and the said George Freeman should severally make good to the said chief registrar all default and defaults in such payments as last aforesaid, to the several amounts for which they had agreed to become such sureties as aforesaid, then the said obligation was to be void. And it was declared to be the true intent and meaning of the said obligation, that no execution should be taken out or levied against or upon the said Plaintiff and the said George Freeman, or either of them, or their or any of their goods, lands or chattels respectively, for any larger sum or sums than those for which they had agreed to become sureties respectively as aforesaid, in respect of any such default or defaults of the said George William Freeman as aforesaid, or of any damages assessed thereon by virtue of the said obligation over and above the costs of any suit or suits against them or either of them in respect of the same; and that the said Plaintiff and the said George Freeman should respectively be liable to contribute towards the payment of such default, damages and costs, to the amount of and in the proportions aforesaid, and no further.

The Defendant, Jane Edwards Lawes, was the executrix of the surviving obligee of the bond.

[282] George William Freeman continued to act as such official assignee until March 1853, when he died; and George Young was appointed his successor.

In the month of May 1853 the said George Young, as such official assignee, filed a bill against the executors of the late George William Freeman and others as Defendants, stating, amongst other things, that the said George Young, having investigated the accounts of the said George William Freeman in respect of the several bankruptcies under which he had acted as official assignee, and of which the said George Young was then the official assignee, had discovered that the said George William Freeman was a defaulter, in his official capacity, to a very large amount; and that there was due from him, in respect of one of the said estates, namely, the estate of Messrs. Parker, Shore & Co., bankrupts, the principal sum of £7000, or thereabouts; and praying, amongst other things, that it might be declared that the said George Young, as such official assignee as aforesaid, was entitled to certain sums of £715, 19s. 6d. and £3877, 5s. 3d., which were standing to his account at the Leeds branch of the Bank of England, and in the Sheffield bank respectively; and also to £319, 17s. 1d. which was found in a cash-box at his office; and all of which said sums were stated by the said bill to be official moneys in the hands of the said George William Freeman at the time of his death.

In the month of May 1853 the said George Young moved for the payment into Court of the said sums of £3877, 5s. 3d. and £319, 17s. 1d. in his said bill mentioned. And in opposition to such motion the executors of the said George William Freeman filed their joint and several affidavit, and thereby stated various matters as evidence that the said account of the said George William Freeman with the said Sheffield bank was not an official account, but was the private account of the said George William [283] Freeman, and was so treated by the said banking company, and was by them closed after the death of the said George William Freeman, and a fresh account was then opened with his said executors, and the said balance of the said George William Freeman's account was thereupon placed by the said banking company to the credit of his executors; and that such account was not kept in compliance with any law or order in bankruptcy; and that the said sum of money in the said cashbox was not wholly made up of money received by the said George William Freeman in his official character, but that the said George William Freeman had also used the said cash-box for his private purposes; and that the debt due upon the said bond was the only specialty debt owing by the said George William Freeman at the time of his death.

Upon the motion coming on to be heard on the 9th of May 1853 an order was made by consent for the payment into Court of the said two sums of £3877, 5s. 3d. and £319, 9s. 1d. This suit was still pending.

Previously to the institution of the suit of Young v. Freeman, a creditors' suit of Beardshaw v. Freeman had been commenced; and in May 1853 the usual decree was made in this suit, and the usual notices were afterwards advertised; but no proof was made under that decree in respect of the bond debt.

The Defendant, Jane Edwards Lawes, as the executrix of the surviving obligee of

the bond, at the instance of the Leeds District Court of Bankruptcy and the creditors' assignees of Messrs. Parker, Shore & Co., and being indemnified by them, put the bond in suit against both the sureties, in two several actions.

