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ART. IV.—RETROSPECTIVE OPERATION OF THE BANKRUPT
We took occasion, in a review of the late Professor Park's Juridical Letters, in a former volume,1 to discuss the necessity of transitive laws, to obviate the intermediate difficulties, if we may so express them, arising from extensive statutory changes in any part of our legal system; and we quoted from the learned author examples of the arbitrary and jarring constructions which the Courts had already been obliged to put upon the various enactments of the new Bankrupt Act, framed as it had been without any provision as to its retrospective or non-retrospective applications to transactions originating under the abrogated law.2 Although more than eight years have now elapsed since this statute came into complete operation, fresh questions of this nature are still occurring upon it, and giving birth to apparently interminable litigation and expense. A case very recently determined having at length supplied, so far as one of the most important enactments of the statute is concerned, a definite rule of interpretation, it seems a fit opportunity for presenting to our readers a concise account of the successive decisions on this subject, since we brought it last under their notice.
Cuming v. Welsford (6 Bingh. 502) arose on the much disputed section 108. Before the statute came into operation, a creditor of the bankrupt obtained a final judgment by nil dicit in an action of assumpsit, on which he sued out execution after the passing of the act. The Court of Common Pleas held the case to be within the restrictive proviso of sect. 108. The words " any judgment obtained by default, confession, or nil dicit," described, they said, as well a judgment obtained before as after the passing of the statute; and they inferred from the use of the words of a future signification immediately before—" provided that no creditor who
1 Vol. V. p. 174.
2 See also a more detailed statement of those cases in Art. IV. of our seventh Number.
shall sue out execution, &c."—that the legislature, if they had intended also to restrict the operation of the enactment to future judgments, would have continued to employ terms referring only to the future, and have said " any judgment to be obtained," &c. The contrary construction, it was added, would have given protection to all executions on secret warrants of attorney whereon judgment had been signed before the 1st Sept. 1825, for which there seemed to be no reason whatever. There might seem, perhaps, to be as little reason for withdrawing that protection with which the previous law had invested them, unless the legislature has in plain terms directed it.
All the subsequent cases have arisen on the construction of the 127th section, the terms of which are as follow:—" If any person who shall have been discharged by such certificate as aforesaid, or who shall have compounded with his creditors, or who shall have been discharged by any insolvent act, shall be or become bankrupt, and have obtained or shall hereafter obtain such certificate as aforesaid, unless his estate shall produce, after all charges, sufficient to pay every creditor under the commission fifteen shillings in the pound, such certificate shall only protect his person from arrest and imprisonment, but his future estate and effects shall vest in the assignees under the said commission, who shall be entitled to seize the same in like manner as they might have seized property of which the bankrupt was possessed at the issuing of the commission." The former acts, instead of absolutely vesting the future effects, under such circumstances, in the assignees, had only made them liable to the creditors.1 . 4
In Robertson v. Score (3 B. & Adol. 338), there were two commissions/ of which the first issued in May, and the certificate was obtained in July, 1823; the second (under which the bankrupt paid less than fifteen shillings in the pound) issued in August 1826, and the certificate was granted in the following November. The question was whether the second certificate barred a debt contracted in June 1826. It was contended for the bankrupt, that the words " such certificate as aforesaid" must be restricted to mean a certificate taking effect under the new act, and could not apply t6 one
1 See Law Mag. Vol. IV. p. i27.
granted under the old law, which required the signature of a different proportion in number and value of the creditors. But if that were so, what, it was replied, would become of the bankrupt's future effects in such a case, the former statutes, which made them liable to the claims of the creditors, being, repealed, and the new act having no application? The Court, however, being of opinion that, in either view of the case, the bankrupt was discharged by the certificate, since otherwise the plaintiff (assuming the new law to apply to the case) would in effect be enabled to have execution against the goods of the assignees, pronounced no positive judgment on the other point, although inclining strongly to the opinion that the clause had a retrospective operation upon the first commission.
