§ 188. “Bankruptcy and Insolvency.”

“Nothing,” says Sir Henry Maine, “strikes the scholar and jurist more than this severity of ancient systems of law towards the debtor, and the extravagant powers which they lodge in the creditor.” It brought many early States to the brink of ruin. In early Athens enslavement for debt was a fundamental law. Such was the sanctity of contract in the estimation of Roman law that during the history of the Republic there was no mercy for the insolvent debtor. It was not until the time of Julius Cæsar that a debtor became entitled to his discharge on formally giving up everything to his creditors— cessio bonorum. This cessio bonorum marks the commencement of the true principle of bankruptcy. (Ancient Law, p. 321; Poste's Gaius, p. 347.)

“The early Teutonic codes exhibit the same Draconian severity as those of Rome and Greece. The insolvent debtor falls under the power of his creditor, and is subject to personal fetters and chastisement; and later on, among the Germans, the witepeow might often be seen working out by his labours a debt that was due to his master. It is not a little remarkable, as Sir Frederick Pollock and Professor Maitland observe, apropos of the above (History of English Law), that our common law knew no process whereby a man could pledge his body or liberty for payment of a debt; neither at common law was the body of the debtor liable to execution for debt, except in the case of the king's debtor. It is interesting to observe how imprisonment for debt came about. No right of arrest on a judgment in debt is given by the express words of any Statute, but the law gave in certain cases a right to arrest a delinquent or defaulter for the purpose of securing his appearance at trial, where, for instance, he was flying the realm; and it came to be held, by some strange mediæval logic, that wherever the law gave this right of arrest on mesne process, a capias ad satisfaciendum would lie upon the judgment itself (1795, 3 Salk. 286). Thus began the long and dreary annals of bailiffs, sponging-houses, the Marshalsea and the Fleet.” (Encyc. Laws of Eng. vol. i. pp. 483–4.)

The historical distinction between bankruptcy and insolvency is, that insolvency laws were intended for the benefit and relief of ordinary private debtors, poor and distressed, but honest; whilst bankruptcy laws were those specially designed and passed for the protection of creditors against insolvent traders and particularly against fraudulent traders. The embryo of English bankruptcy legislation is to be found in the Statute 34 and 35 Henry VIII. c. 4, “against such as do make bankrupt.” This Act recited that:

“Divers and sundry persons, craftily obtaining into their hands great substance of other men's goods, do suddenly flee to parts unknown, or keep their houses, not minding to pay or restore to any their creditors their debts and duties, but at their own wills and pleasures consume the substance obtained by credit of other men for their own pleasure and delicate living, against all reason, equity, and good conscience.”

GENERAL SCOPE.—Bankruptcy and insolvency legislation is a most comprehensive subject. Generally stated, it embraces a large part of the law regulating the relations of debtor and creditor, before and during insolvency; the acts or defaults of a debtor

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which render him amenable to what Wharton in his work on Private International Law describes as “National execution against the assets of an insolvent debtor;” the organization of insolvency and bankruptcy courts and proceedings in connection therewith; the investigation of the business dealings and transactions of an insolvent; the pursuit and recovery of assets fraudulently disposed of in order to defeat creditors; the rescission of voluntary conveyances and other transactions amounting to fraudulent preferences; the effect of legal executions at the suit of judgment creditors; what is protected from and what liable to such executions; the seizure of an insolvent's assets for the benefit of his creditors generally; the distribution of his assets among his creditors; the release, partial or conditional or absolute, of an honest but unfortunate debtor; the punishment of a dishonest debtor. Bankruptcy and insolvency law may also include compositions, compromises, arrangements, and assignments for the benefit of creditors, as alternatives to compulsory insolvency. The winding up of corporations unable to pay their debts is an important branch of insolvency jurisdiction. An insolvency law would also include all ancillary provisions necessary to prevent it from being defeated.

