Ex Parte Ibbetson; In re Moore

(1878) 8 Ch.D. 519

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(Judgment by: Jessel MR, James LJ, Bramwell LJ)

Ex Parte Ibbetson
In re Moore

Court:

Judges:
Jessel MR
James LJ
Bramwell LJ

Subject References:
REPUTED OWNERSHIP
Order and Disposition
Chose in Action
Policy of Assurance

Legislative References:
Bankruptcy Act, 1869 (32 & 33 Vict. c. 71) - s. 15, sub-s. 5

Judgment date: 16 March 1878

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Judgment by:
Jessel MR
James LJ
Bramwell LJ

A policy of life assurance is a "thing in action," and is therefore excepted from the operation of the reputed ownership clause, sect. 15, of the Bankruptcy Act, 1869.

This was an appeal from a decision of Mr. Registrar Hazlitt, acting as Chief Judge in Bankruptcy.

On the 20th of August, 1875, an agreement in writing was entered into between Thomas Moore, a trader, and Frederick Ibbetson, by which it was agreed that, in consideration of a sum of £2819 then owing from Moore to Ibbetson, and to secure which, with interest, a mortgage bearing even date had been executed by Moore, Moore should with all convenient speed pay off a sum of money owing to the London and South Western Bank, and obtain from the bank two policies of assurance for £500 and £200 respectively, then in the hands of the bank, and would forth with execute to Ibbetson such an assurance of the policies to collaterally secure to him the sum owing to him as aforesaid as he might require. On the 1st of November, 1877, Moore filed a liquidation petition, under which, on the 17th of December, a trustee was appointed. When the petition was filed the £2819 still remained due to Ibbetson, and the policies were still in the hands of the bank, their debt being still unpaid. No notice of the agreement of the 20th of August, 1875, was given to the bank until the 31st of December, 1877, and no notice of it was given to the insurance company until the 6th of March, 1878. Ibbetson applied to the Court of Bankruptcy for an order declaring that, subject to the amount due to the bank, he was entitled to the policies as against the trustee. The Registrar refused the application, on the ground that the policies were at the commencement of the liquidation in Moore's order and disposition. Ibbetson appealed.

Roxburgh, Q.C., and Oswald, for the Appellant:-

A policy of assurance is clearly a "thing in action," and it is therefore expressly excepted from the reputed ownership clause: Bankruptcy Act, 1869, s. 15, sub-s. 5. ^[F1]

[They were stopped by the Court.]

De Gex, Q.C., and G. Cary, for the trustee:-

It has never yet been decided that a policy of assurance is a thing in action. In Ex parte Union Bank of Manchester, ^[F2] the Chief Judge decided that shares in a joint stock company are not "things in action" within sect. 15, sub-sect. 5.

[JESSEL, M.R.:- I can conceive that some shares might be choses in action, while others might not be.]

At any rate, that decision justifies the trustee in the course which he has taken. Moreover, the trustee has the better title, because he gave notice to the insurance company before the Appellant did.

[JESSEL, M.R.:- Has an assignee in bankruptcy ever been allowed to get rid of a valid mortgage by giving notice to the trustee or debtor first?]

By the Policies of Assurance Act, 1867 (30 & 31 Vict. c. 144), s. 3, the priority of assignments of policies is regulated by the date of notice to the company. The Appellant ought to have been more prompt in asserting his claim.

[JAMES, L.J.:- He could do nothing till the bank were paid off, and, moreover, you represent the liquidating debtor.]

JESSEL, M.R. :-

The simple question which we have to decide is whether a second mortgagee of a policy of life assurance has lost his right by reason of sect. 15 of the Bankruptcy Act. In my opinion it is clear beyond all argument that a policy of assurance is a "thing in action," and is therefore within the exception contained in sub-sect. 5. The Appellant ought to have succeeded before the Registrar, and he must succeed now.

The Registrar's order will be discharged, with costs in both Courts, and there must be a declaration that the Appellant is entitled to the policies, subject to the rights of the bank.

JAMES and BRAMWELL, L.JJ., concurred.