obtained judgment, and not for the costs of the execution merely : Ryan v. Olarkson, 16 A. R. 311; 17 S. C. R. 251; and the sheriff is entitled to hold the goods until the costs and his own poundage and posses- sion money are paid: Smith v. Antipitzky, 10 C. L. T. Occ. N. 368. " Executed by payment " means executed by payment to the sheriff: Clarkson v. Severs, 17 O. R. 592 ; and where there has been a sale in a mortgage action for sale, and, before '":'■!' SECTION 9. 57 creditors prove their claims, the mortgagor I makes an assignment for the benefit of credi- " tors, the fund passes to the assignee: Carter V. Stone, 20 O. R. 340. ' Costs in the Division Court are provided for by section 52 V. c. 12, s. 2, which is as fol- lows : — " Where in any Division Court *^ction a bailiff has seized goods under and by virtue of a writ of execution or attachment, and the action is afterwards settled between the parties thereto, or the defendant in the ac- tion makes an assignment for the general benefit of his creditors, the said bailiff shall, ;• ^ until his fees and disbursements upon the said ■^:iir writ are fully paid and satisfied, have a lien therefor upon so much of the said goods as will reasonably satisfy the same, but in the event of a dispute as to the proper amount of said fees and disbursements, the amount claimed therefor may be paid into Court until the proper amount shall be certified by the Judge, and on such payment into Court the aaid lien shall cease and determine.'' It will be noticed that this provides only for the bailiff's fees and disbursements, and not for the costs of suit. By 58 V. c. 47, s. 7, goods in the assignee's possession are protected from distress for taxes, other than taxes due by the assignor, and taxes due in respect of the premises in which the goods were at the time of the as- signment, and thereafter while the assignee 58 SECTION 9. occupies the premises or the goods remain thereon. 10. No advantage shall be taken or gained by any creditor of any mistake, defect or imperfection in any assignment under this Act for the general benefit of creditors 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 afore- said, on application of any creditor of the assignor, or of the assignee, on such notice being given to other parties con- cerned as the Judge shall think reason- able, and the amendment, when made, shall have relation back to the date of the said assignment. 48 V. c. 26, s. 10. The omission of any reference to real pro- perty is not a mistake, defect, or imperfection, that can be remedied under this section: Blain V. Pealver, 18 O. R. 109. 11, (1) The assignee shall receive such remuneration as shall be voted to him by the creditors at any meeting called for I SECTION 11. 59 the purpose after the first dividend sheet has been prepared, or by the inspectors, in case of the creditors faihng to provide therefor, subject to the review of the County Court of the county in which the assignment is registered or the Judge thereof, if complained of by the assignee or any of the creditors. 48 V. c. 26, s. 11. (2) In case the remuneration of the assignee has not been fixed under the preceding sub-section before the final dividend, the assignee may insert in the final dividend sheet, and retain as his remuneration, a sum not exceeding five per cent, of the cash receipts, subject to review by the court or judge as herein- before provided ; but no application by the assignee to review the said allowance shall be entertained, unless the question of his remuneration, previous to the pre- paration of the final dividend sheet has been brought before a meeting of creditors competent to decide the same. 59 V. c. 31, s. 8. 60 SECTION 11. (3) No assignee shall make any pay- ment or allowance to ^n inspector beyond his actual and necessary travelling ex- penses in and about his duties as inspector, except under the authority of a resolution of the creditors passed at a meeting regularly called, fixing the amount there- of, and in the notice calling the meeting the fixing of the remmieration of the inspectors shall be specially mentioned as one of the subjects to be ^Tought before the meeting. No inspector shall be al- lowed more than four dollars a day besides actual travelling expenses, but may be allowed less. 59 V. c. 31, s. 7. Under the Insolvent Act of 1875, the assignee was entitled to a commission on the net proceeds of the estate of the insolvent of every kind, of 5 per cent, on the lirst $1,000, 2^ per cent, on any further sum up to |5,000, and 1| per cent, on any further sum., Under the present Act the assignee's fee is usually about five per cent, on the amount of the re- ceipts, and sub-section 2 now makes this the maximum allowance, but there is, unfortu- nately, great looseness in dealing with this matter, and very often the assignee pockets 1 1" lie :u- { r SECTION 11. 01 tbc reiuiiiieration Ihat lie considers himself entitled to and consults nobody. His remu- neration ouglit to be fixed according to the j)rinciples regulating the rt^muneration ot* ordinary trustees: lie Fleming, 11 P. K. 42G; Archer v. Severn, IJi O. K. 31<> ; Ke Prittie Trusts, 13 1*. K. 11). In the last case the trustee was allowed a commission on rents collected, in addition to a commission paid to an agent. The eTudge acts as persona designata, and he can deal only with the question of remuner- ation, and before the enabling Act, 50 V. c. 13, he had no power to give costs in an applica- tion under this section: Re Pacquette, 11 P. R. 403; Re Young, 14 P. R. 303. An assignee is not responsible for loss resulting from the criminal acts of a ser\^'lnt selected and employed by him without negli- gence: Jobson V. Palmer, [1893j 1 Ch. 71. The powers and duties of inspectors ar(» not fully defined in the Act. They have power under this section to fix the assignee's remuneration if the creditors do not do so, and under section 21, they can order the assignee to declare dividends. Then under the amend- ing Acts of 1S95, 58 V. c. 23, and of 1890, 59 V. c. 31, they can take proceedings for the examination of the insolvent and his em- ployees. They are so far trustees for the creditors that they cannot purchase the trust u G2 si:cTi22; for the disposal of Ihe estate^ is in the hands of the creditors, and in default in that of the Judge of the County Court: ibid. Subsection 3 is a mov(^ in the right direc- tion of curtailing the fees that inspectors have been in the habit of arbitrarily helping them- selves to. The maximum allowance is very ambiguously limited, as it is almost impossible to say how many " days '^ an inspector should be i)aid for. A reasonable interpretation would be to allow pay for each day upon which a meeting of inspectors takes place, and tlui resolution appointing the inspectors should provide that there be paid to each inspector for each meeting actually attended by him the sum of I , not exceeding for any inspector the sum of f . In the notice calling the first meeting the remuneration of the inspec- tors should be mentioned as one of the sub- jects to be brought before the meeting (see p. 102). Under the English Act an inspector can- not without the direction of the Court receive any remuneration, and cannot charge for SECTION 11. 68 Hcrviccs rendered by him an solicitor: In re (Jailard, [IStXi] 1 if. B. 08. The present sec- 1i(m does not ji'o so far, and it wonhl seem tliat an insj)ector can act «'is soli<*itor for the estate: Strachan v. Knttan, 15 P. II. 101); lu r»' Miniieo Sewer l*i])e and Mannfactnrinj? Oo., re;nsnirs Case, iM; (). I{. L»S9. 12. (1) 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 the least, having a general circulation in ^he county in which the property assigned is situate, not less than twice. 48 V. c. 26, s. 12 (1) ; 49 V. c. 25, s. 5. (2) A counterpart or copy of every such assignment shall also within five days from the execution thereof be registered, (together with an affidavit of a witness thereto of the due execution of the assign- ment or of the due execution of the 64 SECTION 12. assignment of which the copy filed pur- ports to be a copy), in the office of the clerk of the County Court of the county 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 then 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 where the prin- cipal 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 re- spectively 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 respectively shall number and enter such assignments, and be entitled to the same fees for services in the same manner as if such assignments had been $ V > ;! ^ SECTIOX 12. 05 11 ■^ " registered under the Act respeotin Mortgages and Sales of Personal Pro- perty. 48 Y. c. 20, s. 12 (2). (3) In the districts of Mnskoka, Parry Hound, Nipissing, Algoina, Manitoulin, Thunder Bav and Itainy liiver, and in any other district which niay be hereafter formed, and in the Provisional (Jountv of Haliburton the counterpart or copy of the assii>nnient shall be tiled in the same office and within tlie same time respec- tively as by the law at the time of the assignment in foi'ce mortgages and bills of sale of personal property are required to be tiled in r>uch districts, and j)rc- visional count;, respectively, and the clerk in whose oflice the same is tiled shall perform the like duties and be en- titled to be paid the like fees as clerks acting under the preceding sub-section. 