decree, become defective by reason of three transmissions of interest: first, one of the plaintiffs having died and the other having retired, new trustees had been appointed by the Court, on petition; secondly, one of the defendants had died and devised his interest to a lady who conveyed it to the trustees of her marriage settlement; thirdly, another defendant had conveyed her interest to the trustees of her marriage settlement. Some original defendants remained, but no original plaintiff. There was real estate to be sold in the suit. Mr. Methold asked for an order making the new trustees plaintiffs, and adding as defendants the persons in whom the interests of the above-mentioned defendants had become vested. As authority for combining three steps in one order he cited Noble v. Stow, 30 Beav. 512; s. c. 31 The MASTER OF THE ROLLS (Nov. 14) made the order. Solicitors-Mr. Mark Jameson, agent for Mr. J. Houchen, Thetford. LORD ROMILLY, M.R. June 12; Nov. 24. In re THE GENERAL ESTATES COMPANY (LIMITED), ex parte HASTIE. Contributory Companies' Act, 1862, 8. 75.-Bankruptcy Act, 1861, s. 154.Liability of Discharged Bankrupt. Where the assignee of a bankrupt shareholder does not take or dispose of his shares, and the company is wound up after the discharge of the bankrupt, the bankrupt is properly placed on the list of contributories. Section 154. of the Bankruptcy Act, 1861, does not apply to future calls to be made by a company not in course of winding-up. Mr. Hastie was adjudicated bankrupt, on his own petition, on the 27th of April, 1861; he was at that time the holder of 125 shares in the General Estates Company; his assignee refused to take them; the rest of his estate was duly administered; he obtained his discharge in July, 1866. Shortly afterwards a special resolution was passed to wind the company up voluntarily, and on the 27th of November, 1866, an order was made to continue the windingup under the supervision of the Court. Mr. Hastie's name was placed on the list of contributories in respect of the 125 shares; he took out a summons to remove his name from the list and place the name of the assignee instead. Mr. Jessel and Mr. Fischer, for Mr. Hastie, said the intention of the Bankruptcy Act was to set a discharged bankrupt free from all liabilities, and it would therefore be entirely against that intention to make the applicant liable to contribute in respect of the shares, a liability he had no means of getting rid of. If the shares had been worth anything the assignee would have disposed of them. Moreover, the Companies' Act had provided that the liquidator should prove against the estate of the bankrupt as administered in bankruptcy. If anything more came in to that estate the liquidator would get a dividend on the calls. This shewed that it was not intended that this bankrupt should be personally liable. In Martin's Patent Anchor Company v. Morton, 37 Law J. Rep. (N.S.) Q.B. 98; s. c. 3 Law Rep. Q.B. 306, there had been a lapse of more than two years from the bankruptcy, during which time Morton might have been able to get rid of his shares. Mr. Roxburgh and Mr. Edmund James, for the liquidator, said this was governed by Martin's Patent Anchor Company v. which, they submitted, was right on principle. The assignee had repudiated the shares; the ownership had never been taken out of the bankrupt; the shares could not be annihilated; the ownership could be nowhere but in the bankrupt. If it was not too late to prove in the bankruptcy, in case anything further came in to be administered, the remedies were cumulative, and that did not prevent the enforcement of calls against the bankrupt personally. To shew that the company could not have proved for future calls, they cited The South Staffordshire Railway Company v. Burnside, 5 Exch. Rep. 129; s. c. 20 Law J. Rep. (N.S.) Exch. 120. The General Discount Company v. Stokes, 17 Com. B. Rep. N.S. 765; s. c. 34 Law J. Rep. (N.s.) C.P. 25. Mr. Jessel replied.-If Mr. Hastie was to be considered as owner, his liability to contribute had been taken away by the bankruptcy, and he was, in the same way as a paid-up shareholder, entitled to have his name taken from the list of contributories. The MASTER OF THE ROLLS (Nov. 24) stated the facts, and said-It is obviously impossible to put the assignee on the list of contributories. He cannot be compelled to take the shares; he has repudiated them, and cannot be made liable for anything in respect of them. Whether the bankrupt, Mr. Hastie, should be put on the list of contributories depends on the question whether he is liable, notwithstanding his bankruptcy and discharge, to pay the calls. to be made on these shares. If he is not so liable, then, on the principle which prevents a holder of paid-up shares from being placed on the list of contributories, I think that he ought not to be placed on the list. That this liability to pay the calls is originally a debt due from him cannot be doubted, for the 16th section of the Companies' Act, 1862, makes it a debt exactly as if he had entered into a covenant to pay it; but then arises the question whether, under section 154. of the Bankruptcy Act, 1861, he is not discharged, or