In re DUNCAN ANDERSON & Co. (In Liquidation) Ex parte ,BISHOP et al

120-nlr-nlr-v-03-in-re-duncan-anderson-co-in-liquidation-ex-parte-bishop-et-al

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1876.July 6.
In re DUNCAN ANDERSON & Co. (In Liquidation.)Ex parte, BISHOP et al.
D. C., Colombo, 3.
Patnership—Liquidation of firm in London under Bankruptcy Act, 1869—Same members trading in Ceylon under different style and goinginto liquidation in Ceylon—Application of English creditors ofLondon firm to set aside deed of arrangement entered into by Ceylonfirm with Ceylon creditors—Unity of London and Colombo firms—Evidence of unity—Effect of commission of bankruptcy in Englandupon movable property of bankrupt in Ceylon—Non-conformity ofdeed of arrangement—Cancellation of District Judge’s certificategranted under s. 188 of Ordinance No. 7 of 1853.
Where a partnership business was carried on in England underthe style and firm of John Anderson & Co., and another businesswas carried on in Ceylon under the style and firm of Duncan,Anderson & Co., and it was found that the partners in both concernswere the same, the business of the same nature, the capital one, andthe ratio of profits of the partners in either place the same,—
Held., that the two ventures were branches of one and the samepartnership.
“ John Anderson & Co.” filed on the 29th July, 1875, a petitionfor liquidation in the London Bankruptcy Court, and on the 19thAugust following a trustee was appointed under the BankruptcyAct, 1869. On the 18th August “ Duncan, Anderson & Co.”entered into a deed of arrangement with their Ceylon creditors,which purported to be signed by 6-7 ths in number and value ofsuch creditors, and a certificate was passed by the District Court interms of section 135 of the Ordinance No. 7 of 1853.
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The trustee of the English creditors appeared in the DistrictCourt of Colombo and moved for and obtained a rule on Duncanand on Macgregor (the Ceylon trustee and liquidator) to show causewhy the deed of arrangement of 18th August and the proceedingsfounded thereon should not be quashed as irregular.
Held, that according to the Law of Holland (which is our law) andthe English Law, an assignment and proceedings under the Bank-rupt Laws of one country operate, as a general rule, against theproperty of the bankrupt and its distribution wherever the propertymay be found and whenever it can be reached ;
That the filing of a petition for liquidation is an act of bankruptcyavailable for adjudication, and the title of the trustee in bank-ruptcy relates back to the time of the filing of the petition whetheradjudication ensue or not;
That, though the English trustee under the English liquidationwas appointed on the 19th August, 1869, and the Ceylon deed ofarrangement for liquidation was made on the 18th August, yet theEnglish trustee is entitled to preference and not the Ceylon trustee,because the trusteeship of the former, relating back to the 29thJuly, 1869, when John Anderson & Co. filed their petition forliquidation in the London Bankruptcy Court, commenced fromthat day;
That this priority in date vested the property of both firms (theCeylon firm having only movable effects) preferentially in theEnglish trustee;
That the jurisdiction exercised by the Colombo District Court insigning a certificate under section 135 of the Ordinance No. 7 of1853 was ineffectual, not only because the jurisdiction exercised by ‘the London Court of Bankruptcy was preferential, but also becausethe deed of arrangement signed by the Ceylon creditors did not infact bear the signature of 6-7ths of the creditors of the conjointfirms forming the one partnership ;
And that the District Court has power to cancel the certificate itissued in error under a misconception of facts.
T
HE questions of fact and law raised in this case are fully set
forth in the following judgment (dated 7th February, 1876)
of Bebwick, D.J.:—*
•
In this case certain merchants trading in Ceylon under the styleand firm of Duncan, Anderson & Co. also traded in London underthe style and firm of John Anderson & Co.,—the constituentmembers of the partnership being the same in both cases.Duncan, Anderson & Co. have gone into liquidation here, theproceedings having been taking in this Court under the Insol-vency Ordinance, No. 7 of 1853. John Anderson & Co. havegone into liquidation in London under the Bankruptcy Act of1869; and the matter on which I have now to give judgment
♦In Ramanalhan, 1876, pages 277-281, published in 1890, the judg-ment of the Supreme Court only appears. As the record of the case isnot now forthcoming, Mr. Justice Browne has favoured the Editorwith a printed copy of the elaborate judgment of the District Judge,which he had in his private file, and suggests its publication in the NewLaw Reports, in view of its usefulness to the Bench and Bar.
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comes before me in the form of a proceeding wherein the Englishcreditors of these merchants seek to have the Ceylon deed ofarrangement and the proceedings and orders of this Courtpursuant thereon quashed as irregular : the object being to procurethe whole estate of these merchants to be administered in England;but more especially in order that the assets of the two firms may beadministered as one joint and single estate on which the Ceylonand the English creditors may equally rank. The grounds onwhich the application to quash the Ceylon proceedings are foundedare—
The pendency of the English liquidation proceedings
already mentioned.
That the Ceylon deed has not boen signed by six-
sevenths of the creditors.
That John Dunoan had no authority to bind his other
partners by the Ceylon deed.
