no exception to the general rule which has now been stated; see Creditors of Hamilton v. Hamilton, 11th Jan. 1682; Chalmers v. M'Aulay, Kilk. 426.

789. In the third place, when, previous to the failure of the vendor, a sale has been completed, and, although actual delivery has not taken place, yet some act of fictitious or constructive delivery has been performed, in order to effect the transference of the property, the question arises, (which, in the present state of our law, is a question of great difficulty,) whether the creditors of the vendor are entitled to take the thing sold, as a part of his estate, although an act of constructive delivery has been performed?

The state of the law upon this point has been explained in treating of the rights of the parties, on the bankruptcy of the vendee, and, as has been there observed, the same acts of constructive delivery which, upon the bankruptcy of the vendee, entitle his creditors to claim the goods from the vendor, as transferred to him, must equally entitle the vendee, in the opposite case of the vendor's bankruptcy, to claim the goods from his creditors-the ques tion being, in both cases, whether the real right of property has been transferred to the vendee by the sale and constructive delivery, Supra, No. 753.

790. It is unnecessary to state the cases again in this place. It is sufficient to repeat, that in the present state of the law, the only inference to be drawn from the decisions which have yet been pronounced is, that, where, at the time of the sale, the goods are in the possession either of the vendor himself, or of his servants or special agents, it does not seem to be settled whether any act of fictitious or constructive delivery which leaves the goods in the same situation as before the sale, is sufficient to transfer the property, and prevent the vendor's creditors taking the goods upon his failure, supra 755, 758; but on the other hand, when the goods at the time of the sale are in the hands of a warehouseman or wharfinger, who is not the servant or special agent of the vendor, but merely custodier for his behoof, it is settled that the property may be effectually transferred by certain acts of constructive delivery, without any removal or actual delivery to the vendee, supra No. 762, et seqq.

791. Where, again, before the bankruptcy of the vendor, the goods have been delivered to a carrier for behoof of the vender, as it is certain that such delivery is equivalent to a delivery to the vendee himself in all cases except where a question of stoppage

in transitu arises, it is clear that in the event of the vendor failing after the goods have been so delivered, they form no part of his estate, but are effectually transferred to the vendee, Vide opinion of Lord Alvanley, in Oppenheim v. Russel, 3 B. and P. 48, and of Buller J. in Ellis v. Hunt, 3 T. R. 469.

CHAP. III.

OF THE INSOLVENCY OF THE VENDEE CONSIDERED IN RELATION TO THE DISSOLUTION OF THE CONTRACT BY MUTUAL CONSENT OF THE PARTIES.

792. I have formerly observed in treating of the different modes of dissolving the contract of sale, that it may be put an end to at any time before its execution, by the mutual consent of the parties, Supra, No. 557 and 571. When both parties continue solvent, the application of this principle is not attended with any difficulty. But where the vendee becomes insolvent after the completion of the contract, a new set of questions arise in consequence of the interest which his creditors acquire in every thing belonging to him. In this situation it has already been seen, that the vendor has certain rights in security of the price, by the exercise of which he may obtain payment. But, supposing that the vendor is not in a situation to avail himself of these rights, it is next to be observed, that the vendee is entitled, in certain circumstances, with the consent of the vendor, to rescind the contract, and thereby voluntarily to return goods of which he finds himself unable to pay the price. The object of the present chapter is to ascertain in what circumstances, and to what extent this power may be exercised by a purchaser. I shall begin by stating the rules of the law of England upon this matter *.

* It will be observed, that this investigation is closely connected with the general subject of fraudulent and illegal preferences given to particular creditors, by a debtor before his bankruptcy. I do not mean, however, to enter at large upon that extensive subject, but shall confine myself to those cases which are properly included under the title of this chapter, where the question was between vendor and vendee.

6

798. The first observation to be made upon this subject is, that where the vendee is not merely insolvent, but has committed an act of bankruptcy, it is evident that he has no longer the power of rescinding the contract, and returning the goods to the vendor. The principle upon this point is, that from the moment of com'mitting an act of bankruptcy, a trader is divested of all power of ' charging or disposing of his effects, or any part of them, to the 'prejudice of his creditors; and, when upon a commission being ' issued, he has been adjudged a bankrupt, the commissioners may assign every thing that he had in himself, or such interest as he might lawfully part with at the time he became a bankrupt. They have no property however vested in themselves, but ' merely a power, under the statutes of ordering and disposing of it for the benefit of the creditors. The legal property remains ' in the bankrupt himself, though so bound from the act of bankruptcy, that it cannot be altered until assignment by the commis'sioners. When these have executed their power by assignment, the property is then vested in their assignees by relation from the time of the act of bankruptcy, so as to avoid all alienations 'or dispositions of it made after that time, Cullen on Bankrupt Law, 229; Barnes v. Freeland, 6 T. R. 86.

794. This then being clear, our attention may be confined to those cases in which the question has been, in what circumstances, during the period which intervenes between the completion of the contract and the bankruptcy of the vendee, the contract may be rescinded, and the goods returned to the vendor by mutual con

sent ?

