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Decisions of the Superior Courts of New South Wales, 1788-1899

Campbell v. Macquoid [1838] NSWSupC 37

trover - insolvency, deed of arrangement - law and fact, distinction - reception of English law, bankruptcy - law reporting

Supreme Court of New South Wales

Burton J., 21 March 1838

Source: Australian, 23 March 1838[ 1]

WEDNESDAY. - Before Mr Justice Burton, and a Special Jury.

Campbell and Others v. Macquoid - This was an action of trover brought nominally against the Sheriff, to recover the amount of certain goods sold by him under a writ of execution, under protest of the plaintiffs.  The goods were, however, sold under that writ, the Sheriff being indemnified.  The damages were laid at £2,000.  The case, which entirely rested on the decision of a point of law, was simply this.  The plaintiffs, Messrs John Campbell, George Salt, Tucker, and John Joseph Davis were appointed trustees, on the 19th October last, to the estate of Charles Beilby, an insolvent, under a deed of assignment, and upon that date they took possession of his effects.  After they had done so, one of Beilby's creditors, Mr Evans, sued out execution upon a warrant of attorney, and levied upon the property then in the hands of the trustees.  The question was, whether the judgment entered up on the warrant of attorney could claim to take effect over the deed of assignment.  After hearing counsel on both sides, His Honor left the point to the consideration of the full court; and under his direction, the Jury found a verdict for the plaintiffs - damages, £1,200, being the value of the goods sold, with leave to move to enter a verdict for the defendant upon the point of law reserved.  The learned Judge recommended this course to be adopted, in order to save the parties from being put to further time and expense, as in the event of his decision upon the point in question (a most important one to the mercantile community) being overruled by the full court, it would be the means of forcing the parties to a new trial.  Counsel for the plaintiff, Messrs Foster and Windeyer - Attorneys, Messrs Carr and Rogers.  For the defendant, Messrs Stephen and a'Beckett - Attorney, Mr Lindo.

 

In banco, Dowling C.J., Burton and Willis JJ, 28 March 1838

Source: Australian, 3 April 1838[ 2]

 

Campbell and others v. Macquoid. - This was an action for trover, brought nominally against the Sheriff, to recover the sum of £1200, being the value of certain goods belonging to Charles Beilby, an insolvent, sold under a writ of execution at the suit of George William Evans, a creditor, after Beilby's effects had been taken possession of by certain trustees, to whom he had assigned all his real and personal estate, for the benefit of such creditors as should sign before a certain day.  Evans did not sign the deed, but a few days after the trustees had entered into possession of the property, he levied upon it under a judgment obtained upon a warrant of attorney; and the Sheriff being indemnified, the sale (notwithstanding the protest of the plaintiffs) took place.  A verdict for the plaintiffs was obtained at the trial for the £1200, with leave from the Court to move to enter a verdict for the defendant upon the point of law as to whether the assignment was good as against the defendant.  After a lengthened argument by Messrs Stephen and a'Beckett for the defendant, and by Messrs Foster and Windeyer on the part of the plaintiffs, (in which the latter maintained, under the legal authorities, that nothing but a fraud or collusion on the part of the trustees to defeat the claim of another creditor, could render the assignment invalid as against the defendant), the Court took time to consider their judgment.

 

In banco, Dowling C.J., Burton and Willis JJ, 30 March 1838

Source: Sydney Herald, 2 April 1838[ 3]

 

Friday, March 30. - Before the three Judges; in banco.

J. Campbell and others v. Macquoid. - This was an action of trover for goods and chattles taken in execution by the Sheriff, on a writ of fiori facias, at the suit of one Evans, against Charles Beilby.  Plea, Not Guilty.  At the trial before his Honor Mr. Justice Burton, and a Special Jury during the present term, it appeared in evidence, that Beilby, a merchant in Sydney, being indebted to Evans upon a warrant of Attorney, and being also indebted to the plaintiffs and other persons, on the 18th and 19th October, 1837, executed a deed of assignment of all his estate and effects to the plaintiffs as trustees for their own benefit, and such of his creditors as should sign the deed on or before a day specified, subject to certain conditions, and amongst others; - that Beilby should be allowed to retain possession of a certain house and premises, and the furniture therein, for the use of himself and family, - that he should have a letter of license for five years, - that out of the proceeds of his effects his son, W. Beilby, should be paid a sum of £250, (without stating any consideration for such payment) - that the son should remain in the house in George-street for one week, taking away with him such private effects as belonged to him personally, and that he (Beilby the father) should have a resulting benefit after paying such of his creditors as should have signed the deed within the time stipulated.  Under this deed the plaintiffs entered into possession of Beilby's estate and effects.  Evans did not sign, but entered up judgment on his warrant of attorney and took out execution thereon, and the Sheriff levied upon Beilby's goods in the hands of the plaintiff's to the amount of £1,200.  For the goods so taken the present action was brought.  The learned Judge was about to rule at the trial that the assignment was void in law under the statute 13 Eliz c 5, but at the request of the plaintiff's counsel, left it to the Jury, whether there was fraud in fact in the transaction, and the Jury found for the plaintiffs, but His Honor reserved it as a question of law, for the opinion of the Court, whether the deed was not, on the face of it, void, as being in fraud of Evans the creditor, who had not signed.  A rule nisi was obtained for setting aside this verdict, and entering a verdict for the defendant.

