oblige him to refuse the discharge absolutely, and acting in the exercise of his discretion under the section, he granted the discharge as from 12 October, 1897, a period of three years' suspension. The Board of Trade appealed.

Muir Mackenzie, for the Board of Trade:

First, the finding of the County Court Judge that the bankrupt had not been guilty of a misdemeanour or felony "connected with the bankruptcy" was wrong in law. Secondly, if a discretion has been exercised by the County Court Judge, it has been so erroneously exercised as to be reviewable.

As to the first, the embezzlement here was "connected with the bankruptcy." When a debtor, just before his bankruptcy, takes the money of a creditor and does not account for it-uses it, as the debtor did in this case, for his own speculations—that is an offence "connected with the bankruptcy." It is analogous to the offence under the Debtors Act, 1869, section 11, of concealing or removing part of his property. Any misdemeanour which goes to the conduct of a debtor as such, either to increase or diminish the estate, is "connected with the bankruptcy." It would be strange if such misconduct were to be disregarded in considering the question of discharge.

The charge on which the bankrupt was convicted was only for embezzling 21. 10s., but it represented a systematic course of fraudulent dealing.

Act, or any other misdemeanor connected with his bankruptcy, or any felony connected with his bankruptcy, unless for special reasons the Court otherwise determines, and shall, on proof of any of the facts hereinafter mentioned, either

(i) refuse the discharge; or

(ii) suspend the discharge for a period of not less than two years.

(3) The facts hereinbefore referred

to are:

(a) "That the bankrupt's assets are not of a value equal to ten shillings in the pound on the amount of his measure of liabilities . . .

(b) That the bankrupt has omitted

to keep such books of account as are usual and proper in the business carried on by him and as sufficiently disclose his business transactions and financial position within the three years immediately preceding his bankruptcy.

(c) That the bankrupt has continued to trade after knowing himself to be insolvent.

(f) That the bankrupt has brought on or contributed to his bankruptcy by rash and hazardous speculations . . . .

(1) That the bankrupt has been guilty of any fraud or fraudulent breach of trust."

KENNEDY, J.: The debtor would have become insolvent independently of his defalcations to the building society.]

The section does not say that the felony or misdemeanour must have caused the bankruptcy.

As to the second point, I rely on In re Payne, Ex parte Castle Mail Packets Co. (2). LINDLEY, L.J., there says: "I am inclined to think that a man who, knowing that he has a balance to pay over to his employers, embezzles it, may fairly be said to be guilty of fraudulent conduct as a trustee. But, at any rate, he comes within subsection 3 (h) of section 28 (now section 8 (3) (1) of the Bankruptcy Act, 1890) as having been guilty of fraud."

VAUGHAN WILLIAMS, J.: In In re Payne (2) the Court of Appeal found the facts differently from those on which the registrar had exercised his discretion.]

It is the duty of the Court to take a serious view of offences like this, and show that they cannot be committed with impunity: In re Freeman (3).

Strahan, for the liquidator:

The embezzlement was not "connected with the bankruptcy." It did not bring about the bankruptcy, nor was it committed in contemplation of bankruptcy. So far from prejudicing creditors, it went to increase the assets. There are plenty of offences outside those enumerated in the Debtors Act and the Bankruptcy Act, 1883, which will satisfy the words "connected with the bankruptcy" obtaining letters ordered to be redirected to the trustee ; subornation of perjury; abducting a person who could give information as to the debtor's property; stealing from the trustee after bankruptcy; forging an order of the Court in his favour; seeking by threats to deter the trustee from acting; conspiring to frustrate the operation of the Act. Not accounting for rents is not technically felony or misdemeanour. There was no deliberate fraud. The bankrupt reasonably believed that if he got the profits he

(2) 18 Q. B. D. 154; 3 Morr. 270; 56 L. J. Q. B. 625; 35 W. R. 89.
(3) 7 Morr. 38; 62 L. T. 367.

expected he would be able to pay everybody. The County Court Judge had all the facts before him, and exercised his discretion. If he has been lenient, it is no such over-leniency that this Court will interfere. The bankruptcy is three years old, so that the period of suspension of the discharge is really six years.

Muir Mackenzie, in reply:

Every debtor who misappropriates money hopes to repay it. The question whether a bankrupt is to obtain his discharge or not is one of public interest-of commercial morality: In re Stainton, Ex parte The Board of Trade (4). You could not have a blacker report against a bankrupt than the report here.

