[equity – insolvency – newspapers – reception of English law, insolvency – costs, security for]

Melville v. Swanston, Bilton Dunn, and Others.

Supreme Court of Van Diemen’s Land

In banco, Pedder C.J. and Montagu J., 31 May 1839

Source: Tasmanian, 7 June 1839

            Upon the last Court day, the Solicitor General moved, that, the plaintiff be called upon to find security for costs, upon the ground, that, the said plaintiff was an insolvent and had not obtained his discharge. The Court now delivered judgment. The Chief Justice had taken every pains, since the arguments upon the case, and as far as he could procure authorities, he must decide against the Solicitor General; he could make out no instance, of the Court of Chancery, calling upon a party to give security for costs, upon the ground of his being an insolvent; what might be the practice in a Court of Law, it was not now necessary to enquire into; but what was the practice of the Court of Chancery. He had found a later case, than that reported in Mosely, where the Court held that it was no ground, whatever, for making such an order. In the case of an infant, it was different, it was then required that security should be given, that the party should have some one to look to for costs. He was of opinion that the application must be refused.

            Mr. Justice Montagu stated, that when the application was made, upon principle, if not bound by authority, he would have granted the application; he could see no difference between a party being an absentee, or any other disability, and his being an insolvent; in the former case, security would be required; but, they could not, after the decision by the Court of Chancery, deviate from the practice. He was of opinion, however, that an insolvent should have justice against his assignees, in whom all his property was vested. He did not know the nature of the bill, but, perhaps Mr. Harrison would state, whether it went to that point.

Mr. Harrison. - The bill contains charges of fraud and collusion, against the assignees, with other parties, in the disposal of his property. Application refused.

Mr. Horne had applied to the Court, upon a former day, as to the course he should adopt, in appealing to the Court, against the decision of the Commissioner of the Insolvent Court, under the 8th section of the Act; a petition, or something of that nature, explanatory of the circumstance, had been paid before the Court, but no notice had been given.

The Court thought, that as the appeal involved a large sum of money, the proper course would be, by petition; but, notice must be given.

In banco, Pedder C.J. and Montagu J., 28 August 1839

Source: Tasmanian, 30 August 1839[1]

In Equity. - Melville v. Swanston, Bilton, Warham, Dunn, Maurice Smith, John Macdougall, and John Campbell Macdougall

Mr. Harrison said, this bill had been filed to discover what charge plaintiff had upon certain newspapers, presses, types, and book debts, which had been sold by indenture of agreement, in 1838, to Maurice Smith, for £10,000, or what was due upon it with interest, and that all sums of money for the sale of the paper must be accounted for and paid into Court, and upon his debts being paid, the surplus might be handed over to him.

The Court here stopped the arguments of Mr. Harrison, as the counsel in support of the demurrer must be heard first.

The Solicitor General, in support of the demurrer, observed, that he appeared for the whole of the defendants. He would give a short sketch of the state of the case for the information of their Honors. It appeared that plaintiff some years since had been carrying on the trade of printer in Hobart Town, and was the publisher of one or more newspapers until 1838 up to which time he had had considerable money transactions with Mr. Maurice Smith. On the 18th of May, 1838, Maurice Smith was duly declared insolvent under the 81 section of 6th Wm. 4th, No. 10, and obtained his discharge under that; and he had pleaded his discharge to being made a party to this bill, under the 81st section which protected him, as in the case of Guillam and Carter, where it was pleaded the same in law as in equity.

Mr. Harrison. - We have tendered you 20s. costs in the case of Mr. Smith, and offered to amend the plea.

Solicitor-General. - Justice cannot be done, unless the Court is acquainted with all the circumstances. Mr. Smith is the foundation-stone of all these proceedings, and has been made a party to the bill, but having pleaded that he was declared insolvent and obtained his discharge, by another insolvent not discharged, you now discharge him from the bill and offer him 20s., after putting him to an expense of £20.

Judge Montagu. - If the law is defective, we have nothing to do with that; this plea is not ripe for decision at all.

Chief Justice. - If good, you would ask for the bill to be dismissed altogether.

Solicitor-General. - So we intend, and ask for more costs if we are entitled to any.

Chief Justice. - If Mr. Smith has not a right to have the bill dismissed, of what use is the statute; my suspicion is, that according to the practice mentioned by Mr. Harrison, the bill must be dismissed as against him altogether.

