parte Pease, 1 Rose, Bkt. ca. 232. Ex parte the Wakefield Bank, ibid. 243. See, likewise, the same collection of cases, 254 and 280: and 17 Vesey, 270.

IV.- Where Property is left in the Bankrupt's Hands as Trustee, Executor, or

Administrator.

Here the principle is manifest. The possession is necessarily independent of all collusion. A trader is not put out of the rights and duties of social intercourse, merely because he is a trader. He may become, as matter of course, the executor of a friend, or the trustee of a marriage settlement, &c.

Thus, where the wife of the bankrupt administered to her father, and became possessed as administratrix of his effects, to which she and her infant brother and sisters were entitled, and the husband continued the business of the father for their benefit; Lord Eldon, notwithstanding, held, that this was not such a possession of the goods by the bankrupt, as could be deemed an order and *disposition within the statute, so as to make them liable to his creditors. Viner v. Cadell, 3 Esp. N. P. C. 88. See, likewise, [*568 Butler v. Richardson, Amb. 74. Bedford v. Woodham, 4 Vesey, 40; and Winch v. Keeley, 1 T. R. 619. So, where T. held shares in a trading company in trust for W., who, by his will, appointed T. his residuary legatee, T. continued in possession of the shares, and became a bankrupt. Lord Redesdale held, that T. being a trustee, the shares were not left in his possession within the meaning of the statute, so as to entitle the assignees to take them; but that T. was. the true owner and proprietor of the shares, subject to the debts and legacies of W. Joy v. Campbell, 1 Scho. and Lef. 328.

*LEE et al. v. MUNN.

[*569

An auctioneer is not liable to pay interest upon a deposit, kept in his hands during the investigation of a title. He is to be considered as a mere agent, unless he specially engage as a principal in the sale.

ASSUMPSIT. The plaintiffs were builders; and had purchased property at a sale, conducted by the defendant, as an auctioneer. The plaintiffs being the highest bidders, the lot was declared to be theirs; and they signed an agree ment to complete the purchase, according to the conditions of sale. They likewise paid into the hands of the defendant 2007., as a deposit, and a security for their performance of the contract. Objections being taken to the title deeds, a long negotiation commenced between the vendor and vendee; and from the year 1813, when the property was first put up to auction, until the year 1817, different treaties had been carried on, and arrangements proposed. Finally, however, the contract was rescinded; and the plaintiffs now brought an action against the defendant, to recover the amount of the deposit money, together with interest, from the time of its having been paid into the hands of the auctioneer, and the expenses which the plaintiffs had been obliged to incur in investigating the title to the property. The defendant had paid the amount of the deposit into court.

Pell, Serjt., for the plaintiffs, contended, that they had not only a right to recover the interest of the money, but the expenses of investigating the title. 1. Interest was due in all cases where the sum sought to be recovered was liquidated, and was detained in the hands of the receiver beyond [*570 the period when it ought to have been paid. At least it was competent for a jury to calculate interest in the amount of damages. In this case the defend ant had the use of the money. He might have employed it beneficially; and the plaintiffs had been deprived of the fair profits of it. 2. The expense of investigating the title was incurred as well for the benefit of the vendee as for the vendor; and the plaintiffs were entitled to recover a moiety of this expense if not the whole.

Lens, Serjt., contra.-The defendant was a mere agent, or stakeholder, between the parties. He had no power or control over the money; he could not invest it in any public security. He could not trust it out of his hands for

the purpose of producing interest, but might be compelled to pay it over at any moment. An auctioneer, wilfully detaining money, might be liable to pay interest. But, at any rate, it should be shown that the money was first demanded. With respect to the expense of investigating the title, there was no pretence for the demand. The defendant had never made himself a principal in the transaction, and was merely a trustee for both parties.

GIBES, C. J.-I cannot think that an auctioneer, who does not mix himself as a principal in the transaction, but merely receives a deposit, to hold upon the condition, that, in case the purchase be completed, he shall pay such depo571] sit to the vendor, *and if it be not completed, he shall return it to the vendee, is to be charged with interest. I know of no case to this effect; and I am sure the practice is the other way. As to the expenses of investigating the title, they are foreign to the case. The auctioneer is not liable to pay them. But the question of interest being new, I will reserve it for the opinion of the court.

Pell, Serjt., and
Lens, Serjt., and

for plaintiffs.
for defendant.

Verdict for defendant, subject, &c.

