Subsequent creditors may come in. Voluntary settlement may be set aside, settlor about to engage in hazardous business. Settlement where life income made if on bankruptcy lent. good on that account against creditors under the Act 13 Eliz. c. 5(c). If a deed is set aside as being void against creditors under the statute, the property comprised in it becomes assets for the payment of debts generally, so that subsequent creditors are entitled to participate in it (d). A voluntary settlement may be set aside, although the settlor's assets, irrespective of what is included therein, may be sufficient to pay his debts at the date of the deed, if the settlor contemplated a state of things which might not improbably result in bankruptcy or insolvency, as if he were engaged or engaging in a hazardous or untried business, or was incurring heavy liabilities (e); and a voluntary deed may be set aside at the suit of a subsequent creditor, although there may be no creditor whose debt was in existence at the date of the settlement (ƒ). A voluntary settlement by a person not then engaged in trade, and who owed no debts, by which money was determinable settled in trust to pay the income to the husband for held fraudu- life or until bankruptcy, &c., with remainder to his wife for life, for her separate use, with remainder to the children, and an ultimate remainder to the settlor, was held fraudulent and void against creditors, the settlor having many years after the settlement engaged in trade and become bankrupt (g). Provisions of A settlement which is in form voluntary may be proved by extrinsic evidence to have been made for a valuable consideration (h), and an instrument voluntary in its inception may by ex post facto matter cease to be voluntary in the hands of those who have given value on the faith of it, or if it has formed part of the inducement to a marriage (i). The rule by which voluntary settlements are void (c) Ridler v. Ridler, 22 Ch. D. 74. (d) Richardson v. Smallwood, Jac. 552. (e) Crossley v. Elworthy, L. R. 12 Eq. 158; Mackay v. Douglas, L. R. 14 Eq. 106; Ex parte Russell, 19 Ch. D. 588. (f) Mackay v. Douglas, ubi supra; Taylor v. Coenen, 1 Ch. D. 636. (g) Re Pearson, 3 Ch. D. 807. (h) Pott v. Todhunter, 2 Coll. 76. (i) George v. Milbanke, 9 Ves. 193; Payne v. Mortimer, 1 Giff. 118. to voluntary against creditors is extended by the Bankruptcy Act, Act, 1883, as 1883 (j), which provides that any settlement of pro- deeds. perty not being a settlement made before and in consideration of marriage, or in favour of a purchaser or incumbrancer in good faith, and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years from the date of the settlement, be void as against the trustee of the bankrupt, and shall, if he becomes bankrupt at any subsequent time within ten years after the date of the settlement, be void against the trustee, unless the parties claiming under it can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor in such property had passed to the trustees of the settlement on the execution thereof; and the Act also provides that any covenant or contract made in consideration of marriage for the future settlement on or for the settlor's wife or children of any money or property wherein he had not at the date of the marriage any estate or interest, whether vested or contingent, in possession or remainder, and not being money or property of or in right of his wife, shall, upon his becoming bankrupt before the property or money has been actually transferred or paid pursuant to the contract or covenant, be void against the trustee in bankruptcy. It has been held with reference to a clause to the above effect in the repealed Act of 1869, that the enactment applied to settlements executed before as well as after the Act came into operation (k), but that it did not apply to a covenant for payment of a sum of money not specifically ear-marked; and where a person covenanted on his marriage to pay a sum of £6,000 to the trustees, and became a bankrupt within (j) 46 & 47 Vict. c. 52, s. 47. (k) Ex parte Dawson, L. R. 19 Eq. 433. Voluntary covenants and settlor if com otherwise. two years, his trustees were allowed to prove against his estate under the covenant (1). (3) A voluntary disposition of property is valid settlements are against the settlor, but the disposition must be combinding on the plete, i.e., the settlor must have done everything which plete, but not according to the nature of the property is necessary to be done on his part. Thus, if the legal owner of Consols, standing in his own name(m), or of Bank shares transferable only by entry in the bank books (n), purports to assign such Consols or shares by deed, or if a person possessed of leasehold property purports to assign it by a writing not under seal (o), or if the owner of shares in a colliery signs an entry in the partnership books, to the effect that he agrees to transfer such shares, which entry is not sufficient to pass them according to the partnership articles (p), or if the owner of railway stock hands over the certificate of such stock, saying, "These are yours," or using words to that effect (g), in each of these cases the intended gift, if in favour of a volunteer, is inoperative. On the other hand, a voluntary assignment