On the other hand, the “ Ceylon creditors ” (represented by theLiquidator, Mr. MacGregor), who oppose this application, have fortheir object the administration of the assets of these merchants astwo distinct estates of two distinct firms ; and tho payment ofwhat they call the debts of the two distinct firms out of the distinctestates, severally ; and thuB to exclude those who are for con-venience called the “English creditors” from participation inthe assets of the Ceylon firm. It has been stated to the Court thatif the Ceylon and the English firms respectively be considereddistinct partnerships, having distinct estates to be separatelyadministered, tho creditors of the Ceylon firm will obtain a divi-dend of 9s. 6d. to 11s. in the pound, while the estate of the Englishfirm will only pay its creditors Is. 6<Z. in the pound.
It is important to observe at the outset that there is noquestion here of claims amongst partners or firms inter sc, butonly of the rights of extrinsic creditors upon the estate or estatesof these merchants. I make this observation because a great dealof stress has been laid upon arguments drawn from cases whichhave been deoided on the other class of claims, and therefore onquestions which do not arise here. I refer to Ex parte Sillitoe,Curtis v. Perry, Shakeshaft’s Case. &c.
The following facts are material to be attended to in con-sidering both the contention of the Ceylon creditors that thereare two firms, two partnerships, and two distinct estates to beadministered, and the validity of the grounds advanced by theEnglish creditors for setting aside the Ceylon proceedings.
The constituent and the only partners of each of those firmswere John Anderson, John Duncan, and George Gray Anderson.
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These gentlemen traded, as already observed, as merchants inLondon under the style and firm of John Anderson & Co. and inColombo (in this Island), also as merchants under the style andfirm of Dunoan, Anderson & Co., the partners in each being identicalin number and in individuality. On the 28th July, 1875, thedebtors (all of them) signed, and on the 29th of the samemonth filed in the London Bankruptcy Court, a petition underthe liquidation and composition clauses of the Bankruptcy Actof 1869. In pursuance thereof a meeting of creditors was heldat London on the 19th August following, at which a liquidationby arrangement was resolved upon and a London Actuary, Mr.Bishop, who now moves in the present cause, was appointed trustee.The certificate by the Registrar of the appointment of trusteebears date 15th September, 1875. On the 18th August, 1875(subsequent to the filing of the petition in the London Bank-ruptcy Court, but one day prior to the resolution of the Englishcreditors and the appointment of their trustee), a deed of arrange-ment for liquidation was entered into in Colombo purporting tobe signed by all the debtors, styling themselves as “ carrying on“ business in tho said Island under the style or firm of Duncan,“ Andorson & Co.” with certain creditors here. It was in factsigned by Jolw Duncan for himself and as attorney for the othertwo partners. The validity of the execution on behalf of oneof these is however contested. This was filed and a certificatepassed by this Court in terms of section 135 of our InsolvencyOrdinance of 1853 on the 21st September, 1875, that is to say, twodays after the appointment of the trustee in London under theEnglish proceedings. Thereupon followed the present applica-tion to quash the proceedings in this Court.
It is important also to observe the following further factsas bearing on the disputed questions of the identity of partnershipand the unity of estate and interest of the two firms. In all theEnglish liquidation proceedings, to wit, the petition for liquida-tion, the resolution of creditors, and the certificate of theRegistrar, these gentlemen are described and describe themselvesas “ of 17, Philpot Lane, in the city of London, merchants,“ trading under the style or firm of John Anderson & Co., and of“ Colombo in tho Island of Ceylon, merchants trading under the“ style or firm of Duncan, Anderson & Co.”—the only exceptionin the papers before me being the heading to the notice tocreditors of general meeting, signed by the debtors’ attorneys,which appears to contain a clerical omission, and to which at allevents I attach no importance. The power of attorney by theindividual partners resident in Colombo authorizing their partner
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in London to take steps to wind up in bankruptcy, describes alsothe partners as carrying on business “ jointly in London under the“ style or firm of John Anderson & Co,” and in the said Island(of Ceylon) under the stylo or firm of “ Duncan, Anderson & Co.”On the starting of the Ceylon business John Anderson & Co. (notthe separate individuals, but the partnership company as a partner-ship company) issued this circular :—
Colombo, 1st January, 1873, We have established ourselves asMerchants and Commission Agents at this port under the firm and styleof Duncan, Anderson & Co. We remain, your obedient servants,John Anderson & Co.
Here John Anderson & Co. announce as plainly as words canput it that they in their collective partnership capacity will do theirbusiness in Colombo under the other name. It has indeed beensaid that very few of those circulars were issued, and that they wereissued under a mistake, but in point of fact copies were sent to allthe banks in Colombo, and it is of little consequence whether theirfurther issue was stopped or not; because, what we have to dowith here is to ascertain what were the faqts of the case in respectto the identity of trade and partnership, rather than the mererepresentations of parties; and it is not alleged that anything what-ever was ever done to cancel the circular or to correct the supposedmistake when discovered ; and it was one which could not possiblyhave been overlooked, and must therefore be considered as havingbeen definitely homologated by Mr. Duncan. Again, a notarialcopy has been put in of the profit and loss account for 1874 of thefirm of John Anderson & Co. It is not denied that this is copiedfrom their own books (see Mr. Duncan’s affidavit of March, 1875),and the very last item in the accounts is in these significant words :—“ By nett profits of Colombo Branch, £8,932. 14s. 6d.