The case was argued on a former day by Mr. Foster and Mr. Windeyer, for the plaintiffs; and Mr. Stephen and Mr. a'Beckett of the defendant.

The Court took time to advise upon the case, and now.

The Chief Justice delivered the judgment of the Court:- By the statute 13 Eliz. c. 5, all conveyances of lands and goods, devised in fraud, to the end and intent to defraud creditors and others of their just demands, shall be deemed utterly void.  The first question is, whether this was a case for the sole decision of the Jury, as a question of fraud in fact, or whether of fraud in law, upon the face of the instrument, to be determined by the Court.  "Fraud is sometimes," as was said by Buller J. in Estwick v. Caillaud, 5 T. R. 426, "a question of law, sometimes a question of fact, and sometimes a mixed question of law and of fact. If there are any extrinsic circumstances in a case, from which fraud may be collected, independently of what appears in the terms of a deed, prima facie valid, the those circumstances must be left to the Jury.  Here there were no extrinsic circumstances to leave to the Jury.  The whole question of fraud, or no fraud, arises upon the face of the assignment itself, and we are to determine whether it is void by the operation of the statute of Elizabeth.  Without questioning any of the decisions which have taken plaice in analogous cases, and cited in argument, we think this is distinguishable from them, and that under the peculiar circumstances of it, we are warranted in holding it to be void against creditors, not being parties thereto.  There is no doubt, that an assignment by deed made by an insolvent of all his effects to trustees for the benefit of all his creditors, is not void within the statute.  Indeed in this country, where the bankrupt laws of England are not in operation, it is a mode of proceeding highly to be commended when a trader is in embarrassed circumstances, and the Court would always uphold a transaction of that kind, when untainted with fraud.  The case of Pickstock v. Lyster 3 Maul. and Sel. was decided on this principle.  In Holbird v. Anderson 5 T. R. 235, the warrant of attorney given to the particular creditor was held not void by the statute, because a debtor may prefer one bona fide creditor over another.  In Estwick v. Caillaud 5 T. R. 424, the conveyance was held not to be void, because it was only a conveyance of a portion of Lord Abingdon's property, as a provision for some of his creditors to the exclusion of the rest.  The case of Goss v. Neale 5 J. B. Moore, 19, went upon the same principle, namely, that the effects conveyed by M. Wellesley, for the benefit of the particular creditors, formed but a small portion of his property, and it did not appear that his other creditors, not included in the schedule, would be defrauded.  All these cases are distinguishable from the present. It is necessary to advert to the decisions on the bankrupt laws, because they go upon the question - whether a preference to particular creditors would not amount to an act of bankruptcy by reason of its being in fraud of the general creditors?  We confine ourselves solely to the decisions on the Statute of 13 Elizabeth. Adverting to them we can find none which restrains us from holding this assignment to be void within the Statute.  It is true that this is an assignment for good consideration, with immediate possession following professedly, of all the insolvent's estates and effects, for the benefit of all the creditors.  If it rested there, we should hold on the authority of the cases referred to, that this was not fraudulent within the statute; but when we advert to the peculiar conditions to which the creditors are called upon to subscribe to entitle them to the benefit of the assignment, it is difficult to say that fraud was not intended.  In Cadogan v. Kennett, Cowp. 434 Lord Mansfield says, "The principles and rules of the common law, as now universally known and understood are so strong against fraud in every shape, that the common law would have attained every end proposed by the Statutes 13 Elizabeth c. 5, and 27 Elizabeth c. 4."  The former of these statutes relates to creditors only; the latter to purchasers.  These statutes cannot receive too liberal a construction, or be too much extended in suppression of fraud.  The statute does not militate against any transaction bonâ fide, the circumstance of its being doe for a valuable consideration, will not alone take it out of the statute.  I have known several cases where persons have given a fair and full price for goods, and where the possession was actually charged; yet being done for the purpose of defeating creditors, the transaction has been held fraudulent and therefore void."  Being of opinion as we are, that the effect of this instrument was purely matter of law, and there being no extrinsic circumstances to leave tot he jury, the question for our determination is whether this conveyance was executed with an intent to defraud creditors.  It appears to us that it was manifestly executed with such intent.  In the first place, the creditors must sign within three months; in the second, they must acquiesce in giving the insolvent a letter of license for five years; in the third, to allow him to remain in possession of a house and furniture for the use of himself and family; in the fourth, to let him have any surplus, after paying those creditors only who signed within the three months; and in the last, to consent to the payment out of the proceeds of the goods assigned £250 to the insolvent's son, who is not stated to be a creditor, nor any consideration suggested for such a payment.  