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time of effecting the policy or its amount or the amount of premiums payable. It introduces, however, a new condition-If it is proved that the policy was effected and the premiums paid with intent to defraud creditors, or if the person upon whose life the policy is effected shall be made bankrupt within two years from the date of the policy, it is competent to the creditors to reclaim payment of the premiums so paid out of the proceeds of the policy.1 If neither of these qualifications can be proved it would seem that the policy is good against the husband's creditors. appears to me," says Mellish, J., "that so far as regards the insurance of a man's life for the benefit of his wife and children, the Legislature intended to alter the law, and to say that the creditors would only get what they would fairly be entitled to, namely, that premiums paid in fraud of them should be repaid to them out of the money payable under the policy. Therefore I am of opinion that this . . . section . . . has so far modified the... Bankruptcy Act, that if a trader effects a policy accordingly it will be valid under the Married Women's Property Act, subject to any liability there may be to repay the premiums paid in fraud of his creditors." 2 The qualification as to a trader refers to the terms of sec. 91 of the English Bankruptcy Act of 1861, and has no applicability in Scotland; while as regards England, the Bankruptcy Act of 18833 has now removed all distinctions between traders and non-traders in respect of liability to be made bankrupt.

1 This is taken from the English Statute, 33 and 34 Vict. c. 93, § 10, and the same provision occurs (§ 11) in the English Married Women's Property Act, 1882. It is a modification of a rule of English bankrupt law. See the Bankruptcy Act, 1869, 32 and 33 Vict. c. 71, § 91, and the Bankruptcy Act, 1883, 46 and 47 Vict. c. 52, § 47.

2 See Holt v. Everall L.R. 2 Ch. D. at p. 276.

3 46 and 47 Vict. c. 52.


Modification of law by Married


Property Act.

Post-nuptial provision by an insolvent parent

$194. The law as to post-nuptial provisions has also been modified to a certain extent by the Conjugal Rights Act,1 and by the Married Women's Property Act.2 It is competent to all persons married before the passing of that Act (18th July, 1881) to declare by mutual deed that the wife's whole estate, including such as may have previously come to the husband in right of his wife, shall be regulated by the Act. The deed must be registered and advertised, and is subject to the proviso that it shall not be of any effect as against any debt or obligation, contracted by the husband, prior to the date of the deed being so advertised and registered.

This, it will be observed, is a condition in favour of all prior creditors of the husband. It confers no right, however, upon posterior creditors, and is independent of the question whether he was solvent or insolvent at the time.


195. Post-nuptial provisions by an insolvent father to his children nati or nascituri are deemed gratuitous, and may challengeable. consequently be annulled in a competition with creditors.3

But donation

by a solvent

$196. The position of children, as regards post-nuptial proparent is not. visions, is more favourable than that of wives, if their father was solvent at the date of granting. A donation by a father to his children is not revocable, and is not therefore affected by his subsequent sequestration. A transfer of money or property to the children or to trustees for their behoof,

1 Supra, §§ 62, 63, 66; Appendix, p. 182.

2 Supra, § 95; Appendix, p. 199.

3 See Ersk. 4. 1. 34.

4 M'Gibbon v. M'Gibbon, 5 March, 1852, 14 D. 605; see per Lord Mackenzie primus in Morrice v. Sprot, 27 June, 1846, 8 D. 918; Smitton v. Tod, 12 Dec. 1839, 2 D. 225,

or an obligation in their favour to take effect,-technically, to constitute a jus crediti,—in his lifetime, is valid in a competition with his other creditors.

necessary to

post-nuptial provision to

§ 197. The only conditions necessary to validate such a pro- Conditions vision are (a) That the parent was solvent at the date of the validate a delivery of the deed; 2 (b) That a jus crediti has been con- children. stituted, or that property has been duly transferred; and (c) That the transaction is not intended merely as a fraud upon creditors.4


If these conditions are fulfilled, a transfer of property cannot be reduced; and a provision in obligatione will enable the children to compete with onerous creditors of their father. "A father may effectually denude himself in his lifetime of any fund or subject belonging to him, and if he does so absolutely, without fraud, and while solvent, the deed is unchallengeable." 5

Assurance Act


$198. The provisions of the Policies of Assurance Act apply Policies of to children as well as to wives, and what has been said in applies to regard to policies effected for the benefit of wives applies equally to policies effected for the benefit of children."