A CONCURRENT STATE AND FEDERAL POWER.—The bankruptcy and insolvency jurisdiction is not an exclusive power of the Federal Parliament, like that conferred on the Parliament of Canada; it is a concurrent power. Until the Federal Parliament has passed laws inconsistent with State laws bearing on the question, State laws will remain in full force and effect; and until the Federal Parliament has occupied the whole area capable of being covered by the subject, the States may continue to pass other bankruptcy and insolvency laws, and may enforce them as long as they do not conflict with Federal laws (sec. 107–109). The cases decided under the Constitution of the United States are valuable as illustrating the operation of concurrent laws; those under the Canadian Constitution are only useful as decisions showing what insolvency and bankruptcy legislation is capable of including, and as showing what are merely matters of local and private interests.

AMERICAN CASES.—Under the Constitution of the United States a State legislature may enact a valid law on the subject of bankruptcy if there is no act of Congress at the time in force establishing a uniform system of bankruptcy with which such law conflicts. (Sturges v. Crowninshield, 4 Wheat. 122. Baker, Annot. Const. p. 44.)

This power does not exclude the right of a State to legislate on the same subject, except when the power is actually exercised by the Federal legislature, and the State laws conflict therewith. (Ogden v. Saunders, 12 Wheat. 213. Id. p. 45.)

An insolvent debtor who has received a certificate of discharge from imprisonment, under a State insolvency law, is not thereby entitled to be discharged under an execution against his person at suit of the federal government. (United States v. Wilson, 8 Wheat. 253. Id.)

Insolvency laws of one State cannot discharge the contracts of citizens of another State, even where, by the terms of the contract, it is to be performed in the State enacting the insolvency law. (Baldwin v. Bank of Newbury, 1 Wall. 234. Id.)

A State insolvency law is valid, although enacted while a national bankruptcy law is in force; and takes effect upon the repeal of the latter. (Tua v. Carriere, 117 U.S. 201. Id.)

State bankruptcy laws have no extra-territorial effect and cannot operate upon non-residents. (Baldwin v. Hale, 1 Wall, 223. Id.)

A person in custody under a ca. sa., issued by the authority of a court of the United States, cannot legally be released by a State officer acting under a State insolvency law. (Duncan v. Darst, 1 How. 301. Id.)

A discharge from bankruptcy under a State law is no bar in the courts of the United States or of another State to non-resident creditors. (Gilman v. Lockwood, 4 Wall. 409. Id.)

The power of Congress to enact bankruptcy laws is not limited to the enactment of such laws as existed in England at and prior to the adoption of the Constitution. (Re Klein, 1 How. 277. Id.)

Federal laws may relieve against debts contracted prior to the enactment of such laws. (Re Klein, 1 How. 277; Carpenter v. Pennsylvania, 17 How. 456. Id.)

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CANADIAN CASES.—The legislature of Quebec passed an act for the relief of a benefit and benevolent society, named L'Union St. Jacques de Montreal; imposed a forced commutation of their existing rights upon two widows who were annuitants of the society, under its rules, reserving to them the rights so impaired in the future possible event of the improvement in the affairs of the society. In an action which came before the Privy Council, on appeal, this law was attacked on the ground that it dealt with insolvency. The Privy Council held that this was clearly a local and private matter within the competence of the provincial legislature, in the absence of federal legislation dealing with insolvency in a manner applicable to the circumstances. (L'Union St. Jacques de Montreal v. Belisle, L.R. 6 P.C. 31.)

“Alluding to the hypothesis of a law having been previously passed by the Dominion Parliament, to the effect that any Association of that particular kind, throughout the Dominion, on certain specified conditions, assumed to be exactly those which appeared upon the face of the statute in question, should thereupon ipso facto fall under the legal administration in bankruptcy or insolvency, the Privy Council said they were by no means prepared to say that if any such law as that had been passed by the Dominion legislature it would have been within the competency of the provincial legislature afterwards to take a particular Association out of the scope of a general law of that kind, so competently passed by the authority which had power to deal with bankruptcy and insolvency.” (L'Union St. Jacques v. Belisle, L.R. 6 P.C. pp. 36–7; Lefroy, Legisl. Power in Can. p. 684.)