Solicitor-General. - This plea shows that he was most improperly made a party to the bill, and if entitled to any, he is entitled to full costs.

Judge Montagu. - Upon payment of twenty shillings costs Mr. Harrison is entitled to amend his bill.

Solicitor General. - The bill is not amended, and therefore it must be dismissed quoad Mr. Smith, with payment of full costs.

Judge Montagu. - If you were to ask the Court for full costs before the bill is amended, we might grant that.

Mr. Harrison. - That is never done.

Solicitor General. - It is making the thing a nullity; we are first put to enormous costs, then they turn round and say, we have done wrong and there are twenty shillings.

Chief Justice. - If we are bound by the practice cited by Mr. Harrison, there is an end of the bill quoad him.

Solicitor General. - As to the demurrer of the other parties, there are several, but all the same, arising from their having employed different solicitors. The ground of these demurrers is the want of equity on the part of the plaintiff. Their Honors would collect from the perusal of the bill, that Melville was an undischarged insolvent, and as such had no locus standi in that Court. He commenced by stating, that prior to 1838, he was the proprietor of a printing establishment in Hobart Town, at which time he was indebted about £1100. In January 1838, wishing to retire from business, he entered into a treaty with Maurice Smith, for the whole of the establishment, presses, types, and newspapers. He then states the terms upon which he agreed to part with them, and sets out in full a deed of assignment, dated 25th January, 1838; the consideration was £10,000 to be paid in the following manner:- £6,900 paid previously; £1,100 agreed to be paid by Smith to certain of his (Melville’s) creditors, £800 by two bills at 3 months, and £1,200 by three bills of £400 each; he then set forth, verbatim, the indenture of agreement, proving it to have been a complete sale, but he now contends that he has a lien upon the property so sold to Mr. Smith on the 25th January. He proceeds by saying, that he is led to suppose, and believes, that the said property was transferred to Swanston, Bilton, and Dunn, as trustees of Smith, and that they sold the same by public auction, and that the whole was sold to Messrs. John and John Campbell Macdougall, or one of them, for £3,500, and that the book debts were sold to the same parties, or one of them, for £2,000. The bill discloses a complete sale to Smith, that it was subsequently disposed of to three gentlemen, and then to one or two other gentlemen, and the only ground of filing the bill is, that he supposes he has a lien on the property. He would support the demurrer’s upon two grounds. - first, for a want of evidence, and, secondly, that the Insolvent had no interest in the case, as in law he could not claim a right to the transfer of personal property. In Mitford’s pleadings 110, it states when a demand is tenable, and when it may be taken advantage of’ when a party cannot sue from some personal disability. Here by the fifth section of the Insolvent Debtor’s Act, as it is clearly shown, the plaintiff is an undischarged Insolvent, he is not entitled to sue from personal disability.

Judge Montagu. - Does he alledge these matters to have accrued before or after his Insolvency.

Solicitor General. - The bulk before; but at the end of the bill, there is something about a conspiracy, and his having applied to his assignees to do so and so which they have not done; but he did not apply to the Insolvent Court, as he ought to have done instead of coming here. The insolvent had no interest in the subject, nor could he institute such a proceedings as this; and it is specially provided for, to prevent the multiplying of suits, as in the making Mr. Smith a party to the bill; the whole burthen of this case is founded on erroneous supposition that he has a lien upon the property, but by his own showing it was an absolute sale of personal property; there was no occasion for the deed, and I don’t know how it came to be executed, but perhaps it arose from want of confidence in each other; the deed puts the lien out of the question as it proves it to have been an absolute sale of personal property, and in law possession follows the deed, and no one would be safe if the property was to be followed after an absolute sale.

Judge Montagu. - Has Melville possession?

Solicitor-General. - No your Honor.

Judge Montagu. - Then what is the use talking about a lien.

Solicitor-General. - The bill proves that from January 18th, 1838, to the 9th of May, 1839, nothing was heard of this lien, he does not say that he ever made a claim; the bill furnishes us with a defence, proving that in January he sold the property; it was again parted with, and again sold, by public auction, to one or two gentlemen, but one of the two solemnly declares, that he had nothing to do with the purchase. On the face of the bill, plaintiff mentions that he received payment in bills of exchange, but taking a bill of exchange, does not constitute a lien upon the property, as laid down in Bunny v. Points, 4th Barnwell and Alderson, 418, where a bill of exchange had been given for some hay, which was dishonoured. Lord Edenborough held, that the hay could not be touched. The whole bill is a fiction, and a misrepresentation of facts from beginning to end; perhaps, he thinks he has a lien, because the bills were dishonored, but from circumstances which I am not now alledged to state, I could prove that fifteen shillings in the pound have been received.

