enables the creditor to prove in respect of debts contracted by the bankrupt payable upon a contingency, has been held not to be confined strictly to that for which an action of debt could be brought, but to extend to any transaction, claim, or demand, which in equity or at law might end in a debt(t): the object of the legislature being, on the one hand, to assist the creditor by enabling him to prove in respect of all fair equitable undertakings which ought to be rendered available against the bankrupt's assets, and, on the other hand, to relieve the bankrupt from all his liabilities (u).

In order, however, to render a contingent debt capable of being proved under the 56th section of the late Bankrupt Act, it must be such a contingent liability as can be considered a "debt" existing when the fiat issues, though the payment of that debt may depend upon a contingency (v). And if in consequence of the complication of the events, or otherwise, the contingency cannot be then subjected to any known law of calculation, the difficulty can only be removed by the happening of the contingency or events, before the declaration of a final dividend, and before the bankrupt obtains his cer

(t) Ex parte Myers, 1 Mont. & Bli. 229; ex parte Tindal, 8 Bing. 402; S. C. 1 Mont. 375; S. C. 1 Deac. & Ch. 291.

(u) See the observations of Erskine, C. J., in ex parte Myers, supra; of Best, C. J., in Bell v. Bilton, 4 Bing. 615; S. C. 1 Moo.

& P. 574; and of Abbott, C. J., in Vansandau v. Corsbie, 3 B. & Ald. 13.

(v) Per Erskine, C. J., in ex parte Marshall, 1 Mont. & Ay. 145; and see the Skinners' Company v. Jones, 3 Bing. N. C. 481.

hereby required to ascertain the value thereof, and to admit such person to prove the amount so ascertained, and to receive dividends thereon; or if such value shall not be so ascertained before the contingency shall have happened, then such person may, after such contingency shall have happened, prove in respect of such debt, and receive dividends with the other creditors, not disturbing any former dividends; provided such person had not, when such debt was contracted, notice of any act of bankruptcy by such bankrupt committed."

tificate, and the liability of the surety thereby become matured into a debt (w).

If a surety covenant to pay an annuity (r), or the premiums of an annual policy, (which has been assigned by the person on whose life the insurance had been effected (y),) in case default is made by the grantor of the annuity, or the assignor of the policy; or guarantees the payment of a bill of exchange, in case it shall not be paid when due by the acceptor, (otherwise than by indorsement (2);) or the payment of the debt of a third person, on a day certain, which has not elapsed (a); or upon notice given to the surety that it is unpaid (b); and the surety becomes bankrupt: default must be made by the grantor of the annuity, or the assignor of the policy, or the bill of exchange must have become due, or the day for the payment of the debt of such third person must have elapsed, or notice must have been given to the surety, to entitle a party to prove in virtue of the 56th section of the 6 Geo. 4, chap. 16; for until then, the surety's undertaking is a mere collateral liability depending on events incapable of valuation. But if there be a positive contract by the surety to pay at all events, without regard to the principal; as where a party appears upon the instrument to be substantially a joint grantor of an annuity (c), or a co-obligor in a bond (d), or a joint

(w) Ex parte Myers, 1 Mont. & Bli. 229; ex parte Lewis, 1 Mont. & Maca. 426; ex parte Simpson, 3 Deac. & Ch. 792; S. C. 1 Mont. & Ay. 541.

(x) Ex parte Thompson, Mont. & Bli. 219; S. C. 2 Deac. & Ch. 126; Thompson v. Thompson, 2 Bing. N. C. 168; Johnston v. Compton, 4 Sim. 37.

(y) Atwood v. Partridge, 12 J. B. Moo. 431; S. C. 4 Bing. 209.

(z) Ex parte Harrison, 2 Bro.

maker of a note (e): or where the party indorses (ƒ), or draws (g), or gives his acceptance to (h) a bill of exchange, though he may be, as regards the other joint grantor of the annuity, or the parties to the note or bill of exchange, simply a surety (i): then it is a debt that is immediately proveable under the surety's fiat. The grantee of an annuity, however, will not be allowed to prove the value of the annuity, under a fiat issued against a grantor in an annuity deed, though the deed contains a covenant from the bankrupt for payment of the annuityt o the grantee, which is in its form absolute and unconditional, if it can be collected from the tenor of the whole contract, that it was the manifest intention of the parties that the bankrupt should only be responsible, as surety, upon default of the grantor (j).

If the surety, in addition to the guarantee given by him to the creditor, to be answerable for the value of goods supplied to the principal, indorse a bill of exchange in favour of the creditor, drawn by the creditor upon, and accepted by, the principal debtor, for the price of those goods, and the bill of exchange is not proved under the surety's bankruptcy, the creditor's demand under the guarantee will be barred by the surety's certificate; for the reason that the bill was indorsed in satisfaction of the guarantee (k).