if he be not discharged from such liability, under the act of 1861, whether the sections 75. and 77. of the Companies' Act, 1862, do not make it imperative for the company to prove against the estate of the bankrupt for future calls as well as for calls existing at the date of the bankruptcy. The question seems to be in a great measure governed by the case of Martin's Patent Anchor Company v. Morton. I have carefully considered that case as bearing on the present, to which it seems expressly to apply. In deciding that case Mr. Justice Blackburn says, "it would be a monstrous injustice that when a man remains a shareholder, the assignee not taking his shares, he should be allowed to get rid of his liability to pay calls, on the ground that he had been a bankrupt several years before." But the learned Judge does not seem to have had present in his mind that if the shares are worth anything the assignees will take them and sell them, and that the bankrupt has no possible means of getting rid of them if they are utterly worthless, yet that, though the policy of the Bankruptcy Act is to release him from all liabilities, he will still remain liable for the future calls which may be made. However, this is certain, that inasmuch as his liability is imposed by the 16th section of the Companies' Act, 1862, it follows necessarily that he must pay them unless he is relieved by the effect of some act of parliament. The only acts of parliament which relate to this subject are the Bankruptcy Act, 1861, and the Companies' Act, 1862. In the first of the statutes the clause specially relied upon is section 154. of the Bankruptcy Act, 1861. [After reading that section, Lord Romilly proceeded]-It is quite settled that under the prior Bankruptcy Acts the future call was not proveable, either as a debt payable in futuro or as a debt due on a contingency. I think this act does not carry the matter further than the previous Bankruptcy Acts in respect of making the future calls proveable as debts, the value of which is to be ascertained, inasmuch as it is obviously impossible to know whether or not any call will ever be made in the case of a company that is still pending as a working company. The clause was obviously meant for fixed payments in future at any interval of time. It resembles a case where a man has entered into a covenant with a lessor that the lessee shall leave the property leased, at the end of the term, in a proper state of repair; if the covenantor becomes bankrupt and obtains his discharge before the termination of the lease he still remains liable on his covenant with the lessor, who could not by possibility have proved anything under the bankruptcy. The other statute relied on is the Companies' Act, 1862, sections 75. and 77. Section 75. does provide for proof and payment on valuation where the company is in course of liquidation. The question is, whether this clause extends to a case where the bankruptcy has been wound up and the bankrupt discharged, and the assets administered before the winding-up of the company. The Judges in Martin's Patent Anchor Company v. Morton thought that this could not be the construction of the clause, for that an order to prove a debt against the estate of a bankrupt where the bankruptcy had been completely and finally wound up was, on the face of it, a mere mockery, and Mr. Justice Blackburn shews that from the following sections, 76. and 77, and how that section 75. refers to the bankruptcy still pending when the winding-up takes place while the assignees have still assets, and that in such a case the company may prove for the estimated amount of the liability to future calls. But I am inclined to think that this does not apply to every case, and that cases will arise in which it is difficult to say how the clause can be so restricted where an estate comes in unexpectedly to the assignees under an old bankruptcy after the bankrupt's discharge and after the former assets have been administered; and against such property coming to the assignee I presume the call made on the bankrupt after his discharge could be proved. If this be so, the difficulty might be avoided by holding that the true construction of the 75th clause is that the bankrupt is not to be discharged from the call unless it can be shewn that there is something to prove against under the bankruptcy, in this way obviating the objection suggested by Mr. Justice Blackburn, but certainly these words do not carry this meaning with any distinctness; and the difficulty in construing the clause is equally great if it be held that it applies where there are assets remaining unadministered, in which case it absolves the bankrupt and does not apply where all the assets are administered and the bankrupt discharged. At the same time it is to be observed that the unanimous decision of the Queen's Bench is, that, in the latter clause, the clause had no operation. In support of the view of the clause as held by the Court of Queen's Bench, it may said that it is the duty of the bankrupt, if he wish to free himself from his shares, to sell them, or if he cannot do this to get some person to accept them as transferee; but even then the