On 16 June, 1893, a receiving order was made against the defendant founded on the act of bankruptcy committed by him on 16 May. The defendant was subsequently adjudicated bankrupt, and on 24 October, 1893, the trustee in the bankruptcy was made a defendant to the action.

Neither the plaintiffs nor the receiver ever gave the debtors of the bankrupt any notice of the assignment of 31 December, 1891. The receiver carried on the business, and in the course of the management received book debts due to the bankrupt at the commencement of the bankruptcy to the amount of over 400l. Upon the receiver's account being taken in Chambers, the trustee in the bankruptcy claimed such amount as representing book debts in the order and disposition of the bankrupt with the consent of the true owner at the commencement of the bankruptcy; and the question of the validity of such claim was adjourned into Court and now came on for argument.

Eve, for the trustee in bankruptcy :

Inasmuch as neither the mortgagees nor the receiver gave any notice of assignment or appointment to the debtors the assignment was not completed, and the trustee consequently is entitled to the book debts in priority to the assignees.

As to the appointment of receiver, the Conveyancing Act, 1881, s. 19, subs. 3, only gives power to appoint a receiver of the income of the mortgaged property: Hood & Challis, Conveyancing and Settled Land Acts, 4th edit. pp. 76, 86. It is a question how far in a deed of this kind there is power to appoint a receiver of what was in effect the mortgaged property and not income. If necessary, I contend that the power of appointment of 19 May was inoperative.

[STIRLING, J.: The form of the appointment follows the words of the Act. It does not mention book debts.]

Section 44 of the Bankruptcy Act, 1883, deals with property of the bankrupt divisible among the creditors, and by subsection 3 things in action-i.e. the book debts-due or growing due to the bankrupt in the course of his trade or business are so

divisible: Tailby v. Official Receiver (1). These debts were in the order and disposition of the debtor at the time of his bankruptcy. Williams on Bankruptcy Practice, 6th edit. p. 204, says: "With respect to trade or business debts, the only things in action, which are now within the operation of the section, the fact of no notice having been given to the debtor would seem to be conclusive evidence, where there is an opportunity of giving such notice of the consent of the true owner to the debt remaining in the reputed ownership of the bankrupt: Ryall v. Rowles (2), Edwards v. Martin (3). In neither case was a receiver appointed. Lord HERSCHELL, in Tailby's Case (1), draws attention to the fact that there the mortgagees gave notice to the debtor.

Here there was an assignment of a good equitable chose in action and no notice; consequently, the receiver was never in possession of the debts.

The constant practice is for the receiver on being appointed to give notice.

Cooper Willis, Q.C., and Butcher, for the mortgagees the plaintiffs :

Taylor v. Eckersley (4) shows that the appointment of a receiver by the Court takes goods-no distinction being made between one kind and another-out of the order and disposition of the bankrupt.

Under section 44 of the Bankruptcy Act, 1883, the goods must be not only in the order and disposition of the bankrupt, but with our consent, as the true owners, and the mere fact of our asking the Court to appoint a receiver is sufficient to negative consent, inasmuch as the appointment of the receiver of the money amounts to an injunction against the debtor restraining him from receiving it. If he did, it would be a contempt of Court.

Further, with regard to what was done, it is true that the words of the appointment only go to a receiver of the income of goodwill and connexion. The debtor says the receiver took possession of the premises, and the stock and money there. No notice was given

(1) 13 App. Cas. 523; 58 L. J. Q. B. 75; 60 L. T. 162; 37 W. R. 513.

(2) 1 Ves. Sen. 348; 2 W. & T. L. C. 6th edit. 799; S. C. 1 Atk. 165, sub nom. Ryall v. Rolle.

(3) L. R. 1 Eq. 121; 35 L. J. Ch. 186; 13 L. T. 236; 14 W. R. 25. (4) 5 Ch. D. 740; 36 L. T. 442; 25 W. R. 527.

because the receiver was on the premises, and those premises were the only place where the debts could be paid. The official receiver would not give any notice. If he had done anything the debtors would have interpleaded and brought the money into Court. Moreover, our writ claiming the appointment of a receiver was issued on 17 May; on the same day we gave notice of our application, and on 19 May the order was made.

By bringing the action we put an end to our consent. If on 17 May we had no notice of an act of bankruptcy we should be within the protection of section 49 (i.) of the Bankruptcy Act.

Anything that puts an end to the consent is a "dealing" within the words of the section, "contract, dealing, or transaction."

Determination of consent for value before notice of an act of bankruptcy is the same thing as determination of consent prior to the act of bankruptcy: Brewin v. Short (5). Even a demand on the debtor is sufficient to put an end to consent: Ex parte Ward, In re Couston (6), Ex parte Kelsall, In re Beattie (7).