Much more evidence to the same effect might be cited ifnecessary. The result is that it is very clear to my mind that“ Dunoan, Anderson & Co.” and “ John Anderson & Co.” formedbut one and the same partnership company, carrying on businessin two places under distinct “trade-signs,” “signatures,”or“ firms,” and that the businesses were mere branches of one andthe same concern ; and I feel quite justified in applying the verywords of one of the Judges of the Court of Session in the case ofthe Royal Bank v. Cuthbert (Rose 477), “ there were the same“ partners in both houses, the same trade, the same capital, and“ they were truly one and the same company to all intents and“ purposes whatever.” It makes no difference that Mr. Duncanalone or any other individual partner may have actually found
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the capital for the Ceylon branch in the first instance, that is tosay, advanced it; for by such advance it became the capital of thepartnership, subject to accounting merely between the partnersinter se.
And here I would observe that there has been in this casesome confusion of ideas (as I think) in respeot to the meaning ofthe word “ firm,” which should be cleared away. The term “ firm ”has been improperly confounded and identified with the term”partnership ” or “company,” as if they meant the same thing. A“ firm ” is however not a partnership or company, .but is merelythe “title,” “designation,” “sign,” or “confirming signature”under which a partnership-company or an individual chooses totransact business, and there is nothing to prevent a company orindividual, for their or his own convenience, transacting businessunder two or more “firms,” that is to say, “signs” or “tradesignatures,” and he or they will not the less remain the sameindividual or the same association. Suppose an individual orcompany of persons in the public house or any other line carryingon a trade in two different towns, and hanging out a differentsignboard in each town—the “ Bed Lion ” in the one and the“ Cross Keys ” in the other—then I think we have a physicalillustration of the meaning of the word “ firm ” or trade sign.Similarly, a man or a company might use two seals or stamps, onefor one set of purposes and the other for another set, but a mancannot divide either his identity or responsibilities by hangingout two different signboards, or using two different signatures, norcan he say that his property of the “Cross Keys” shall not beliable for the debts he incurred to creditors in carrying on businessat the “ Red lion ” or vice versa. These are only illustrations, butthat will be no fault if they help to remove any confusion ofideas which entangled and embarassed the case. In any othersense the word “ firm ” is a merely ideal, though convenient, abstrac-tion to distinguish a trading concern from the individual or indi-viduals interested in it, but by no possibility in point of law, anymore than in physics, can a name alter a thing or any of its qualities,capacities, or liabilities; nor can any person or association ofpersons, by assuming two names or firmB, divide himself as if itwere, in his personal liablity to his creditors, unless they haveconsented to look to some special fund only. Suppose that Mr.Duncan had been a sole trader and had no partners, and that forobvious reasons of convenience he kept the accounts of, say, hisColombo and his Kandy business separate, and in order further tofacilitate this traded in the one place by the simple designationof ” John Duncan ” and in the other as “ John Duncan & Co.” ;
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1876.—and suppose there was a dead loss in the one place and a great
JulyjS.profit in the other, could it be suggested that he could refuse
to satisfy his Kandy creditors in full on the ground that he hadtraded under two distinct “ firms,” and that although he had mademoney elsewhere his Kandy business had been a loss ? But thereis no difference in principle from the position now advanced forthe Ceylon creditors against thr English ones, though therehappens to be several partners, and not only one person concerned.It would only be carrying the matter a fair step further to put thecase of an “ individual ” or a “ company ” who has two adjoiningcoffee estates, the accounts and working of which are for con-venience kept distinct, refusing to pay in full the debts incurredin respect to the one, on the plea that this property had turnedout a failure, and that the profits derived from the other formed aseparate fund. If I have been prolix in these illustrations it isbecause I see and regret the grievous disappointment founded ona popular vagueness of appreciation of the legal import and valueof adopting for business purposes a special ‘”designation” or” firm ” ; and would desire therefore to present it to the partiesooncemod, as far as I can, in the light of plain common sense andreason, to which, after all, moBt of the sound principles of our lawresolve themselves when cleared of adventitious excrescences. Ihave only to add on this point, with reference to the highly res-pectable cross affidavits read in support of the view of two distinctpartnership companies without unity of interest or estate orliability, that these, though fully entitled to the greatest con-sideration, only show that the deponents and possibly the generalmercantile public here were not aware of the existence of whathowever turns out to have been the actual fact, viz, that thetwo firms were merely different designations of the differentbranches of one identical house, trading in ‘two places under twodistinct signboards (so to speak), that iB to say, two firms or names.We have a case identical in° principle in Ex parte Wilson in reDouglas (7 L. Rep. Oh., App., p, 490), where one person carriedon trade at Liverpool under the firm of Douglas & Co., and inBrazil under the firm of Douglas, Latham & Co. having businessin the two places, and having assets in the two places connectedwith the two businesses. Sir W. James, L.J., said : “ The estate isin my judgment one estate,” and “ 1 quite agree with the learnedJudge (of Bankruptcy) that there are not here two distinct“ estates to be wound up in bankruptcy ; ’’and Sir G. Mellish, L.J.:“ It is not a case where there are distinct estates, but it is a case‘‘ in which the same estate is being distributed partly in Brazil andpartly in England.” In Ex parte St. Barbe {11 Vesy, Jun., 413),
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the same principle is recognized, though it happened that the factsin that case showed the concerns to be distinot, and the marginalnote to it is therefore quite accurate.