VAUGHAN WILLIAMS, J.: This is an appeal from an order suspending the bankrupt's discharge for a period of three years. It is said by the appellant-the Board of Trade-that there ought to have been an absolute refusal of the discharge. The law governing the case is contained in section 8, subsection 2, of the Bankruptcy Act, 1890. [His Lordship read the subsection, and continued:] The first point made is this. The bankrupt here was convicted, on his own confession, of felony; of embezzlement of a sum of 21. 10s. received by him as servant of the directors of a building society. It is said that that embezzlement was a "felony connected with his bankruptcy" within the meaning of section 8, subsection 2, of the Bankruptcy Act, 1890, and that, for that reason, the County Court Judge ought to have refused the bankrupt his discharge absolutely, unless for special reasons the Court otherwise determined. The County Court Judge arrived at the conclusion that the felony in question was not "connected with the bankruptcy" within that subsection, and I think he was right. It is not easy to say what precisely is meant by the words "any other misdemeanour connected with his bankruptcy," or "any felony connected with his bankruptcy," but one may get some guidance from looking at the misdemeanours and felonies defined by the Debtors Act, and by the Bankruptcy Act of 1883; and following such guidance, I am of opinion that the section must be read as extending the operation of

(4) 19 Q. B. D. 182; 4 Morr. 242; 57 L. T. 202; 35 W. R. 667.

the section to misdemeanours and felonies ejusdem generis with the misdemeanours and felonies defined by those Acts.

Let me try and define the sort of offence which would be connected with the bankruptcy." It would be "connected with the bankruptcy," in my opinion, if the conviction was a conviction on facts which resulted in or brought about the bankruptcy, or if the facts on which the conviction was based were misconduct by the bankrupt as a bankrupt, or in view of his impending bankruptcy, and it may be a crime, I may add in passing, to defeat the policy of the bankruptcy laws, whether the doing so has the effect of increasing or diminishing the estate. This case does not come within that definition. The embezzlement of the building society's money was an offence irrespective of the bankruptcy. It was not committed in view of bankruptcy at all.

Then Mr. Mackenzie says, that if we look at the category of offences enumerated in section 8, subsection 3, of the Bankruptcy Act, 1890, we find in clause (1): “That the bankrupt has been guilty of any fraud or fraudulent breach of trust." Here the bankrupt has been "guilty of fraud or fraudulent breach of trust." But in such a case, as in all the cases comprised in the same category (section 8, subsection 3), the Court has a discretion either to refuse the discharge or to suspend the discharge for a period of not less than two years, or to impose conditions. Here, the County Court Judge thought it right, in the exercise of his discretion, to suspend the discharge for three years from the date of the application. Mr. Mackenzie says that was too little. I agree; but we do not sit here to rectify the exercise of a County Court Judge's discretion because it is wanting in severity. If we had arrived at the conclusion that the bankrupt's felony was a felony "connected with the bankruptcy" we might have interfered with the County Court Judge's decision so far as he had acted upon "special reasons." As it is, that question does not arise.

66

KENNEDY, J.: I have come to the same conclusion; and I adopt the definition given by my brother as to the meaning of the words connected with the bankruptcy." I agree, too, that the County Court Judge has been too lenient, and there might be circumstances under which this Court would alter the County Court Judge's

decision for over leniency or over severity, but for the Court to do so, the over leniency or the over severity must be excessive, and it is enough to say that the present is not a case of that kind.

Solicitors: The Solicitor for the Board of Trade.

C. Rogers, for Criddle, Newcastle, for the Bankrupt.

E. M.

IN RE HOWELLS, EX PARTE MANDLEBERG.

1895, April 25. VAUGHAN WILLIAMS AND KEnnedy, JJ. Bankruptcy-Distress for Rent-Proportionate Part-Right to Prove-Trustee— Privity of Estate Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), ss. 9, 42, and sched. ii. r. 19—Apportionment Act, 1870 (33 & 34 Vict. c. 35), 88. 2, 3.

Where a tenant becomes bankrupt during the currency of a quarter, the landlord is entitled, on the expiration of the quarter, to distrain for rent accrued due up to the commencement of the bankruptcy by virtue of section 42 of the Bankruptcy Act, 1883, and for rent accrued due between the commencement of the bankruptcy and the end of the current quarter by virtue of the trustee's common law liability as assignee by privity of estate.

In re Wilson, Ex parte Lord Hastings (1), explained and distinguished.

APPEAL from the registrar of the Huddersfield County Court. In this case the lessee of certain premises situate in New Street, Huddersfield, by underlease dated 20 March, 1894, demised to Howells, the present bankrupt, part of the premises (a shop) at a rent of 2001. per annum, payable by equal quarterly payments on the usual quarter-days. The first quarter's rent, due 24 June, 1894, was duly paid. On 1 September following a receiving order was made against Howells, and on 15 September he was adjudicated a bankrupt, and a trustee was appointed who entered into possession of the shop and premises on 28 September. On 29 September a second quarter's rent became due, and the landlord on the following day distrained for the whole quarter's rent. The trustee tendered the landlord 16l. 13s. 4d., the proportion of the

(1) 5 R. 455; 10 Morr. 219; 62 L. J. Q. B. 628.