59 Y. c. :]1, s. 1. Kc^istration of llie assij»rmHMit in the ja'o- per oHice is sutticient fouiKlaJioii for the renewal of a chattel niort«;age by the assij?nee: C.A.A. — 5 GO SECTION 12. Fleiiiinj'- v. Kjau, 21 A. 11. 39; 57 V. c. 37, s. 18. Tho Act respecting;" Mortgages and Sales of Persona I l*roperty requires from the mort- j^aji^ee an allidavit of bona tides. In the case of an ;ii-si;innieni for Ihe benefit of creditors this is unnecessai y. Tlie fee for registration is lift J cents. The notice of the itssijinnieiir here spokcni of is iIm' sinii)le notire tliat th(* assij^ninent lias b(HMi made. In practice, however, it is usual to join with this notict* a notice to credi- t(»rs to pr'>ve claims and a notice of distri bution of the esla<(^ (See notes to sectioii 2()j. Kef'istration of an assignment affecting goods and chattels situate in the Districts or in Haliburton should be effected as follows, seven days being allowed for registration in Haliburton and ten days for registration in the Districts: Algoma — ChM'k of District Court at SauU Ste. :^rari(- 59 V. c. 32. Haliburton — Clerk of Division Court at Minden: 59 V. c. 32. Manitoulin — Deputy Clerk for Manitouliii ar Gore Bay: 57 V. c' 37, s. 28. ^luskoka — Clerk of Division Court at Bracebridge: 59 V. c. 32. Nipissing — Cler); of District Court at North Bay : 59 V. c. 32. ^1^ I SECTION 12. 07 ^^' l*ju'i'v ^^ouu(l — Clerk of Division Ooiirt at l^ii'iv Sound: 51) V. c. :\2, Kiiiny Kivor — Clerk of Division Court at Kat Poi'taj-o: 59 V. c. :\2. Thunder Bay — Clerk of Distriel Court at INjrt Arthur: 51) V. e. :{2. An error as to the ])laee of rej^istration is not, however, of much importance: see section 15. 13. (U If the said notice is not pub- lished in the regular number of the Ontario Gazette, and of such newspaper as afore- said, which shall respectively be issued first after five days from the execution of the assignment by the assignor, or if the assignment is not registered as aforesaid within five days from the execution there- of, the assignor shall be liable to a penalty of $25 for each and every day which shall pass after the issue of the number of the newspaper in which the notice should have appeared until the same shall have been published ; and a like penalty for each and every day which shall pass after the expiration of five days from the 68 SECTION 13. execution of the assignment by the as- signor until the same shall have been registered. (2) The assignee is to be subject to a like penalty for each and every day which :sliall pass after the expiration of five days from the delivery of the assignment to liim, or of live days after his assent there- to, the burden of proving the time of such delivery or assent being upon the as- signee. (3) Such penalties may be recovered summarily before a Judge of the High Court, or of the County Court of the county in which the assignment ought to be published or registered ; one-half of the penalty shall go to the party suing, and the other half for the benefit of the estate of the assignor. 48 V. c. 20, s. 13. (4) In case of an assignment to the sheriff, he shall not be liable for any of the penalties imposed in this section, unless he has been paid or tendered the •>' »nr 1< m> ,t. + 1 SECTION 13. 69 cost of advertising aocl re.ii;istering the assigiiineut, uor shall he be coiiipelled to act under assignment until his costs in that behalf are paid or tendered to him. 50 V. c. 19, s. 10. 14. li^ case the assignment be not registered, and notice thereof published, an application may be made by any one interested in the assignment to a Judge of the High Court, or of the County Court aforesaid, to compel the publication and registration thereof ; and the Judge shall make his order in that behalf, and with or without costs, or upon the payment of costs by such person as he may in his discretion direct to pay the same. 48 V. c. 20, s. 14. 15. The omission to publish or register as aforesaid, or any irregularity in the publication or registration, shall not in- validate the assignment. 48 V. c. 20, s. 15. 70 SECTION 16. I i 16. It sliall be the duty of the assignee to iminediately inform himself, by refer- ence 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 con- vene a meeting of the creditors for the appointment of in pectors and tlie giving of directions with reference to the disposal of the estate, by mailing prepaid and registered to every creditor known to him, a circular calling a meeting of creditors to be held in his office 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. 48 Y. c. 26, s. K). 17. (0 I^^ ^^^^ of a request in writing signed by a majority of the creditors having claims duly proved of $100 and upwards, computed according to the pro- h ' -"-••Htw SECTION 17. 71 4. jr . \!sions of section 19 of this Act, it shall b3 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. 50 V . C* -*-ty, S. O. (2) In case • a sufficient number of creditors do not attend the meeting men- tioned in section IG of this Act, or fail to give directions with reference to the dis- posal of the estate, the Judge of the County Court may give all necessary directions in that behalf. 50 V. c. 19, s. 11. The disposal of the estate is in tlie hands of the creditors, jind if th(\v fail to give direc- tions, tlie Judi>i' of tlH^ County Court niav f^ive all necessary directions : Morrison v. ^Vatts, 19 A. R.' 022. In the absence of 72 SECTION 17. HiKH'ial (lir(»ctions, tlic assi<'noo shoi^M realize liic assists as (piickly and as a(lvaiiti.;;(H)nsly as possible. He cannot himself purchase, even with the insj)ectors' consent: Morrison V. Watts, IJ) A. K. i\'2'2. It is usual to sell the stock-in-trade an:l lixturc^s en bloc by auction as soon as ])ossible. The following form of conditions of sale and ji<;^reem(»nt to purchase is fr(([uently used: CONDITIONS 01-' SALE. Conditions of Sale of the stock-in-trade and fixtures of the estate of 1. The stock-in-trade and tixlur(»s men- tioned in the inventory ]U'oduced are sold at a rate u})on the dollar of tlu* inventory value tliereof, without nnluction or abatement, ox- ( c])t as r<^<»ards sliorts and lonj^s in (piantities, which are to be adjusted by inventory prices before settlement of purchas(\ 2. Tlie hijihest bidder shall be the pur- chas< r. and if any dispute arises as to the last oi' highest bid, the stock-in-trade and tixtun^s shall be ])ut up at a former biddinj>". :\. No person shall n^ract his bid. 4. The assij>ne(^ resfU'ves tht^ riclit to one bid. 5. The imrchaser shall at the time of sale siurdiase nioniM' to the nssi^iiec and suflicidit llieiwvitli to iiijikc ono-fourtli of the juirchase nioii(\v in Jive days, and the bahince in three ecjnal instalments secured to the satisfaction of the assignee, at two, four and six months, >\ ith int(M-est at six per cent. \)rv annum. And upon the full com]»letion of such purchase, the purchaser slujll be entilhd to be juit into pense, after which the pur- chaser is to assunu* the rent and taxes and other rates, and to arranj»-e with the landlord of the i)remises as to tenancy. ♦ AGREEMENT FOR PURCHASE. It is hereby declared and a^a^eed, by and between the vendor of the stock- in trade and fixtun^s rcf(*rred to in the annexed conditionn of sale, and 74 SECTION 17. tlijit the said lias btMOine Xiiv purchaser of the said stock-in-trade and tixtures at the rate of cents on the dol- hir of the inventory value thereof, and tiiat the sum of . has been paid by the said to the said by way of dej)osit and in part payment of Siiid j)iH'(hase money, and that the particulars and <*()nditions of sale shall be taken as the terms of agreement for the said sale and purchase irs])ectiv sent to the right of the creditor to rank for the claim after deducting such valua- tion, or he may require from the creditor an assignment of the security at an^ ad- vance of ten per cent, upon the specified value to be paid out of the estate as soon as the assignee has reahzed such security ; and in such case the difference between the value at which the security is retained and the amount of the gross claim of the credi- tor shall be the amount for which he shall rank and vote in respect of the estate 4ft V. c. 26, s. 18 (4) ; 50 V. c. 19, s. 5 (5) If a creditor holds a claim based upon negotiable instruments upon which rttfi^f^'jwsw?*^!??^^^^ SECTION 19. 79 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 sec- tion, 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. 48 Y. c. 26, s. 18 (5). (b) In case a person claimmg to be en- titled to rank on the estate assigned holds security for his claim or any part thereof, of such a nature that he is required by this Act to value the same, and he fails to value such security, the Judge of the County Court of the County wherein the debtor at the time of making the assign- ment resided or carried on business, mav, upon summary application by the assignee or by any other person interested in the debtor's estate, of which application three 80 SECTION 19. If . days' notice shall be given to such claim- ant, order that, unless a specified value shall be placed on such security and noti- fied in writing to the assignee within a time to be limited by the order, such claiujant shall, in respect of the claim, or the part thereof for which the security is held in case the security is held for part only of the claim, be wholly barred of any right to share in the proceeds of such estate ; and if a specified value is not placed on such security, and notified in writing to the assignee according to the exigency of the said order, or within such further time as the said Judge may by subsequent order allow, the said claim, or the said part, as the case may be, shall be wholly barred as against such estate but without prejudice to the liability of the debtor therefor. 