difficulty is not wholly removed, because as such transferee must be supposed to be a pauper, the directors may refuse to accept the transfer and consider the prospects of the bankrupt, though he be at that time devoid of all property, better than those of a mere pauper be transferee. On the whole, the case seems to me to be one of difficulty not foreseen and not provided for by the legislature, and that the true construction of the clauses referred to does not meet the exact point which has occurred. It might be desirable if the legislature, following out the principle already adopted, would declare that in all cases where the assignees of the bankrupt refuse to adopt the shares the company should be at liberty to sell them, and that if the company decline or are unable to do so, the bankrupt should be at liberty to surrender them to the company and have them cancelled, and that in default he should remain liable. But the act does not say so, and it is impossible as it stands so to construe it. Of course if the bankrupt chooses to go on with the speculation and keep the shares he is at liberty to do so; and in the case in the Queen's Bench the bankrupt appears to have kept them for two years and a half after his bankruptcy and before the company was wound up. And the expressions of Mr. Justice Blackburn point to this fact, as if the bankrupt had desired to adopt the shares for his own benefit. In that case no question can arise, but that he must be liable for the call if he has since his bankruptcy been speculating on the receipt of a dividend, or on the shares obtaining a value in the market. In the present case no attempt seems to have been made by Mr. Hastie to get rid of the shares he had taken. The case seems to me to resolve itself into this the applicant, who was lately bankrupt, owes a debt to the company, made so by the Companies' Act, 1862; he must remain liable for the debt unless he is released by statute. Section 154. of the Bankruptcy Act, 1861, does not release him. The 75th section of the Companies' Act, 1862, is too obscurely worded as to the point for me to come to the conclusion that it does release him in the events which herein occur. If this does not, no other sections do apply, and he must therefore remain liable unless the assignees are substituted in his place under the 77th section of the Companies' Act, 1862. I think that this does not deprive the assignees of their power of electing whether to take the shares or not, and that if they decline to take them they cannot be compelled to do so; and after this refusal to take the shares, and after they have fully administered the estate of the bankrupt and distributed it amongst the creditors, it would be monstrous that a subsequent failure of the company should make the assignees contributories personally to pay the calls, assignees who have no property of the bankrupt remaining and who have already refused to be mixed up with the affairs of the company. Besides which the clause says that calls are to be paid out of the assets, and the case I am now considering is and arises when all the assets are gone. In this state of circumstances, and for the reasons I have stated, I am of opinion that the chief clerk has come to a right conclusion in fixing Mr. Hastie on the list of contributories, and that his summons must be dismissed, but without costs. Trust, Declaration of— Voluntary Gift — Retention of Title-Deeds by Donor. A testator who had bequeathed two legacies, of 50l. and 2001., afterwards, in order to avoid legacy duty, revoked the legacies, and verbally instructed F, who owed him 3001. secured by a deposit of title-deeds, to pay similar sums to the legatees, adding that one of the donees was to "hold the writings." F. accepted the trust, but the deeds remained in the custody of the donor:--Held, notwithstanding the retention of them by the donor, that a valid trust was effectually created in favour of the donees. This suit was instituted by the direction of the Court in order to determine a question which arose in the administration of the estate of William Clark, a farmer, as to whether a voluntary trust had been effectually created by him under the following circumstances, which it was admitted were correctly set forth in the answer to the present bill. The defendant, Edward Stones, was for many years the farm-servant of the testator, W. Clark, who, by his will, dated the 8th of July, 1862, gave a legacy of 200l. to Harriet Elizabeth Stones, the daughter of the defendant Stones, and another of 50l. to Stones himself. In August, 1862, the testator lent a sum of 300l. to Edward Foster upon the security of certain title-deeds, which the latter deposited with the testator by way of equitable mortgage. In the latter part of 1862, shortly before making the codicil hereinafter mentioned, the testator sent for his brother-in-law, and told him that his will wanted altering, as several of the legatees named therein were dead, and that as the defendant Stones and his daughter were no relatives of his, there would be 101. per cent. to pay for legacy duty, and therefore he had determined to give the money in his lifetime, and would have the sum E. Foster