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.
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