59 V. c. 31, s. 3. Apart irom the statute, one creditor can- not, in the administration of an estate, be (•oni])(^lled to value any securities held bv him. He is entitled to rank for the full amount of his claim and to realize any securities as well, SECTION 19. 81 provided he does not receive in all more than 100 cents in the dollar: Beaty v. Samuel, 29 Or. 105; Eastman v. Bank of Montreal, 10 O. E. 71); Young v. Spiers, IG O. R. G72; Mol- sons Bank v. Cooper, 23 A. R. 14G. Under this section the creditor need not value secur- ity given by a third person for the debtor, .e.g., a guarantee, but if the guarantee is a general one, and not for the ultimate balance only, the guarantor, upon i)ayment of the amount of the guarantee, is entitled to rank for the amount: Martin v. McMullen, 19 O. R. 230; 20 O. R. 257; 18 A. R. 559; and a firm and an individual partner are for this jjurpose treated as distinct persons, so that security by an individual partner for a firm debt need not be valued, nor in the converse case: Re Jones, 2 A. R. 62G; In re Chaff ey, 30 U. C. R. G4; Re Baker, 3 Ch. Ch. 499. Where, how- ever, i)ayment of goods has been guaranteed jind the vendors seek to rank on the guaran- tor's estate, they must value the liability of the purchaser: Wyid v. Clarkson, 12 O. R. 589; and where a debt was payable to execu- tors and there were vested in them lands in which the debtor had an interest, it was held that this interest must be valued: Tillie v. Springer, 21 O. R. 585; but where payment of a promissory note was guaranteed and the payee discounted the note and transferred the benefit of the guarantee and then failed, the transferee was held entitled to rank upon the pfiyee's estate without valuing the guarantee: C A.A. — 6 8-1 ►SECTION 19. Id re Hallett & Co., [1894J 2 Q. B. 250. Guar- autors may make payments to a suspense ac- count and the creditor may rank against tlie co-guarantor's estate for the full amount of the claim without giving credit for the amount of this suspense account: Commercial Bank of Australia v. Official Assignee of Wilson [180;^] A. C. 181; and see Molsons Bank v. Cooper, 2?> A. R. 140. Under the similar sec- tion of the Insolvent Act it has been held that the creditor holding security may give it up and prove for the whole claim, or that he may value it and prove for the balance, or that he may keep it and not prove at all: Deacon v. Driffil, 4 A. R. 335; but that he cannot keep the security and realize it and then prove for the balance: Re Beaty, A. R. 40; and that where th(- creditor values his security the estate must pi omptly decide whether it is to be taken over or not, and that if it is not promptly taken over the inference is that the creditor is in- tended to keep it, and he becomes the absolute purchaser of it at the value placed upon it by him: Bell v. Ross, 11 A. R. 458. So on the other hand a creditor cannot, after valuing his security and having that value accepted by the assignee, amend his claim by reducing the value: Re Street, 15 C. L. J. 80. Clause (b) was added by 59 V. c. 31, s, 3, and is intended to remedy the difficulty that has often been occasioned by the secured credi- tor's delay or refusal to value. :'Sigr-a SECTION 2'». 83 20. (1) Every person claiming to be entitled to rank on the estate assigned shall furnish to the assignee particulars of his claim proved by affidavit and such vouchers as the nature of the case admits of. 48 V. c. 26, s. 19 (1). (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 satisfacto y proofs of his claim as provided by this and the preceding sections of this Act, the Judge of the County Court of the County where- in the debtor at the time of making the assignment resided or carried on busiut ss, may, upon a summary application by the assignee or by any other person interested m the debtor's estate (of which applica- tion at least three days' notice shall be given to the person alleged to have made default in proving a claim as aforesaid), 84 SECTION 20. 1 ill ; i order that unless the ckihn be proved to the satisfaction of the Judge within a time to be hmited by the order, tlie per- son so making default shall no longer be deamed a creditor of the estate assigned, 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 assignee 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. 50 V. c. 19, s. 6, part. (3) The preceding subsection is not in- tended ^o interfere with the protection afforded to assignees, by section 36 of the Act respecting Trustees and Executors, and the Administration of Estates. 50 V. c. 19, s. 6, part. (4) A person whose claim has not accrued due shall nevertheless be entitled SECTION 20. 85 to prove under the assignment and vote at meetings of creditors, but in ascertain- ing the amount of any such claim a de- duction for interest shall be made for the time which has to run until the claim becomes due. 48 V. c. 20, s. 19 (2). k (5) At any time after the assignee re- ceives 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 regis- tered may on application allow, an action shall be brought 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 served within the time aforesaid, the claim to rank on the estate shall be forever barred. 8G SECTION 20. (d) The notice by tlie assignee shall contain the name and place of business of one of the solicitors of the Supreme Court of Judicature for Ontario, upon whom ser- vice of the writ may be made ; and service upon such solicitor shall be deemed suffi- cient service of the writ. 60 V. c. 19, s. 7. (b) In case the assignee is satisfied with the proof adduced in support of any claim, but the debtor disputes the same, such debtor shall do so by notice in writing to the assignee, stating the grounds upon which he disputes the claim ; and such notice shall be given within ten days of such debtor's being notified in writing by the assignee that he is satisfied v/ith the proof adduced as aforesaid, and not after- wards unless by special leave of the said Judge. 59 V. c. 31, s. 4 (6). (c) If upon receiving such notice of dis- pute the assignee does not deem it proper to require the claimant to bring an action I' i ff'-rim'ivmi^n^^. SECTION 20. 87 to establish his claim, he shall notify the debtor in writing of this fact, and the debtor may thereupon, and within ten days' of his receiving such notice, apply to the said Judge for an order requiring the assignee to serve a notice of contes- tation. 59 V. c. 31, s. 4 (c). (d) The Judge shall only make such order if after notice to the assignee the Judge is of opinion that there are good grounds for contesting the claim. 59 V. c. 31, s. 4 {d). (e) In case the debtor does not make such application, the decision of the as- signee shall HS against him be final and conclusive. 69 V. c. 31, s. 4 [e), (/) If upon such application the claim- ant consents in writing, the Judge may, in a summary manner, decide the question of the validity of the claim. 59 V. c. 31, {g) If an action is brought by the claim- ant against the assignee the debtor may 88 SECTION 20. intervene at the trial, either personally or by counsel, for the purpose of calling and examining or cross-examining witnesses. 59 V. c. 31, s. 4 {g). (6) (1) The assignee may, if he deems it advisable so to do, take the proceedings authorized by section 32 of the Creditors' Belief Act to be taken by a sheriff, and in that case sections 32 and 33 of the said Act shall apply to proceedings for the dis- tribution of moneys and determination of claims arising under an assignment made under the said Act respecting iVssign- ments and Preferences by Insolvent Per- sons, with the substitution of ^^ assignee " for '' sheriff" where it occurs in said sec- tion 82; and the substitution of '' accord- ing to law "for '* as directed by this iVct," where these words occur in said section 32 ; but this section shall not be con- strued to relieve the assignee from mailing to each creditor the abstract and other information required by section 22 of the Act respecting Assignments and Prefer- T I wmmm T SECTION 20. 89 ! ences by Insolvent Persons to be sent to creditors, so far as the same is not con- tained in the list sent by him under sec- tion 32 aforesaid. 59 V. c. 31, s. 6 (1). (2) The Judge of the County Court of the county wherein the debtor at the time of the assignment resided or carried on business shall be the Judge to whom ap- plications under this section shall be made. 59 V. c. 31, s. 6 (2). If a creditor holds negotiable paper for hi« claim it should be produced and the amount of any dividends endorsed upon it. If the assignee is a creditor his rights as creditor are not lost or merged: Robinson v. Cook, r. o. R. 590. A cestui que trust ranks against the estate of his trustee as an ordinary claimant only: Culhane v. Stuart, G O. R. 97; and creditors residing in a foreign country are entitled pari passu with the creditors in this Province: Milne v. Moore, 24 O. R. 456. In fact, apart from the special provisions as to rent and wages, all creditors share equally. Even the Crown has no prioritv: Clarkson v. Attorney- General of Canada/ IG A. R. 202. But if noney is entrusted to an agent to be used in DO SECTION 20. the purchase of goods, and some of the money 4s in the agent's hands at the time of his assignment the principal is entitled to it as against the assignee: Long v. Carter, 23 A. K. 121. The making of an assignment does not stop the running of interest: Stewart v. Gage, 1?