From the Kentish Chronicle, 16 July, 1864.

COURT OF BANKRUPTCY, LONDON.

RE HOILE’S BANKRUPTCY.

The bankrupt carried the business of a brewer at Canterbury, and also at Sandwich.

Mr. Sargood, instructed by Messrs. Furley, Callaway, and Furley, of Canterbury, on behalf of the assignees, now applied for an order to expunge a proof for £391 made against the estate by the London and County Bank.

It appeared that the bankrupt had been a customer of the London and County Bank, and at the date of his suspension in July, 1863, was indebted to them in a sum of about £800. At a meeting of creditors held on the 5th of August, 1863, it was announced to the creditors present at the bank had agreed to accept a composition of six shillings in the pound upon the balance of their debt, after deducting the value of the securities which they held. The composition was paid, and the creditors in the belief that the bank had been settled with, consented to allow the bankrupt to continue in business, by a letter of license, he undertaking to pay them in full by three yearly instalments.

The bankrupt was unable to effect payment, and bankruptcy supervened. It was now contended that the bank having assented to the statement made at the meeting of creditors that their debt would be satisfied by payment of 6s. in the £, could not now prove in competition with the other creditors in respect of any balance that might be owing.

Mr. Sargood contended that the bank having affected to agree to a proposed arrangement for payment to their debt, and having thereby induced other creditors to grant an extension of time to the debtor by giving him a letter of license, the bank could not now claim in competition, of license, the bank could not now claim in competing with these who had not yet received anything on account of their demands. He urged that the private bargain which the bank had made could not be enforced, and the proof, having been inadvertently admitted should be expunged.

Mr. Doria, contra, submitted that the agreement to pay the 10s. in the pound having been broken all parties were remitted to their original rights.

Mr. Commissioner Holroyd:— It is contended that the agent became bound by what took place on the 5th August to accept the 6s. in full payment.

Mr. Doria referred to the paragraphs in the affidavits, from which it appeared that the bank had declined to accept 6s. in the pound, and that it was only upon bankrupt's application that they consented to receive 10s. The learned counsel said it was material to consider that the other creditors bargained for payment in full of their debts, while the bank were satisfied the amount of their claim. With regard to the facts of Mr. Reader having voted with the majority of creditors that was without meaning, for the bank had no voice in the matter either way.

Mr. Commissioner Holroyd, without calling upon Mr. Surgood to make any observation in reply, said:— There is no dispute here with regard to the facts. The objection to the proof is that on the 5th of August, at the adjourned meeting of the creditors, a statement was made on behalf of the bankrupt, and not contradicted by Mr. Reader, that the London and County Bank had consented to receive a composition of 6s, in the pound, in addition to the amount which they would derive from the securities in their hands. Upon that statement the debtor obtains a letter of license from the other creditors, and he continues his business accordingly. This, as it seems to me, approaches very nearly to what must be termed a fraud in law. There is nothing which is fraudulent in fact, though in point of law it must be considered a fraud upon the other creditors. I think the bank are not entitled to receive more than the 6s. in the pound upon the balance of their debt. The proof will therefore be expunged.

Application granted.