I was pressed at the hearing by the learned counsel for theCeylon creditors with the words “ in whole or in part ” in section37 of the English Act of 1869 and in section 152 of the EnglishAct of 1861. But in the first place, I do not think that those sec-tions have any application to the question 1 have to decide. Theylay down a rule in a case in which a debtor is liable to a creditoron distinct contracts incurred by him in different capacities indifferent trades, and due from distinct estates, and they regulatethe question of what is called “double proof.’’ The learnedcounsel, before he can apply these clauses, must assume that thereare distinct estates ; but that is the very question of fact which isat issue in this case, and which, on the evidence, I am constrainedto decide against him. As already said, it appears to me that thecase I have to deal with is precisely that of Ex parte Wilson inre Douglas (7 L. Rep., Ch. App. p. 490). Secondly, the provisionreferred to forms no part,, by statutory law at all events, of ourBankruptcy system. It was first introduced into the English Actof 1861, and had no place in the Act of 1849 on which our Ordi-nance of 1853 is based ; and therefore I apprehend that if thequestion arose in our Courts and were to be governed by Englishlaw, we should have to ignore those sections and follow thedecisions in Goldsmid v. Cazenove, House of Lords (29 L. J. Rep.N. 8. Bankruptcy, 17), and the doctrines laid down in the notes toEx parte Rowlandson in Tudor’s Mercantile Cases, p. 407. ButI think the whole of this line of argument is really irrelevant, forit touches the question of “ double proof ”—one which mightpossibly arise if the firms are to be wound up in two liquidations,in London and Colombo respectively, but which certainty hasnot yet arisen, and which it is premature to consider. But remarksvery worthy of attention have been made on these very clauses inthe later English Acts in discussing what constitutes distincttrades and estates, which strongly tend to confirm the accuracy ofthe view I have already expressed. I refer to the remarks ofMr. Griffith in his book on Bankruptcy at page 675, where, comment-ing on the use of these terms under and within the meaning ofthe Act of 1861, he says as follows : “ It is extremely difficult to“ say what are separate and distinct trades ; it may be held to“ mean dealing in different sorts of goods or manufactures; it may be“ keeping separate and distinct accounts in which the profit and loss“ are separately balanced, and division of profits made separately ;“ and we cannot undertake even to suggest what precise view theVol. III.12(56)29
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“ Courts may take of the meaning of the words in many cases. In“ the case where all the members of me firm are also members of the” other, and there are no members of the one except the members of■’ the other, it is presumed, if the accounts are common, and there is” a common balance sheet, that the English Law would probably” hold the houses not distinct.” He adds (adverting to the fact thatin. such a case the laws of foreign countries would sometimes con-sider them distinct) that “where one firm is abroad and the other athome, as often happens, further complication is thus introduced.
‘ ‘ If there be, however, a partner or partners in one firm who is or‘ are not members of the other, it will probably be held that thetrades are separate and distinct, though the opinion is advanced’■ with diffidence, for, if so, why the further limitation of having“ distinct estates to be wound up in bankruptcy.”
There is, however, another view in which the case may beviewed, even from the standpoint of distinct partnerships andestates, which will be equally favourable to the English creditors.It is quite clear from the balance sheet or profit and loss accountput in, that the whole trade and adventures of Duncan, Anderson& Co., were joint ventures with the firm of John Anderson & Co.;and according to the marginal note to Ex parte Nolte and others(Olyn & Jameson, 295) “ where different firms [or partnerships]“ are engaged in a joint adventure, the creditors of the adventure“ may prove against the joint estates of the minor partnerships.”The question there, as stated by the Lord Chancellor, was whetherthe debt could be proved against the joint estate of Crowder,Clough & Co., or whether it must be proved against the separateestate of Clough ; but, on principle, Clough might as well havebeen a distinct partnership of two or more persons as one indivi-dual ; and the marginal note cited gives the very case we wouldhave to deal with, even if Duncan, Anderson & Co. and JohnAnderson & Co. had been distinct partnerships, and would givethe English creditors of the joint venture (for every adventurehere is proved to have been a joint one) a right to prove againstthe estate of Duncan, Anderson & Co., the so-called Ceylon firm.Whether in the event of a “ double proof ” they would (supposingthe concerns distinct) be required to collate in the one what theyrecovered in the other liquidation, is not at present in question.
The facts of the case, however, have led me to the conclusionthat the estate of Duncan, Anderson & Co. and of John Ander-son & Co. is one estate in point of fact, and liable as such to allcreditors of the two businesses, and must be administered assuch in bankruptcy or any analogous proceedings in this
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Colony; and that, as the so-called English creditors are thereforeentitled to rank upon this estate, the deed of arrangement shouldhave been signed by six-sevenths of the creditors, inclusive ofthese English creditors, or at all events (for this admits of lessroom for doubt in my mind) that the account appended to thecertificate should have included the debts due to the Englishcreditors. It is of course a fair question for discussion whetherthe word “ creditors ” in our Ordinance includes foreign creditors.The reason I adopt for holding, that it does, is that every personmust be deemed a creditor in this Court who has a .right to cometo it and be heard and to sue for judgment against his debtor,alleging rightfully that the law of this country, gives the Courtjurisdiction in his case, either on the ground of the defendant’sresidence or the locus contractus, or on any other ground of juris-diction ; and that the debtor is bound to take notice of the Court’sjurisdiction over the cause when he seeks the protection or aid ofthe Court in a matter in which he is required to set out fully thenames of his debtors.