> O. R. 458, there being no restrictive provisions as in the Insolvent Act: In re McDougall, 8 A. R. 309. It has been held in administration pro- ceedings that claims may be sent in or amend- ed at anv time before the final distribution of the estate: but that dividends actually paid cannot be disturbed: Andrews v. Maulson, 1 Ch. Ch. 31G; In re Metcalfe, Hicks v. May, 13 Ch. D. 236; Gillespie v. Alexander, 3 Russ. 130; Greig v. Somerville, 1 R. & M. 338; Ex parte Boddam, 2 DeG. F. & J. 625; Broad- bent V. Thornton, 4 DeG. & S. 65; Holmsted and Langton, pp. 179, 180, 777. The same dcf^trine ought to apply under this Act. A debt payable in future in five annual in- stalments is provable by virtue of sub-section 4 ; Tillie v. Springer, 21 O. R. 585. The ques- tion whether a claim can be made for future jiales of rent has been raised but not settled. The opinions of two leading counsel on the question are in direct contradiction, but hav- ing regard to the scope of the Act the better opinion would seem to be against such a right. See In re Harte and the Ontario Express and SECTION ao. 91 Transportation Co., 22 O. R. 510; Connolly v. Coon, 23 A. R. 37; and Grant v. West, Court of Appeal, 12tli May, 1896. Subsection 5 applies only to a right of action against the estate, and failure to en- force the alleged right of action does not bar the right to set otf the claim against the pur- chaser from the assignee of a debt alleged to be due bv the claimant: Johnston v. Burns, 23 O. R. 179, 582. There is no presumption against the validity of claims by relations. As Lord Eldon says, a man is more likely to apply for loans to his relations than to any one else: Ex parte Gard- ner, 1 V. & B. 45. A wife may rank against the husband's estate, but there must be clear and conclusive evidence to support her claim: Re Miller, 1 A. R. 393. The landlord's rights in case of an assign- ment for the benefit of creditors are defined by subsections 4 and 5 of R. S. O. (1887) c. 143, (as amended by section 3 of 58 V. c. 26), as fol- lows: " In case of an assignment for the general benefit of creditors the preferential lien of thi* landlord for rent is restricted to the arrears of rent due during the period of one year last previous to, and for three months following, the execution of such assignment and from thence so long as the assignee shall retain possession of the premises leased. 92 SECTION 20. 4 f ^'' Notwithstanding any provision, stipula- tion or agreement in any lease or agreement contained, in case of an assignment for the general benefit of creditors, or in case an order is made for the winding up of an incorporated company, being lessees, the assignee or liqui- dator shall be at liberty within one month from the execution of such assignment or the making of such winding-up order by notice in writing under his hand given to the lessor to elect to retain the premises occupied by the assignor or company as aforesaid at the time of such assignment or winding up, for the unexpired term of any lease under which the said i^remises were held, or for such portion oi the said term as he shall see fit, upon the terms of such lease and paying the rent there- for provided by said lease." This section applies only to assignments made after the IGth of April, 1895, and re- peals subsection 4 of section 28 of R. S. O. (1887) c. 143, which was the same in effect as section 74 of the Insolvent Act of 1875, and was as follows: — "In case of an assignment for the general benefit of creditors the pre- ferential lien of the landlord for rent is re- stricted to the arrears of rent due during the period of one year last previous to the execu- tion of such assignment, and from thence so long as the assignee shall retain the premises leased.'' In the absence of special restriction, every tenant, except a tenant at sufferance, may 4 SECTION 20. 93 ijssign the term, and the lessor cannot object: Woodfall'S Law of Landlord and Tenant, 15th ed., p. 209; but most written leases contain the statutory covenant that the lessee " will not assign or sublet without leave," and the pro- vision that '' if the term hereby granted shall be at any time seized or taken in execution or attachment by any creditor of the lessee or his assigns, or if the lessee or his assigns shall make any assignment for the benelit of creditors, or becoming bankrupt or insolvent, shall take the benefit of any Act that may be in force for bankrupt or insolvent debtors, the then current quarter's rent shall immediately become due and payable, and the term shall immediately become forfeited and void.'^ Apart from the provisions of the present sec- tion, an assignment for the benefit of creditors by a tenant who holds under a lease with this covenant or this provision, gives the landlord the right to eject, and this without prelimin- arv notice of the breach : Kerr v. Hastings, 25 O.'P. 429; Magee v. Rankin, 29 U. C. R. 257; Barrow v. Isaacs & Son, [1891] 1 Q. B. 417; Argles V. McMath, 26 O. R. 224; 23 A. R. 44; and acceptance of payment of arrears due before the making of an assignment is not a waiver of the right of forfeiture: Dobson v. Bootheran, 15 O. R. 15. Such a proviso for forfeiture applies only in respect of the status of the holder for the time being of the term; and therefore the lessor, after a valid assign- ment of the term has been made, cannot take advantage of the fact that the original lessee 94 SECTION 20. has become bankrupt: Smith v. Gronow, [1891] 2 Q. B. 394; nor can the assignee of part of the reversion enforce the right of forfeit- ure: Mitchell V. McCauley, 20 A. R. 272. Under this section, however, the assignee is given the right to retain the demised premises upon making his election in the prescribed manner, and the question of the right of for- feiture is not of much importance. The landlord's right to preferential pay- mt^nt depends upon the existence of distrain- able effects, and if there is nothing upon which a distress can be levied, the landlord ranks only as an ordinary creditor: Linton v. Imperial Hotel Company, IG A. R. 337; In re Kennedv, Mason v. Higgins, 36 U. C. R. 471; Mason v. Hamilton, 22 C. P. 190, 411; In re Hoskins, 1 A. R. 379; In re McCraken, 4 A. R. 486. It is not necessarv that a distress should in fact be made, and making a distress does not give the landlord any higher right, though if before an assignment is made the arrears are recovered by distress, the landlord cannot be compelled to refund the excess over the statutory allowance: Griffith v. Brown, 21 C. 1*. 12; Mason v. Hamilton, 22 0. P. 190,411; Mc- Fdwards v. McLean, 43 U. C. R, 454; In re Mc- Craken, 4 A. R. 486. For rent accruing due after the assignment the landlord may dis train, as the goods are not by the assignment placed in custodia legis: Briggs v. Sowry, 8 M. & W. 729; Ex parte Hale, 1 Ch. D. 285; Eacrett v. Kent, 15 O. R. 9; Linton v. Imperial Hotel Company, 16 A. R. 337. The restriction mm SECTION liO. 95 on the landlord's rights applies only for the benefit of the assignee as representing credi- tors: Kailton y. Wood, 15 App. Cas. 803; and would not relieve a surety: Tuek y. Fvi^on, 6 Bing. 321; nor the tenant himself: Young V. Hmith, 21) C. T. 109; nor a chattel mort- gagee in possession before the assignment : Brocklehurst y. Lawe, 7 E. & B. 170. While a proviso for acceleration of pay- ment is good as between the parties: London and Westminster Loan and Discount Company v. London and North Western R. W. Co., [1S03] 2 Q. B. 49; Buckley y. Taylor, 2 T. R. COO; Young y. Smith, 29 C. P. 109, it has been held, under the Insolvent Act of 1875, that j-ucU a proviso would be a fraud upon creditors, and could not be enforced : In re Hoskins, 1 A. R. 379, but a similar view of the effect of the present section: Baker v. Atkinson, 11 O. R. 735, 14 A. R. 409, has not prevailed: Linton V. Imperial Hotel Company, IG A. R. 337. It was also held under the Insolvent Act of 1875, that as the assignment protected the goods from distress, and as the accelerated rent did not become due until after the assignment had been made, the landlord, as far as the accel- erated rent was concerned, could neither dis- train nor rank as a creditor: Grififith v. Brown, 21 C. P. 12; In re McCraken, 4 A. R. 480; In re Hoskins, 1 A. R. 397, but under section 28 (4) of R. S. O. (1887) c. 143, it has been held that the accelerated rent either falls due at the same instant that the assignment is made, 96 SECTION 20. or at all events while the assignee '' retains the premises leased," and that either way the landlord mav recover: Baker v. Atkinson, 11 O. R. 735; i4 A. R. 409; Linton v. Imperial Hotel Company, 16 A. R. 337; Graham v. Lang, 10 O. R. 248; Eacrett v. Kent, 15 O. R. 9, and that recovery was not necessarily limited to a year's rent, but to the rent, whatever it might be, falling due during the year previous to the assignment, or during the period of the assignee's possession: Linton v. Imperial Hotel Company, 16 A. R. 337; and the same case decided that the parties to the lease might agree that the section should not ap- ph. The present section enlarges the land- lord's rights by giving him the right to re- cover " arrears " of rent due for the three months following the assignment. The clause is not happily expressed, but seems to be in- tended to give the landlord at least three months' rent. Apart from the right of election given to the assignee, it would seem that a landlord could claim the accelerated rent, and yet at the same time eject the assignee. The right of distress of a mortgagee as quasi landlord is limited to one year's arrears of interest, provided the assignee takes the proper steps to obtain the benefit of the statu- tory provision dealing with that rifflit : R. S. O. (1887) c. 102, s. 17; Munro v. Commercial Ruilding and Investment Society, 36 U. C. R. SKCTION 20. 