George Robert Dawson thereupon filed the bill in this suit against the said Jane Edwards Lawes, stating the above-mentioned facts; and that the original obligees of the bond had been, and the Defendant was now, a [284] trustee of the said bond for the said Court of Bankruptcy, and the several creditors of the bankrupts in whose several bankruptcies the said George William Freeman acted as official assignee, or their respective assignees; and that, since the death of the said George William Freeman, it had been alleged, on the part of the said Leeds District Court of Bankruptcy, and on the part of the creditors' assignees and creditors under the bankruptcy of Messrs. Parker, Shore & Co., and on the part of the creditors' assignees and creditors of some of the other bankruptcies under which the said George William Freeman acted as such official assignee as aforesaid, that the said George William Freeman had violated his duties as official assignee, by applying to his own use numerous sums of money to a large amount, part of the estates of the bankrupts under whose bankruptcies he was appointed to act as official assignee; and that there was due from him, in respect of such misapplication, a sum of £12,000 or thereabouts, and that it had been alleged that the condition of the said bond had consequently been broken, and that the said sum of £6000 had consequently become due to the Defendant as such legal personal representative of the surviving obligee as aforesaid; and that until after the death of the said George William Freeman the Plaintiff was wholly ignorant that the said George William Freeman had not strictly and faithfully performed his duties as such official assignee as aforesaid. But that, in consequence of such demand, the Plaintiff had caused inquiries to be made, and he had since ascertained for the first time, and the fact was, that not only was not strict attention, pursuant to the rules and regulations in bankruptcy in that behalf, paid by the proper authorities in the said Leeds District Court of Bankruptcy, and by the creditors' assignees and creditors in the several bankruptcies under which the said George William Freeman acted as such official assignee as aforesaid, to the accounts of the said George William Freeman as official assignee, and his administration of the [285] estates for which he was appointed to act as official assignee; but that the investigation, which in the ordinary and regular course of business ought to have been had of the said George William Freeman's accounts, and his administration of the said bankrupts' estates, was neglected. The bill then stated or referred to certain provisions of the statutes, rules and regulations in bankruptcy, which were in force when the bond was executed by the Plaintiff, and which have in substance continued in force up to the present time. The principal provisions which it became necessary to rely upon in this case were, in effect, as follows:-That every official assignee should keep full and accurate books of account of the estates and effects of each bankrupt of whose estate he was appointed an assignee; and, further, should direct, in a specified form, the payment of all money due to any bankrupt's estate from any one person or from two or more persons being partners, and carrying on business or residing in England, and exceeding in amount the sum of £500, and all moneys being in the hands or under the control of any assignee or assignees chosen by the creditors of any bankrupt's estate, to which such official assignee should have been appointed, into the Bank of England, to the credit of the accountant in bankruptcy, and for the particular estate to which such money should belong; and that, to the party making such payment, a receipt should be given by one of the cashiers of the said bank, in a certain specified form; and that a voucher for such payment should, on the same day, be sent to the said accountant; and, further, that no official assignee should keep under his control, upon any estate, more than £100, or, in the aggregate of moneys of bankrupts' estates, more than £1000; and that any excess beyond such sum should be paid by him forthwith into the Bank of England. And, further, that all moneys, without exception, received by the official assignee, and not paid [286] by him forthwith into the Bank of England, to the credit of the accountant in bankruptcy, should be paid by the official assignee, as soon as they should amount to £100, into the hands of a banker with whom such official assignee should keep an account as such official assignee, such account to be intitled as official assignee, and in which account no moneys should be entered except

such as were received by the official assignee in his official capacity; and that the official assignee should, before any audit, enter in one of the books to be kept by him, called the debtor and property book, the names of all the debtors to the bankrupt's estate as returned in his balance-sheet, and should state the reasons why debts were not paid on the opposite page, such book to be produced to the Court at every audit. Rule 16 was as follows:-"The audit account of the official assignee or creditors' assignees shall be made out in the ordinary form of a debtor and creditor account, each item thereof being entered according to its date, and a name, date and proper explanation given to such item, and that a duplicate of such account shall be sent by the official assignee to the solicitor two days at least prior to the day appointed for auditing such account, subject to the power of the commissioner to require an account, digested under proper heads, to be annexed to the audit account, if he shall think proper." Rule 17. "At every audit the debtor and property book of the official assignee shall be carefully examined and compared with the debts and property collected, as stated in the audit paper; and the cause of any moneys remaining uncollected shall be ascertained, and a minute thereof made and filed with the proceedings; and all persons appearing to be indebted to the bankrupt's estate shall be forthwith summoned and examined in that behalf upon oath, and the examination so taken shall be filed with the proceedings, and such directions shall be given by this Court as to any further proceedings thereon as to the Court shall [287] seem fit." And, further, it was provided that the official assignee should, once in every quarter of a year, deliver to the Court to which he should be attached an account, made up to the last day of the preceding month, together with his cash-book and banker's passbook duly balanced, and any other books that the commissioner might require; and such account should shew the balances placed to the credit of the accountant in bankruptcy, and of every estate under the charge of such official assignee, in the books kept in the office of the accountant in bankruptcy, such balances to be certified by the said accountant; and such account should also shew the balances of every bankrupt's estate then in the hands or under the power or control of the official assignee. And, further, that such quarterly accounts should be kept by the registrar of the Court to which such official assignee should be attached, and should be open to the inspection of creditors; and that notice should be given in each Court of such account having been delivered, and that any creditor applying to the Court might inspect the same without fee, at such convenient time as might be appointed by the Court. And, further, that if any assignee should retain in his hands or employ for his own benefit, or knowingly permit any co-assignee so to retain or employ, any sum, to the amount of more than £100, part of the estate of the bankrupt, or should neglect to invest any money in the purchase of Exchequer bills when directed by the Court, every such assignee should be liable to be charged in account with certain large sums of money by way of penalty; and the Court was required to charge every such assignee in his account accordingly; and, subject to the aforesaid provisions, it was provided that the official assignee should follow the directions of the commissioner under whom he should act.

