1833. Ex parte and the proof was allowed. In that case part of the proceeds were actually paid into the firm. If (as it must be admitted it was) at first fraudulent, the question is, In the matter what subsequent acts will in law be considered as an MACKENZIE acquiescence? In Sikes' case the dividends were paid and another. and entered from time to time, and the principal pre of sumed to be returned. The payments to the wife, from motives of kindness, on account of her destitute situation, cannot be termed approbation of the fraud. The CHIEF JUDGE:-No difference of opinion exists as to the law. It is admitted that no proof can in this case be made, unless the amount were fraudulently abstracted. The question is, whether, if the fraud be proved, subsequent conduct will divest the transaction of its fraudulent character. I am not satisfied that the original transaction amounted to a fraud. It is stated that the entries were not regularly made by Mackenzie when he appropriated the bills. It is true that Abbott discovered the bills had been taken before any entry was made, but it is not necessarily to be inferred that they were taken in fraud; for as soon as he is asked he admits having taken the bills, and they are entered in the books; and although Abbott did not immediately know when they were taken, yet it was known to the clerk, whose duty it was to keep the books; so that Abbott had the opportunity of immediate knowledge. In ex parte Smith (a) it was held that the withdrawing money was not a fraud entitling the joint estate to prove, as the transaction was duly and openly entered in the books, by which there was no concealment, the partner having the opportunity of knowing. (a) 1 G. & J. 74. If, however, I were satisfied of the fraud in the first instance, I am of opinion that the subsequent conduct would have waived it, and that Abbott has approved, not morally, but legally approved the withdrawal of the bills; that he has, by his conduct before the bankruptcy, waived the tortuous act so as to reduce it to an item in the partnership account. It does not appear that any directions were given by Abbott not so to treat it. The debt, therefore, is not proveable, and the proof must be expunged. Sir John Cross:-The first question is, whether the original abstraction was fraudulent? for it is admitted, that, unless it were, the proof cannot stand. What are the facts? Some twenty years ago, a fraud was, it is said, committed upon the partnership. To support a case of fraud, strict evidence is required, and here, the party being abroad, the Court is asked, after this lapse of time, to convict him of the fraud in his absence. It appears that he was entitled, at the time of the alleged fraud, to draw out 1,200l., but he drew out 2,700, which, it is said, being more than by agreement he was entitled to draw, is a fraud. I concur with his Honor, that the proof ought to be expunged. Sir George Rose: - Upon the principles in equity as to fraud there exists no difference, and this question of fraud only arises in bankruptcy. It has been found to be most convenient to adopt the rule in bankruptcy, that one partner shall not prove against another in competition with their joint creditors, except in cases of fraud; but, looking at the state of the facts at the time of the bankruptcy, and looking at the books, I think there was nothing more than contract, and that the proof must be expunged. 1833. Ex parte In the matter MACKENZIE and another. Ordered. Each party to have their costs out of their respective estates, but the assignees to have their costs out of the general estate, as they must at all events be covered. C. R. June 2, July 18, 1832. Statute of limitations not a bar in cases of fraud. Ex parte BOLTON.-In the matter of BAILLIE and JAFFRAY. A COMMISSION issued in October 1806, against In November 1806, J. Parker proved for 1,5147. 78. upon a Bill accepted by the bankrupts, drawn by McKenzie and Co. in Spain. The bill did not become due till the 21st October 1807, when it was dishonoured, and on the 22d, Cox, under protest, took it up for the honour of one of the drawers who resided in Spain; and a receipt for the amount, signed by the agent of J. Parker, was now produced in court by the assignees. On the 2d of June 1807 a dividend of Is. 3d. in the pound was declared; and the assignees, not being aware that the bill had been paid, included the debt proved by J. Parker in the first and in every subsequent order of dividend. For the first dividend, amounting to 947. 12s. 11d., neither Parker in his lifetime, nor his personal representatives, ever applied. Before a second dividend was declared, viz. in the end of 1807, Parker died, leaving his son, since deceased, and Greenwood, executors. Until after the death of the son, Greenwood did not act as executor, but, soon after his death, he received a letter from the solicitor of the assignees directed to the son, apprizing J. Parker that he might receive a dividend on the proof, which was the first inti 1832. Ex parte BOLTON of mation Greenwood had of Parker having proved. Since the first order of dividend, six several dividends were, between 1811 and 1828, declared, and were respectively received by Greenwood. The assignees did not, at the In the matter time of any of the payments, require the production of the bill; and it was not, till within six months of the petition being presented, that they discovered it had been paid to Parker, the bill having remained in the possession of Cor. In 1816 a commission issued against Greenwood, under which he obtained his certificate on the 8th September 1817. As executor of Parker he proved a debt of 2007. under his own commission, in respect of monies due to the estate of Parker to the date of his commission. In December 1831 the assignees applied to Greenwood to refund the amount of the several dividends, which he refused; but tendered to them the last dividend, amounting to 31. 3s. 1d., paid to him after he had obtained his certificate. This was a petition by the assignees of Baillie and Jaffray, praying that the proof made by J. Parker for 1,5147. 78. might be expunged, and that Greenwood might refund to them the several dividends, and pay the costs of the petition. Mr. Swanston and Mr. Richards for the petition :The dividends having been paid in ignorance that the debt was fully paid, Greenwood must refund the amount, and the proof be expunged. Two objections will probably be made to this application; the statute of limitations, and the certificate of Greenwood. The statute of limitations does not, however, apply to BAILLIE and another. 1832. of BAILLIE and another. this, which is a case of fraud. The respondent admits that he received the dividends without finding any docuEx parte BOLTON ment amongst Parker's papers shewing he was entitled, In the matter and merely because inadvertently a letter had been addressed to Parker by the solicitor. Even if there had not been any fraud, the statute would not be a bar to any part of this demand; for six years had not run between the receipt of the first dividend by Greenwood and the time he became bankrupt, ex parte Ross, 2 Gl. & J. 46. 330. The payment of a dividend is in the administration of a trust, and therefore may be recalled at any time. (a) The same observations apply as to the certificate being a bar; for the certificate does not release the bankrupt from pecuniary demands in cases of fraud, Mackworth v. Marshall, 3 Sim. 368. That this is a case of fraud appears from the facts, and from the respondent not having applied any of the dividends to the use of the testator's estate. The assignees are, therefore, entitled to the order as prayed. Mr. Montagu and Mr. Quin for the respondents :There are four objections to this application:- 1st, the Court has not jurisdiction over an executor, ex parte Crow, Mont. & M. 281, the remedy being by bill or by action; 2dly, the demand is barred by the statute of limitations; and, 3dly, by the certificate; 4thly, the drawer of the bill is not before the Court. This is not a case of fraud, for the utmost which appears is that the dividends may have been paid by the assignees in their own wrong, and received by Green (a) See Galway v. Barrymore, 1 Dick. 163. Burke v. Jones, 2 V. & B. 275. Ex parte Roffey, 9 Ves. 468. |