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![handle is hein.slavery/ssactsengr0093 and id is 1 raw text is: HALHEAD V. YOUNG
be taken under a fi. fa., and so creditors must be delayed. That is in effect saying
that an assignment of all a trader's goods as a pledge for a sum less than their value
must, in point of law, be an act of bankruptcy. But to hold so seems to me incon-
sistent with the very salutary decision that a bon& fide sale of goods in a season of
pressure by a trader for whatever ready money can be obtained is valid, though the
price may be small. The principle of that decision I take to be, that the power of
raising a small sum in ready money on an emergency may often, in the exigencies of
trade, be of immense value. We have seen times when bankers of undoubted solvency
have had difficulty in raising a few thousand pounds, though the command of that
sum for a few hours was essential to enable them to keep the bank open, and so to
preserve a business of immense value. It would be dangerous to lay down that an
arrangement by which a trader under such circumstances raises money is as a matter
of law void because of any disproportion between the security and the sum raised. I
think that the (310] proportion which the sum raised bears to the value of the property
pledged, in this case about one third, is a circumstance to be considered in determining
whether the transaction is bona fide or not, but is not conclusive that it is fraudulent ;
and I think the same of the circumstance that the assignment embraced all the trader's
stock, including what he might acquire afterwards. There often may be a very good
reason for taking a security over the whole of a trader's stock present and future, as
then the stock may be used in the mean time and made a source of profit, whilst, if a
portion of the existing stock is separated and set aside as a security, it is tied up from
use. I am confirmed in this conclusion by the decision in Hutton v. Cruttwell (1 E. &
B. 15), which is precisely in point. If it were competent to us to overrule that case
I should not do so, as I think it a salutary decision, and that such bills of sale should
be watched to see if they are bona fide, not held necessarily void.
Crompton J. We must first determine whether we may look at the real transac-
tion, or whether we are concluded by the terms of the bill of sale, and bound to consider
this as a conveyance, in part for a bygone debt. Now, the question for decision is,
whether this deed was fraudulent as intended to delay or defeat creditors ; and, for the
purpose of determining whether it was or not, we must look at the real transaction
and we find that it was intended to be a pledge exclusively for future advances.
Then is that, though bonu fide, necessarily as a matter of law an act of bankruptcy 7
It could hardly be so [311] argued consistently with Hutton v. Cruttwell (1 E. & B. 15).
Had there not been that decision, I should have thought it well to take time to con-
sider the decided cases. The old cases clearly established the rule that a conveyance
of the trader's property, leaving it no longer in his option whether he would continue
his trade, was in law an act of bankruptcy, as necessarily defeating his creditors. On
this an exception has been engrafted, that the conveyance is not an act of bankruptcy,
if it be for an equivalent; Baxter v. Pritchard (1 A. & E. 456), Rose v. Haycock
(1 A. & E. 460, note (a)). The point in the present case is, whether a conveyance by
way of pledge for an advance is for an equivalent, so as to bring it within the excep-
.tion : but it is expressly decided in Hutton v. Cruttwell (1 E. & B. 15) that it is. We
ought not to overrule that decision, which I think lays down a rule consistent with
the modern course of mercantile business. All merchants now raise money by pledge
of their property ; in times of pressure they often must bring every available thing to
pledge; and, if they did do so by pledging their whole property in separate parcels
to different pledges, the transactions would not be impeachable. It is difficult to see
why the transaction should be invalid if all the property is included in one pledge to
one person, if that be most convenient.
Then, if the transaction of this kind is not necessarily fraudulent as a matter of law,
was this fraudulent in fact? I come to the conclusion that it was bona fide done as
the most convenient way of raising as much money as could be got for the purpose
of the trade, and not fraudulent in fact.
Judgment for the defendants.
[312] HALHEAD AND LORD against YOUNG. Thursday, May 1st, 1856. Declaration
alleged that plaintiff had chartered a ship, then on her way to New York, to
proceed to Quebec after discharging at New York, and to load At Quebec from
plaintiff's factor a cargo of timber, and therewith proceed to Liverpool. That,
at the time of such chartering, the ship was on her voyage to New York. That
plaintiff contracted with R. of Quebec for the purchase of a cargo of timber,
880
6 EL. & BL. 310.](ViewImageLocal?handle=hein.slavery/ssactsengr0093&div=1&collection=&method=preview&ext=.png&size=3)