Bankruptcy-Fraudulent preference-Agreement between debtor and creditors-
Dealings between the debtor and one creditor

AI trader, being in financial difficulties, agreed with eight creditors tha
he should give each of" them a promissory note falling due after two years,
and that each should postpone his claim. Seven months later, the defend-
ant, one of the eight, opened a new trading account with the debtor" for
the supply of goods. The other seven sued the defendant claiming the
value of the goods in the debtor's shop at the time of the agreement.

Held: (i) The agreement was not a bill of sale, and the goods in the
debtor's shop remained his property to do what he chose with, them.

(ii) There was no term in the agreement restraining any creditor from
doing anything which might prejudice the others' chance of obtaining pay-
ment on the promissory notes, and nothing to prevent any creditor from
obtaining payment for himself in full.

Appeal

November 22, 1931. Owen C.J.: On December 20,.1930 eight
creditors of one Kamamis of Gedaref concluded an agreement with
their, debtor, the effect of which was that in consideration of the
postponement of their several claims, Mr. Kamamis should give to each
a promissory note falling due in two years time. It .Is a proper
inference that at the time when this agreement was entered into the
debtor was not in a position to fulfil his obligations" and in fact
it is alleged that his assets consisted of no more than £E.85 by way of
stock-and £E.160 in the form of book debts. The claims of the eight
creditors amounted to about £E.417.

• Court: Owen C.J., Halford andGorman n.

In or about the month of July, 1931 the creditors discovered
that Mr. Kamamis had opened a trading account with one of their
number, Mr. David the defendant, and the remainder therefore peti-
tioned the District Commissioner for relief, alleging that Mr. Kamamis
had delivered goods to Mr. David; and that other goods had been
sold and the proceeds disposed of in the same way. The nature of
the relief claimed, and against whom, is not clear from their petition.
It seems to be suggested in that document that the agreement of
December 20 was a bill of sale, and that they claimed to pursue the
goods or their value into the hands of anyone to whom they are de-
livered. It seems also to be suggested that the transactions between
Mr. Kamamis and Mr. David are nothing but a fradulent conspiracy
to secure for Mr. David an undue preference in the matter of his
indebtedness, and to deprive the remaining creditors of any security
they have for the due payment of their bills.

At any rate an action was allowed against Mr. David for the
sum of £E.80; this sum represented "the estimate of the goods in

, Kamamis' shop on the day the agreement was made." The evidence
at the trial consisted of a statement on behalf of the plaintiffs that
Kamamis handed ove~ goods to, the defendant in defiance of the
agreement, and a reply by the defendant that he had simply started
a new account with the debtor, that he had furnished him with goods
and that he the defendant, had received no goods from the debtor at
all. There was no other evidence. The District Judge for reasons
set out in his judgement found in favour of the plaintiffs in the sum

, of £E.80, and it is from that judgement the defendant has appealed,

I am unable to follow those reasons. The agreement is not a
bill of sale. The goods in his shop are the debtor's, to do with them
precisely what he chooses. The agreement does not imply or import
any, control' over or restriction of his 'trading with anybody in Gedaref
or elsewhere, any more than it implied or imports a promise by the
creditors not to trade with him. If, on the other hand the judgement
is one for damages for the breach of a term in an agreement between
the creditors not to do anything which might prejudice each others'
chances of obtaining due payment of the promissory notes on maturity,
then the 'answer is that there is no evidence of any such agreement,
and the law imposes no such obligation.

There is no evidence of a tortious conspiracy between these
parties. If it was intended by them that Mr.' David should obtain
some sort, of preference, over the other creditors, there is nothing