Judge Montagu. - Confine yourself to the bill, it is making an improper use of a public Court of Justice, to make statements which may go abroad to the prejudice of the party. This is a question of law, whether he has disclosed such facts upon the bill, as to warrant us in granting the prayer.

Solicitor-General. - Then taking the facts, he says, that it was a sale, and that there were subsequent sales, and as cited in the case of Edwards and Harvey, reported in Darnford and East, possession must follow the deed. If an Insolvent can come here and file a bill, and rip open cases, which have been long decided, it will have the effect of superseding all insolvencies, and would preclude judgment creditors from their just rights; he comes here, making his assignees parties to the bill, in fact superseding his insolvency, instead of taking the proper course of going to the Insolvent Court.

Judge Montagu. - What Section of the Act entitles him to go before the Commissioner and obtain redress?

Solicitor General. - In the bill he says that he can pay 40s. in the pound; if so, he could have gone before the Commissioner, and superseded his Insolvency.

Judge Montagu. - But it is not a charge of fraud against him, if he does not do so.

Solicitor General. - No, but the assignees are liable, if he has property, to see that his debts are paid, and therefore he should have gone before the Commissioner.

Judge Montagu. - Shew me any Section of the Act, if he was to go before the Commissioners, and complain of the assignees, through which he could obtain redress, and it will weigh with me nine-tenths in favor of your argument. Suppose he had gone to the assignees, and they had struck him on the head, could the Commissioner have tried that action of trespass?

Solicitor General. - The Court will never grant any remedy when a party has not availed himself of a course open to him. He says that he was able to pay 40s. in the pound; if so, he should have told your Honor, before whom he came, of the circumstance, and have been discharged. He says, that his debts amounted to that the balance due and owing on the £10,000, would pay the whole and leave a large surplus.

Chief Justice. - From what I have seen of the bill, he alleges, that the £6,900 was not paid before nor since, and that only a small sum has been paid.

Solicitor-General. - Yes; but suppose none had been paid, and a receipt had been merely given to a bill, and the property given up, at law he would have no remedy, nor any lien to recover it back; without that, there would be no safety at all in the transfer of personal property; as soon as the vendor parts with the property, the vendee is invested in all his right; if anything should arise upon that, the case of Mr. J.C. Macdougall was much stronger, and was separate from all the others, he being the third purchaser of the property; he says, Mr. J.C. Macdougall had, with the rest, some notice of the lien, but it is quite clear on the face of the bill, that he does not charge any knowledge preceding the purchase; he also charges Swanston and Bilton, but not specifically.

Chief Justice. - I don’t see that the bill alleges it, but you admit it on the demurrer.

Solicitor-General. - There is something prima facia on the bill to show that; and Mr. J.C. Macdougall is represented as the accidental purchaser at an auction mart.

Chief Justice. - That does not show that he had not notice before.

Solicitor General. - There are some allegations in the bill which make that reasonable to be supposed.

Chief Justice. - The argument goes the other way; a person intending to make so large a purchase as this would most probably make enquiries. The probabilities are against you.

   Judge Montagu. - Was it necessary to set forth, that A.B. and C. had been given notice? That was a fact in evidence; was it not sufficient to state it generally?

Solicitor-General. - The Court would look with a jealous eye, upon a party who had been found tripping in one point, but I will not press the point any further. There are acts antecedent to the insolvency, minor points, which are the fringes of the bill. The whole affair should have been settled in the insolvent Court.

Judge Montagu. - If he cannot get redress there, I should assume that Equity is the place where he should complain.

Solicitor General. - Yes; but the insolvent took no measures to obtain redress; and, from the 77th to 84th section of the Act, inclusive, points out the course he might have adopted. He does not show on the bill that he objected to the insolvency, and therefore he must have acquiesced in it; but he now says, that he had plenty to pay his debts besides his landed property.

Judge Montagu. - There have been many instances where parties could pay 20s., or even 50s., in the pound, and, as the cheapest way of arranging their affairs, they have submitted to a bankruptcy. In many instances, when the large Banks failed in England some years ago, they adopted this course.