In contracts for indemnity. it has been held, that no "debt" is created until a loss has been actually incurred upon which principle it was lately deter

: :

(e) Ex parte Crosfield, 2 Mont. & Ay. 543.

(f) See the observation of Erskine, C. J., in ex parte Myers, Mont. & Bli. 229.

(g) Starey v. Barns, 7 East, 435; ex parte Douthat, 4 B. & Ald. 67.

(h) Stedman v. Martinnant, 12 East, 664; S. C. 13 East, 427;

and see the observation of Lord Eldon, C., in ex parte Minet, 14 Ves. 190.

(i) Baxter v. Nichols, supra. (j) Ex parie Marks, 3 Mont. & Ay. 521.

(k) Gaskell v. Lindsay, Holt, N. P. C. 212.

mined, in the case of ex parte Marshall (1), that the obligee in a bond of indemnity, not forfeited before the issuing of the fiat, was not entitled to prove under the bankruptcy of the obligor, in respect of liabilities which had been subsequently incurred; inasmuch as there was no "debt" existing at the time of the issuing of the fiat. If, however, the bond had been forfeited before the issuing of the fiat, though the obligee had not, at the date of the fiat, sustained any damage, then, it seems, a debt will be considered to have existed at the issuing of the fiat, although the amount to be paid depends upon an event then resting in contingency: the Court of Bankruptcy, in such a case, fixing upon the penalty as the nominal debt, upon which to fasten the equitable relief (m). And a forfeiture, if it has been incurred, is not cured at common law, in consequence of the principal's being at the time solvent, or from the creditor's receiving from the principal, subsequently to the forfeiture, payments on account of the bond; but the bond having been once forfeited, constitutes a debt proveable under the surety's bankruptcy, and, consequently, will be barred by his certificate (n).

The instalments of an annuity, for the payment of which a bankrupt is surety only, and which he covenants to pay in case of the default of the grantor, are not proveable under a fiat issued against the bankrupt's surety, where they become due after the surety's bankruptcy, though default should have been made by the grantor, and the estate of the bankrupt not have been exhausted (o); for the 54th section of the 6 Geo. 4, c. 16, which enables a creditor to prove under the bankrupt's fiat for the value of the annuity, applies only to the case where the grantor

(1) 3 Deac. & Ch. 120; S. C. 1 Mont. & Ay. 145.

(m) See exparte Marshall, supra, and the cases there cited.

(n) The Skinners' Company v. Jones, 3 Bing. N. C. 481.

(0) Thompson v. Thompson, 2 Bing. N. C. 168.

of the annuity becomes bankrupt, and not to the surety; and under the 56th section of the same act, the instalments are not a debt, nor ever can become one from the surety, except in the event of the grantor's never paying, the value of which contingency it is impossible to calculate.

Where the debt to the creditor, for which the surety is liable, is absolute at the date of the fiat, the creditor may prove against the estate of the surety for all that is due to him from the principal (o); and if the principal have become bankrupt, as well as the surety, the creditor may prove under both fiats the amount of his debt, until he has thereby worked out the whole of the money due to him (p).

But if a dividend has been received by the creditor under the principal's fiat, or (as it would seem) if a dividend has been declared (q) before the creditor has proved his debt under the surety's fiat, the amount of the dividend must be deducted from the debt sought to be proved under the surety's fiat. However, in a case where C., with whom a bill of exchange drawn by D. upon, and accepted by, A., for D.'s accommodation, had been deposited by D. as a security for a debt owing from D. to C., and which bill was, upon the bankruptcy of D., proved by C. against D.'s estate, and thereby and by means of other securities deposited with C., C.'s debt was reduced to a small sum, and afterwards a commission issued against A.: C. was held to be entitled to prove under A.'s commission, not only for the balance upon the principal of the debt, but also for

(0) Ex parte Rushforth, 10 Ves. 409; ex parte Marshall, 1 Atk. 129; ex parte Wildman, 1 Atk. 109; ex parte Simpson, 3 Deac. & Ch. 792; S. C. 1 Mont. & Ay.

541.

(p) Ex parte Powell, 1 Deac. 378; S. C. 2 Mont. & Ay. 533; ex parte Marshall, supra; ex parte

Wildman, supra; ex parte Rushforth, supra; ex parte Martin, 2 Rose, 87.

(q) Ex parte the Royal Bank of Scotland, 2 Rose, 197; S. C. 19 Ves. 310; ex parte Todd, 2 Rose, 202, in notis; ex parte Leers, 6 Ves. 644.