I will now glance at the question of conflict of jurisdictionand law arising from the circumstance of proceedings in liqui-dation having taken place both in England and here. I do notthink that section 74 of the English Bankruptcy Act of 1869, orany other section of that Acts meets the case, whatever con-struction may be put on the words *■’ British Court ” in section 74as contrasted with the expression “ Her Majesty’s Dominions ” insection 76. Although England and Ceylon owe allegiance to thesame sovereign, they are, in respect to each other, foreigncountries governed by their own separate systems of laws. Thequestion has to be asked, What effect an adjudication of bank-ruptcy in one country has on the rights of creditors abroad andon the estate which the bankrupt has in that foreign country inwhich the question has to be decided ? In the present case, a verylarge general question is very much simplified and condensed bythe fact of the identity of the partners comprising the partnershiptrading in the two countries; and by their already having sub-mitted (so far at least as two of them are concerned) to the juris-diction of the Bankruptcy Courts both there and here, andjoining in liquidation proceedings in both places; and further,by the identity, as I think, of the English and Ceylon Law on thepoint. For (dealing in this case only with movable property)it seems to me that there is no room for doubt that the old law ofHoUand—that is to say, our law—coincides with the English Lawin holding that as a general rule an assignment and proceedingsunder the Bankrupt laws of one country operate against the
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1870.property of the bankrupt, and its distribution, wherever the
July o.property may be found, and whenever it can be reached in fact:
see particularly Story’s Conflict of Laws, section 417. where theDutch Law is especially referred to.
I think it is also a sound statement of the law to hold thatwhere there are two bankruptcies in different countries thequestion which is to govern the distribution of the estate is to beregulated by the priority of the judicial vesting of the estate underthe bankruptcy proceedings. Indeed, this seems to follow as aoorollary from the first position; because all property which canvest does vest in the assignee or trustee for creditors, on hisappointment, and as mobilia non habent sequdam, the vesting inthe assignee at once divests the debtor domiciled of all property(movable) he may have in any part of the world, and conse-quently none is left for the latter bankruptcy to work upon. Andif this vesting in law be sometimes inoperative in fact, as againsta creditor attaching property in a foreign country, unless anduntil it has been either brought within the jurisdiction of theCourt of the country where the prior bankruptcy issued, or hasbeen reduced into the assignee’s possession, this possible failureof result need not be considered just now in the present case, andcan indeed hardly occur in it. for obvious reasons. Enough tonote in passing, independently of any statutory provision, thatthe “ comity of nations,” and multo mag is of the several countriesof our common empire, will facilitate the Courts of the respectivecountries in being auxiliary to each other in matters of bank-ruptcy, and more especially auxiliary in aiding that just and equaldistribution of the bankrupt’s effects which is the object of bank-ruptcy laws everywhere, and 1ms been well said to be :: the com-mon concern of the whole commercial world.” For the. appli-cation of the foregoing principles of the law’ of “ bankruptcy ” tothe present case of “ liquidation by arrangement ” in respect to theeffect of priority of proceedings, I would refer to the decision ofLord Gifford in the Scotch case of Causland <t- Company reportedin Roche and Hazlitt’s Law of Bankruptcy, 2nd edition, p. 2.
Now, applying this rule to the case before me, Mr. Bishop’sappointment as trustee by the English creditors under the Englishliquidation was made on August 19, 1869 ; and under section125 of the English Act all the bankrupts’ property vested in himfrom that date; that is to say, if there was any property thenbelonging to the bankrupts, and of which they had not alreadybeen divested. But Mr. Macgregor had been appointed trustee ofthe Ceylon liquidation on the previous day; and if, as I think,that deed divested the debtors, or some of them, of all their
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property, I see no reason why the title of the trustee appointedby it to the property of the debtors so divested by it should not bedeemed preferent to the title of the English trustee who is laterin date, so far that, is to say, as concerns any reason merelydependent on the English liquidation proceedings, and notdependent on some other grounds of invalidity or objection suchas that which I will presently have to consider and decide upon.
Plainly, this Court can liavo no desire that the tribunals of thiscountry should arrogate the jurisdiction rather than the EnglishCourt (indeed, looking to the schedule of debts, it would seemto me that the bulk of these being in England, it would be ofmore general convenience that the estate should be administeredthere). But I find, as I think, certain principles equally recog-nized by the laws of England and of Ceylon, and which the Courtsof either country will, I am sure, desire reciprocally to give effectto. The application of these principles to the question of juris-diction turns on the accident of the priority of a date ; and thatpriority happens to be with the Ceylon liquidation. I therefoream of opinion that the liquidation is with, and should remain with,the Ceylon jurisdiction and the Ceylon trustee, unless it be voidedon some ground quite independent of the mere existence of theEnglish liquidation. If I have taken a right view of the principleswhich should decide this question, and no conflict of opinionarises between the English Bankruptcy Court and this Court{which would be very regrettable in the interests of the creditors),then the title of the trustee here would practically override theEnglish liquidation on grounds both of comity and law, unless thecreditors on both sides of the water come to some mutual under-standing—an understanding. I may remark, which will ‘be themore desirable in the interests of all the creditors, even thoughthe Ceylon proceedings be elsewhere held valid—if I am right inconsidering that the English creditors have an equal claim to thedistribution of the Ceylon assets as the Ceylon creditor’s., and viceversa,, wherever the estate be administered.
