dents have never had any notice that these were accommodation bills; but, on the contrary, all the circumstances that have transpired would lead them to believe it was not an accommodation transaction.

Mr. Steer, for the assignees.

Mr. Swanston, in reply.-There is no objection to having a memorandum upon the proof, that the petitioner is entitled to the future dividends. If the respondents had proved no more than the amount of the bills, there could be no doubt in the case, and what difference can there be on account of their having proved a larger debt? The bills of exchange cannot be considered as a security for more than their amount on the face of them. Then, if they are paid in full, how can it be contended that the debt is not paid, so as to enable the surety to come in and prove as a surety, who has paid a debt? It is well known, that, in practice, before the act of parliament enabled a surety to prove, the mode was to get the money into court by a suit in the Exchequer; and all the act does is to establish a mode of arriving at the equity of the case.

SIR J. CROSS.-After the bankers had received the dividends, the petitioner pays the amount of the bills; and he now says, that he is entitled to stand in the place of the bankers, which is not disputed by the assignees, and that also he has a right to call upon the bankers to refund the amount of the dividends which they have received upon their whole debt. It has been urged, that these were accommodation bills, and we believe that he was a collateral surety for a floating balance: if so, we cannot interfere with what the bankers have received, but we consider the proof should be reduced by the amount of 500l.

SIR G. ROSE.-The equity which has been urged, has not, in any way, been affected by the act; and it is a strong circumstance that there never has been an application of this kind, either before or after, in which the petitioner has sought that a dividend so received should be refunded. What are the circumstances of this case? The petitioner accepts accommodation bills for the general use of the bankrupt, and they are deposited as security; bankruptcy occurs, with the bankers.

holding the bills as a security for the floating balance, upon which the proof is made, deducting the bills as securities deposited in their hands. Suppose these bills had been sold, as they might have been, what claim then would the petitioner have had to be put right by the bankers? I have stated it thus, to set the case in each point of view before you, as there seems some misapprehension as to the extent of our power. What is the right we can work out for him in bankruptcy? All our power is over the assignees as trustees for the creditors; but, has there ever been a case where, for the assignees, we have compelled a third party, a holder of a bill of exchange, to pay back any dividends he may have received after the bill has been paid? if so, then, how can we interfere? Try it in the case of an action upon the merits. How can you enforce your claim? Will not the answer be "No: we will not part with these bills, upon which we have a lien for a balance of 7,000l." If you were to file your bill against the party, and offer to pay the difference, would it be equitable, as between parties equally innocent, to take the securities out of their hand? I would advert to a very material circumstance in Ex parte Rushforth; it was a payment of the whole of the debt, which was 10,000l., due by the surety upon the bond, although the proof was for 20,000l.; it, therefore, differed from this case in the only material point.

Order The petition, as far as it prays against the bankers, to be dismissed with costs. With respect to the part as against the assignees, all parties to have their costs out of the estate. A memorandum to be made upon the proceedings, without disturbing the proof, that, to the extent of the amount claimed, the assignees hold as trustees for the benefit of the petitioner.

rity upon bills at three months, at the rate of 1041. per cent. interest, with an understanding that the bills should be renewed every three months for a period of eighteen months. It appeared also, that the bills were occasionally overdue between the periods of their being renewed; and that interest at 10l. per cent. was calculated and paid upon the bills for such period:-Held, to be usurious, and not protected by the statute.

In July 1834, the bankrupt being in want of money, applied to the petitioner to raise him 1,6007. by way of mortgage. There being some difficulty as to the title, the petitioner agreed to lend him the money on the security of bills, at three months at 10l. per cent. On the 5th of July, the bankrupt received from the petitioner 3007., and on the 9th, the balance of 1,600., minus 42l., three months' interest in advance, and other deductions for law charges, &c. On the 10th of July, the bankrupt accepted in favour of the petitioner a bill of exchange payable at three months for 1,600l.; and it was then arranged that the money should not be called in for eighteen months, and that at the end of every three months, until the expiration of eighteen months, the bankrupt should renew the bills for another three months, paying the petitioner in advance interest at the rate of 104. per cent.; the petitioner effecting, at his own cost, a policy for that amount on the bankrupt's life. The bill of the 10th of July became due on the 10th of October, but it was not presented for payment, and on the 8th of November the bankrupt paid to the petitioner's banker 141. for one month's interest, and 421. for interest in advance upon a renewed bill, drawn for the same amount, and dated the 8th of November. This second note became due the 11th of February 1835, but was not presented for payment. On the 23rd, the petitioner received 71. for fifteen days' interest, and 421. for three months' interest, in advance, and a third acceptance of that date was given by the petitioner, which became due on the 27th of May, when the 421. interest was paid, and the bill renewed. The fourth bill became due on the 27th of August, when 41. 3s. 7d. was paid for three days' interest formerly due, and 427. for the re