by deed of a chose in action not assignable at law (r), or of a reversionary interest in stock standing in the name of a trustee (s), will be sustained, on the ground that the assignor has done all that he can, having regard to the nature of the property, to divest himself of his interest; nor is it necessary that notice of the assignment shall have been given to the debtor or the trustee, the giving of such notice being an act within the province of the assignee rather than the assignor. Voluntary declaration of A voluntary agreement, whether by deed or writing, trust good, but to make a disposition of property in favour of another cannot be enforced, but a voluntary declaration of trust, being a complete transaction, is valid (t), and instruments void as incomplete (1) Ex parte Bishop, L. R. 8 Ch. 718. (m) Bridge v. Bridge, 16 Beav. 315; Beach v. Keep, 18 Beav. 285. (n) Milroy v. Lord, 4 D. F. & J. 264. (o) Richards v. Delbridge, L. R. 18 Eq. 11. (p) Heartley v. Nicholson, L. R. 19 Eq. 233. (9) Moore v. Moore, L. R. 18 Eq. 474. (r) Fortescue v. Barnett, 3 M. & K. 36. (8) Kekewich v. Manning, 1 De G. M. & G. 176. (t) Pulvertoft v. Pulvertoft, 18 Ves. 99; Jefferys v. Jefferys, 1 Cr. not good as such declaration may, as regards property other than assignments lands, tenements, or hereditaments (u), be either in declarations of writing or by parol (x). In some cases it has been trust. sought to sustain as valid declarations of trust, instruments purporting to be assignments, but which are incomplete as such. The principle applicable to such cases has been thus laid down by Turner, V.-C., in Milroy v. Lord (y). "If the settlement is intended to be effectuated by one of the modes to which I have referred (viz., transfer and declaration of trust), the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust" (2). In accordance with this principle, an imperfect assignment of furniture by a husband to his wife by letters was held void in a recent case (a). be shown, in settlor. In order to support a voluntary deed against the What must settlor, the parties claiming under it must be able to order to supshow that he understood what he was doing, and this tary deed as is particularly the case if the settlor was young or against otherwise inexperienced in business at the time when he made the settlement, or if the deed contains unusual provisions (b). It has been sometimes supposed to be Whether a the duty of the solicitor who prepares a voluntary deed cation should to advise the insertion of a power of revocation in all be inserted. cases, and that the want of such a power, unless by & P. 138; Meek v. Kettlewell, 1 Ph. 342. (u) A declaration of trust of lands, tenements, or hereditaments must be in writing: 29 Car. 2, c. 3, s. 7. (x) Ex parte Pye, 18 Ves. 150. (y) 4 De G. F. & J. 274. (z) See also Warriner v. Rogers, L. R. 16 Eq. 340; Richards v. Delbridge, 18 Eq. 11; Moore v. Moore, ib. 474. The cases of Airey v. Hall, 2 Sm. & Gif. 315; Richardson v. Richardson, L. R. 3 Eq. 686; Morgan. Malleson, ib. 10 Eq. 475, must be considered as overruled. (a) Re Breton's Estate, 17 Ch. D. 416. In this case Hall, V.-C., com- (b) Cooke v. Lamotte, 15 Beav. power of revo Voluntary assignment to trustees for benefit of creditors revocable, unless communicated to, and acted on by creditors. the express direction of the solicitor, invalidates the deed (c). But there is no such general rule. It depends on the circumstances, whether such a power should be recommended or not; in many cases it would be proper, while in others it would defeat the very object for which the deed is executed (d). All that the Court has to be satisfied of is that the settlement, whether it contains a power of revocation or not, is the free determined act of the party making it, and the absence of advice as to the insertion of a power of revocation is a circumstance, and a circumstance merely, to be weighed in connection with the other circumstances of the case (e); and in a late case it was said that, if a person of full age and sound mind executes a voluntary settlement, he cannot have the deed set aside without giving some substantial reason why the transaction should not stand, and the fact that the deed contains no power of revocation will not throw upon the grantee the onus of supporting it (f). In a case where a young man made a voluntary settlement in favour of himself, his wife, and children, with an ultimate trust in default of issue for his next of kin, the Court upheld the settlement on the whole, but directed that it should be rectified by giving to the settlor a general power of appointment in default of issue (g). A voluntary assignment of property to trustees in trust for the benefit of creditors who do not execute and are not privy to the deed, operates merely as a power or mandate to the trustees, which may be revoked by the debtor at any time (h). But if the disposition is communicated to creditors who, on the faith of it, forbear to sue the debtor, the (c) Coutts v. Acworth, L. R. 8 (d) Prideaux v. Lonsdale, 1 D. (e) Per Turner, L. J., in Toker v. Toker, 3 D. J. & S. 491. (f) Henry v. Armstrong, 18 Ch. D. 668. (g) James v. Couchman, 29 C. D. 212. (h) Garrard v. Lord Lauderdale, 2 R. & M. 451; Acton v. Woodgate, 2 M. & K. 492. |