Solicitor-General. - He leaves the assignees liable to the operation of the insolvent laws, and comes to this Court at the same time. He should have gone to the Commissioner, to have superseded his insolvency, and if he had failed, he might have sought justice elsewhere.

Judge Montagu. - If a party is declared insolvent, and the assignees, get hold of property amounting to 50s. in the pound, and will not refund to him, where is he to go for redress?

Solicitor General. - He does not say that on the face of the bill; he ought to have shown that he could not get redress elsewhere; the matter which he assigns has nothing to do with it; the sale was absolute, and he could not look to the property for the lien, as he calls it; on the second ground there was a want of equity, or the assignees could not have a claim.

Chief Justice. - He says there was a conveyance from Warham and others, and if so, I presume, fraud and collision is one of the charges, he brings against the assignees.

Solicitor General. - Only generally; lst, against the trustees of Maurice Smith; 2nd against his assignees, and 3rdly, against J.C. Macdougall, as purchaser at auction.

Mr. Harrison. - Your Honors are not trying this by the insolvent law. On the authority of the case of Barton and Jane, in 7th Symmonds Reports, this bill had been executed, where the executors to a will, by fraud and collision, had not taken steps to recover the property of an insolvent, which would have paid his debts and left a large sum, a demurrer was filed to the bill in this case, which was overruled. In Barton v. Tattersall, lst Russell and Milne 237, Sir John Leach held, that where assignees refused to take steps to recover property, they were liable. In Newman and Champion, in the same Reports, it was held, that not only could trustees be sued, but they could sue all parties having any portion of the property, though collusion was neither charged nor proved; also in Barbarossa and Watkins, and another in Russell and Milne’s Reports.

Chief Justice. - You must prove there was a trust.

Mr. Harrison. - The greater part of the property was conveyed in trust to Smith, and from him to Macdougall, and in recovering the book debts they must sue in Melville’s name.

Chief Justice. - You must first prove that Smith was a trustee. Does every contract in a Court of Equity make the party a trustee to fulfil that contract?

Mr. Harrison. - I conceive so. The vendor can follow property for a lien, and holders, if they have notice, both real and personal, and the plaintiff having established a lien here, had a right to call upon these parties to pay the money into Court and, his debts being first paid, the balance to be handed over to him. Under these circumstances he considered the demurrer would be overruled.

The Solicitor General thought the whole of Mr. Harrison’s argument totally inapplicable. Unless the Court was prepared to assume a lien, it was a perfect begging of the question; or, that the sale to Smith made him a trustee. He was of opinion that the demurrer should stand.

The Court would delivery judgment on Friday.

In banco, Pedder C.J. and Montagu J., 28 August 1839

Source: Hobart Town Advertiser, 30 August 1839

            In re Melville v. Smith, Dunn, Warham, Swanston, Bilton, J. Macdougal, and J.C. Macdougal.

This was a general opposition by the Solicitor General for the several defendants to the bill filed by the complainant. It appeared that the complainant was formerly the proprietor of a certain printing establishment, and several newspapers in Hobart Town, but being desirous of retiring from the business, had some time prior to 1838 agreed to dispose of the said establishment and trade to defendant Smith, for the sum of £10,000, the consideration being as follows:

The amount of various sums already paid (as alleged) by Smith

on account of Melville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £ 6,900

Amount of debts still owing by Melville agree to be paid by Smith . . . . .    1,100

Smith’s two several acceptances for £150 each . . . . . . . . . . . . . . . . . . . . . .    300

Amount of three other bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,200

Smith’s having got into difficulties assigned over all his estate to the defendant’s Swanston, Bilton, and Dunn for the benefit of his creditors, and these assignees subsequently sold the business by auction, when it was purchased by the defendants J. and J.C. Macdougall, “or (as the bill sets forth) one of them,” for the sum of £3500, and the said assignees afterwards sell to the same parties, “or one of them” the book debts belonging to the establishment for £2000. Smith subsequently is declared insolvent, and duly discharged under the act; but the liabilities given to Melville (it is alleged in the bill) are not satisfied. After this, the complainant Melville is himself declared insolvent, and the defendants Warham and Dunn became the permanent assignees under the said[?] insolvency. The bill then goes on to declare that the complainant Melville has still a lien on the property, charges all the defendants with collusion, &c., and prays that the Court will take possession of the property, pay the complainant’s debts, and hand over the surplus to himself.