newal, being the fifth bill. In March 1836, certain sums were paid by the bankrupt in reduction of the 1,600l., and the petitioner still pressing for money, the bankrupt forwarded to him the title-deeds of an estate in which he was interested in right of his wife, as a security for his debt. On the 4th of May 1837, a fiat issued against Poynter. It was then arranged between the assignees and the petitioner, that this estate, so equitably mortgaged, should be sold, and the proceeds paid to the official assignee, in trust for the parties entitled to the same. The estate was sold for 2621. On the 20th of February 1838, the petitioner applied to the commissioner to be allowed to prove his debt of 1,1377. 1s. 8d., being the balance due upon the last renewal of the bill, when the proof was opposed by the assignees, as a usurious contract. On the 3rd of August, the commissioner admitted his proof for that amount; but the assignees refused to allow him the benefit of the proceeds of the estate, so paid into the hands of the official assignee. The petition prayed that the official assignee might be ordered to pay over to the petitioner the 2621., after payment of costs incidental to sale, &c., and that the petitioner might be at liberty to go in before the commissioner, and prove for the balance which would then remain due to him of the 1,1371. 1s. 8d.

Mr. O. Anderdon, for the petitioner.That there has been no proof of debt, does not place the petitioner in the situation of an appellant against the decision of the commissioner, for he saw no objection to admitting the proof; the application is as equitable mortgagee, to claim a right to the proceeds of the estate sold, and for the usual order to prove for the difference. The first objection is on the ground of usury, which, if tenable, the claim as equitable mortgagee must fail; but for this there can be no pretence, inasmuch as the transaction was a bona fide bill transaction, protected by the statute; and the case of Ex parte Knight re Pownall (1) has settled the point, that the taking of a collateral security besides the bill does not take the bill out of the protection of the

(1) 2 Mont. & Ayr. 568; s. c. 5 Law J. Rep. (N.S.) Bankr. 20.

statute. The bankrupt's wife and another were devisees under a will, and the deeds relating to the property were in the hands of the petitioner as a solicitor; and the bankrupt being desirous of raising money upon them, consulted him; but there appearing a doubt about the right, he agreed to lend him a sum of money upon bills at three months, at 1047. per cent., under an understanding that it should not be called in for eighteen months. But it is not in evidence that this understanding was binding upon Mr. Terrewest; all the other side know of it came out in his own examination: therefore, the petitioner has a right to contend that his debt is free from any taint of usury. As to the deposit, which is also resisted, it is in the judgment of the Court, whether the several conversations, and more particularly the letter of the bankrupt, do not create such a lien as to enable the petitioner to claim the proceeds of the estate, and have a right to an order for proof for the deficiency.

Mr. Swanston and Mr. J. Russell, for the assignees. In the first place, the equitable mortgage has not been shewn at present. From this schedule of the deeds deposited, it will be very difficult to say what property passed. There must be an inquiry on that head. The next point is, has this petitioner any debt at all? Is this such a contract as is protected by the 3 & 4 Will. 4. c. 98, as to bills at three months? The petitioner has been examined before the Court, and admits it was a contract framed to evade the effect of the usury laws; and it is clear, that during the interval of drawing the billssay a period of fourteen days-interest at the rate of 10. per cent. was charged; so that whatever may be the construction of the law as respects the bills of exchange, the time when no bills existed will be sufficient to bring this case within the mischief of the usury laws. In the case of Ex parte Knight re Pownall, although under the 3 & 4 Will. 4. c. 98, which does not in anything essential differ from the present act, this Court held, that a loan on bills of three months, on which more than 51. per cent. interest is taken, is not taken out of the act by the taking of collateral security; his Honour Sir J. Cross, who differed from the rest of the Court, said

