Judgment was given by his! Honour Judge Sir Skinner Turner at 4H, M, Supreme Court on Thursday in the case of the Trustee of Dent Ca, (in bankruptey) v. the Banque Mr, A. C. Holborow appeared for the Trustee, und Mr. R. N. Mac-Jead for the Banque de I'Indo-Chine, His Lordship said:
This is a motion to determine the right of the Banque de Indo-Chine and the Trustee in the Bankruptey of Dent & Ca. in a sum of Tis 20,160, paid into this Court by order of the French Mixed Court.
The facts from the: evidence before me are as follows: In July, 1922, the Mayor Silk Mills wanted: financing: they applied to Dent Ca., who in the ordinary way of Dusiness agreed to do this to the tent of Tls. 20,000, the Mill giving as security w guaranteed promissory note for the amount, and a guaranteed mill receipt covering goods and stock in trade in the mill and assurance policies on the goods. Dent & C the ordinary: way of business, obtained the money from the Banque de I'Indo-Chine, giving their own promissory note for the amount, and, as security, the Mill receipt and assurance policies which were formally mentioned in the, memorandum, and enclosing with these document (but not mentioned in the memorandum) the Silk Mill's promissory note. There is no evidence that the silk' mill had any) Knowledge of the transi tween Dent & Ca. and there is ample evidence that the Bank knew that Dent & Ca. waned the money for the mill and not for themselves, The documents signed by the mill were executed in dupliefate and one set only was hat to the Bank, the other set remaining in the hands of Dent & Ca. No notice of any kind was sent by the Bank to the mill prior to July 23, 1923, The promissory notes and other documen.s were all dated July 27, 1922, About July 13, 1923, Dent & Ca., found themselves in financial diffi: culties, and x0 informed the Banque On July 16, 1923, they presented their petition in bankruptey. A receiving order wax made and the offcial Receiver took charge. He appointed Mr. McClure as special Manager" i July 17, and on his 1023, the bankrupt. On July 27 at a meeting of credi Mr. McClure was "appointed in' the bankruptey.
In the bankrupt's statement of] affairs appear two items: (1) ereditly secured: the Banque de thine (the present applicants)
20,000, a loan through us to the Mayor Silk Mills, secured certain goods to value of Tls. 1,281.30, (2) Debts due to estate: Mr. Chu, silk compradore, Tls. 20,000, money collected by him for Dent' & Ca. and retained by him. There is nothing in the statement of affairs to show that these items were connected.
Complications due to Bank's Action On July 16 the Sitk Mill paid <o Mr. Chu, described as silk compra dare or compradore of Dent & Ca,, the sum of Tls. 20,000 in discharge of their loan, but did not in fact get the return of the documents signed by them in respect of that Joan. Mr. Chu did no: hand this! money to Dent & Ca. or to the Official Receiver, but on hearing that rival claims were being made to it, applied to the In: ernational Mixed Court to enable him zo get rid. of it, "About the same time the Bank brought an action against him in the French Mixed Court: the proceedings in the Imernational Mixed Court seem to have been transferred to the French Mixed Court and about July 30 the money was paid into that Court under its order. Proceedings went on in that Court, the Mayor Silk Mill and the trustee in Dent's bankruptey being cited. 'That Court, and its decision was confirmed on appeal, held that it, ould not decide on' the ultimate destination of the: money, and on Novemar 48, 1028,.the money was formally sent to the Registrar this Court (with an addition of Tls. 150 for interest) pending adjadi tion by this Court as to the rights lof the parties. The matter seems to have been much complicated by the faction taken on behalf of the Bank, which resulted in an order to. pay' ithe money into the French Court. There never were any contractual relations between the Bank and the Mill. "Even if an assignment of the debt had been attempted no notice ras given to the Mill by the bank Jand its title was therefore ineomplete. 'The Mill was fully. entitled to pay to its creditor (Dent & Ca.) Jand et a clean receipt from them. Tu addition it is to be remembered that the debt from Dent & Ca. to the Bank was not due til July' 27, 1928, and no action could have been brought til that date against Dent The Duplicate Documents 'A good deal has been said about the non-endorsement of the Mill's promissory note by Dent & Ca., to the Bank, and about its non-inelusion in the schedule of the memo. random of security. In face of the facts that the existence of the note was fully brought to the knowledge! of the bank by. (1) its deposit with the bank and (2) the mention of it the letter accompanying the Mill reveips, and also that the Memovanduni Was renewed on. three o¢- casions, I can hardly understand that this nonsinelusion and. non endorsement. was a mere matter of oversight. T rather expect that it twas tele that this particular—pro-Imissory note wax not negotiable, At the same time, I'do not under and why" all the documents. were signed in duplicate may be there a good and sufficient reason for this but none has been given to me. And it is not suggested that the Bank was in any way aware of the! second set of documents, Matter Not Ended hold that che Bank is not ent Jed to this money by virtue of any assignment of the debt by Dent Ca, to themselves. But this docs not' end the matter. What is the' position in the bankruptey of Dent!
Ca.? It seems to me that, though the bank knew of the exist" Jence of the mill and of fis connexion with this money, there are two separate transactions to be consider-jed: a loan from the bank and a Toan from Dent & Ca. and in the absence of any notice from the bank, the Mill was fully entitled to pay Dent. The transaction between the Bank and the bankrupt is, then, all that has to be cor what was that? Tt Dent & Ca. as being a Joan security of certain goods only, but fs that 20? We now know it loan from the Bank on the promis: sory note plus a deposit of documents of title to certain goods, plus deposit of a guaranteed promisjsory note. This was handed to the Bank as being security for their oan, just as it had been received by Dent & Ca. as security for their loan, "And when the Mill paid off Dent & Ca. as they were entitled to do, they were entitled to have decuments back, ar Dent & Ca., would have been had they paid "off the Bank. It seems to me that the Trustee cannot be heard to say that security given by Dent & Ca. as such and accepted by the Bank as such is no security at all: that, therefore the Bank must rank as; secured creditors for their loan. They must prove as such in the ordinary way: they are scheduled ax having other security: know not: and their loan is a: eight per cent. and not nine per cent.
As far as the debtor is concerned: [Tagree it was left in the order, disposition and control of Dent Cou and therefore it falls into the hands of the Trustee, but that is not enough for him: the Bank is not Jonly a creditor but a secured credi-for in the fund now representing' the secu fr. MacLeod raised the question lof the Bank's costs. Had he to ask leasts out of the estate?
After a lengthy argument on this point, the Judge pointed out that it was largely due to Mr. Mae-
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