Against this bill, the Solicitor General appeared to put in a plea for the defendant Smith, that he having been duly discharged under the Insolvent Act, was released from all suits in law or equity.

Mr. Harrison, for the plaintiff, admitted the plea, and had tendered the 20s. costs required by chancery practice.

The Solicitor General had refused the 20s. because he thought Mr. Smith had been improperly made a party, and was therefore entitled to full costs, if any.

With respect to Mr. J. Macdougall, the Solicitor General said that he totally disclaimed any act, part, or participation in the business, and upon this total disclaimer prayed the bill might be dismissed as against him.

The other five defendants demurred to the bill generally upon the following grounds:-

1st - That the plaintiff being an undischarged insolvent had no interest whatever in any property he might have held prior to his insolvency, all his right title and interest becoming vested in his assignees under the act.

2nd. - That the plaintiff had not and could not have any lien either at law or in equity upon a transfer of personal property, all estate in which passes (it was contended) with the possession.

Mr. Harrison, in support of the bill, cited several cases to prove:

1st. - That a bill by an insolvent is not demurrable.

2nd. - That where assignees neglect or refuse to take steps to recover property they become liable to be made parties to a suit in equity.

3rd. - That in equity, though not at common law, the party beneficially interested may sue any person through whose hands the property may have passed although collusion is neither charged nor proved.

4th. - That the vendor may follow property whether real or personal for a lien, where notice of that lien had been given.

The Solicitor General shortly replied that in his opinion the cases cited by Mr. Harrison did not hear upon the present one.

Their Honors received their opinion for a future day.

In banco, Pedder C.J. and Montagu J., 30 August 1839

Source: Hobart Town Courier, 6 September 1839[2]

His Honor, the Chief Justice, was not prepared to deliver his opinion.

His Honor, Mr. Justice Montagu, wished to suggest to Mr. Harrison, the counsel for the plaintiff, whether the bill should not be amended, because even if the defendants should be obliged to answer, it seemed to him, that without gross expense justice could not be done between the parties. His Honor considered that there could be no lien, or charge, on personal property, after the possession was parted with. The common transaction of life could not go on if it were otherwise. This is a general demurrer, and does not touch many parts of the bill; and if a general demurrer is overruled in part, it must be over-ruled altogether. It does not go to that part of the bill which charges fraud and collusion in reference to the Van Deimen’s Land Annual, the Independent Newspaper, and the Binding concern, on which the plaintiff claims no lien - the question is, shall the defendants answer that part of the bill? The council for the plaintiff did not urge it, but still it is the duty of the Judge to consider it. On that point the defendant must answer. His Honor then made some suggestions as to the alteration of the bill. The position of insolvents is different here from what it is in England. There, there is a tribunal to administer the assets; here, there is no other tribunal to come to but this Court. Admitting therefore, that in England an insolvent could not go to a Court of Equity, it does not follow that that doctrine can be applied here. If assignees misconduct themselves here, how is an insolvent to act? Is he to get his assignees removed? Is that redress? Besides, the insolvent cannot get them removed here. He can only ask his creditors to call a meeting for that purpose; and, if they refuse, are the assignees to be allowed to ruin him? He may be entitled to property worth £10,000 and only owe £2,000 and the assignees may choose to stand by and refuse to recover it. He is utterly remediless unless he be at liberty to come into this Court. It is difficult to say from this bill, on what ground it goes. The bill admits an absolute sale of the newspapers and printing establishment, and debts, by a deed which acknowledges the receipt of £6900 by Melville, prior to its execution. If it should turn out that this sum is nominal, the real consideration will be only £3,100, and the trustees have made more the property than this; for they have sold the newspapers and printing established for £3,500, and the debts for £2000. If the ground of complaint be that the plaintiff had a lien for part of the purchase-money, and that the parties, by a fraudulent deed, endeavoured to destroy this lien, the Bill should have so stated. But if the substantial ground of complaint be against the trustees of Smith, of whom Melville is a creditor, then a creditor’s  bill might have been filed without charging all these parties with collusion and fraud. What the effect of an answer may be, it is impossible to say. It may turn out that the bill is all moonshine - every party may have dealt with the property in the best possible manner. But when a bill alleges that the assignees have been guilty of collusion and fraud, and that they will not act, this Court is bound to afford the insolvent relief. If the fact was, that the trustees of Smith have sold the Annual, Independent Newspaper, and Binding concern, which never was sold, or intended to be conveyed to Smith by Melville, and that the assignees (of whom one is a trustee,) have joined in the conveyance for the purpose of ridding themselves of the trouble of recovering this property, this Court will not stand quietly by.

