require, in the same manner as if her said husband were dead; with a further direction that it should be lawful for the trustees, in their discretion, and without assigning any reason for so doing, at any time to refuse or discontinue payment of the annuity to her husband during the whole or any portion of his life. After satisfying the above purposes, the trustees were to hold the remainder of the trust property upon trust as Mrs. Trappes (a sister of the testatrix) should by deed or will appoint, and in default of and subject to any such appointment as last aforesaid, for the use and benefit of the children of Mrs. Trappes equally. Mrs. Graham died on the 21st of June, 1864. On the 1st of April, 1868, Mrs. Payne, the tenant for life of the trust property, died. On the 7th of May, 1861, H. C. T. Graham, who was then resident in Scotland, was upon his own petition duly adjudged bankrupt, under a sequestration according to Scotch law, and Mr. Balgarnie was elected and declared the trustee under the sequestration. On the 29th of August, 1868, H. C. T. Graham obtained his discharge under the sequestration; but it was alleged by the amended bill that such discharge was obtained without the consent of, and without making any composition with or for, his creditors who were still unpaid; and further, that such discharge was void, by reason of H. C. T. Graham not having notified or disclosed to the trustee or the Court the existence of Mrs. Graham's will, or the benefits thereby given to or intended for him. Mr. Balgarnie, the trustee under the Scotch sequestration, was on the 10th of February, 1869, discharged from his office of trustee. On the 16th of January, 1868, H. C. T. Graham was adjudged bankrupt in this country upon his own petition, and a creditors' assignee was appointed. On the 21st of July, 1868, an order was made by the Court of Bankruptcy upon the bankrupt's own petition, with the consent of the creditors, annulling the adjudication in bankruptcy. At the hearing of the suit (which was instituted for the purpose of administering the trust property), in December last, the ViceChancellor held that as the bankruptcy was annulled before the first payment to Graham under the annuity fell due, the clause of forfeiture did not operate (1). (1) Law Rep. 9 Eq. 229. V.-C. J. 1870 TRAPPES บ. MEREDITH. (No. 2.) V.-C. J. 1870 TRAPPES MEREDITH. With respect to the Scotch sequestration, which had been alleged by one of the answers and in the affidavits, leave was given to amend the bill by stating the Scotch sequestration and the proceedings taken under it. The case now came on for hearing upon the question raised by the amended bill. The opinions of Scotch advocates of eminence had been given on either side as to the effect of the Scotch proceedings in bankruptcy against H. C. T. Graham, and his discharge under the sequestration in August, 1868. On the one side, the present Solicitor-General for Scotland (Mr. A. R. Clark, Q.C.) and another Scotch advocate had (on the assumption that the gift of the annuity was absolute, and contained no clause of defeasance) given their opinion that the discharge of H. C. T. Graham on the 29th of August, 1868, even if valid, did not prevent the annuity from falling under the sequestration and vesting in the trustee, the discharge having been subsequent in date to the opening of Mr. Graham's right to the annuity, that the annuity was still bound by the sequestration, and that a discharge without composition did not reinvest the bankrupt in his estate. In their opinion Mr. Graham's discharge was not void, but voidable on account of his having failed to notify to the trustee the acquisition of the legacy or the annuity: 19 & 20 Vict. c. 79 (Bankruptcy, Scotland), s. 103. On the other hand, an affidavit had been made on behalf of the Defendant Graham, by Mr. E. S. Gordon, Q.C., Dean of the Faculty of Advocates, to the following effect: Assuming it to be true that H. C. T. Graham was duly adjudged bankrupt in Scotland, under a sequestration according to Scotch law, on the 7th of May, 1861, and obtained his discharge under the sequestration on the 29th of August, 1868, and that Balgarnie, the trustee appointed under the sequestration, was on the 10th of February, 1869, discharged from his office of trustee, any property or moneys acquired by Graham, or to which he became entitled since the 29th of August, 1868, would, according to Scotch law, be subject to his absolute personal control, free from any claim on behalf of or liability to any of his creditors; nor after the 10th of February, 1869, would Balgarnie or any other person be entitled to prosecute any claim or demand in respect of any property which might have formed part of the bankrupt's estate previously to his discharge. According to Scotch law, the discharge of a bankrupt, even if obtained by fraudulent concealment, would not be absolutely void; and until actually avoided by means of a formal order of the Court, made after the fraud had been duly proved, every such order would be effective and binding. Mr. Gordon was also of opinion that the mere omission to disclose a fact relating to a bankrupt's affairs of no practical importance to the creditors of the bankrupt, and from which they could not derive any benefit, would not render an order of discharge voidable; and, further, that where a trustee under a Scotch sequestration had been discharged from his office after the discharge of the bankrupt, a new trustee would not be appointed unless such appointment appeared likely to be for the benefit of