owed him applied for that purpose. On the 9th of January, 1863, he made a codicil to his will revoking the legacies to Stones and his daughter; and shortly after, a few days before his death, he sent for Foster, whom he had previously promised not to distress by calling in the 300l. at once, and told him that he (the testator) had arranged about the payment of the 3007. which Foster owed him, that "Ted" (meaning the defendant Stones) was "to hold the writings," and Foster was to pay the 3007. in the following way: The testator's miller was to have 35l., his blacksmith 15., if he conducted himself, if not, the miller was to have it as well as the 351., and the testator left that matter entirely to Foster to do as he thought right. "Ted" (meaning the defendant Stones) was to have 50%, and his eldest girl (meaning Harriet Elizabeth Stones) was to have the remaining 2007. Her money was to be paid into a savings bank to her account, as Foster could pay the money from time to time, and in the meanwhile the interest was to be paid to Stones for the bringing up and schooling of the girl. The testator told Foster he had confidence in him, and could trust him to pay the money according to his directions; and as the answer alleged, and it was not denied, "Foster then and there accepted the trust reposed in him by the testator, and undertook and agreed to pay the 300l. according to the testator's directions." The testator subsequently informed Stones of the provision he had made for him and his daughter being paid out of the money which Foster owed the testator, adding that he (Stones) was to hold the title-deeds. The deeds, however, were not handed over to him, but remained in the custody of the testator up to his death. After his decease the testator's widow delivered them to Stones, saying "Ted, these are yours, and you are to take them." This bill was filed against Stones by the trustees and executors of the testator's will, charging that no valid trust had been created by the testator of the 300l. or of the deeds, and praying that the defendant Stones might be ordered to deliver them up, with an injunction against his parting with them or receiving the money secured thereby. Mr. F. North, for the plaintiff, contended that the testator had not done enough to constitute a complete trust in favour of the defendant Stones and his daughter, urging that the retention of the deeds by the testator must be taken as evidence of the abandonment of his original intention. There was nothing to shew that it was an accidental omission. The test was this, was there a trust in Foster which Stones could have enforced against him by suit in the lifetime of the testator without making the testator a party? Clearly, as the settlor had retained the deeds, and executed no declaration of trust, he would have been a necessary party to such a suit, which he would not be if the trust had been perfected Reed v. O'Brien, 7 Beav. 32. s. c. 23 Law J. Rep. (N.S.) Chanc. 788. The retention of the deeds was a most material fact, because the money could not be received without delivering up the deeds by which it was secured. It was essential that the testator should have assigned the debt, or done something definite to constitute himself or Foster a trustee for the claimants. The expression of an intention never acted on was not enough Coningham v. Plunkett, 2 You. & C. Jones v. Lock, 35 Law J. Rep. (N.S.) Nor even if partly acted on- Mr. Martineau, for the defendant, was not called on. MALINS, V.C.-This question admits of no doubt whatever. Having ascertained that the legacy duty would be 10l. per cent. if he gave the money to the farmservant and the daughter by his will, the testator made up his mind to do what he purposed, and do it effectually, in his lifetime. Accordingly, he sent for Foster, the debtor from whom the 300l. was due, and told him of the arrangement he had made; and I must take it that what passed at the interview is correctly stated in the answer. [His Honour then referred to the conversation which took place, as stated above, and continued]-Therefore, there is a distinct allegation, uncontradicted, that Foster then and there accepted the trust reposed in him, and undertook to pay the money according to the testator's directions. The argument is that the retention of the titledeeds by the testator has prevented this from being a complete declaration of trust; though it is admitted that if nothing had been said about them, what passed at the interview would have been enough. But the deeds were merely the security for the money, and the accidental omission of the testator to hand them over to Stones is immaterial. The whole transaction is perfectly clear. The testator must be taken to have declared himself trustee of the deeds as he had declared Foster trustee of the money. There was a valid trust effectually declared in favour of the defendant and his daughter. The suit, therefore, entirely fails, and the bill must be dismissed, with costs. Solicitors-Messrs. Norris & Allen, agents for Mr. Langley J. Brackenbury, Alford, for plaintiff; Messrs. Cunliffe & Beaumont, agents for Messrs. R. & R. Clitherow, Horncastle, for defendant. |