97 404; Hobbs v. Ontario Loan and Debentun^ Company, 18 S. C. K. 483. An assignee for the benefit of creditors under an assignment which is in terms wide enough to elfect a transfer of the lease, be- comes personally bound to pay rent and per- form covenants as assignee of the term, and cannot disclaim, but may assign over and thus put an end to his liability: How v. Ken- nett, 3 2^. & E. G59; Ringer v. Cann, 3 M. & W. 343; White v. Hunt, L. R. G Exch. 32; Kerr v. Hastings, 25 C. P. 429; Magee v. Rankin, 21) U. C. R. 257; Hopkinson v. Lovering, 11 Q. 1». D. 92; Magill v. Young, 10 IJ. C. R. 301. A specific reference to the lease in the assign- ment is not necessary; such general expres- sions as " all property of every sort and de- scription " ; ^^ all personal estate and effects " ; "^ all goods and chattels and personal estate -'; ^* all property and effects,'^ are, unless the lease is specially excepted, sufficient: Burrill ou Assignments, 6th ed., pp. 103, 110; Ringer V. Cann, 3 M. & W. 343; Palmer v. Andrews, 4 Ring. 348; White v. Hunt, L. R. G Exch. 32; Magill v. Young, 10 U. C. R. 301. Even though the assignee assigns over before a gale of rent falls due he is personally liable for the period during which the term has been vested in him: R. S. O. (1887) c. 143, s. 2; Woodfall'f^ Law of Landlord and Tenant, 15th ed., p. 273; Swansea Bank v. Thomas. 4 Exch. D. 94; Ex parte Dressier, 9 Ch. D. 252; Wilson v. Wal- C.A.A, — 7 98 SECTKJN 20. laiii, 5 Exch. D. 155; Graham v. Laii^, 10 O. K. 248; 111 re Howell, [181)5] 1 i^. B. 811. There is no provision in the Act for the proof of contingent claims or claims for dam- ages. Having regard to the language of sec- tion 4 and the terms of the form of assignment in general use, it would seem that only debts strictly so-called can be proved, so tliat a per- son who has a pending claim for damages is not a creditor: Ashley v. Brown, 17 A.li. 500; and costs incurred after the assignment, aris- ing out of proceedings pending at the time of the assignment, do not rank: lie Dumbrill, 10 P. K. 21C. Special provision is made in the Winding-up Act, R. S. C. c. 129, s. 50, for the right to rank in respect of contingent claims and claims for damages. And see Burrill on Assignments, Oth ed., p. 531, et seq.; Robson's Law of Bankruptcy, 7th ed., p. 273, et seq., and Grant v. West, Court of Appeal, 12th May, 1896. If an assignee knows that a creditor has a claim he cannot ignore it because it is not proved; the proper course is to call upon the creditor to prove it: Oaiiing Brewing and Malting Co. v. Black, G O. R. 441. The time for bringing an action cannot be extended after the thirty days have expired: Article, 28 C. L. J. 99; and the creditor in his action is confined to the items and quan- tum of the affidavit of claim: Grant v. West, 12th May, 1896. Where a claim is disputed, an action asking a declaration of the right to rank, is an action SECIKJN 20. 99 ^ lor equitable relief, and, as sucli, could not, befoie the auiendnient of 1JSJ)(), be entertained by the County Court: Whidden v. Jackson, 18 A. K. ^:i9. By 59 V. c. 19, s. ;i (14), it is pro- vided, however, that the County Court snail have jurisdiction in '' every action or con- testation to establish the rij^ht of a creditor to rank upon an insolvent estate where the amount of such claim does not exceed |40()." If a limited {»uarantee is given for an ulti- nuite balance, the surety can rank upon throvides as follows: *' Where i\ trustee or assif^uee aetinj*' under tlie trusts of a deed or assignment for tli(» benefit of creditors j^encM'ally, or a particular class or classes of creditors, where the credi- tors are not desij»nated by name therein, or au executor or an administrator has given such or the like notices as in the ojiinion of the Court in which such trustee, assignee, executor, or administrator is sought to be charged, would liave been given by the High Court in an ac- tion for the execution of the trusts of such deed or assignment, or an administration suit (as the case may be), for creditors and others, to send into (sic) such trustee, assignee, execu- tor or administrator, their claims against the person for the benefit of the creditors of whom such deed or assignment is made, or the es- tate of the testator or intestate, (as the case may be), the trustee, assignee, executor or administrator shall, at the expiration of the time named in the said notices, or the last of the said notices, for sending in such claims, be at liberty to distribute the proceeds of the trust estate, or the assets of the testator or intestate (as the caje may be), or any part thereof amongst the parties entitled thereto, having regard to the claims of which the trustee, assignee, executor or administrator has then notice, and shall not be liable for the proceeds of the trust estate, or assets (as the case may be), or any part thereof, so dis- SECTION 20. 101 liibiited to any iK^rsoii ul" whose claim the trustee, aHsij»iiee, executor or administrator iuid not notice at the time of the distribution thereof or a part thereof (as the case may be); but nothing in tliis Act contained sliall pre- judic(? the right of any creditor or claimant to follow the proceeds of the trust estate or assets (as the case may be), or any part there- of, into the hands of the person or persons who may liave received the same respectively.'^ It is entirely optional with the assij^nee to give this notice or not, and the nature of the notice depends very much upon the locality and nature of the business: In re l^racken, Doughty V. Townson, 43 Ch. D. 1. It is always better to give it, however, as liability for un- known claims is then guarded against. The notice under section 12 is a compulsory notice, and must be published in the Ontario Gazette, while this notice need not: Re Cam- eron, Mason v. Cameron, 15 P. R. 272, but the two may, with advantage, be combined, and it is well to publish the combined notice for at least four weeks in the Ontario Gazette, and lor the same time (one insertion a week) in some paper or papiu's having a general circu- lation in the locality or localities where claim- ants are likelv to be. Although the assignee is protected if pro- per notice is given by him, it would seem that an unpaid creditor has a right to make those creditors who have receiyed a share of the estate make up enough to put him on an eq^aal- i V. I! ? W- I ii 102 SECTION 20. ity with them. This is n settled principle in the distribution of the estate of a deceased person, and the statutory provision for rat able distribution in that case is in effect the same as the provisions of an assij?nment under this Act: Doner v. Ross, 19 Gr. 229; Bank of British North America v. Mallory, 17 Gr. 102; Ohamberlen v. Clark, 9 A. R. 273; and see R. S. O. (1887) c. 119, s. 36. This is an equit- able riirht, however, and may be barred by lapse of time or acquiescence: Blake v. Gale, 81 Ch. D. 190. If a payment is proper at the time it is made, but owinj? to a subsequent unexpected depreciation in value the estate^ cannot pay otlier beneficiaries at the same rate, payments of the excess will not be ordered: In re Winslow, Frere v. Winslow, 45 Ch. D. 249; Todd v. Studholme, 3 K. & J. 324. The following: form of notice is sufPicient: i I' NOTICE TO CREDITORS. In the matter of Notice is hereby jxiven that of the of in the county of , carryintr on business as at the said of , has made an assignment und^r R. S. O. 1887, c. 124, and amendincr Acts, of all his estate, credits and effects to , of the of , for the general benefit of his creditors. SECTION 20. 