In the case of Cushing v. Dupuy it was argued that the Canadian Insolvency Act, 1875, interfered with property and civil rights and was therefore ultra vires. In answer to the objection the Privy Council (per Sir Montagu E. Smith) said—

“It would be impossible to advance a step in the construction of a scheme for the administration of insolvent estates without interfering with and modifying some of the ordinary rights of property and other civil rights, nor without providing some mode of special procedure for the vesting, realization and distribution of the estate, and the settlement of the liabilities of the insolvent. Procedure must necessarily form an essential part of any law dealing with insolvency. It is therefore to be presumed, indeed it is a necessary implication, that the Imperial statute, in assigning to the Dominion Parliament the subjects of bankruptcy and insolvency, intended to confer on it legislative power to interfere with property, civil rights, and procedure within the provinces, so far as a general law relating to these subjects might affect them.” (5 App. Cas. 415.)

In the Assignment for Creditors' Act, passed by the Legislature of Ontario (Rev. Stat., 1887, c. 124, sec. 9) it was provided that an assignment for the general benefit of creditors under that Act should take precedence of all judgments and executions not completely executed by payment, subject to any lien of an execution creditor for his costs. The validity of this Act was called into question in the case of the Attorney-General of Ontario v. the Attorney-General of Canada, on the ground that it encroached on the Federal power in respect of insolvency. In the judgment of the Privy Council it was said—

“It is not necessary, in their Lordships' opinion, nor would it be expedient, to attempt to define what is covered by the words ‘bankruptcy’ and ‘insolvency’ in sec. 91 of the British North America Act. But it will be seen that it is a feature common to all the systems of bankruptcy and insolvency to which reference has been made, that the enactments are designed to secure that in the case of an insolvent person his assets shall be rateably distributed amongst his creditors, whether he is willing that they shall be so distributed or not. Although provision may be made for a voluntary assignment as an alternative, it is only as an alternative. In reply to a question put by their Lordships, the learned counsel for the respondent were unable to point to any scheme of bankruptcy or insolvency legislation which did not involve some power of compulsion by process of law to secure to the creditors the distribution amongst them of the insolvent debtor's estate. In their Lordships' opinion, these considerations must be borne in mind when interpreting the words ‘bankruptcy’ and ‘insolvency’ in the British North America Act. It appears to their Lordships that such provisions as are found in the enactment in question, relating as they do to assignments purely voluntary, do not infringe on the exclusive power conferred upon the Dominion Parliament. They would observe that a system of bankruptcy legislation may frequently require various ancillary provisions for the purpose of preventing the scheme of the Act from being defeated. It may be necessary for

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this purpose to deal with the effect of executions and other matters which would otherwise be within the legislative competence of the provincial legislature. Their Lordships do not doubt that it would be open to the Dominion Parliament to deal with such matters as part of a bankruptcy law, and the provincial legislature would doubtless be then precluded from interfering with this legislation, inasmuch as such interference would affect the bankruptcy law of the Dominion Parliament. But it does not follow that such subjects as might properly be treated as ancillary to such a law, and therefore within the powers of the Dominion Parliament, are excluded from the legislative authority of the provincial legislature when there is no bankruptcy or insolvency legislation of the Dominion Parliament in existence.” (Per Lord Herschell, 1894, App. Cas. p. 200.)

In conformity with the dicta of the Privy Council in the above case, the Supreme Court of Nova Scotia, in Kinney v. Dudman, 2 Russ. and Chess. 19, held that sec. 59 of the Dominion Insolvent Act of 1869, 32 and 33 Vic. c. 16, was within the competence of the Dominion Parliament, though it provided that no lien upon the property of an insolvent should be created for a judgment debt by the issue of an execution, or by levying thereunder, if before the payment over to the plaintiff of the moneys levied the estate of the debtor had been assigned or placed in liquidation; thus overriding existing provincial legislation which gave to a creditor a lien on his debtor's property by the levy of his execution on it.

