Ex parte Saffery. Re Cooke
| Jurisdiction | England & Wales |
| Year | 1876 |
| Date | 1876 |
| Court | Court of Appeal |
Bankruptcy - Stock Exchange Rules - Fraudulent Preference.
An assignment of part of the property of a man who is unable to meet his engagements to a trustee for a special class of creditors is not prevented from being a fraudulent preference by any amount of pressure.
According to the rules of the Stock Exchange a member who is unable to meet his engagements on the Stock Exchange is declared a defaulter, ceases to be a member, and cannot be re-admitted unless he pays 6s. 8d. in the pound on his Stock Exchange debts. According to the same rules his Stock Exchange assets are collected by the official assignees of the Stock Exchange, and distributed among the Stock Exchange creditors. A member who had been declared a defaulter attended the usual meeting of the Stock Exchange creditors and gave to the official assignees, for distribution among his Stock Exchange creditors, a cheque on his bankers for £5000, being about five-eighths of his assets, stating at the same time that he had none but Stock Exchange creditors. On the day after this sum had been distributed the debtor informed the Stock Exchange creditors that his father-in-law claimed to be a creditor for a large amount for money lent. It did not appear that up to this time the debtor had committed any act of bankruptcy, but soon afterwards he filed a liquidation petition, and was adjudged bankrupt:—
Held (reversing the decision of the Registrar), that the trustee in bankruptcy was entitled to recover the £5000 from the official assignees of the Stock Exchange.
THIS was an appeal by the trustee in bankruptcy of J. E. Cooke from a decision of Mr. Registrar Pepys, sitting as Chief Judge.
Cooke was a broker on the Stock Exchange from 1872 till the 27th of April, 1876, and was admitted a member according to the rules of the Stock ExchangeF1. On the 26th of April, finding that he could not tide over the settling day, he applied for assistance to his father-in-law, who had helped him on two former occasion, and to whom he was heavily indebted, but on the 27th he was informed that his father-in-law would not help him again. Cooke then, on the same morning, gave formal notice to the secretary of the Stock Exchange that he could not fulfil his engagements, and his failure was announced in the room in the usual way. The official assignees of the Stock Exchange thereupon sent a notice to the Bank of England, with whom Cooke kept his account, and with whom he had a balance of about £5000. On the following day a meeting of the Stock Exchange creditors was held, at which Cooke was present and made a statement as to his affairs. The creditors, as he stated by his affidavit, decided that if he could get enough to make up 13s. 4d. in the pound, including the assets he then shewed, which were about £8000, the Stock Exchange would be content. The official assignees then requested him to give them a cheque for £5000 to be distributed among his Stock Exchange creditors, which he accordingly did. The official assignees received the proceeds of the cheque, and got in £360 due from members of the Stock Exchange for differences. Out of the £5360 thus received they distributed among the Stock Exchange creditors, on the 2nd of May, £4260, making a dividend of 3s. 4d. in the pound on their debts, which amounted to £24,790. One of the official assignees and two other persons who were present at the meeting deposed that Cooke stated at it that he did not owe any debt to others than members of the Stock Exchange, and that, on being questioned as to advances from his father-in-law, he stated that all the moneys he had received from his father-in-law were gifts. It was further deposed that it was not till an adjourned meeting, on the 3rd of May, that Cooke informed his Stock Exchange creditors that he was indebted to his father-in-law. The claim of the father-in-law, it appeared, was for £107,850. Cooke deposed that his total assets were at the time of his stopping payment about £8000, including the £5000 at his bankers.
On the 13th of May Cooke filed a petition for liquidation, which became abortive, and on the 1st of June his father-in-law filed against him a petition for adjudication, under which he was adjudged bankrupt, the act of bankruptcy being the filing of the liquidation petition.
The trustee, on the 31st of July, moved that the official assignees might be ordered to pay to him the £5000 received by them from the bankrupt. Mr. Registrar Pepys, on the hearing of the motion, held that the £5000 was received before any act of bankruptcy, for that Cooke's not attending the Stock Exchange was not such an absenting himself from his place of business as to constitute one — and no other act of bankruptcy till the 13th of May was suggested; that the payment was not a fraudulent preference, as there was pressure, and that of the strongest kind; nor was it a fraudulent...
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Re Sarflax Ltd
...E.R. 993, H.L.(E.). Roy v. Prior [1971] A.C. 470; [1970] 3 W.L.R. 202; [1970] 2 All E.R. 729, H.L.(E.). Saffery, Ex parte, In re Cooke (1876) 4 Ch.D. 555, C.A. Schmidt v. Secretary of State for Home Affairs [1969] 2 Ch. 149; [1969] 2 W.L.R. 337; [1969] 1 All E.R. 904, Ungoed-Thomas J. and C......