103 A meeting of his creditors will be held at in the of on the office of day, the 181) , at the hour of o'clock in the noon, to receive a state- ment of affairs, to appoint inspectors and fix their remuneration, and for the ordering of the affairs of the estate generally. Creditors are requested to file their claims with the assignee, with the proofs and particu- lars thereof required by the said Acts, on or before the day of such meeting. And notice is further given, that after the day of , 189 , the assignee will proceed to distribute the assets of the debtor amongst the parties entitled thereto, having regard only to the claims of which notice shall then have been given, and that he will not be liiible for the assets, or any part thereof, so distributed to any person or persons of whose claim he shall not then have had notice. . Assignee. The following form of Contestation of Claim mav be used: IN THE MATTER OF AN ACT RESPECTING ASSIGNMENTS AND PREFERENCES BY INSOLVENT PERSONS, R. S. O. (1887), CHAPTER 124, AND AMENDING ACTS. To And in the matter of the estate of You are hereby notified, pursuant to the provisions of the above Act and under the an- thority and direction of the Creditors and b -1 101 SECTION 20. '1^ Inspectors of this estate, that I dispute your right to rank on the estate of the above named insolvent for | , the amount of your claim filed with me, or for any part thereof. 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 said claim and within the same time a copy of the writ or process is served upon me or my solicitor herein named, your claim to rank upon the estate shall be forever barred. And you are hereby further notified that service of any writ or process to enforce said claim may be made upon my solicitor, A. B., of, etc. Daied at the day of Assignee. Clauses 5 (b) to 5 (g) were added by 59 V. c. 31, s. 4, and give the debtor an opportunity of protecting himself from improper claims. Clauses 6 (1) and 6 (2) were added by 59 V. c. 31, s. 6, and enable the assignee, if he see fit to do so, to adopt the contestation yvo- cedure of Creditors' Relief Act, the sections in question being as follows: 32. Where the money levied is insuificient to pay all claims in full, and the time has come for distributing the money levied, the % I SECTION 20. 105 sheriff may forthwith distribute the same as directed by this Act; or he may first prepare for examination by the debtor and his credi- tors a list of the creditors entitled to share in the distribution of the amount levied, with the amount due to each for principal, interest and costs; the list to be arranged so as, among other things, to shew the amount going to each creditor under the provisions of this Act, and the total amount to be distributed; and the sheriff maj' deliver, or send (prepaid and registered) by post to each creditor or his solicitor, a copy of the list, with the several particulars aforesaid; and in such case the further proceedings may be as follows: (1) If within eight days after all the said copies have been delivered or posted, or with- in any further time the Judge may allow, no objection is made as provided by this Act, the sheriff shall make distnbution forthwith pursuant to such list; (2) In case an objection is made as pro- vided by this Act, the sheriff shall forthwith distribute such an amount of the money made, and to such persons pari passu, as may not interfere with the effect of the objection in case the same should be allowed ; (3) The sheriff may disregard objections which are frivolous, or manifestlv insufficient to interfere with the distribution proposed, and distribute as if such objections had noi been made; 106 SECTION 2\ (4) Any person prejudiced by the pro- posed scheme of distribution, may contest the same in manner following, viz., by giving a notice in writing to the sheriff, stating there- in distinctly his objection to the scheme (or any part thereof) and the grounds of objection, and by, at the same time, delivering to the sheriff an affidavit of previous service of a copy of the notice on the debtor and the credi- tors interested in resisting the objection, un- less the Judge shall by order have dispensed with the service, or on affidavit of service as the Judge shall have sanctioned; (5) The contestants shall, within eiglit days thereafter, apply (upon notice) to tlK^ Judge for an order adjudicating upon the matter in dispute; and otherwise the contes- tation shall be taken to be abandoned. The notice mav be in the Form G. in the schedule hereto ; (G) The Judge may determine any ques- tion in dispute in a summary manner, or may direct an issue or action for the trial thereof, either bv a iurv or otherwise and in anv Court or county, and may make such order as to the costs of the proceedings as may be just. This sub-section is subject to the same pro- visions as are set forth in sub-section 2 of sec- tion 11 of this Act; [Subsection 2 of section 11 provides that if a contestation is not being carried on in good faith another creditor may intervene.] 01 SECTION 20. 107 (7) In the event of a claimant under a con- testation being held not entitled, or only en- titled to i)art of his claim, the money retained pending the contestation, or the portion as to which the claimant shall have failed, shall be distributed among the execution creditors and other creditors who would have been entitled thereto, as the same would have been dis- tributed had the claim in respect thereof not been made. 33. In case several creditors are interested in a contestation, either for or against the same, the Judge shall have authority to give, and shall give, such directions for saving the expense of an unnecessary number of parties and trials, and of unnecessary proceedings, as may be just, and he shall direct by whom and in what propotions any costs incurred in the contestation, or in any proceedings thereunder, shall be paid; and whether any and what costs shall be paid out of the money levied. Form G. is as follows : In the Countv Court of the Countv of A. B., Claimant, V. C. D., Debtor. To F. n. and M. N., claimants of moneys levied bv the sheriff of the countv of OUT of the estate of C. D. 108 SECTION 20. I Take notice that I will on the day of next, apply to the Judge of the County Court of the county of at his chambers at the court house in the town of for an order adjudicating upon the right of you the said to rank upon the said moneys for any amount whatever (or as the case may be); and further take notice that I will, upon the said applica- tion, read the affidavits of E. F. and X. Y.^ filed with the clerk of the Court. 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 a'^d afterwards from time to time at intervals of not more than three months, the assignee shall prepare and keep constantly accessible to the cred- itors accounts and statements of his doings as such assignee, and of the posi- tion of the estate ; and he shall declcire 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. 49 V. c. 25, s. 6. msm SECTION 21. lOf) r as 1 of e to iree and red- his osi- I'cire the tify he V. (z) As large a dividend as can with safety be paid, shall be paid by every assignee under the said Act within twelve months from the date of any as- signment made under the said i\ct, and earlier if required by the inspectors ; and thereafter a further dividend shall be paid every six months, and more frequently if required by the inspectors, until the estate is w^ound up. and disposed of. 59 V. c. 31, s. 5. It is the duty of an assignee to at all times have his accounts ready, to afford all reasonable facilities for their inspection and examination, and to give full iuformatioa whenever required, and if a creditor lives at a distance he should if required give this in- formation by letter, and should also, at the creditor's expense, furnish copies of any ac- counts that may be asked for: Sandford v. Porter, 16 A. B. 565. The assignee may choose his own solicitor: In re Lamb, 17 C. P. 173; but this solicitor's bill of costs may be taxed by any of the credi- tors: Sandford'v. Porter, 16 A. R. 565. The assignee must be careful not to make himself personally responsible to the solicitor for the estate: Butterfield v. Wells, 4 O. R. 168. I! > 110 SECTION 21. ^fi !/ ;! In the absence of special difficulties the estate should be wound up within a year : Ontario IJank v. Laniont, (). R. 147. Undeclared dividends mav be attached : l*arker v. Howe, 12 l\ li. 35l!^ The creditor may take the dividends and I.' Ihen sue the debtor for the balance of the claim : Mackenzie v. Blackburn, Common Pleas Division. 12th February, 1890. 22. So soon as a dividend sheet is pre- pared, notice thereof shall be given by letter posted to each creditor, enclosing an abstract of receipts and disbursements, showing 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 ob- jected to within that period shall be paid. 49 V. c. 25, s. 7. SECTION' 22. Ill as lob- dd. The receipt of a dividend does not deprive a creditor of the right to call the assignee to account, and to make him responsible for profit alleged to have been made by him at the exjjense of the trust ( slate : Morrison v. Watts, 19 A. R. 022; Beemer v. Oliver, 10 A. R. 050; but conduct directly conducing to the transaction afterwards attempted to be com- plained of will be a bar: Miller v. Hamlin, 2 O. R. 103. It is doubtful how far a claim that has before the assignment passed into judgment can be objected to by other creditors. It was held in In re Hague, Traders Bank v. Murray, 13 O. R. 727, that creditors could not defeat a judgment creditor's claim by showing that the note in respect of which the judgment had been obtained against the deceased as endorser had not been protested. In that case, however, there was nothing in the nature of fraud, and it was an attemj^t to take advantage of a technicality. In the Imperial Bankruptcy Act special provision is made for attacking judgments, and this ^eems to be merely a statutory recognition of an equit- able doctrine that would apply to an adminis- tration under this Act, so that if fraudulently obtained a judgment would be open to objec- tion: In re Hawkins, [1895] 1 Q. B. 404; Ex parte Lennox, 16 Q. B. D. 315; Ex parte Ban- ner, 17 Ch. D. 480; Ex parte Kibble, L. R. 10 Ch. 373; McDonald v. Boice, 12 Gr. 48; Bower- man V. Phillips, 15 A. R. 079. If a judgment 112 SECTION 22. I « ] . ■ ii is obtained after the assignment against tlie assignor for an alleged pre-existing indebted- ness it is not even prima facie evidence against the assignee: Stewart v. Gage, 13 O. K. 458. It has been held that an administrator, in the absence of objection by a creditor, is not bound to set up the defence of the Statute of Limitations, but the objection can be taken by one creditor against another in administra- tion proc(»<'dings, and the administrator can- not waive the defence after objection. The doctrine would apply to an assignee, who should, therefore, set up the defence if open to him: In re Wenham, Hunt v. Wenham, [18921 3 Ch. 59; Budgett v. Budgett, [1895] 1 ' C^li. 202; Midffley v. Midgley, [1893] 3 Ch. 282; Alston V. Trollope, L. R. 2 Eq. 205; Jardine v. AVood, 19 Gr. 017; Re Ross, 29 Gr. 385. There is no right under any circumstances to waive the defence of the Statute of Frauds: in re Rownson, Field v. White, 29 Ch. D. 358. 