In McLeod v. McGuirk, 15 N. Bruns. (2 Pugs.) 248 (1874), Ritchie, C.J., expressed a doubt whether section 81 of the Federal Insolvent Act of 1869, 32 and 33 Vic. c. 16, restricting landlord's preferential lien for rent to one year, was not ultra vires. Mr. Lefroy says that the decision of the Privy Council in Cushing v. Dupuy may be considered to have resolved the doubt in favour of the Dominion Parliament; and to have shown that the view of Wetmore, J., in McLeod's case, that if the Act had attempted to take away the landlord's right of distress it would have been ultra vires, was erroneous. So the decision of Wetmore, J., in McLeod v. Wright, 17 N. Bruns. (1 Pugs. and Burb.) 68 (1877), that sec. 89 of the Insolvent Act of 1869—which declared null and void all sales, transfers, &c., by any person in contemplation of insolvency by way of security to any creditor, whereby the latter obtains an unjust preference—was ultra vires, seems to have been equally erroneous. (Lefroy, Leg. Pow. p. 439.)

The Dominion Parliament passed an Act, 42 Vic. c. 48, intituled “An Act to provide for the liquidation of the affairs of building societies in the Province of Quebec.” It recited that “whereas a large number of persons of limited means have invested their earnings in building societies in the Province of Quebec, and on account of the long period of depression such persons are exposed to lose their earnings for want of means to continue the payment of their contributions, and it is expedient to come to their relief by providing a speedy and inexpensive mode of liquidating the affairs of such societies in the said Province.” It was enacted that liquidation might be resolved upon by a general meeting, after notice; and made other necessary provisions for the liquidation of such societies, whether insolvent or not. In giving judgment, Dorion, C.J., said:—“This Act is not in the nature of an insolvent law, for it is intended to apply to all building societies, whether insolvent or not. It is, therefore, essentially an Act affecting civil rights… The case of L'Union St. Jacques de Montreal v. Belisle is in point.” (McClanaghan v. St. Ann's Mutual Building Society [1880] 24 Lower Can. Jur. 162.) It was held by Robertson, J., in re Iron Clay Brick Manufacturing Co., 19 Ont. Rep. at pp. 119–20, that the Ontario Joint Stock Companies Winding-up Act, 1887, c. 183, had no application in a case where a winding-up was sought by a creditor on the grounds that the company was insolvent, the provincial legislature having no jurisdiction in matters of insolvency. (Lefroy, Leg. Pow. p. 458.)

In re Killam, 14 Can. L.J. (N.S.) 242, Savary, J., in reference to the Nova Scotia Act for the relief of insolvent debtors, which provided for discharge from prison of a debtor on assignment of his property in trust to pay his debts, said:—“So long as the party seeking the benefit of that chapter has not become insolvent under the Dominion statute, all the proceedings under it are valid and effectual, for they only relate to property and civil rights; but as soon as the Dominion statute on insolvency is invoked

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that chapter has no more force as to him or his case, and the relief it contemplates can only be obtained under the Dominion statute. He is then in bankruptcy or insolvency, within the meaning of the British North America Act, and the Insolvent Act of Canada, therefore, attaches with exclusive authority upon his person and the property. When and where that chapter conflicts or operates inconsistently with the Dominion Insolvent Act of 1869 or 1875, it is superseded, and must be treated as repealed by the concluding clause of section 154 of the former Act or section 149 of the latter. In any instance where it does not so conflict, and its operation does not become inconsistent with either of those Acts, there is nothing to hinder its provisions being carried out, and quoad that case it is an Act intra vires, unrepealed, and by the Dominion Parliament unrepealable.” (14 Can. L.J., N.S., p. 242. Lefroy, Leg. Power, 531.)