Eve, in reply:

I concede that, if between the date of the act of bankruptcy and the receiving order, the creditor had got possession of the goods without notice of the act of bankruptcy, such possession is good against the trustees in bankruptcy. In Brewin v. Short (5) the claimant had got possession of the goods, and the question was whether he got possession before receiving notice of an act of bankruptcy.

All that the Court decided in Ex parte Ward (6) was that there was a good custom which was to be recognized as taking goods out of the order and disposition of the bankrupt. With regard to the choses in action, by section 50, subsection 5 of the Bankruptcy Act, 1883, things in action shall be deemed to have been duly assigned to the trustee, and by section 54 the official receiver is to be the trustee. for the purposes of the Act until a trustee is appointed.

On 16 May, to which date the title of the official receiver relates back, there was an assignment to the trustee of the choses in

(5) 5 El. & Bl. 227; 24 L. J. Q. B. 297.

(6) L. R. 8 Ch. 144; 42 L. J. Bk. 17; 27 L. T. 502; 21 W. R. 115. (7) De Gex, 352.

action. Wigram v. Buckley (8) is an answer to the argument as to the appointment of receiver.

[STIRLING, J.: That does not quite cover this case.]

No, because there was there an assignment for value, but the mere appointment of a receiver does not complete title.

The only way in which the property could be taken out of the order and disposition of the bankrupt was by notice to the debtor; and according to Tailby v. Official Receiver (1), the title of the chargee or mortgagee of book debts is not complete until such notice.

[STIRLING, J.: It is not a question of possession at all; it is a question of consent.]

In Edwards v. Martin (3) there was an opportunity of giving notice.

July 24.

Cur. adv. vult.

STIRLING, J.: [after stating the facts, continued:] It was alleged that the plaintiffs had, on 16 or 17 May, notice of the act of bankruptcy committed by Everett; such notice, however, has not, in my opinion, been established by the evidence.

On behalf of the plaintiffs, it was not disputed that the debts were at the commencement of the bankruptcy in the order and disposition of the bankrupt, but it was contended that they were not in such order or disposition with the consent of the true owners, the plaintiffs; or that, at all events, they were not in such order or disposition with such consent on or after 17 May, at which date, as I have found, the plaintiffs had no notice of any act of bankruptcy on the part of Everett.

In support of the contention that the debts were not in the order and disposition of the bankrupt with their consent, the plaintiffs rely in the first place on the instrument of 9 May, 1893. It is objected by the trustee in bankruptcy that this instrument does not in terms include the book debts, and further, that the Conveyancing

(8) 7 R. 469; [1894] 3 Ch. 483; 63 L. J. Ch. 689; 71 L. T. 287; 43 W. R.

Act, 1881 (see sections 19 and 24), only enables a mortgagee to appoint a receiver of the "income of the mortgaged property," and that the book debts are not such income, but constitute the mortgaged property itself. There is certainly weight in these objections; but they do not appear to conclude the case in favour of the trustee in bankruptcy. It may be that the acts of the receiver, although not authorised by the instrument in question, ratified by the plaintiffs, amount to or are evidence of a termination of their consent to the receipt of the debts by the bankrupt; and I pause to consider how the law on this point stands.

As a general rule, the assignee of a debt, in order to take it out of the order and disposition of the assignor, is bound to give notice of the assignment to the debtor. This is laid down in Bartlett v. Bartlett (9). There the subject-matter of the assignment was a reversionary interest in a fund in Court, and there had been, prior to that case, some conflict of opinion as to whether it was necessary in such a case to give notice. Lord Justice TURNER in that case was dealing with an earlier Bankruptcy Act, but his observations appear to me to be equally applicable to that which is now in force. In the course of his judgment he expressed himself as follows: "Looking at the question upon principle, what is the object of the enactment? Clearly to prevent credit being obtained by an apparent ownership, assumed with the consent and permission of the true owner. To confine the enactment to cases in which there is a visible ownership would be to subvert decisions without end upon the subject, nor would it be consistent with the object of the enactment, for credit may be got as readily upon property in which there is not, as upon property in which there is, a visible ownership. Considering then the enactment to extend to personal chattels in which there is no visible ownership, when (to adopt the language of the statute) is a bankrupt to be said, with the consent and permission of the true owner, to have had in his possession, order or disposition, goods and chattels of this description whereof he was the reputed owner, or whereof he has taken upon himself the sale, alteration or disposition as owner? How is the true owner to prevent the reputed ownership? How can it be prevented otherwise than by notice to the person who is under

(9) 1 De G. & J. 127; 26 L. J. Ch. 377.