In Michaelmas term the facts above stated were put into a special case, when the court, absente the Lord Chief Justice, coincided with the opinion which he had given at the trial; and, with regard to the demand of interest, they said, that the defendant could only be considered as an agent; that auctioneers generally were not liable for the interest of deposits lodged in their hands, but that some peculiar circumstances might affix this lia. bility upon them. That, in the present case, no demand was made upon the defendant for the money till the action was brought; and that, until such demand and refusal, the question of the liability of an auctioneer could scarcely be agitated.

*572]

*FRIERE et al. v. WOODHOUSE.

In effecting a policy of insurance, a circumstance of intelligence, inserted in Lloyd's Lists need not be communicated to the underwriters, however important it may be to the computation of the risk; for it is to be presumed within their knowledge, and to be taken into account.

THIS was an action on a Policy of Insurance on the ship Louisitania, from the Brazils to Lisbon, including the common risks. The question was, whether there had been an undue concealment at the time of the insurance. The policy had been effected by the broker, who went to the underwriters, exhibiting a letter from the plaintiffs, in which they stated-"Our ship, the Louisitania, sailed from Maranham to Lisbon, on the 1st of September, 1815. We have to request the favor of your effecting an insurance on her account. We are not alarmed at her having been fifty-seven days on her voyage, as there have been many contrary winds. We are, &c."

No other communica

This letter was dated, Lisbon, the 27th of October. tion was made to the defendant; but it was in evidence that the plaintiffs had received a letter from their agent at Maranham, dated August 31, 1815, which letter had been brought by another vessel, the Victorioso. The latter vessel sailed from Maranham on the 1st of September, in company with the plaintiff's ship, the Louisitania; and arrived at Lisbon on the 17th of October, being ten days before the plaintiff's letter to their broker to insure. The usual passage from Maranham to Lisbon is between 60 and 70 days. It appeared, moreover, by Lloyd's Lists, that between the 1st of September and the *573] *27th of October several vessels, besides the Victorioso, had arrived at Lisbon from Maranham. The plaintiff's vessel was lost shortly after she left Maranham.

VOL. III.-29.

Best and Vaughan, Serjts., for the defendant, contended, that the plaintiffs had concealed a material circumstance which ought to have been communicated to the underwriters. They should have mentioned the arrival of the Victorioso, which sailed in company with their ship. Their communication to the underwriters was not candid and explicit.

Lens, Serjt., and Puller, contra. The arrival of the Victorioso was in Lloyd's List, which may be considered, for this purpose, equivalent to a special communication to the underwriters. What was commonly known at Lloyd's need not be communicated.

BURROUGH, J.-This is not a concealment to vitiate the policy. The material facts were honestly disclosed in the letter; and the arrival of the other vessels at Lisbon from Maranham, (however important this intelligence might be,) must be presumed within the knowledge of the underwriters, from the circumstance of its being contained in Lloyd's printed Lists. What is exclusively known to the assured ought to be communicated; but what the underwriter, by fair inquiry and due diligence, may learn from the ordinary sources of information need not be disclosed. It is, however, a question for the jury. *The jury, which was a special jury of merchants, said, that inasmuch as the arrival of the Victorioso and of the other vessels was [*574 noticed in Lloyd's List at the time the insurance was effected, and as these Lists were in the hands of the underwriters, they were of opinion that there was no concealment.

Lens, Serjt., and Puller, for plaintiffs.

Best and Vaughan, Serjts., for defendants.

Verdict for plaintiffs.

See Durrell v. Bederley, 283, ante; in the note to which the cases are collected, classed, and commented upon, as far as relates to the question of concealment.

*ARBOUIN et al. Assignees of BAYFIELD, a Bankrupt, v.

HANBURY et al.

[*575

Where the creditor acts adverse to the views and wishes of the trader, and by urgency and importunity, obtains a transfer of property, to cover his liability upon a bill then running, (which bill he had discounted,) although such transfer be made on the eve of bankruptcy, it will not be a fraudulent preference on the part of the trader.

THIS was an action of trover to recover the value of some wine and spirits. The bankrupt, Bayfield, employed the defendants as his bankers; and they had been accustomed to accommodate him with discounts. On the 3d of June, 1816, he deposited with them, in aid of his account, a bill for 4021. drawn by himself upon one Arnold. On the 17th, the defendants, hearing that Arnold was in embarrassed circumstances, and apprehending that he would not be able to take up his acceptance, which became due in August, went to the bankrupt, and asked him if he would be in cash to honor the bill he had deposited with them. He told them that he was afraid he should not be able to stand, and had no prospect of taking up the bill. They then inquired if he had committed an act of bankruptcy: he told them he had not. Upon which they proposed that he should make a transfer of the wine and spirits, for which the action was brought, to them, by way of collateral security for the bill when it should become due. The bankrupt hesitated: but, upon their telling him that unless he made the transfer they would not permit him to draw any more money from his account, he consented to the proposal. He had then a balance

of 1407. in their hands; and he afterwards drew a check, *which they

*¿76] paid, for 35. He committed an act of bankruptcy on the 22d.

