[insolvency]

Atkinson v. Nokes

Supreme Court of Van Diemen’s Land

Pedder C.J. and Montagu J., in Banco, 15 May 1840

Source: Hobart Town Advertiser, 22 May 1840[1]

            The plaintiff in this case was the assignee of a person named Nicholson, an insolvent; the defendant, a brewer at Longford. A considerable time before Nicholson’s insolvency, Nokes had purchased a quantity of barley from him, to be delivered at a future time, and had paid for it by an acceptance. The barley was not delivered at the time specified, but some time afterwards. Within sixty days from the delivery Nicholson became insolvent, and an action was brought by the assignee to recover the barley under the local statute. A verdict went by consent on a case stated, upon which the present argument arose. Mr. Stephen, for the plaintiff, contended that Nokes was a creditor of Nicholson, and that as the delivery of the barley within sixty days of the insolvency, must be viewed in the light of a transfer having the effect of preferring one creditor to the rest, it was therefore void, and the plaintiff entitled to recover.

The Solicitor General, for the defendant, contended that Nokes was not a creditor, and that the delivery of the barley was only the completion of contract which, by having been made so long before the insolvency, was not affected by the provisions of the insolvent act.

In the course of the argument, the Chief Justice asked the following questions: “Suppose I have a thousand pounds in my possession, and I pay out of that money the only debt that I owe in the world, say £100 and that within sixty days from that payment I, from circumstances of which I had not the slightest idea, should become insolvent, is it contended that this honest payment of a just debt - every farthing I then owed, would be a preference of one creditor to the others?” Mr. Stephen said he thought the law was to that effect, and that the intention of the Legislature was to prevent all payments whether honest or otherwise, within sixty days of the insolvency.

Judgment deferred.

Pedder C.J. and Montagu J., 26 May 1840

Source: Hobart Town Advertiser, 29 May 1840[2]

            His Honor the Chief Justice delivered the unanimous opinion of the Court on this case, which was, that it did not appear that Nokes ever was an existing creditor of the insolvent Nicholson; and therefore the transfer of the barley was not contrary to the local statute. His Honor also observed, that in the case before the Court, it did not appear that Mr. Nicholson had any creditors. The fact was an important one, and ought to have been stated, had it existed. The case, therefore, must be viewed in that light. It had been argued by Counsel for the plaintiff, that the original contract had been violated by the non-delivery of the barley at the time specified, and therefore that the defendant became a creditor for the amount paid on the contract, but did not coincide with the opinion of the learned counsel. There were a class of cases in which a party situated like the defendant in this action, had the option of standing on one of two characters, either as plaintiff in an action on the contract - or in a suit for money had and advanced. It was clear he could not stand in “both characters;” and therefore until he made his election he could not in fact be in either. Had Mr. Nokes commenced an action on the contract, or otherwise disaffirmed it, as His Honor submitted he might have done, then he would have placed himself in the position contended for; but he had done no such thing. No fraud was imputed in the case - it was therefore out of the question; and His Honor was clearly of opinion that the transfer of the barley - the identical article mentioned in the contract, was a plain honest and fair completion of an agreement or contract still open, and therefore that judgment ought to be entered for the defendant.

Mr. Justice Montagu remarked that his opinion was founded solely upon the words of the local act, “an existing creditor”. He should carefully abscond from saying one word that might even be supposed to be an opinion on the Act of Council or its powers. It was clear that Mr. Nokes was not a creditor within the meaning of that Act, and therefore judgment ought to go for the defendant.

The Solicitor General then said that it might be some satisfaction to their Honors to know that the creditors fully coincided with the judgment that he been given - they were fully satisfied with the justice of the case, but as the point was undecided, they thought it worth while to try the question.