The bill in this suit then alleged that it was the duty [288] of the commissioner and creditors' assignees and creditors to exercise a constant supervision over the official assignee, and to see that he observed the said rules; and that they had respectively access to all his books and accounts; but that the Plaintiff had not such access, nor had he any means of discovering or preventing the defaults of the said G. W. Freeman, or of compelling him to obey the said rules, save only by the information of the commissioner or creditors' assignees, or creditors, or some of them. The bill averred that, by the exercise of reasonable care and diligence under the said rules on the part of the said commissioner or creditors' assignees or creditors, the whole of the defaults of the official assignee would have been prevented, and that such defaults were owing entirely to the want of such care and diligence, and to the wilful neglect of the said commissioner and creditors' assignees and creditors. The bill stated that, when the Plaintiff was asked to become a surety, he hesitated, because of the amount of the penalty, and made inquiries concerning the actual responsibility which he would incur; and he was assured by the said E. H. V. Lawes, then chief registrar, that, owing to the aforesaid rules and the powers of control over the said G. W. Freeman,

which would be possessed and exercised thereunder by the said commissioner and creditors' assignees and creditors respectively, G. W. Freeman could not have in his hands at one time or be in default to a greater amount than £1000, and that the Plaintiff's utmost risk as surety would therefore be only £500. The bill alleged that the Plaintiff became surety upon the faith of this representation, and trusting to the proper examination and vouching of the accounts and books of G. W. Freeman by the said commissioner, and also by the said creditors' assignees and creditors; and that, if the Plaintiff had anticipated the neglect which had occurred on their parts, he would not have consented to become such surety.

[289] The bill then alleged that the said commissioner and creditors' assignees and creditors had not exercised due or any vigilance as regarded G. W. Freeman and his accounts, and, in particular, that he was permitted to keep more than £100 of each of several bankrupts' estates, and to receive into his own hands more than £500 at one time belonging to each of such estates, and to keep more than £1000 in the whole of official moneys under his control for a long time, and all this with the knowledge of the said commissioner, creditors' assignees and creditors; and that by such dealings the losses which had occurred were, in fact, occasioned. And the bill alleged that G. W. Freeman was also permitted to receive large sums from some bankrupts' estates at stated periods, with the like knowledge of the said parties; and that, notwithstanding such knowledge, in many cases no audit, examination or inquiry into his accounts was held; and that he was permitted to deliver inaccurate quarterly accounts, and the same were not duly examined by the said parties, nor compared with the cash-books, banker's pass-book, ledger or any of his books, or duly vouched; and that upon the face of the books and accounts of the said G. W. Freeman it was apparent that he had neglected the said rules, and had applied moneys belonging to bankrupts' estates to his own use; and that this would have been discovered by even a very slight inspection and comparison of the said books and accounts, and thereby the whole or the greater part of such defaults would have been prevented.

The bill prayed that it might be declared by the decree of the Court that, under the circumstances aforesaid, the Plaintiff was absolutely discharged from all liability upon the said bond; and that the Defendant and all future obligees of the said bond for the time being, her and their attorneys and agents, might be restrained by the perpetual injunction of the Court from continuing or any further [290] prosecuting the said action at law so commenced against the Plaintiff as aforesaid, and from commencing or prosecuting any other proceedings at law or otherwise against the Plaintiff or his representatives for the time being upon the said bond, and for further relief.

This was a motion for an injunction in the terms of the prayer. The Plaintiff made an affidavit, supporting the statements in the bill.