23, The law of set-off shall apply to all claims made agamst 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 'i > I SECTION 23. 113 defendant, as the case may be, except in so far as any claim for set-off shall be affected by the provisions of this or any other Act respecting frauds or fraudulent preferences. 48 V. c. 20, s. 20. Ill o r e r This section is the same in effect as sec- tion 107 of the Insolvent Act of 1875, which has been given a liberal construction: Mason V. Macdonald, 45 U. C. R. 113; Court v. Hol- land, 29 Or. 11). The subject of set-off is too large to be dealt with here. The main prin- ciple is that the claims to be set oft* must be payable by and owing to a person in the stime capacity; thus a debt due by an individual partner cannot be S€4 oft' against a claim by a partnership estate: Graham v. Toms, 25 Or. 184. Making an assignment for the benefit of creditors after a verdict for damages has been rendered in favour of the assignor does not prevent the defendant from setting off a debt due by the assignor: Moody v. Canadian Bank of Commerce, 14 P. R. 258; and a pur- chaser of a stock-in-trade may set off against the price the full amount of claims against the vendor bought up by him at a discount before the vendors assignment for the benefit of creditors: Thibaudeau v. Garland, 27 O. R. C.A.A. - 8 lU SECTIOX 2a. Ii il 1 1 A chattel mortgagee is entitled to set-oiT as against the mortgagor's assignee surplus proceeds of nale of the mortgaged goods, and if this is not done in pursuance of any agree- ment between the mortgagor and mortgagee the (lansaction is not a preference: Stephens V. Jioisseau, 2:1 A. K. 2:50. As to allowance of eommision on accounts set olf, see In re Central Bank, Lye's Claim, 22 O. 11. 247. Costs of taxation payable to an assignee who taxes a solicitor's bill for services rendered to the insolvent cannot be set-off against the solicitor's claim: In rt? Rogers :and Farewell, 14 V. K. 88. 24. Any affidavit authorized, or re- quired, under this Act may be sworn be- fore any person authorized to administer affidavits in the High Court, or before a Justice of the Peace, or, if sworn out of Ontario, before a Notary Public. 48 V. c. 26, s. 21. IP ' Probably " person authorized to take affi- davits " is intended : R. S. O. (1887) c. 62. 25. (1) Where there has been an as- signment for the benefit of creditors the SECTION 25. 115 M assignee, or assignees, upon resolution passed by a majority vote of the creditors present or represented at a regularly called meeting of the creditors of the as- signor or upon the written request or resolution of the majority of the inspec- tors of the estate may withoi^t an order examine the assignor, or any person who is or has been an agent, clerk, servant, ofKcer or employee of any kind of the assignor, upon oath before a mas- ter or local master, or an examiner, or before one of the registrars, deputy clerks of the Crown, or before the Judge of the County Court of the county within which such assignor resides, or before any official referee or may by the order of the Court or a Judge examine the assignor on oath before any other person to be special- ly named in such order, touching the estate and effects of the assignor, and as to the property and means he had when the earliest of the debts or liabilities of the assignor existing at the date of the as- 116 SECTION 25. ! i n .!! t signinent was incurred, and as to the pro- perty and means he still has of discharging his debts and habihties, and as to the dis- posal he has made of any property since contracting such debt or incurring such liability and as to any and what debts are owing to him. (2) Any person liable to be examined under this Act may be compelled to at- tend and testify and to produce books and documents, in the same manner and sub- ject to the same rules of examination, and the same consequences of neglecting to attend or refusing to disclose the mat- ters in respect of which he may be examined, as in the case of a witness in an action in the High Court of Justice. (3) Any person liable to be examined under this Act may be served with an appointment signed by the Judge or offi- cer, or a copy thereof, and where the ex- amination is to take place under an order, also with a copy of the order ; such service p ■•'!¥ SECTION 25. 117 to be made at least 48 hours before the time appomted for the examination ; and the person to be examined is to be paid the same fees as a witness. (4) The examination shall be conducted in the same manner as in case of an oral examination of an opposite party. (5) In case such assignor does not attend as required by the said appoint- ment, or appointment and order, as the case may be, and does not allege a suffi- cient excuse for not attending, or if attending, refuses to disclose his property or his transactions respecting the same, or does not make satisfactory answers re- specting the same, or if it appears from such examination that such assignor has concealed or made away with his property in order to defeat or defraud his creditors or any of them, the Court or Judge may order the assignor to be committed to the common gaol of the county in which he 118 SECTION 25. resides, for any term not exceeding twelve months. (6) The rules and procedure from time to time in force in the High Court of Jus- tice for the examination of judgment debtors shall, as far as may be, apply to an examination under this Act in all respects as if the assignor were a judgment debtor. Section 25 was addtd by 58 Y. c. 23, and was amended by 59 V^. c. 31, s. 9, and by the latter Act section 26 was added. The prac- tice as to examinations will be found in Holmsted and Langton, p. 734, et seq. 26. (1) Ii^ case any person has or is believed or suspected to have in bis pos- session or power any book, docunK nt, or paper of any kind relating in whole or in part to the debtor, his dealings or property, such person may, upon resolution passed by a majority vote of the creditors pres- ent or represented at a regularly called meeting of the creditors of tbe assignor exclusive of such person (if he is a cred- SECTION 2G. 119 itor) or upon the written request or reso- lution of the majority of the inspectors of the estate, be required by the assignee to produce such statement or statements for the information of such assignee. (2) In case such person fails to produce the said book, document or other paper within four days of his being served with a copy of the said resolution and a request of the assignee in that behalf, or in ca.se the assignee or the majority of the in- spectors is or are not satisfied that full production has beeu made, the assignee may without an order examine the said person before any of the officers mentioned in the preceding section touching any book document or other paper which he is supposed to have received. (3) Any such person may be compelled to attend and testify, and to produce upon his examination any book, document or other paper which under this section he 120 SECTION 26. is liable to produce in the same manner and subject to the same rules of examina- tion and the same consequences of neglecting to attend or refusing to dis- close the matters in respect of which he may be examined as in the case of a wit- ness in an action in the High Court of Justice. f P ll I COMPOSITION AGREEMENTS. It very frequently happens that after an assignment for the benefit of creditors has been made a composition is arranged, and it may be useful to mention a few of the authori- ties relating to composition agreements. The most important point to be borne in mind is.: that all creditors must be dealt with on an equality, and that any advtmtage or bonus to any creditor to induce him to assent to the agreement will make the agreement void : Dauglish v. Tennent, L. R. 2 Q. B. 49. A general discussion of the subject will be found in Addison's Law of Contracts, 9th ed., p. 82; Kerr on Fraud, 2nd ed., p. 2.31, et seq.; and Forsyth on Composition, p. 104, et seq. The doctrine isi very far-reaching. Any pro- mise made by the debtor or any person on his behalf, to pay the creditor more than the other creditors are to receive, cannot be en- COMPOSITIOX AGREEM ENTS. 121 forced, and not to disclose is to conceal: Me- Kewan v. Sanderson, L. R. 20 Eq. 05; Kniennett, 2 Atk. 527; Ex parte Vere, 10 Ves. 93; Andrews v. Bank of Toronto, 15 O. R. 048; In re Hatton, 124 COMPOSITION AGREEMENT!?'