HARRISON v. AITON, ET AL., SKINNER, GARNISHEE. MCLEOD, ASSIGNEE, v. AITON, ET AL., SKINNER, GARNISHEE.

[Full Court, before ALLEN, C. J., and WELDON, DUFF and PALMER, JJ. ] Garnishee Act-Insolvent Act of 1875-Where writ of attachment in insolvency is issued against primary debtor-To whom garnishee shall pay-Primary creditor entitled to the debt to amount of his claim, as against assignee of insolvent.

Held, (by ALLEN, C. J., and DUFF and PALMER, JJ., WELDON, J. dissenting,) that where the primary debtors' estate was put in liquidation by the issue against them of a writ of attachment under the Insolvent Act of 1875, their debts vested in the assignee subject to the same charges and obligations as they were liable to in respect thereof, and that the primary creditors, who had caused an attaching order under the Garnishee Act to be served before the insolvency, were entitled to be paid the amount of their claims out of the sum attached in the hands of the garnishee.

Special case stated for the opinion of the Court by direction of Mr. Justice Duff. After the commencement of a suit by the primary creditors against the primary debtors, and after service on the garnishee of an attaching order issued under the Insolvent Act of 1875, a writ of attachment was issued under the Insolvent Act of 1875 against the primary debtors and their estate was placed in liquidation. The only question involved was whether the assignee in insolvency was entitled to the sum attached in the garnishee's hands, or whether the primary creditors were entitled to it, to the extent of their claims. The several sections of the Insolvent Act and Garnishee Act discussed in this connection are set out in the argument and judgment.

June 9th, 1880. C. N. Skinner, Q. C., moved for an order directing the money to be paid to the assignee of the primary debtors. The Garnishee Act and Attachment Act must be read together. You cannot attach a debt under the former unless you have a right to attach property under the latter. It is clear, by the terms of the Act, that in the case of attachment property the attachment must be dissolved on the issue of a writ under the Insolvent Act. Then, by the 83rd section of the Insolvent Act of 1875, it is provided that even where an execution has issued, the moneys levied under it go to the assignee unless paid over before the issue of the writ in insolvency against the judgment debtor. The primary creditor

of

1880.

December.

1880.

ought not to stand in a better position than the judgment HARRISON creditor. The attaching order does not operate as a lien. Harrison, contra.

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AITON.

The 16th section of the Insolvent Act of 1875 enacts that the assignment by an insolvent to the assignee shall vest in him all his assets under the same charges and obligations as he was liable to with regard to the same. The attaching order is at least, if not a lien, a charge or obligation, and no means having been provided for dissolving this charge or obligation, as in the case of an attachment, the money must go to the primary creditors. [PALMER, J. I do not think it is contended it should be set aside only that the Insolvent Act intervening the money shall be released]

There is no ground for the contention that the Attachment and Garnishee Acts should be read together. They are different Acts, passed at different times, and do not expressly or by implication refer to each other.

De Veber v. Austin' is conclusive as to my position in the case. It will be necessary to overrule that before judgment can be given against the primary creditors.

E. McLeod, for himself, argues on the same side.

Apart from the technical language, we both seek the decision of the Court as to who is entitled to the money. The assignee took no more than the primary debtors had. The 10th section of the Insolvent Act of 1869 had not the words subject to "charges and obligations," &c., which are contained in the 16th section of the Insolvent Act of 1875.

The position that the Attachment and Garnishee Acts should be read together is not arguable. [PALMER, J. Suppose they were, would that make any difference?] No. I cite Neal v. Smith; Clarke's Insolvency, 248. Suppose primary debtor had not gone into insolvency, can it be contended that the isssue of attaching order would not make a charge on moneys? We contend it charges it just the same.

Skinner, Q. C., in reply.

I contend that the words of 4th section, chap. 43 Consol. Stat., binding moneys in the hands of garnishee is entirely different from the case of a memorial binding lands.

The following opinions were now delivered:

1880.

ΑΙΤΟΝ.

ALLEN, C. J. The plaintiff in this case attached in the HARRISON hands of Mr. Skinner, a debt due from him to the defendants, (the primary debtors.) Subsequently to the service of the attaching order, and while the debt from Mr. Skinner to the primary debtors remained unpaid, a writ of attachment under the Insolvent Act of 1875, was issued against the primary debtors and their estate went into liquidation. The assignee of their estate claims that the debt 'due from Mr. Skinner to the insolvents, vests in him as part of their estate.

The question is, what is the effect of an attaching order made under the Garnishee Act, (Con. Stat. c. 43)? Does it vest in the plaintiff, the debt due from the garnishee, so as to prevent it from passing to the assignee of the primary debtor, or does it remain a debt due to the primary debtor, and vest in his assignee upon his insolvency?