The Chief Justice concurred in all that had fallen from Mr. Justice Montagu, in respect to the bill being altered. Supposing any money be paid into Court, there will be a difficulty in its deposition. If the assignees are proved to have committed fraud, could these assignees say, “By law we are entitled to this money, hand it over,” and thus get the fund? If the creditors would not in such a case choose new assignees, the money must remain in Court. Probably, if Melville had gone to his creditors and represented the facts, they might have appointed new assignees, and then there would have been no difficulty. If the trustees of Smith have dealt with property not conveyed to them, and the assignees have  abetted them, it can hardly be conceived but that the creditors would have turned them out.

In banco, Pedder C.J. and Montagu J., 30 August 1839

Source: Tasmanian, 13 September 1839[3]

            In re Melville, v. Swanston, Bilton, Dunn, Warham, J. Macdougall, J. C. Macdougall, and Maurice Smith

            The Chief Justice would give no opinion upon the matter, as he was not prepared; but he wished to know, whether the deed to Swanston and the other trustees, constituted the lien, or whether it was something previous - the £6,900 that was considered the lien?

Mr. Harrison. - Certainly.

Judge Montagu. - I wish to make a few observations, in the nature of suggestions, to Mr. Harrison and not as a decision. The Chief Justice has not given an opinion, and, as such, I shall keep mine open. My only motive is to point out one of two facts, which, if adopted, may save considerable trouble and expense; if not allowed, and the case goes on to be heard, many difficulties will occur, great expense and time will be wasted, and injustice done. Mr. Jones’ arguments upon the demurrer go short of the Bill; as, against Smith, we have relieved him. On the demurrers, Swanston, Bilton, Dunn, and Warnham are set forth as assignees and trustees, and the Messrs. Macdougall as purchasers of the whole of the plaintiff’s property. On the whole bill, two sales are endeavoured to be overturned -one, of the papers, presses, and type to Mr. Macdougall, which was a distinct sale; the other, the sale of the Independent, the Annual, and the bookbinding concern. Upon them plaintiff’s attorney insists that plaintiff had a right of lien, although it was personal property, sold and gone into the possession of Smith, and again sold to a third party, yet he had a right to retain the property in possession, until the amount of the sale to Smith is paid, and that there was no difference in this respect, in law or equity. The last observation used by Mr. Jones, upon the previous occasion, must be convincing to every mind, that, if the argument of lien in cases of personal property was to be held that he might be made a party to a bill for the book he held in his hand, because his bookseller had not paid the publisher, or because the publisher had not paid the editor, Mr. Chitty. If such an argument was to be held, it would upset all matters of common life, but no lien can exist upon personal property, when the possession is parted with, for then the lien ceases. The property might be stopped at the very door, or on the road, in transitu, if the person was discovered to be insolvent, but when the property is out of possession or not, in transitu, the lien ceases. Here the property was given up, under deed, to Maurice Smith, conveyed by him to trustees, and then sold by auction. I can’t see how the claim of lien can be set up. This general demurrer does not go to the whole bill, and if disallowed in part, it must be disallowed in the whole, that is, if any part is open, does this demurrer go to the whole length? It does not meet the charge of fraud and collusion, or the Independent, the Annual and the bookbinding concern, upon which, plaintiff also claims a lien or charge, but the mischief here is that the demurrer does not go to the whole length, and it is for the Court to say, whether they will call upon the defendant to answer. I may safely say, that the argument, that plaintiff being an insolvent, he had no right to sue, that being vested in his assignees, does not touch, nor can it apply to this case. I think it my duty to point out one or two parts of this bill, of which I complain, as they are calculated to mislead, and would have misled me, if I had not read them very closely. The bill, after setting out that he was possessed of the printing materials, &c., goes on to say, that he was “then” possessed of £12,000 in book debts, but in the draft, which has been laid before me, the word “then” has been expunged, whether purposely or not I cannot say, but it has the effect of misleading, and is most unfair; in the preparation of these things there should be the utmost fairness and candour, and I shall endeavour to put down such an abominable practice, and, whenever it occurs, mention it publicly in open court, that it may have its due weight outside by deliberately denouncing it as improper; I think you had better strike out of the bill the £12,000, as it does not show when he was possessed of these debts, and also the subsequent section, to which there is no date. At home, the insolvent can obtain redress through the act, but he cannot do so here; how then is he to obtain redress without he comes here, if he could by any proofs of law get the assignees removed, of whom he complains, and gets new ones appointed, they might sue those, who had not done their duty. In the bill, the nature of the trust is not stated, no discovery or disclosure is sought for; he would put it to Mr. Harrison, whether, without the deed from Smith to the trustees was set forth in the bill, justice could be done? If the bill was persisted in, he thought the form must be different, or justice could not be done to either party, after considerable expense and trouble had been incurred. He did not consider himself bound by any opinion he had given that day, which he merely stated in the shape of suggestion.