Vaughan, Serjt., and Reader, for the plaintiffs, contended, that this was a voluntary preference. There was no threat. The bankrupt, having disclosed his circumstances, and stating that he could not go on, the defendants request a transfer of part of his stock, which, without any compulsion of law, or any threat which ought to operate on a steady mind, he consents to make. It is true that they refuse to let him draw a check unless he makes the transfer; but this they had no right to do, because he had an ascertained balance in their hands, and he might have maintained an action for it instanter. He had, as yet, committed no default on the bill, of which he was only the drawer, and which had two months to run.

Best, Serjt., and Nolan, contra.

BURROUGH, J.-I always think question, of this sort should be left, in as unmixed a state as possible, to the decision of a jury, who are the best judges of the acts and motives of men. The case is clear upon this point. A bankrupt, contemplating a commission, shall not single out one creditor in preference to another; but any creditor may endeavor to gain a preference by urgency and importunity, by diligence in fact, or diligence in law. It is not contended in this case that the importunity of the defendants was colorable. They send for the bankrupt, and require security. He does not single out and *solicit them. Whether Bayfield contemplated bankruptcy or not, it *577] was immaterial for them to inquire. They satisfy themselves by asking him the question, whether he had committed an act of bankruptcy, which he answered in the negative. He had then the jus disponendi. They demand security. What is this but the just and natural diligence of a creditor? The bankrupt hesitates; but at length consents. It is said, that the threat of not answering his check was futile, inasmuch as he had a right to draw. Be it so; it was a threat, notwithstanding and it is a strong circumstance to negative a fraudulent preference. Where the creditor bona fide, and not colorably, acts adverse to the views and wishes of the trader, by urgency and importunity, and thereby obtains payment, there is no fraudulent preference. Had the proposal to transfer originated with the bankrupt, it would have been another question; but I can see nothing to impeach this transaction.

Vaughan, Serjt., and Reader, for plaintiffs.
Best, Serjt., and Nolan, for defendants.

REPORTER'S NOTE.

Verdict for defendants.

In the treatises on the bankrupt laws, much has been written upon the effect of a preference given to a creditor by a trader under a contemplation of bankruptcy, or in a condition of circumstances from which it is a necessary inference that the trader foresaw his insolvency.

The cases under this head depend upon one simple principle; namely, that all the ef*578] fects of a trader, in such a state of circumstances, belong equitably to the whole of his creditors; and that, although he has still the jus disponendi, because he has not actually committed an act of bankruptcy, the equity of disposing of his property, in preference to a favored creditor, is gone; and it is the policy of the bankrupt laws to consider such disposition of the trader's effects as made in fraudem legis. This is the prin ciple.

But to bring any particular case within this principle, that is to say, to render it a fraudulent preference, two things are manifestly necessary-1. The contemplation of bankruptcy. 2. A voluntary preference (an act immediately moving from the free will of the trader) made under such contemplation, or expectation, of bankruptcy.

These two circumstances being necessary, the following limitations naturally attach to the above principle:

1. The act of bankruptcy must not have been committed at the time of the preference given. For if so, the trader is not at that time in possession of the jus disponendi; and, therefore, of course, has no right of transfer in the first instance. 2. He must not have given such preference under terror of law, or any demand or compulsion, urgency, and importunity, from which such terror may reasonably be inferred. Because the act in that

case is not voluntary; it does not flow from his immediate free will. This is the whole doctrine.

It may be observed, in fine, that the doctrine of such cases of fraudulent preference flows entirely from an equitable construction of the bankrupt laws, and not, as in the preceding note on reputed ownership, from the strict letter of the statutes of bankruptcy. It was much expanded, if not altogether established by Lord Mansfield, in the celebrated case of Harman v. Fisher, Cowp. 123. This, indeed, is one of those cases in which the learning, and, still more, the ability and sagacity of Lord Mansfield, contrived to introduce a larger equity into commercial law, without, at the same time, departing from the precision and exactness, required by the different natures of courts of common law and equity.