Several affidavits were filed on the part of the Defendant, from which it appeared that the successor of G. W. Freeman, in his office of official assignee, had, since the death of G. W. Freeman, partly by himself and partly by a clerk of G. W. Freeman, and by his own clerks, made a minute investigation of the books and accounts of the said G. W. Freeman, and had discovered that his deficiencies amounted to £11,400 at the least. It was also stated that the whole of these deficiencies had arisen between the latter part of 1850 and the death of G. W. Freeman; and that a sum of more than £8000, part of them, was due to the estate of the bankrupt firm of the said Messrs. Parker, Shore & Co., and the rest to several other estates not particularly specified. It also appeared that upwards of £7000 was due from G. W. Freeman on the 31st of December 1852, the day up to which his last quarterly account was made up; and more than £4000 was received by G. W. Freeman after that date, £2000 of it from the estate of the said bankrupt firm, and the remainder from several other estates; the whole of which £4000 was unpaid, and the greater portion was not entered by him in his cash-book or ledger, as it was his duty to do. And it was alleged that the deficiency prior to the last quarterly account arose from such neglect so to enter his receipts on the part of G. W. Freeman, and from his neglect duly to apply the moneys which he had received.

[291] The affidavit of the successor of G. W. Freeman stated that it was not possible for anyone, however well-skilled in accounts, to discover from the examination of the quarterly accounts of an official assignee, or from a comparison of such

accounts with his cash-book, ledger and banker's pass-book, that he had received sums which he had not duly entered; and that the commissioner had not and could not have such a knowledge of the accounts of a bankrupt's estate, and of the dealings of the official assignee therewith, as to enable him to form any opinion whether or no all sums received by him had been duly accounted for; and that the examination by the commissioner of the accounts of the official assignee, as prescribed by the rules in bankruptcy and instituted by the commissioner, was an efficient check only on the assumption that such accounts were honestly kept.

It was also sworn that G. W. Freeman delivered his quarterly accounts in due course, and that the same were examined by the commissioner, and compared with the cash-book, ledger and banker's pass-book; and that, upon the face of these particular books and accounts, no irregularity was observable; but that G. W. Freeman received various sums of money which he did not enter, as he should have done, in these books and accounts, but applied them to his own purposes.

It appeared also that the last audit of the accounts of G. W. Freeman, in respect of the aforesaid bankrupt firm, was held in September 1850; and that any further audit was delayed until the assets in hand should amount to £19,000, which was the sum requisite to pay a dividend of 1s. in the pound in that bankruptcy; and that the creditors' assignees in that bankruptcy inquired of the said G. W. Freeman himself respecting his receipts on account of the said estate and the application thereof; to which [292] inquiries he answered that he had paid all the moneys received into the Bank of England to the credit of the accountant in bankruptcy. It was denied that creditors' assignees or creditors had any right or duty to inspect the official assignee's books and accounts, except the debtor and property book, the quarterly accounts and the audit accounts; and, generally, any negligence on the part of the commissioner, creditors' assignees or creditors was denied.

No affidavits were filed on the part of the Plaintiff in reply, except a short affidavit by his solicitor, to explain the apparent delay in commencing the suit.

Previously to the opening of the motion the Defendant's counsel offered to stay proceedings in the action, if the Plaintiff would pay £3000 into Court in this suit; but this offer was not acceded to.

Mr. Daniel, Q.C., and Mr. E. E. Kay, for the motion. In a commercial country, under a system of bankruptcy carefully elaborated, it would be expected, à priori, that the most responsible officer, who was entrusted with the collection of bankrupt's estates, amounting often to a very large value, should be placed under strict control, and subject to a series of checks which it would be difficult for the utmost ingenuity to evade. The system of supervision afforded by the statutes and rules in bankruptcy is of that nature: First, the bankrupt himself makes out his balance-sheet, shewing all the property to which he is entitled in any manner whatsoever; and to the truth of this account he pledges his oath; and he is subject to the heaviest penalties if it should be untrue, which in practice, therefore, seldom happens. From this account the official assignee [293] is compelled to make for every bankrupt's estate a debtor and property book, which must contain a statement of all the bankrupt's property, and in whose hands the same is, how much has been paid over to the official assignee, and when and what sums remain to be paid, and why. To make it impossible to falsify this book as to any sum which appears to be outstanding, the commissioner is under the obligation (rule 17) to summon the debtors to the estate, and examine them upon oath at every audit. Then from this debtor and property book, which must be produced at the audit, the audit account is made out, which shews the same things, and also the application by the official assignee of the moneys which he has received; and it is not denied that these accounts were correct in this case. These are the basis of all the other books and accounts. Now, by another rule, the commissioner has the power of calling for all the books of account of the official assignee, and comparing the quarterly accounts with them; and this power must impose upon him an obligation to do so, because it is obvious that otherwise the quarterly accounts could not be properly vouched; for comparing them only with the cash-book, ledger and pass-book would be comparing accounts over which the official assignee has full control with books in the same position, and of course the official assignee would take care to make these books and accounts consistent. But if these quarterly accounts