The Chief Justice concurred in what had fallen from Judge Montagu. He wished to know, what on earth they would do with the fund, if it was paid into Court?

Here the matter ended.

In banco, Pedder C.J. and Montagu J.,  19 November 1839

Source: Hobart Town Courier, 22 November 1839[4]

This case stood over for judgment from last term. The decision of the Court was now given, that the demurrers put in by the defendants were good.

The Chief Justice delivered his judgment at some length. The Bill states that the plaintiff had been the proprietor of certain newspapers, and of printing materials of the value of £6,000 and had debts owing to him to the amount of £12,000; and had also an agreement for a lease of certain premises in Collins-street, and other valuable property; and that he had agreed to sell the newspapers, printing materials, debts, &c. to the defendant, Smith, for £10,000; and that out of the £10,000 Smith was to pay certain sums to parties to whom Melville owed money. The Bill further stated, that in pursuance of this agreement, a deed had been executed assigning the newspapers, debts, &c. to Smith, in consideration of the sum of £6,900, therein untruly stated to have been paid by Smith to the plaintiff, and of the sum of £3,100 to be paid by Smith, and for some portion of which Smith gave bills. It further alleges that the whole, or nearly the whole of the £10,000 still remains due, and claims a lien upon the property for so much. It then goes on to state that the property had been assigned by Smith to trustees, upon trust for the benefit of his creditors; that the original draft of the assignment contained a clause recognising the plaintiff’s lien, which was struck out at the request of Captain Swanston, one of the trustees, or of his solicitor, Mr. Pitcairn; that on the 25th March, 1838, the trustees sold the printing establishment to the defendants, John Campbell Macdougall and John Macdougall, for £3,500; that this sale was managed badly, no printed particulars having been published; that the trustees subsequently sold the debts to the Macdougalls for £2,000, a much less sum than they would have fetched if sold properly; and that all the defendants had notice of the paramount lien of the plaintiff. The Bill then contains the singular statement, that on the 20th April, 1838, the plaintiff was declared insolvent “in consequence of Smith not performing his agreement,” which is not to be understood, as none of the payments under the agreement were then due. If he became involved through this transaction, it is in consequence of his taking only the covenant and personal security of Smith for one-third only of the purchase money. It seems strange that Melville should execute this deed without taking any security for the remaining two-thirds, and we can only understand it by supposing it to be a fictitious sum to raise the value of the property, for if £6,900 be a real sum, next to madness must have been the conduct of Melville. It then goes on to state that the plaintiff’s debts amount to £2,500 and that his assignees refuse to recover this £6,900, colluding with the other defendants. The Bill further states, that the plaintiff had the Independent newspaper, and a business at Launceston, and also the Van Diemen’s Land Annual and a lithographic and bookbinding business, and debts owing him in respect of these, which were not conveyed or intended to be conveyed to Smith; but that, nevertheless, the Macdougalls had seized all this property under some pretended deed from the trustees of Smith; and that the plaintiff had applied to his assignees to restrain them, who refused. The Bill then charges, that the £3,500 is much less than the value of the newspapers, &c., and that the debts would have realised £6,000 but for the neglect of the trustees of Smith; that after payment of the plaintiff’s debts large surplus would remain; and that the defendants pretend that the assignees have released the other dependants; and charges that if any such releases have been executed, the same are fraudulent and collusively executed, to relieve them from responsibility. The Bill then prays that the plaintiff’s lien may be established, and that the £10,000 may be paid; that the trustees may be charged for all loss occasioned by the improper sale, and that what may be found due by them may be paid into Court; that it may be declared that the Independent, Van Diemen’s Land Annual, binding business &c., were not comprised in the assignment to trustees by Smith; and that all sums received by the defendants in respect of these be paid into Court; that the defendants may be charged with all leases, and that after payment of his debts the surplus may be paid to him; and that all deeds by the assignees to the other defendants may be declared fraudulent and void. The defendants