In Harman v. Fisher, Cowp. 123, it was adjudged, that the property was not transferred, because an act of bankruptcy was previously committed. In Harvey v. Liddiard, 1 Stark, *123, the case was this:-A., shortly before his bankruptcy, drew a bill; and hav[*579 ing procured it to be discounted, gave B. (a creditor) an order to receive the amount, which he directed C., who discounted the bill, to transmit to B., by a carrier. An act of bankruptcy was committed on the 17th of May; the money arrived in London on the 18th; and, on the 19th, it was received by B.'s porter. Lord Ellenborough ruled that, whilst the money remained in the hands of the carrier, the property remained unaltered, and therefore the assignees were entitled to it. In Rust v. Cooper, Cowp. 629, where a pre tended sale was made of a part of a trader's goods to a particular creditor, a bill of parcels made out, and the goods delivered before an act of bankruptcy committed, it was held fraudulent and void. Here, it will be observed, was the jus disponendi, because the trans. fer was before the bankruptcy: but the equitable right of disposition in preference was gone, because made under a state of affairs indicative of insolvency. The good considera tion, as respects the individual creditor preferred, is nothing. He is presumed to be a bona fide creditor, and the debt to be due to him. As respects the bankrupt and himself, there may be the strongest moral and honorable reason for such preference. But this is not sufficient. There are, in fact, three parties concerned in the transaction :-the bank. rupt, the favored creditor, and the remaining creditors. The fraud is against the last party; and the two former shall not consult their honor or feeling from a stock which be longs in common to the whole. Thus, in Martin v. Pewtress, 4 Burr. 2477, where a trader made an absolute sale of goods, but at prime cost, it was held to be a fraudulent sale; perhaps a fraudulent return of goods, which, having come into the stock of the bankrupt, were equitably divisible amongst his whole creditors. So, where the bankrupt indorsed and sent a promissory note, by the post, to a creditor, in contemplation of bank. ruptcy, the assignees were held entitled to the note.—Alderson v. Temple, 2235.

But where the preference is consequential, that is to say, is not directly intended by the bankrupt, but only incidentally becomes such, in this case, as the free will of the bankrupt is wanting, it will not be held a fraudulent preference. Thus, in Har[*580 man v. Fisher, above cited, Lord Mansfield said, that if a preference were only consequential, the case might be different; as if a payment were made, or an act done by a trader, in pursuance of a private agreement. As in the following case :-A., whilst he was solvent and resident at Calcutta, directed B., at Bombay, to transmit certain proceeds to C. in England, who acted as the agent of A., under a power of attorney, and was in the habit of accepting bills for him. The proceeds were remitted by B. to C. after an act of bankruptcy committed by A. But Lord Ellenborough held, that as the remittance was made in pursuance of an order given by A. whilst he was solvent, and without fraud, C. was entitled to retain the amount for his balance. Jamieson v. Hodson, 1 Starkie, 150. But in a case where bankers had fraudulently sold out stock which belonged to a cus tomer, but stood in their names, and applied the proceeds to their own use, and whilst they remained solvent wrapped up certain bonds belonging to them in an envelope, inscribed with the customer's name, and inclosed a memorandum, stating that they had deposited the bonds with him as a collateral security for his stock, which they promised to replace they then deposited the parcel amongst securities belonging to other persons who dealt with them, but did not give any information of the circumstances to the cus tomer, until the evening before their bankruptcy, when they sent him the parcel with the bonds, saying, they must stop payment next morning; Lord Ellenborough, in this case, held, that the customer could not retain the bonds against the assignees of the bankrupts; and the Court of King's Bench afterwards confirmed his direction. Wilson v. Balfour, 2 Campb. 599. The reason of this case is evident upon the principles above stated. For, as a claim of the highest degree upon the part of the creditor could not justify such pref erence; so neither, a fortiori, would the strongest honorable obligation of the trader He could not amend his own fraud at the expense of his general creditors. But, where trader obtained bills of exchange from the defendant upon a fraudulent representa tion, that a security given by him to the defendant (which was void) was an ample security, and on the next day, *having resolved to stop payment, informed the de[*58) fendant that he had repented of what he had done, and had sent express to stop the bills, and would return them; and, three days after, committed an act of bankruptcy after which, he returned to the defendant all the bills, (except one which had been dis counted,) and also two bank notes, part of the proceeds of such discount; the defendant delivered back the security, and afterwards a commission issued against the trader, and the assignees brought an action of trover against the defendant for the bill and bank notes: It was held in this case, by K. B. that the defendant was entitled to retain them, as tho bills were originally obtained under a false pretence of giving a good security; and, under