In Quirt v. The Queen, 19 S.C.R. (Can.) 517, the Supreme Court of Canada held that an Act of the Dominion, 33 Vic. c. 40, reciting the insolvency of the Bank of Upper Canada, and providing for its winding up, and for a fair and equitable adjustment and settlement of the claims of all creditors, was intra vires. Strong, C.J., considered that the Privy Council had, in L'Union St. Jacques de Montreal v. Belisle, held “that a special statute, providing for the winding up of an incorporated company, would be bankruptcy or insolvency legislation.” Patterson, J.A., said:—“The words, ‘bankruptcy and insolvency’ in that article, no doubt, point primarily to the enactment of a general bankrupt or insolvent law, as was well explained by Lord Selborne in delivering the judgment of the Judicial Committee in L'Union St. Jacques de Montreal v. Belisle, but, as I think is conceded by the same judgment, a special Act for the winding up of some particular company which was insolvent and the distribution of its assets would not be beyond the competency of the Dominion Parliament… It is easy to imagine cases arising in connection with bankruptcy proceedings under a general law where special legislation would be required, such, for instance, as the necessity for curing some irregularity so as to validate or remove doubts as to titles taken under the proceedings. There must be power to do this in one legislature or the other, and I take it to be obvious that the power would be in the Dominion Legislature alone. Such legislation would be like that now under consideration, special legislation addressed to an individual case, but it would not on that account be ultra vires.” (Lefroy, Leg. Pow. p. 569.)

In the Primary Court (17 Ont. Rep. 618), Street, J., said:—“The right to pass a general law of the kind must also involve the power to pass a special law to meet a particular case; the local legislature having no power to deal with insolvency legislation at all are debarred from passing either a general or special Act, and the right must therefore exist in the other legislature.” In the Ontario Court of Appeal, Hagarty, C.J., and Osler, J.A., agreed that the Act was intra vires. Maclennan, J.A., said that “the power of legislation over bankruptcy or insolvency, which was intended to be conferred on the Dominion Parliament, was the same as had been exercised by the Imperial Parliament and by the provincial legislatures before confederation, namely, the passing of laws more or less general in their application, with proper courts and procedure and machinery for the carrying them into effect, and not Acts declaring a particular person or firm or corporation bankrupt or insolvent, or putting their affairs into a course of liquidation.” Legislative power of the latter kind was “intended to be given to the legislatures of the provinces, as matters of property and civil rights, and matters of a merely local and private nature.” (17 Ont. App. 452. Lefroy, Leg. Pow. p. 570.)

In his work on the Law of the Canadian Constitution Mr. Clement says:—“The judgment of the Supreme Court in Quirt v. The Queen must be taken as conclusive upon all Canadian Courts, that the power of the Dominion Parliament under the various sub-sections of section 91, does extend to private Bill legislation so long as the subject-matter legislated upon can be fairly said to fall within any of those sub-sections” (p. 355). “Whether the Act in question, in Quirt v. The Queen, was properly regarded as within the category of bankruptcy and insolvency legislation,” Mr. Lefroy says, “seems somewhat doubtful, since the decision of the Privy Council in the Attorney-General of

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Ontario v. the Attorney-General of Canada (1894), App. Cas. 189. (See per Burton, J.A., S.C., 20 Ont. App. at pp. 496–8.) Perhaps, however, such view may still be upheld on the ground that the Act amounted to a bankruptcy proceeding by Parliament itself in invitum against the insolvent institution. (And see per Street, J., in Regina v. County of Wellington, 17 Ont. Rep. p. 618.) In the Court of Appeal in that case (17 Ont. App. 428), Hagarty, C.J.O., placed the Act in question rather under the Dominion power over banking and the incorporation of banks, saying:—‘It perhaps may be objected that such special legislation may be faulty. I hardly see this, where the special legislation is in reference to settling the affairs of an institution wholly the creation of Parliament, and wholly outside the creative powers of the provinces.”’ (Lefroy, Leg. Pow. p. 371. As to Dominion Bankruptcy and Insolvency Acts applying to one or more provinces only see Hagarty, C.J.O., in Clarkson v. the Ontario Bank (15 Ont. App. 178. Lefroy, Leg. Pow. p. 573).