"The statute in question does not repeal any of the laws relating to usury; it merely exempts a particular class of bills of exchange from the operation of those laws; and the sole question here is, do the parties bring their case within the statute? The intent of the legislature was, to allow more than 51. per cent. in case of loans on particular bills of exchange only. The words 'interest to be taken thereon' mean on bills alone, and to be 'secured thereby' mean secured by such bills alone, and not by anything else." Now, this is not an application to prove on the bills of exchange alone, but also to prove for the balance of an equitable mortgage, which is, at any rate, quoad the equitable mortgage, usurious.

Mr. Anderdon, in reply.-The Court will not direct an inquiry as to the 831. Then, as to the deposit of part of these deeds, the case of Ex parte Knight re Pownall is in favour of the petitioner. There it was held, that the taking of collateral security did not take the case out of the protection of the statute; and what then is there in this to vary the judgment of the Court? At any rate, the deposit of these deeds can only be looked upon as a subsequent transaction, and not connected with the original loan on the bills of exchange. Nothing can be more clear, than that the legislature had in contemplation such cases where there would be a difficulty in procuring money, when it relaxed the usury laws; and that there was an imminent risk in lending his money, is evidenced by the fact, that a balance of nearly 1,200l. is sought to be proved under the bankrupt's estate. Now, it is a fact that cannot be disputed, that every separate bill was a distinct and separate negotiation under the terms of the act, for Mr. Terrewest was in no way bound, at the expiration of any one of the bills, to have renewed, but might have recovered at any of those periods. If so, then there was a clear negotiation, and a good consideration given to the bankrupt. The effect in the mercantile world would be very embarrassing, if it were supposed that a bill at three months could not be renewed, which would be the case if such a construction as that contended for by the assignees were adopted by this Court. What can be more common, than for persons in all good faith to say, if you are not

able, at the end of three months, to take up this bill, I will permit you to renew? Surely the charging of a larger rate of interest than 57. per cent. under such circumstances is not unreasonable, but what the legislature intended to permit.

Cur. adv. vult.

April 27.-SIR J. CROSS.-In this case, the petitioner claims a debt of 1,1377., the residue of a loan of 1,600l., secured by a bill of exchange; and the question is, whether the contract was usurious. The circumstances of the case, as stated by the petitioner, are as follows:-The bankrupt, about two years before his failure, had occasion to borrow a sum of 1,600l. on a mortgage of an estate, which he intended, at a convenient opportunity, to sell. He applied to Mr. Terrewest, a solicitor, to procure the loan. Some impediment arose about the title, and the solicitor then offered to advance the money himself, on a bill of exchange, payable three months. after date, and renewable from time to time, at the option of the borrower, for a period not exceeding eighteen months, the bankrupt agreeing verbally to pay interest at the rate of 104. per cent. per annum until the estate should be sold. The petitioner further states, that the money was to be lent on such renewable bills, in order to bring the matter within the new act of parliament-meaning the 3 & 4 Will. 4. c. 98. s. 7-which authorizes any rate of interest to be paid on money advanced upon bills or notes payable within three months. The money was accordingly advanced to the bankrupt on the 9th of July 1835. He thereupon gave the first bill of exchange, payable three months after date, and returned the lender 421., the amount of the stipulated interest for three months. That bill was not presented for payment, and was not renewed till about three weeks afterwards. It was renewed for the next three months on the payment of the same rate of interest for that period, and a like rate for the interval of three weeks; and in this way four successive renewals were made, and each time a similar payment; and it is on the fifth bill the present claim is made, for a balance of principal and interest, the rest having been paid off. There are two obNEW SERIES, VIII.-BANKR.