To sum up what has been already said. I am of opinion—
That the assets of these merchants, although • trading intwo distinct countries, nominally under two distinct firms, areliable to be treated and administered in bankruptcy or analogousproceedings in either country as one estate for the benefit equallyof the English and the Ceylon creditors, whichever country mayhappen to have preferent jurisdiction. I think that,-putting anyquestions of bankruptcy aside, the partners of the English firmare liable to be sued here for a debt contracted by the members ofthe one partnership, and vice versa. It is a corollary that there is
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187«.a unity of estate, the univeraitas of which in bankruptcy (as
July 0-regards movable) will be liable to distribution under the pro-
ceedings in the Courts of either country. This opinion, if sound,will practically dispose of the main object of contention betweenthe parties ; but—
1 am of opinion that there is a preferent jurisdiction inthe Courts of that country which has priority of time, and whichin contemplation of law—(by assignment in trust for creditors,judicial sequestration, or other like proceedings)—has thepossession of the estate (movable at least), so far as the Courtcan reach it; and that the Courts of the respective countrieswould, to avoid the confusion and unseemly conflict whichwould otherwise arise, act upon this principle in remitting credi-tors to their proper forum; and I am of opinion that in thisparticular case, on the ground of priority of proceedings, theproper fomm would be Ceylon, saving, as I have said, the ques-tion of the validity of the Ceyon proceedings under our own law,of which this Court must judge ; and, if these are tainted withany fatal irregularity under our own law, that then the EnglishBankruptcy Ccurt will succeed to the same position that thisCourt held; and, without saying that every foreign creditormust be bound against his will by a bankrupt’s discharge underthe law of this country, in proceedings to which he has not beena party, I think he is entitled to the benefit of our law if he choosesto seek it, and that I should be bound to admit the proof (subject. to all questions of collation) on the same principle that I ambound by our law to entertain an action by a foreign plaintifffor a debt contracted abroad against a defendant who is withinmy jurisdiction by residence or otherwise. 1 need hardly addthat I would concede the same preference of administration tothe Bankruptcy Court in England, supposing the proceedingsthere to have been prior in point of time to the proceedings here,and consider that it would equally be for that Court, guided bythe recognition given, or not, by the law of England to foreignclaims, to determine whether or not they will admit Ceylon claimsto proof.
The next point for consideration is the validity of the Ceylonproceedings in respect of their conformity with our own Ordi-nance. I have already held as a matter of fact that the Ceylondeed of liquidation has not been signed by six-sevenths of thecreditors (the English ones having been overlooked) as requiredby sections 134 to 138 of the Ordinance : wherefore the questionsarise,—Is the deed and whatever has followed on it eitherwholly null and void, ipso jure, or voidable, or simply not
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obligatory on creditors who have not signed it, but valid other-wise ? Or is it, on the other hand, capable of amendment ? Iconfess I have had much difficulty in arriving at the intentionand meaning of the English clauses of the Act of 1849 (sections224, &c.) which our Ordinance has copied. The plain meaning ofsection 224 of the English Act (section 134, Ceylon Act) if it stoodalone would be, not that the proceedings would be either whollynull or voidable, but simply that the deed would be not obliga-tory on a creditor who had not signed it. There would, Iimagine, be no need for proceedings like the present to quash it,but simply it and the debtor’s discharge under it would be nobar to an action by such a creditor, or to execution at his instanceagainst property in the possession of the liquidating trustee.The document is only primafacie evidence of six-sevenths havingsigned, and therefore evidence which might be rebutted on thefact being traversed in an action. But section 225 of the EnglishAct (section 135, Ceylon Act) gives creditors a right to notice,and therefore, by implication, a right to object to the certifi-cate of due signature being granted. Another difficulty arisesfrom section 227 of the English Act (section 137, Ceylon Act), whichwhile it provides that any omission with intent to defraud shalldeprive the debtor of the benefit of the statute and of any dischargeproposed in the deed, adds that any omission not made throughculpable negligence or fraud “ shall not defeat or otherwise affect“ such deed or memorandum of arrangement ”—a proviso whichseems somewhat inconsistent with section 224 of the English Act(section 134, Ceylon Act). There are cases, however (see Ex parte,Lawrence, 14 Jur. 144; 19 Law Journal, Bank. 6; and Ex parteMortimer, 3 de G. and S. 649), in which the Vice-Chancellor hasdischarged the certificate of signature granted by the BankruptcyDistrict Court, where it appeared that it ought not to have beengranted, or, what is the same thing, where the Registrar hadimproperly declined to hear a creditor against the granting of it;and the opinion I have formed is that, although there was neitherfraud nor culpable negligence, but a mere mistake of law on Mr.Duncan’s part in omitting the English creditors from the list,still the deed and certificate are not obligatory upon them, not-withstanding the proviso in the 227th section (section 137, CeylonAct): and, further, that as the Ordinance expressly makes thecertificate only prima facie evidence of the deed having beensigned by six-sevenths, which evidence has now been rebutted ;and as it has been held in Ex parte Lawrence (14 Jur. 144) thatthe function of the Bankruptcy Court in giving the certificate isnot purely ministerial; and as I would certainly have refused the25-
1876.
July 6.
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1876. certificate had it been shown to me at the time by any one entitledJulyJ. be heard that the statutory six-sevenths had not joined ; andthe Court was therefore deceived or surprised into granting it(though neither negligence nor fraud is imputable); for thesereasons I think I shall do rightly and save the expense to theparties of a needless series of actions by discharging the certificateand order of this Court dated 21st September, 1875. 1 am con-firmed in this course by the exemplar (though it can be no more)afforded by section 309 of the General Buies of the new BankruptcyAct of 1869, which expressly provides for the case of a foreigncreditor who has not received notice to attend in time to enablehim to show cause against the resolution for liquidation, whomay nevertheless oppose its being proceeded with, on provingthat had he been present and dissented from the resolution the samecould not have been carried by the statutory majority, and thatit is unjust or inequitable that the resolution should be bindingon him, I am further confirmed in the propriety of my proposedcourse by the principle of the decision in Ex parte lmbert (3 Jur.