The 4th section of the Garnishee Act declares that the service of an attaching order on the garnishee shall have the effect, (subject to the rights of other parties,) of attaching and binding in his hands all debts and sums of money then owing from him to the primary debtor, or sufficient thereof to satisfy the primary creditor's judgment.

When the claim of the primary creditor is not a judgment, he obtains, under section 10, a like attaching order as if he had a judgment, and a summons issues to the primary debtor, to answer the plaintiff's claim; and to the garnishee, to state whether he owes the primary debtor, and if so, to shew cause why he should not pay the amount to the primary creditors. If the debt is not disputed, or if the amount is proved to the satisfaction of the Judge, he makes an order for the garnishee to pay it to the primary creditor, or that an execution shall issue against the garnishee to recover it.

In either case-whether there is a judgment against the primary debtor or not-(in the present case there was no judgment), the effect of the service of the attaching order on the the garnishee is the same. It attaches and binds in his hands any sum of money he may owe to the primary debtor; and if no person can shew cause why such debt should not be paid over to the primary creditor, he may enforce his right to it by execution.

1880.

V.

AITON.

This principle of attachment of debts is adopted, substanHARRISON tially, from the English Com. Law Procedure Act, 1854, secs. 60 to 67. The 62nd section of that Act declares that "service of an order that debts due or accruing to the judgment debtor shall be attached, or notice thereof to the garnishee in such manner as the Judge shall direct, shall bind such debts in his hands."

The construction of this section, and the effect of the bankruptcy of the judgment debtor after service of the attaching order and before payment of the debt to the judgment creditor, was first brought before the Court in the case of Holmes v. Tutton,1 when the bankruptcy Act of 1849 was in force, and it was held that the property in the debt was not changed by service of the attaching order on the garnishee, but that the judgment creditor was in the position of a creditor having "security for his debt," within the meaning of sec. 184 of the Bankruptcy Act, but that he had not a "lien" within the exception in that section; and, therefore, though the attaching order operated as a security, binding the garnishee and the debtor, the debt passed to the assignee of the latter on his bankruptcy. In delivering the judgment Lord Campbell said: "We construe the word 'bind' as not changing the property, or giving even an equitable property, either by way of mortgage or lien, but as putting the debt in the same situation as the goods were when the writ (fi. fa.) was delivered to the sheriff. We take the word 'bind'

to mean that the debtor, or those claiming under him, shall not have power to convey, or do any act as against the right of the party in whose favor the debt is bound; and we construe it as not giving any property in the debt in the nature of a mortgage or lien, but a mere right to have the security enforced."

This case was followed in Tilbury v. Brown.2

Similar questions arose after the passing of the Bankruptcy Act of 1869, which contained no such provision as was in sec. 184 of the preceding Act. Thus, in Emanuel v. Bridger it was held that the attachment of a debt under a garnishee order constituted the attaching creditor a creditor "holding security on the property of the bankrupt," within sec. 12 of the Bankruptcy Act of 1869, that such security was a charge on the bankrupt's estate; and that the creditor was entitled to realize his security out of the estate. The question was again considered in Lowe v. Blakemore, with the same result.

1880.

V.

AITON.

In Ex parte Joselyne1 the Court of Appeal went further than in any of the previous cases, and held that by service of HARRISON an attaching order on the garnishee, the property in the debt due from him was absolutely transferred from the judgment debtor to the judgment creditor, and therefore, that the creditor was entitled to the attached debt as against the trustee in bankruptcy, under a liquidation petition filed by the debtor after service of the attaching order.

It would have been sufficient for the purpose of that case to hold, as was held in Emanuel v. Bridger and Lowe v. Blakemore, that the effect of the attaching order was to create a security or charge on the bankrupt's property. It seems to me impossible to reconcile what was said in Ex parte Joselyne about the debt being transferred to the creditor by the attaching order, with the language of Lord Campbell in Holmes v. Tutton. Neither can I understand how the words "bind such debt" in sec. 62 of the Com. Law Procedure Act can be construed to transfer the property in the debt to the creditor. I think if the Legislature had intended the attaching order to have that operation, they would have used some other word than "bind "-the word used in the Statnte of Frauds with reference to the delivery of executions to a sheriff-which, it is clear, does not operate to divest the debtor of his goods.

In the more recent case of Ex parte Nelson, Brett, L. J., only says that the service of the attaching order on the garnishee creates a charge on his debts due to the judgment debtor, as against the trustee in bankruptcy of the debtor.

The claim of the assignee of the insolvents in this case, (the primary debtors), depends principally on the 16th section of the Insolvent Act, 1875, which declares that the issuing of a writ of attachment under the Act, or the execution of a deed of assignment, shall vest in the official assignee all the property and assets of every kind which the insolvent may be possessed of, or entitled to, up to the time of obtaining his discharge "under the same charges and obligations as he was liable to with regard to the same."

If the effect of the attaching order under our Act, was, upon service on the garnishee, to transfer, from the primary debtors,