795. Upon this matter, the general principle is, that ‹ until an "act of bankruptcy, the jus disponendi over goods remains by law 'with the trader, unless he exercise it by way of a voluntary and 'fraudulent preference of a particular creditor, in contemplation of bankruptcy,' Dixon v. Baldwin, 5 East, 186. A material alteration has taken place upon this part of the law within the last fifty years. Formerly the act of bankruptcy drew the line of separation between that property which might be disposed of by the bankrupt, and that which vested in the assignees. But a limitation of this principle was at length introduced in consequence of the obvious injustice of allowing a trader, upon the eve of bankruptcy, to make a voluntary disposition of his property in favour of a particular creditor, in such circumstances, as evidently to show, that it was made in contemplation of bankruptcy, De Tas

tet v. Carrol, 1. Starkie, 89. This rule was first distinctly stated, and effect was given to it in a case decided by Lord Mansfield in 1774, (Harman v. Fisher, Cowp. 117.) and it has since been acted upon in a great variety of cases, by which the general rule has been established, that if a trader in contemplation of bankrupty, make ' a voluntary disposition of his property, in favour of a particular 'creditor, such disposition is void.' Selw. Nisi Prius, 200.

796. The general result of these cases is thus stated by a learned writer: All dispositions of property made in contemplation ' of bankruptcy, though without deed, whether by delivery of ' a written instrument, as a note, bill of exchange, order for pay'ment of money, order for delivery of property, bill of parcels, or letter of attorney to receive debts; or by a colourable sale, ' or actual delivery of goods; or by suffering them to be taken ❝ in execution—though they are not acts of bankruptcy in them'selves, yet if they are made voluntarily to prefer a particular creditor, in contemplation of an impending bankruptcy, and with 'a view to defeat the consequences of it, are held to be void as 'frauds upon the general spirit and policy of the bankrupt laws. And this, though made for a valuable consideration, and bona 'fide as between the parties, and though the insolvency or embar'rassments of the bankrupt are not known to the creditor; and though the act of delivery, or transfer of the property, is com'pleted before the bankruptcy *.

797. Keeping in view this general restriction on the power of a party to dispose of his property before bankruptcy, I shall now state more particularly the cases which have been decided with regard to the power of the vendee, who, although not bankrupt, feels himself unable to pay for goods which he has bought, to rescind the contract with consent of the vendor.

Cullen on Bankrupt Law, 279.-It will be observed that it is only against voluntary preferences that this rule strikes. It does not affect acts done in the ordinary course of business on the application of the creditor, nor from legal process, or the threat or dread of it, or from the importunity of the creditor, although the act should be done immediately before bankruptcy, Cullen, ut supra; De Tastet v. Carroll, 1 Starkie, 88; Reed v. Ayton, Holt, N. P. C. 503; Arbouin v. Hanbury, ibid. 575, and notes to last case.

It may also be observed that, in a recent case, Lord Ellenborough, in speaking of this rule, said, Strictly, only the acts of a trader subsequent to his bankruptcy, are void. Precedent acts, supposed to be in contemplation of bakruptcy, have likewise ⚫ been invalidated; but this is an excrescence upon the bankrupt laws. The cases ⚫ upon the subject have gone far and far enough; and I am not disposed to give them any extension.'-Crosby v. Crouch, 2 Campb. 166.

798. In the first place, suppose that the vendee, although in embarrassed circumstances, is not only not bankrupt, but does not know nor believe himself to be insolvent, and does not contemplate bankruptcy; in this situation it was held in the following case, that the vendee was entitled, with the consent of the vendor, to rescind a previous contract of sale, even after the goods had been actually delivered to him, and to return them to the vendor; and further, while the rule above mentioned was recognized as sufficient to invalidate such an act, if done in contemplation of bankruptcy, and for the purpose of giving a fraudulent preference to the vendor, it was held that the question whether the act had been so done, was a question for the jury.

This was an action of trover brought by the assignees of Becher and Barker, who had become bankrupts, to recover the value of certain goods, which the defendant, as it appeared upon the trial of the cause, had received from the bankrupts, under the following circumstances: The bankrupts exported cotton goods to Russia. On the 8th of October, 1812, they purchased, with a view to exportation, the goods in question, of Taylor and Company, through the defendant, who was the factor of the vendors; and, having no warehouse of their own, sent them to Woodward, their packer. They had also purchased certain other goods of Habgood and Company. On the 16th of October the bankrupts found that they must suspend their payments; they therefore turned their thoughts to the newly-purchased goods, and gave directions to Woodward to return them to the persons of whom they were purchased. He would not attend to that order, because he claimed a lien on the goods, until he was satisfied for the debt due to himself. The bankrupts then gave him another order, to deliver back the goods to each vendor, upon payment by him of the proportion of the charges which attached on such goods. Under this order, Habgood and Company discharged the whole lien, and took possession of all the goods, and restored to the defendant those which he had sold, receiving from him a proportional part of the charges they had paid to Woodward. On the 19th, at a meeting of the creditors of Becher and Barker, it was, at the instance of one creditor, determined to make them bankrupts. They at that time thought they had L.17,000 or L.18,000 good beyond paying their debts. Their property was locked up in goods in Russia. They had no intention or suspicion of being made bankrupts.

5