N. S. SOI), where the Court of Appeal held that they had juris-diction notwithstanding the 12th section of the ConsolidationAct of 1849 (on which our Ordinance is framed), which limitedthe time of bringing an appeal in view of the foreign domicile ofthe appellants. In the present case the foreign creditors havecome forward as promptly as could be to object to the certificateof due execution of the Ceylon deed of liquidation.
The last ground urged by the English creditors was that .John Duncan had no authority to bind his other partners by theCeylon deed. It is scarcely necessary to enter into this point, ifthe foregoing decision be correct. I may, however, observe that hecertainly had a power of attorney, which I think sufficient, fromGeorge Grey Anderson. No express power, however, appears fromJohn Anderson, and without this I think the latter cannot bebound by the assignment in trust (Harper v. Goodsell, 18,Weekly Reporter 954), and neither of course could creditors claimin his right; but I do not think this affects the validity of theassignment as respects the property of the other partners (whodid sign) and their interests in the joint partnership. It maytherefore perhaps be that Mr. MacGregor, as trustee of two of thepartners under the Ceylon deed, and Mr. Bishop as trustee of oneof them under the English Bankruptcy Act, are joint tenants ofthis joint partnership estate—a most complicated and inconvenientresult if it be so ; but as respects the certificate granted by theCourt, it simply makes the Court set out what is not the fact insaying that the deed has been entered into with John Anderson;
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and on that ground also I think the certificate should be dischargedwhatever may remain as the operation of the deed considered as atransfer by two of the three partners under the common law ofthe Island.
The order will he that the certificate and proceedings of thisCourt dated 21st September, 1875, will be discharged, on thegrounds : (1) that the deed therein referred to has not been signedby six-sevenths in number and value of the creditors of the partiestherein designated “ debtors and (2) that the deed has not beensigned by John Anderson, as erroneously stated in the said deed,certificate, and proceedings, nor by any one duly authorized toexecute it on his behalf. This order only applies to its own certi-ficate and proceedings, and is not intended to affect the deedconsidered by itself.
The English Trustee, Mr. Bishop, appealed against thisjudgment, as also Duncan, Anderson & Co.
Layard (Broume with him), for trustee, appellant.
Qrenier (Ferdinands with him), for insolvents, appellants.
Cur. adv. vult.
6th July, 1876. The judgment of the Supreme Court wasdelivered as follows by Stewabt, J.—.
The facts of this case are clearly set out in the able and elaboratejudgment of the learned District Judge.
The first proceeding before the District Court of Colombo wason the 21st September, 1875, when upon a certificate presentedby George Macgregor, dated the 1st of that month, certifying thata deed of arrangement- or composition produced therewith, dated18th August preceding, had been entered into between JohnDuncan, John Anderson, and George Grey Anderson,. carrying onbusiness in Colombo under the style or firm of Duncan, Anderson& Co., and their creditors, signed by and on behalf of 6-7ths innumber and value of the said creditors whose debts amounts toten pounds and upwards, and that he, the said George Macgregor,had been appointed trustee and liquidator under the said deed,“ the District Court declared that such deed of arrangement“ dated the said 18th day of August, 1875, has been duly signed by“ or on behalf of such majority of creditors as required by the“ Insolvency Ordinance No. 7 of 1853.” On the 8th day of Novem-ber, 1875, a motion was made on behalf of Mr. H.’ Bishop, trusteeunder liquidation by arrangement in London of the affairs ofJohn Anderson, John Duncan, and George Grey Anderson, of
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Phil pot lane, in the city of London, merchants, trading under thestyle or firm of John Anderson & Co., and of Colombo tradingunder the style or firm of Duncan, Anderson & Co., and on behalfof several English creditors, for a rule on John Duncan andGeorge Macgregor to show cause why the deed of arrangement ofthe 18th August and the proceedings founded on the said deedshould not be quashed as irregular for reasons stated in theaffidavits filed with the motions.
The rule was allowed, and the parties having duly appearedand been heard by counsel, the learned District Judge decreed asfollows:—“ That the certificate and proceedings of this Court,
“ dated the 21st September, 1875, will be discharged on the“ grounds (1) that the deed therein referred to has not been signed“ by 6-7ths in number and value of the creditors of the partiesdesignated debtors ; (2) that the deed has not been signed by“ John Anderson, as erroneously stated in the said deed, certificate.
” and proceedings, nor by any one duly authorized to execute it on‘ his behalf. This order only applies to its own certificate andproceedings, and is not intended to affect the deed consideredby itself.”
From this judgment Mr. Duncan has appealed, and so haveMr. Bishop and the English creditors. No appeal has been takenby Mr. Macgregor, the Ceylon liquidator.
The first and main issue for determination on the argumentbefore us is as to the unity or otherwise of the London andColombo firms.
■ (2) Supposing the unity to be established, what effects havethe proceedings in London on the partnership in Colombo.
Ought the District Judge to have cancelled the Ceylon deedof arrangement, assuming it not to be in conformity with ourInsolvency Ordinance.
(1) With respect to the first point, we are of opinion that it hasbeen clearly established that the Colombo firm was only a branchof the London house of John Anderson & Co. The partners inboth were the same, the business of the same nature, the capitalone, and the ratio of profits of the partners in either place thesame.