1 See Morrice v. Sprot, 27 June, 1846, 8 D. 918; Geddes v. Waddell, 5 July, 1836, 14 S. 1084. In this case certain bonds were granted by a solvent man in favour of his children, but the money was not payable until after his death. It was found that the children could not compete with his creditors, because there was not a jus crediti. See post, § 208.

2 Dawson v. Thorburn, 12 July, 1888, 15 R. 891.

3 If the property is transferred, but the provision to the children is only payable at the father's death, it is of no effect against his creditors. Bruce v. Bruce, 9 June, 1831, 9 S. 695. Geddes v. Waddell, supra, note 1.

4 Roseberry v. M'Queen, 1 July, 1823, 2 S. 443; Dig. 42. 8. 17, § 1.

5 Per Lord Neaves in Wilson's Trustees v. Pagan, 2 July, 1856, 18 D.

at p. 1111; per Lord Craigie in Bruce v. Bruce, supra,

Supra, § 196,

Jus crediti.


necessary to give a preference.

Or a claim as creditors.



§199. A contract of marriage may not, in itself, be liable to challenge at the instance of creditors, and its provisions may, in a question with the person who grants them and his heirs, be onerous and irrevocable, and yet these may not be such as will entitle wife or children to a preference or even to compete with creditors.

To entitle the provisees to a preference they must have an unexceptionable claim and have obtained security therefor. To entitle them to compete with creditors they must themselves be in the position of creditors, or, as technically expressed, they must have a jus crediti. If this is effected, then, if the provisions have been secured, they are entitled to a preference; if the provisions have not been secured, they are entitled to rank upon the grantor's estate pari passu with his other creditors, in the event of his sequestration. If the provisions do not constitute a jus crediti, but affect the grantor's succession, i.e., if they are

1 Ross v. Mackenzie, 11 July, 1838, 16 S. 1385. See Wilson's Trustees v. Pagan, 2 July, 1856, 18 D. 1096, 2nd branch as to life policy. Edmond v. Gordon, 16 Nov. 1855, 18 D. 47, affd. H. of L. 3 M'Q. 116.

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2 Jus crediti is defined by Lord Benholme in Wilson's Trustees v. Pagan, supra, 18 D. at p. 1104, as a right which entitles the parties vested with it to compete with onerous creditors upon a deficient fund." See also per M'Neill, L.P., ib. p. 1127. See post, § 214, note o. The phrase was no doubt borrowed from the civilians, who distinguished between creditors Separati ex jure dominii and those Separati ex jure crediti; although jus crediti is there used in a much narrower sense than with us. It referred to a class of creditors who claimed against a particular portion of the bankrupt estate, to the exclusion of all others.

31 Bell, Com. pp. 639, 640 (5th ed.); p. 685 (7th ed.); Brodie's Stair, p. 556,

testamentary merely, they cannot compete with onerous creditors.

There is no difficulty in so framing a provision as to give a jus crediti; but it was long before the law was settled; and many questions have arisen upon clauses, in the framing of which the contingency of bankruptcy and the constitution of claims capable of competing with those of onerous creditors were not in the mind of the draftsman.

in favour of


200. 1. As regards Wives.—As a rule, the provisions made Provisions by a husband in favour of his wife by ante-nuptial contract a wife deemed are, irrespective of the time when they are to be paid, deemed onerous, and the wife is allowed a preference, or to claim in the sequestration, according as her provisions have been secured or not.


that they are

until after husband's

§ 201. It is no objection to an annuity to a wife that it No matter only payable in the event of her surviving her husband, and not payable consequently upon his death. Such an obligation by the death." husband in an ante-nuptial contract confers upon her a jus crediti which will entitle her, upon his bankruptcy, to be ranked upon his estate as a contingent creditor,' and to draw dividends along with his onerous creditors. Such an obligation in a post-nuptial deed will also confer a jus crediti and entitle the wife to a ranking, provided the conditions specified in § 187 are satisfied.

cannot compete with

onerous debts

§ 202. It may be that a contract of marriage, ante-nuptial Provisions or post-nuptial, is testamentary in its character, and the provision in favour of the wife consequently a right of succes- tamentary only sion only. If so, she cannot compete with the husband's

1 Comb v. Chapman, 2 March, 1826, 4 S. 513; Ross v. Mackenzie,

11 July, 1838, 16 S. 1385; The Bankruptcy (Scotland) Act, 19 and 20 Vict. c. 79, $$ 53, 54. Duff, Treatise on Deeds, pp. 181, 192.

if they are tes

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