jections to this claim-first, that the transaction is not in conformity with the act of parliament; and secondly, that if it were, the form was merely colourable; and we are of opinion these objections are well founded. The act appears to be applicable only to bills and notes existing at the time the contract is made for discounting, negotiating, and transferring the same, and to loans specifically made thereon; but no money was advanced on this fifth bill; it was drawn, and interest at the rate of 104. per cent. was paid, in consideration of the forbearance of a pre-existing debt-a case which, if real, does not seem to come within the intention of the act; for if so, it would be applicable to all simple contract debts, and in effect repeal all the laws made for the prevention of usury in such contracts. But be that as it may, we are of opinion, that in fact the loan was advanced, and the interest paid, upon one entire continuous contract; and that the fabrication of a series of bills, renewable every three months, instead of a single bill for a longer or an indefinite time, was merely a shift and colourable contrivance to evade the usury laws, which no court of law or equity can sanction (2).

The petitioner's claim must therefore be rejected as regards the debt upon the bill, and consequently as regards the real security subsequently given; and the petition must be dismissed, with costs. SIR G. ROSE concurred.

The fiat issued against the petitioner, who was a grocer, on the 26th of February, and he was found a bankrupt on the 4th of March; but there being reason to apprehend that he intended to abscond to America, the commissioners issued a summons for him to appear before them, upon which the messenger arrested him, and took him before the commissioners upon the 11th of March, when he was examined, and, among others, the following questions were put to him.

Q. You having five months ago taken away 1,500l., and now accounting only for 600l., how do you account for the rest?

A. I can give no account.

The commissioners committed him for an unsatisfactory answer.

Mr. Bethell, for the petitioner, argued, that, in the first instance, the messenger had no right to take the petitioner without a warrant; that the arrest was clearly illegal; and, consequently, the petitioner was entitled to his immediate discharge.

Mr. Swanston, contrà, for the petitioning creditor, objected, that the present proceeding ought to have been by habeas corpus, and not by petition.

SIR G. ROSE.-I do not recede from what I am reported to have said in Ex parte Jones (1). There is nothing to preclude a person in custody, under commitment by the commissioners, from petitioning this Court; and the Court will, in favour of the liberty of the subject, do all in its power, by compelling the assignees to call meetings, and by intimating its opinion to the commissioners, which is always respectfully attended to, do as much as if the party had been at the greater expense of a habeas corpus. This, therefore, is no preliminary objection. If the bankrupt had remained in the illegal custody of the messenger, the Court would have interposed its authority; but, as it stands, the illegal act of the messenger has nothing to do with it. The bankrupt, no matter how, was before the commissioners, and they considered his answers not satisfactory. The illegality of the messenger's arrest might entitle him to indulgence, as explaining his em

(1) 4 Dea. & Chit. 536; s. c. 4 Law J. Rep. (N.S.) Bankr. 9.

barrassment; but being before them, he was clearly amenable to their right to examine him, and to the consequences of his not answering to their satisfaction; and that, upon a petition here, is the only question. The order asked is, either for his discharge from the custody of the gaoler-and then, what authority have we over the gaoler?— or an order that the commissioners do discharge him; and then, I would ask, what jurisdiction have we over the commissioners in that matter? Lord Eldon had long settled the practice, that he would not interfere except upon habeas corpus. I am willing, however, to go as far as I can go, and have no hesitation in saying, that I do not think the examination has gone far enough. He ought to be brought up before the commissioners for further examination, when he will have an opportunity of explaining.

SIR J. CROSS.-This petition prays an absolute discharge. I confess, I felt no doubt respecting the jurisdiction of the Court, when I first heard this case; but having heard the opinion of my learned colleague, I feel it right to take time to consider. The prayer for the absolute discharge of the petitioner cannot be granted, unless we had the gaoler before us; but I see nothing to preclude our making an order on the commissioners, which appears to me within the powers given to this Court by the 2nd section of the act, which gives this Court superintendence and controul in all matters in bankruptcy. In Jones's case, the Court agreed, that the party was not entitled to his discharge on the merits. It is urged, that a commitment, like a certificate, is purely within the discretion of the commissioner; I think there is a great difference. The Court cannot order the commissioners to be satisfied with a certificate if they are not; but we can order a discharge from their commit