In Allen v. Hanson, 16 Queb. L.R. 85, the Court of Queen's Bench in Quebec held that the Dominion Act 47 Vic. c. 39, providing that the Dominion Winding-Up Act should apply to incorporated trading companies “doing business in Canada, no matter where incorporated,” was intra vires, and confirmed an order granted upon the petition of the liquidator, under a liquidation previously instituted under the Imperial Act, 1862, in Scotland, and as ancillary to that principal winding up. Dorion, C.J., delivering the judgment of the majority of the Court, said (p. 84–5):—“It is evident that the Dominion Parliament never intended to regulate, suspend or dissolve, by the Winding-Up Act, any corporation existing under British or foreign authority, but merely to regulate their property and restrain their action in this country, which it undoubtedly had a right to do so. The several legislative bodies in Canada can have no concern in what a foreign corporation might do elsewhere; they are only interested in protecting the rights of the creditors of such corporation upon their own property within this country, and more particularly the right of their own citizens and of resident creditors… The provisions of the Winding-Up Act of Canada regulate the proceedings of our Courts to enforce the rights of creditors and of shareholders in the property of such companies. As they only relate to procedure, their operation is confined to property found within the territorial limits of the jurisdiction of the Courts authorized to enforce them. For the same reason, within such limits their operation can neither be regulated nor restrained by any foreign legislation.” This decision was confirmed by the Supreme Court of Canada. Ritchie, C.J., said:—“All the Winding-Up Act, as I understand it, seeks to do in the case of foreign corporations is to protect and regulate the property in Canada, and protect the rights of creditors of such corporations upon their property in Canada.” (18 S.C.R. [Can.] p. 674. Lefroy, Leg. Pow. p. 629.)

In re Clarke and the Union Fire Insurance Company, 14 Ont. Rep. 618, Boyd, C., held that the Dominion Winding-Up Act, 45 Vic. c. 23, was intra vires of the Dominion Parliament, as being in the nature of an insolvency law; that it applied to all corporate bodies of the nature mentioned in it all over the Dominion, and that the company in question in that case, though incorporated under a provincial charter, was subject to its provisions; and he observed:—“The case in the Supreme Court of the Merchants' Bank v. Gillespie does not touch the status of the present company, which is a domestic corporation within the territorial limits of Canada, whereas the company there in question was, for the purpose of the Act, a foreign one domiciled in England.” (Lefroy, Leg. Pow. p. 631.)

In the Merchants' Bank of Halifax v. Gillespie, 10 S.C.R. (Can.) 312, the question raised was as to the validity of winding-up proceedings under the Dominion statute, 45 Vic. c. 23, as the sole and principal winding-up of a company incorporated under the English Act of 1862. The Supreme Court held that an order could not be made under that statute for the winding-up of the Steel Company of Canada, which was a joint stock company incorporated in England in 1874, under the Imperial Joint Stock Companies Act, never incorporated in Canada, but having its chief place of business in Nova Scotia,

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where it owned mines and works, while it owned no real estate elsewhere, but merely occupied an office in Great Britain. 10 (S.C.R. [Can.] 312. Lefroy, Leg. Pow. p. 629.)

The Merchants' Bank of Halifax v. Gillespie was distinguished in re Briton Medical Life Association, 12 Ont. Rep. 441, where it was held by Proudfoot, J., that the Dominion Acts, 31 Vic. c. 48 and 34 Vic. c. 9, requiring foreign insurance companies doing business in Canada to make a certain deposit with the Minister of Finance, were intra vires, and an order was there made, on petition, for the distribution of the deposit made by the English company in question among the Canadian policy-holders, notwithstanding that proceedings to wind up the company were pending before the English Courts. Proudfoot, J., observed, with reference to the Merchants' Bank of Halifax v. Gillespie, that in that case there was no question of a deposit, and what was sought was not the distribution of the deposit, but the general winding-up of the company (12 Ont. 447. Lefroy, Leg. Pow. p. 632.)