. m\ iii L. R. 7 Oh. 723; Weese v. Banfleld, 22 A. It. 4b'9; and applies even where there is a surety Ex parte Gilbey, 8 Ch. D. 248; unless the in- tention to substitute the composition pay- ments for the original debt is clearly shown: Ex parte Hemaman, 12 Jur. 643. Such a con- dition is not a penalty so far as the original debtors are concerned, but is a penalty and cannot be enforced against third persons : Watson V. Mason, 22 Gr. 1£0, 574; Thompson V. Hudson, L. R. 4 H. L. 1; and creditors of a new business are entitled in priority to cre- ditors of an old business who set up that a discharge has been fraudulently obtain- ed : Buchanan v. Smith, 17 Gr. 208 ; 18 Gr. 41. It is also usual to insert a condition that the agreement shall be binding only if a cer- tain number of creditors sign, and in the ab- sence of such a condition each creditor who signs is bound : Nornian v. Thompson , 4 Exch. 755; Carey v. Barrett, 4 C. P. D. 379. A creditor who signs is bound to the full amount of his claim: Harrhy v. Wall, 1 B. & Aid. 103; and cannot wilfully misstate the amount' of his claim and afterwards sue for the balance: Britten v. Hughes, 5 Bing. 460; Holmer v. Viner, 1 Esp. 132; Fowler v. Per- rin, 16 C. P. 258; Eastabrook v. Scott, 3 Ves. 456. A false statement bv the debtor that other creditors have agreed to sign if the creditor approached signs vitiates the agree- ment: Cooling V. Noyes, 6 T. R. 263; and so COMPOSITION AGUEEMENTW. 125 also does any non-disclosure of assets hv tiw. debtor: Vine v. Mitchell, 1 Moo/l K S7 midei an insolvent Act the debt remains dSion'r "* '" "'•'"^«'"' ""^ thei'e is r: Md,iat on for a prontisc to pav it; but it is otherwise where there has been a vo nnt n v release: Samuel v. TairRrieve, 21 i I 4lA i'.rle'ron,';"'" ^'"'- ^"-'"^^'^ '» ^^ ^'"- nie l>iiJs of Exchange Act.) INDEX > ^ A. ACCOUNTS, assignee's duty to keep, lOi) creditor's risrht to have cojMes, 100 creditor's right to inspect, 100 ACTION to enforce claim, 85, 98, 103 ADVANCES, what are, 29 when protected, 29 ADVERTISEMENTS, when to be publisher], 03 where to be published, 63, 101 form of, 102 penalty ffir not publishing, 07, G9 AFFIDAVIT, before whom to be sworn, 114 form of, 75 AGREEMENT to give security, 12 to purchase stock-in-trade, 73 ALIMONY, 56 AMENDMENT of assignment, 58 of claim, 90 of valuation of security, 82 f ■ 128 INDEX. A ASSKiNEE, iiccomits of, KK) action by, 45, 48, \\) appnintniont of, 43 attack on bills of sale, 41) chanj,'e of, 43 death of, 44 ({♦.'legation of powers, 24 <.'xclu«ive right of action, 48 how far bound by equities affecting assignor, 4!) liability for costs, 47 personal a-? distinguished from official acts, 4S rf moval of, 43, 45 remuneration of, 32, 58 residence out of jurisdiction, 32 fcale by auction by, 40 security for costs, 47 setting up defences by, 112 settlements by, 48 sheriff acting as, 10, 21, 45, 47, -.^ solicitor not to be, 44 wrongful useof assets, 25 ASSIGNMENT, amendment of, 58 attack upon, 27, 30 by company, 30 creditors' consent, 30 defect in, 58 by firm, 30, 37 form of, 32, 33 by infant, 37 pending action, effect on, 39, 46 by power of attorney, 40 registration of, 41, 63 to sheriff, 19, 21, 45, 47, 68 variations from statutory form, 26 what it passes, 27, 36, 97 when within the Act, 21, 31 f %' INDEX. 129 ATTACHMENT, assignment takes |)roco(lenco of, 55 dividend may be attached, 110 B. BOXA FIDES, a/iidavit of, not required, 00 purchaser's, siiftioient, m wliat is, :M) BOOK DEBTS, assignment of, may bo attacked, 15 assignment of. is not within the Bills of Sale Act 10 assignment of, effect of assignment for the benefit of creditors upon, 50 0. CH/V >[GE of assignee, 4H, 45 CHATTEL MORTGAGE, assignee's right to attack 49 assignee's right to renew, 05 CLAIMS, action to enforce, 85, 98, 103 acquiring, after assignment, 77 advertisement for, 03, 101 amendment of, HO barring, 85 compelling proof of, 83 compromise of, 48 contestation of, 85, 88, 98, 103 contingent, 98 damages, 98 debtor's right to contest, 80 extension of time for proof, 98 form of affidavit proving, 75 future, 90 negotiable instruments, 78 overpayment of, 102 C.A.A, — , \ 130 INDEX. I 1 i \\ CLAIMS, produetion of vouchers, 8iJ proof of, 74 by relations, 91 for rent, 90 summary procedure for contestation of, 88 by wife, 91 COGNOVIT ACTIONEM, 2, 3 COMPOSITION AGREEMENTS, 120 COMPROMISE of claims, 48 CONCEALMENT of assets, 18 CONDITIONS of sale of stock-in-trade, 72 CONFESSION of judgment, 2, 3 CONTESTATION of claims, 85, 88. 98, 103 action to enforce claiiii, 85 notice of contestation, 85, 103 summary procedure for contestation, 88, 104 CONTINGENT CLAIMS, 98 COSTS, assignee's liability for, 47 Division Court costs, 57 execution creditor's costs, 55 lien for, 55 security for costs, 47 taxation of costs payable by estate, "• 09 CREDITORS, notice to, 63, 70, 102 right to use assignee's name, 48 right to attack transactions notwithstanding assign- nent, 40, 47, 48, 50 who may attack preferential transactions, 15, 45 who may be attacked, 15 who may claim, 90, 98 CREDITORS' RELIEF ACT, 4, 104 INDEX. CRIMINAL liability of fraudulent debtor, 18 CROWN, no priority, 80 D. DAMAGES, claims for, 15, 98 DESTROYING books, 19 DISCLAIMER by sheriff, 47 DISPOSAL of estate, 71 DIVIDEND, declaration of , 108, 109 effect of receipt of, 18, 27, 110 notice of, 110 payment may be ordered by inspectors, 108, 109 DIVISION COURT costs, 57 DEBTOR'S right to contest claims, 86 DOUBLE PROOF, 42 DOWER, 40 E. EXAMINATION of assignee, 40 of assignor, 114 of employees of assignor, 115 production of books, 118 EVIDENCE of parties to transaction, 15 EXECUTIONS, 55 EXEMPTIONS, 37 131 '0 3ign- FAIR relative value, 30 FALSIFYING books, 19 FINDING of fact, 15 F. 132 INDEX. I I 1 FOLLOWING proceeds, 51, 53 FOREIGN creditor, 80 FORFEITURE of lease, 92 FORMS, affidavit proving claim, 75 agreement to purchase stock-in-trade, 73 assignment, 33 conditions of sale of stock-in-trade, 72 notice of assignment, 102 of contestation of claim, 103 to creditors, 102 of meetings, 102 proxy, 76 FRAUDS, Statute of, assignee should plead, 112 FRAUDULENT transfer or concealment, 18 G. GUARANTOR, right to ra:'k, 99 L INDORSER taking security, 14 INSOLVENT CIRCUMSTANCES, 13 INSPECTOR acting as solicitor of the estate, «2 cannot buy assets, 61 cannot profit at expense of estate, 62 may fix assignee's remuneration, 61 may have assignor and his employees examined, 114 may order payment of dividends, 108, 109 remuneration of, 60, 62 INSURANCE, assignment of, 16 INTEREST, 90 INTENT, 9, 15 » ) . INDEX. 138 JOINT and separate debts, 41 JUDGMENT, attacking. 111 confession of, 2, 3 effect of assignment upon, 55 proof by, 112 K. KNOVVLEDCxE of creditor, 13 L. L ANDLO RD-^Vf Lease . LJOASE, arrears of rent, 91 assignee's right to disclaim, 97 assignee's right to hold, 92 assignee's liability to pay rent, 97 distress for rent, 94 forfeiture of, 92 future rent, 90 interest as rent, 90 LIENS of mechanics, 56 LIMITATIONS, Statute of, assignee should plea.l, 112 M. MECHANICS' LIENS, 56 MEETINCxS, how to be called, 70 requisition for, 70 when to be held, 70 where to be held, 70 1/ ' i it il:/ fl \ MISTAKE, 53 MORTAGEE'S claim for interest, 96 N. NEGOTIABLE INSTRUMENTS, claims under, 78 NOTICE of assignment, 70, 102 of contestation, 85, 103 to creditors, 70, 102 of dividends, ilO of meetings, 70 penalty for non-publication, 67, 69 to prove claim, 83 ^ to send in claims, 102 PARTNER, assignment executed by, 37 distribution of partnership estate, 41 double proof, 42 security given by, not to be valued, 81 security to, 17 PAYMENT, what is, 28 when protected, 20, 28 PREFERENCES, assignee's right to attack, 45 creditor's right to attack, 15, 46 effect of setting aside, 17 setting aside in part, 17 what are, 16 what are not, 16 PRESSURE, 3 PRESUMPTION of intent, 10, 11 PROCEEDING, what is, 12 PROOF of claims— 5'cc Claims. INDEX. 135 PROXY, form of, 76 voting: by, 74 R. REGISTRATION OF ASSiaNMENT, effect of. G3 65 fee for, 66 omission to register, 69 places for, 64, 66 RELATIONS, claims by, 91 REMOVAL of assets out of province, 25 REMOVAL of assignee, 43, 45 REMUNERATION of assignee, 32, 58 RENT-5ec Lease. REPAYMENT by overpaid creditor, 102 REQUISITION for meeting, U: RESTORATION of security, 22, 23 S. SHERIFF, death of, 47 deputy acting, 47 disclaimer by, 47 expenses of, 68 sale by, 45 SECURITY, compelling valuation, 79 effect of valuing, 81 how valued, 78 restoration of, 22, 23 voting by secured creditors, 78 what must b3 valued, 81 SETOFF, 112 f^ '' i!M 'l\ m . \h At I ■'-^. 136 INDEX. SOLICITOR, appointment of, 109 assignee, 44 taxation of costs, 109, 114 SUBSTITUTION of security, 123 SURETY, claim by, 99 security to, 14 TAXES, 57 TRUST moneys, no priority for, 89 unless earmarked, 90 VOTES, casting vote, 77 liow calculated, 77 proxy, 74 who may vote, 74, 77 VOUCHERS, 83 W. WAGES, 31 WARRANT of attorney to confess judgment, 2, 3 WIFE, claim by, 01 WRONGFUL use of assets, 25 \ '\f