On the 1st January, 1873, we find the London firm notifying bythe letter the admission of Mr. John Duncan as a partner in thisfirm, thus making its constituents to consist of John Anderson,John Duncan, and George Grey Anderson. Simultaneously withthis notice another circular is issued by John Anderson & Co.,dated at Colombo, announcing as follows :—“ We have established“ ourselves as merchants and commission agents at this port under
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“ the firm and style of Duncan, Anderson & Co.” It is manifesttherefore that from the very outset it was the London firm thatestablished itself here, though under a modified designation, thepartners in both places being identical. Further, we have theprofit and loss account of what is styled the new firm (consistingof members as above) for the years ending 31st December, 1873and 1874, in both of which the Colombo firm is described as the“ Colombo branch.” The power of attorney dated 22nd June, 1875,to which we shall have occasion to refer hereafter, also confirmsthe conclusion that there was in fact but one partnership. Inthis document we find Messrs. Duncan and G. G. Anderson, whenappointing their London partner John Anderson their attorneyfor the purpose of liquidating the two firms, expressly statingthat-‘they were “ lately carrying on business jointly with John
“ Anderson of in London, under the style or firm of
“ John Anderson & Co., and in the said Island of Ceylon under“ the style or firm of Duncan, Anderson & Co.”
We agree with the views of the learned District Judge as tothe effect of a commission of bankruptcy in one country upon themovable property of the bankrupt in another. In addition tothe authorities cited in judgment, see Knapp’s Priv. C. Rep.p. 259.
In considering whether the London or Colombo liquidator(supposing the appointment of the latter to be valid) should havepriority, it is essential to have regard to the dates of the severalsteps in the proceedings.
The first act in priority of time is the power of attorney of22nd June, 1875, already alluded to, by which Messrs. Duncan andG. G. Anderson appointed Mr. John Anderson their attorney to“ appear before the Court of Bankruptcy in London or any other
“ Court, and in their respective names to sign and deliver
“ any and every petition, declarationfor the purpose of
“ winding up their business in bankruptcy,” &c.
In pursuance of this power a liquidation of both firms waspresented to the London Court of Bankruptcy on the 29th July.1875, by John Anderson, for himself and on behalf of JohnDuncan, and by George Grey Anderson, who had by that timereturned to England. Subsequently, agreeable to the provisionsmade in that respect, a meeting was held in London on the19tK August, and Mr. Bishop appointed liquidator, the certificateof such appointment being registered on the 11th September,1875.
These proceedings were all consecutive and in due order, andmust in our opinion be taken to have relation one to the other;
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July 6.
ST E WATT, J.
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1876.and consequently to be looked upon as originating (as respects
July a.two of the partners), if not on the 22nd June, the date of the
Stewart, .t. Ceylon power of attorney, at any rate as regards all on the 29thJuly, when the petition for liquidation of both firms was filed inthe London Court of Bankruptcy. See 6th and 11th sections of theEnglish Bankruptcy Act, 1869, and Ex parte Duignan re Bissel, 19,IV. Rep., p. 711, where it was held that the filing of a petition forliquidation is an act of bankruptcy available for adjudication,and the title of the trustee in bankruptcy relates back to thetime of the filing of the petition, whether adjudication ensueor not.
The Ceylon deed of arrangement was only signed on the 18thAugust, at which time an act of bankruptcy had already beencommitted incapacitating Mr. Duncan, whether for himself or asattorney of his partners, from entering into any valid engagement.
Accordingly, if we have to decide on the bare point of priority,
■ it appears to us that the London and not the Ceylon trustee wouldbe entitled to preference, such priority vesting in the former theproperty (the Colombo firm has only movable effects) of bothfirms from considerably before the 18th August. We also thinkthat the jurisdiction thus first exercised by the London Court ofBankruptcy should, in the interest of all concerned, be exclusive,so as to prevent confusion and possibly conflict of decisionsbetween Courts of different countries. (See Bank of Scotland v.Cuthbert and Rose, pp. 17-8.) In view, however, of the opinionwe have formed on the 3rd point, it was scarcely necessary,except on general grounds, to enter upon the above questions,there being in fact no insolvency proceedings whatever nowpending in the District Court of Colombo affecting the bankrupts.
It is not disputed that the. deed of arrangement of 18thAugust does not bear the signature of 6-7ths of .the creditors of theconjoined firms, which, as already stated, we consider to be onepartnership. And it also appears that, though purporting to besigned by all the three partners, Mr. Duncan had no legalauthority to sign the deed on behalf of John Anderson, the powerof attorney under which Mr. Duncan acted being insufficient.We have therefore no hesitation in holding, independently of thesteps taken in London, that this deed is ineffectual for the purposementioned in the 134th section of the Ordinance No. 7 of 1853,and that the learned District Judge was right in cancellinghis certificate of 21st September, 1875, containing a declarationobviously made in error under r~ misconception of facts. It isdifficult to perceive, if the deed be invalid for attaining theobjects with which it was entered into, viz., the liquidation by
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arrangement of the Colombo firm, how it can be of avail for anyother purpose. But we are not prepared to say that the learnedDistrict Judge was wrong in confining his decree to only whatwas strictly pending before him, and not on a mere motionwithout notice to the creditors, who are parties to the deed,summarily quashing the document. He under a mistakenconclusion made an order, and that order he has cancelled.
Judgment affirmed, parties bearing their own costs in appeal.
1870.
July 6.
Stewart* J.