The next case was that of Carew v. Edwards (4 B. & Adol. 351). There, the bankrupt, having previously been discharged under the Insolvent Act, obtained his certificate under a commission of bankruptcy before the passing of the 6 Geo. IV., paying less than fifteen shillings in the pound. Here the Court held without difficulty that the statute had no retrospective application. The effect, indeed, of a contrary construction would have been to render every such certificate granted under the 5 Geo. II. c. 30, that is, since the year 1732, a bar to subsequent actions by the creditors, and to disturb most extensively the long-established rights both of the creditors and of the bankrupt. The Court especially adverted to the provision made by the 135th section of the act, that " nothing therein contained should lessen or affect any right, demand, or remedy, which any person then had under any subsisting commission or proceedings, or upon or against whom any commission had been issued, except as was therein specifically enacted."
The recent case of Elston v. Braddick, decided by the Court of Exchequer in Hilary term last (not yet reported), has at length settled the construction of the 127th section in conformity with the opinion intimated by the King's Bench in Robertson v. Score. The bankrupt, having been discharged under the Insolvent Act previously to the passing of the 6 Geo. 4. c. 16, had, subsequently to its passing, obtained his certificate under a commission, paying less than fifteen shillings in the pound. His assignees, insisting that his future effects vested absolutely in them by section 127, sought to recover a sum of money paid by him to the account of a creditor with whom he dealt subsequently to his bankruptcy and certificate. The defendant's counsel contended that the grammatical construction of the clause (so far as it could be made out through such perverse intricacy of expression) would be satisfied by referring the words "shall have been discharged," &c. to previous certificates or insolvencies subsequent to the passing of the 6 Geo. 4; that the certificate mentioned in s. 127 must be intended to mean the same certificate as was provided for by s. 121, which clearly described a certificate that was to derive all its operation from that act; that the statute was intended to have operation only upon the property of the bankrupt, but here the bankrupt was not the only party interested; his property being liable, under the Insolvent Act by which he was discharged, to the claims of one set of creditors, from whom the statute, if construed retrospectively, would take it to give it to a different set of creditors; an operation not to be attributed to it without a clear and express declaration that such was the purpose of the legislature. We cannot help thinking that some of these arguments possessed a weight which entitled them to a graver and more extended consideration than they appear to have received from the Court; who, after a very short interval of deliberation, conceded rather to the importance of the question than' to any doubt they entertained upon it, pronounced a unanimous judgment that the statute had a retrospective application in the case before them; a judgment of course applying equally to all the cases for which the clause makes provision. It is unquestionably of far less importance how a question of this kind is settled, than that it should be settled one way or the other; and although, therefore, we should ourselves have been disposed to consider the point as involved in a much greater degree of doubt than the learned judges who determined it,1 the decision, of which we have no reason to expect any reversal, will put an end at all events
1 We have reason to know that in a recent and extensive bankruptcy a case was submitted to no fewer than five counsel of eminence upon this point, three of whom expressed opinions one way and two the other.
to a considerable amount of litigation; nor does it appear probable that many provisions of the statute remain which are likely to furnish further difficulties of this nature.
It may be convenient to subjoin in this place, by way of postscript to our observations in a former volume,1 the substance of one or two cases which have been more recently decided on the construction of the 108th section of the Bankrupt Act, modified as it has been by the operation of the statute 1 Wm. 4, c. 7, s. 7. Our readers will remember that by the judicial interpretation of the former clause, its effect was to deprive creditors of the bankrupt holding securities unexecuted at the period of the bankruptcy, of any priority of claim by reason of such securities; but to render them available to their full extent in case the creditor had levied on the goods of the bankrupt before the bankruptcy, except in the case of an execution following upon a judgment by default, confession, or nil elicit, which the creditor was bound, in order to entitle himself to its full benefit, to perfect by sale as well as seizure before the bankruptcy. The 1 Wm. 4, after reciting the proviso contained in the last clause of sect. 108, and stating that by reason of that provision "plaintiffs have been and may be deterred from accepting a cognovit actionem with stay of execution, whereby the expense of further proceedings in such actions might have been and may be saved or diminished," proceeds to enact, "that no judgment signed, or execution issued, after the passing of that act, on a cognovit actionem signed after declaration filed or delivered, or judgment by default, confession, or nil dicit, according to the practice of the Court, in any action commenced adversely, and not by collusion for the purpose of fraudulent preference, shall be deemed or taken to be within the said provision of the said recited act." The effect of this enactment manifestly is to restrain very materially the disabling proviso of the former section, and to exempt cognovits almost universally from its operation. One case only (Crosfield v. Stanley,