have put in a general demurrer, that the plaintiff has not stated such a case as entitles him to relief and discovery in a Court of Equity. The counsel insisted, that the plaintiff being an insolvent, could not come into a Court of Equity; but we are clearly of opinion, that if the case rested on that ground only, that the demurrer must have been overruled; because when all the creditors have been paid, the whole purposes of the Insolvent Law have been satisfied, and in equity the insolvent is entitled to the surplus. This, indeed, has been decided in England. But we are of opinion that the plaintiff has not made out such a case as entitles him to relief in a Court of Equity, and if so, he cannot have a discovery. The deed to Smith is an absolute one without any trust, the plaintiff taking the personal security of Smith only. The plaintiff now claims a lien paramount, and to follow this property. He does not come to claim the benefit of any trust in the trust deed. The whole of this property is personal, and there is no legal notion of a lien on personal property not in possession. If a man will be a fool and take only a covenant for payment of one-third of the purchase money, there is no case which says the sender shall have a lien. It is clear, therefore, that this part of the case has no foundation. Then as to the Launceston property, &c. the plaintiff first says that the Macdougalls have taken possession under an assignment from Smith’s trustees, but in what is called the charging part of the bill, he varies his statement, and says that they claim all (that is, both the Hobart Town and Launceston property,) by means of conveyances from the assignees, the very persons who might give a title. The plaintiff says that those are fraudulent and void; but the question is, has he made out such a case as entitles him to relief in a Court of Equity. If he has a surplus and comes into Court and avers that the assignees have sold his property at grossly inadequate prices, it might be different, but this is not averred in this case. If we were to allow this bill, any insolvent might say - “I was declared insolvent, my property is worth more than my debts, and there is a surplus. A B and C are in possession of my property, they pretend they have it by assignment from my assignees; if so, it is a fraudulent assignment. The assignee will not account, and the only answer I get from A B and C is, that they have it from the assignee. Therefore declare the assignment to be fraudulent and void.” No person purchasing from an assignee would be safe. It is quite consistent with the plaintiff’s bill in this case, that the Macdougalls are in possession by assignment from the assignees, and quite consistent that that assignment was at a fair price; and if we were to overrule this demurrer we must go this length, that because assignee will not account, a third party must take an office copy of a long bill at an expense of £10 perhaps, and make an answer to purge himself of what is not imputed to him. Every purchaser would purchase from an assignee at the risk of being dragged into Court, because the assignee will not furnish accounts, which of course the purchaser has no means of compelling him to do.

Mr. Justice Montagu concurred in opinion. The plaintiff has not made out a prima facie case. The only ground taken on the argument by the defendants’ counsel was, that an insolvent could not come into this Court, and upon that I entertained no doubt but that this Court would interfere if a case of fraud was made out; because, if not, the Insolvent Act would leave parties without redress. But as in criminal matters and at common law, it is necessary to set forth specifically the charge or claim, so it is in equity; and this bill does not contain any distinct charge. Indeed, I am inclined to think that the facts are purposely kept back. The plaintiff states that he was worth, in all, £19,300 - a very rich man! It is rather odd, that a few months after, when he owes only £2,500 that he should become insolvent, his property still being of the same value. It does appear that it is not true, and I cannot believe it. He says himself that he sold the property worth £17,500 for £10,000 of which £6,900 is acknowledged in the deed to have been received by him, yet he charges that he has not received it. The object of this must be concealed. If it be a nominal sum, it is dishonest. It should appear on the face of the bill. The plaintiff must be under some delusion, or in error as to the value of his property, or there must be some transactions with Smith concealed, or there is trickery in keeping back the real facts. I cannot say which. The demurrer must be allowed.

Solicitor-General. - We are entitled to our costs.

Chief Justice. - Of course; but where you will get them from I do not know.