IMPERIAL BANKRUPTCY LAWS IN THE COLONIES.—The question, how far English Bankruptcy Statutes extend to the colonies, has been considered in a number of cases. A decision of Lord Mansfield (cited Webb's Imperial Law 64) goes to show that “the statutes of bankrupts do not extend to the colonies.” In Ellis v. McHenry, L.R. 6 C.P. 228, it was, however, decided that the English Bankruptcy Act of 1861 (24 and 25 Vic. c. 134), was of general application and binding within the colonies. In Callender Sykes and Co. v. Colonial Secretary of Lagos (1891), App. Ca. 460, it was held that the English Bankruptcy Act, 1869 (32 and 33 Vic. c. 71), applies to all the Queen's Dominions, and therefore that an adjudication under that Act operates to vest in the trustee in bankruptcy the bankrupt's title to real estate in Lagos, subject to the requirements of the law of Lagos as to the mode of transfer of real estate.

The English Bankruptcy Act of 1883 (46 and 47 Vic. c. 52, s. 118), provides that the English and Colonial Courts having jurisdiction in Bankruptcy and Insolvency shall severally act in aid of and be auxiliary to each other in matters of bankruptcy. In the case of Re Mann, 13 V.L.R. 590, Higinbotham, C.J., said: “The section of the English Act on which the application was made to our Court of Insolvency is a new section, and if I may be allowed to say so, I think it is a very wise and excellent section and one which should receive a liberal interpretation and should be cheerfully co-operated with and acted upon by the Courts to which it applies. It is an enabling section as well as an enjoining one, and applies to all British Courts having jurisdiction in bankruptcy or insolvency.” A Court which has no bankruptcy jurisdiction cannot act as auxiliary. (Callender Sykes and Co. v. Col. Sec. of Lagos, 1891, App. Ca. 460.)

COLONIAL BANKRUPTCY LAWS.—The inconvenience resulting from the absence of uniform laws relating to insolvency and bankruptcy, operative throughout the Australian communities, was illustrated in the case of the Union Bank v. Tuttle (1889), 15 V.L.R. 258. In that case the estate of the defendant had been sequestrated in New South Wales. Before such order of sequestration, creditors of the defendant had seized assets in Victoria under execution on judgments obtained in Victoria. By the law of New South Wales the order for sequestration had relation back to a period antecedent to the seizure by the creditors in Victoria. It was held that the retrospective operation of the order for sequestration in New South Wales did not divest the title of the execution creditors in Victoria. In giving judgment, Mr. Justice A'Beckett said: “The order of sequestration under the law of New South Wales had relation back to a period antecedent to the seizure by the Victorian creditors, and it has been argued that this Court, recognizing the operation of the sequestration in New South Wales, must do so to its full extent, giving it in Victoria the retrospective operation which it would have had in New South Wales, thus divesting the title of the execution creditors in Victoria. No authority has been cited which supports this contention. Story's Conflict of Laws, p. 412, and Geddes v. Mowat, 1 Glyn and J. 414, are against it. I hold that the judgment creditors' rights are not displaced by the sequestration of the debtors' estate in New

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South Wales subsequently to the seizure, and I bar the claim made on behalf of the estate of Tuttle, the judgment debtor. The property seized is admittedly the property of a bankrupt firm, of which Tuttle is a member, and I have not to decide anything as to how the debtor's interest in this property is to be sold. I merely decide that his official assignee in insolvency cannot stop the sale of his interest in the chattels seized.”

51. (xviii.) Copyrights189, patents of inventions190 and designs191, and trade marks192:

HISTORICAL NOTE.—The Constitution of the United States empowers Congress “to promote the progress of science and useful arts, by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries.” (Art. I. sec. viii. sub-s. 9.) “Copyrights” are enumerated in sec. 91, sub-s. 23, of the British North America Act. “Patents of Invention and Discovery” and “Copyright” were among the subjects which might be referred to the Federal Council, under the Act of 1885. In the Bill of 1891 the sub-clause was worded “Copyrights and patents of inventions, designs, and trade marks.” At Adelaide it was introduced in the same form, and at Melbourne a verbal amendment was made before the first report.