the creditors claiming under the bankruptcy. Evidence was also given as to the knowledge by Mrs. Graham of the proceedings under the Scotch sequestration. Mr. Willcock, Q.C., and Mr. Townsend, for the Plaintiffs. Mr. De Gex, Q.C., and Mr. C. Pontifex, for persons interested in remainder. Mr. Kay, Q.C., and Mr. Bradford, for the Defendant Graham. Mr. Bristowe, Q.C., and Mr. C. C. Barber, for the trustees, who (considering that the primary intention of the testatrix was to benefit her husband) were willing to pay him the annuity if they could safely do so. The arguments, with the additional element of the knowledge by the testatrix, when she made her will, of the Scotch bankruptcy of her husband, which had already happened, were similar to those used on the former occasion. The following authorities were referred to:-Manning v. Chambers (1); Twopeny v. Peyton (2); Seymour v. Lucas (3); Young V.-C. J. 1870 TRAPPES V. MEREDITH. (No. 2.) 08 V.-C. J. 1870 husband v. Gisborne (1); Rochford v. Hackman (2); White v. Chitty (3); Lloyd v. Lloyd (4); Dorsett v. Dorsett (5); Davidson's TRAPPES Conveyancing (6); 19 & 20 Vict. c. 79 (Scotch Bankruptcy), s. 103. V. MEREDITH. (No. 2.), June 27. SIR W. M. JAMES, V.C.: This case was heard before me some time ago, and, as heard upon the materials before me then, is reported (7). On that occasion I came to the conclusion that an English bankruptcy, which had been superseded, did not operate as a forfeiture of the annuity under the peculiar terms by which that annuity was given to the husband by the will of the wife who was the testatrix in the cause. But in the course of the proceedings it came out that there had been a previous Scotch sequestration, and I desired the bill to be amended, and evidence to be gone into so as to shew exactly the state of the Scotch sequestration and the rights under it. It appears that in 1861, that is to say, two years before the will of the testatrix, the husband, H. C. T. Graham, was adjudged a bankrupt in a sequestration according to the Scotch law, the effect of which would be to vest in the trustees any estate whatever which might come to him before he should obtain his full discharge under the sequestration. She The discharge was obtained by Mr. Graham on the 29th of August, 1868, but was not such a discharge as to divest anything that had vested in the assignees, or to revest it in him. The discharge would not have the operation that an annulment of the English adjudication would have. It appears however that the wife, who was living with the husband, was, in fact, a party to the proceedings under which the sequestration was obtained. appears to have furnished the means of obtaining the necessary legal proceedings, and to have actually bought part of the assets under it; so that when she made her will it is impossible to doubt that she was fully and perfectly aware of the existence of that Scotch bankruptcy, and must, I think, be taken to have known the legal effect of it. (1) 1 Coll. 400. (2) 9 Hare, 475. (3) Law Rep. 1 Eq. 372. (4) Law Rep. 2 Eq. 722. (7) Law Rep. 9 Eq. 229. I have now to consider the will with reference to that knowledge which we must impute to the wife; and I am of opinion that when she made this bequest in favour of her husband, with the declaration that if he became bankrupt, or should assign, charge, or incumber, or so on, the annuity should cease as if he were dead, it is impossible to attribute to her the intention that the Scotch sequestration should be a bankruptcy within the meaning of that clause. It would be perfectly idle, it seems to me, to have made these provisions for the husband determinable by an event which she herself knew had occurred already. Then, on the other hand, it seems to me to be equally absurd to suppose that she intended to give this to the assignees under the Scotch bankruptcy. These are two intentions, either of which, as it appears to me, it is too unreasonable to impute to the testatrix. Then we have to consider the will, and to see what provision she has made, whether she has enabled the Court to give any reasonable operation to that provision; and it appears to me that the will does afford sufficient indication of her intention in the clause by which she has provided that it "shall be lawful for her said trustees or trustee, or either of them, if they or he should in their or his absolute discretion think fit, and without assigning any reason for so doing, at any time or times to refuse or discontinue the payment of the annuity to her husband during the whole or any period of his life." It appears to me that that provision exactly meets the case of the Scotch sequestration-that she must be taken to be aware that her husband could take nothing under the will without the assent of the trustees under the Scotch bankruptcy. At the same time she did not mean them to have it, and therefore she has enabled her husband to go to the Scotch trustees and say, "Now you see the position in which I am placed. You cannot take it, the trustees will not pay it to you, and it is not probable that they will pay it to me. If you do not let me have it, it must go over to those in remainder, so you had better come to terms with me." I believe she intended that he should have the means of going and making terms with those Scotch trustees, by which he would be able to resume his right to the personal receipt of the annuity. Therefore, I propose to declare that the Scotch bankruptcy is not a bankruptcy within the meaning of the clause V.-C. J. 1870 w TRAPPES v. MEREDITH. (No. 2.) |