There is one preliminary objection to this instrument, upon which in a court of law it could not be supported against the non-executing creditor.  The time stipulated is three months for them to come in and if, that time elapsed before they signed, it would not operate to bind them, however equity might allow them to come in, if the deed was made for their benefit.  But our decision proceeds upon the broader ground that the deed is tainted with fraud.  We ask, then, has not this conveyance the effect of defrauding such creditors as do not choose to sign within the time stipulated.  If it has that effect, can it be denied that such was not the intent?  A party must be presumed to intend that which is the necessary consequence of his act.  A debtor has no right too impose such terms as have been mentioned on his creditors, and to compel them to come into his terms by such a proceeding.  This is not like the case of a man giving a warrant of attorney to a particular creditor to satisfy a particular debt.  This is a voluntary assignment for a portion of the creditors to the prejudice of the rest, unless they come into his terms.  It may be that the debts due to the plaintiffs were bonâ fide and that the deed was executed for good consideration; but if it appears manifest that it was made for the benefit of such only as chose to come into Beilby's terms by a particular day, that, in our opinion, is a fraud which vitiates the transaction.  Evans was a bonâ fide judgment creditor, and if he did not choose to come in, was not the intention of this deed to defeat his execution?  There is a vast difference between an assignment of a man's estate and effects for the benefit of all his creditors, and an assignment merely for a portion, which this would be in effect, unless the others came into the terms imposed.  The assignment in question seeks to obtain for Beilby all the benefit of the bankrupt laws, without imposing upon him its obligations and responsibilities.  The effect of this proceeding is to defeat Evans's judgment, and looking at the various reservations, not merely in Beilby's own favour, but in favour of his son (who does not appear to be a creditor), the case clearly comes within the statute 13 Elizabeth.  The obvious intent of the deed was, that no creditor should get any of the insolvent's estate, but hose who signed.  Surely that is a fraudulent intent within the meaning of the statute.  It is conceded, that the question must in every case by, whether the act done is a bonâ fide transaction, or whether it is a trick or contrivance to defeat creditors.  Trying this case by that test, can it be denied that the intent of this deed of assignment, upon the face of it, was fraudulent against those creditors who did not choose to sign it within the time stipulated?  It appears to us that we are bound so to hold, and that it is a question for the Court, and not for the Jury to determine.  If  the Jury were directed as they must have been, that this deed was void upon the face of it, they would be bound by the law as laid down, and therefore it would have been a useless ceremony to leave it to them, where there were no extrinsic circumstances for their consideration.  If any authority were wanting to justify the Court in determining upon the validity of this deed, without submitting it to the Jury, the case of Owen v. Body 6, Neville & Manning 448, is in point.  There, one question was, whether the trust to carry on the business and to pay the profits to such of the  creditors as might choose to execute the assignment within three months, and to pay the surplus to the debtor himself, invalidated the deed, and the Court upon view of the terms of the deed itself, held that the assignment was invalid, as it imposed upon the other creditors terms to which they were not bound to submit.  In the present case, the other creditors were not bound to submit to the various terms imposed, that Beilby was to have a letter of license for five years, that he should retain the possession of the house and furniture, that he should have £250 paid him out of the proceeds of the goods sold by the plaintiffs, that the son should take away what goods he considered to be his own, and that the other creditors, to entitle themselves to ta share of the effects, must come in within three months.  These conditions they were not bound to accede to, and they are such as must invalidate the deed, constrained to hold otherwise, still Evans, the judgment creditor, who has not signed would have a right to take in execution that portion of Beilby's effects which were excepted out of the assignment, and on that ground the plaintiffs could not have retained the verdict, and we should have been obliged to award a new trial; but as we think the deed void altogether as against Evans, a verdict must be entered for the defendant. Rule absolute.

 

Notes

[ 1]See also Sydney Herald, 22 March 1838.

[ 2]See also Sydney Herald, 29 March 1838; Sydney Gazette, 3 April 1838.

[ 3]See also Australian, 3 April 1838; Sydney Gazette, 3 April 1838.  The newspapers all printed the same judgment, indicating that the judges handed down a written version.

Published by the Division of Law, Macquarie University