Section III. Order of Making Restitution

When several have co-operated in some act of injustice for which they are bound to make restitution there may be question as to who is primarily bound, and whether the others are excused if he repairs the damage. The answer to such questions will be clear from what follows.

When those who co-operated in injustice are only bound to restore ratably, no order need be observed among them. Each must fulfil his obligation independently of the others and restore his share. Even if they are bound jointly and severally to make restitution, but all co-operated in the unjust act in the same way—as, e.g., by conspiracy and mutual help— the question of order will not arise. Each and all are bound to restore their quota, and in default of any, the rest are equally bound to indemnify the injured person. If this has been done, those who indemnified the injured party will have a claim against the defaulters.

If, however, those who are guilty of an injustice in common co-operated in it in different ways and degrees, so that, for example, one gave the command, others executed it, and others who were bound to prevent it neglected to do so, then it is plain that all are not equally primary causes of the injustice, nor are all equally bound to make restitution. In such cases the co-operators are bound to make restitution in the following order: (a) If anyone has the property of the injured person he must restore it, for res clamat domino.

(b) One who co-operates by command is the principal cause of the injury; the rest merely act in his name and for his advantage, so that he is primarily bound to make good the damage done.

(c) Thirdly, those who inflicted the damage will be bound to make it good. (d) Then others who co-operated positively by advice, consent, or flattery, will be bound. (e) Finally, those who co-operated negatively.

If the primary causes of the injustice make restitution, the rest will be free, whereas if the secondary causes who merely acted for others restore to the injured party, the primary causes will thereafter be bound to make restitution to them.

The question of order of payment among creditors also arises when a debtor is insolvent and cannot pay all in full, for if he can pay all in full, order of payment is not of consequence. If a man cannot pay his debts as they become due, he will be adjudicated a bankrupt, and his property will in general be divided ratably among his creditors. Some debts, however, have priority according to English law, and must be paid in full if the assets are sufficient for the purpose; otherwise they will abate equally among themselves. These are (1) Rates and taxes. . . . (2) The wages or salary of any clerk or servant, not exceeding £50, in respect of services rendered during four months prior to the receiving order. (3) Wages of any labourer or workman, not exceeding £25, for services, whether time or piece work, rendered during two months prior to the date of the receiving order.”’¹

“A secured creditor has four courses open to him: (1) He may rest on his security and not prove. (2) He may realize his security and prove for the deficiency. (3) He may value his security and prove for the deficiency, after deduction of the assessed value. (4) He may surrender his security and prove for the whole debt.”’” The debts of a person lately deceased must be paid by the executor or administrator in the following order: ‘‘ First, the funeral expenses; next, the expenses of probate or taking out administration, including the costs of an administration action and other executorship expenses; and then the debts of the deceased are payable out of legal assets in the following order:

(a) Crown debts due by matter of record, a surety to the Crown having the like priority; (b) debts having priority by statute—e.g., under the Friendly Societies Act, 1896, sec. 35; (c) debts of record consisting of judgements in courts of record and recognizances; (d) debts by specialty and simple contract.”²

If, however, the deceased died insolvent, on the petition of one or more of his creditors, whose debt would have been sufficient to support a bankruptcy petition against him if he 2 bid. had been alive, his property will be administered as in bankruptcy according to English law.

If a debtor makes a payment of money or a delivery of property to a creditor not in the ordinary way of business and without any pressure or demand on the part of the creditor, knowing that his circumstances are such that bankruptcy will be the probable result, he is guilty of a fraudulent preference in English law. Such fraudulent preference is void against the trustee in bankruptcy, if made within three months before the bankruptcy petition is presented. There is a similar provision in American bankruptcy law, but the period is four months instead of three.

Those who are on the verge of bankruptcy should not, of course, give such preferences to any of their creditors merely with the intention of favouring them at the expense of other creditors. If they cannot pay their debts in full, the claims of justice are the same for all, and all creditors should share alike. If such a preference has been given, the property must, of course, be surrendered to the official receiver or trustee on his demand, But supposing that he does not come to the knowledge of it, and makes no demand for it, is the preferred creditor bound to surrender the property of his own accord ? There would seem to be no obligation in conscience to do so. He has only received payment of what was due to him, as we suppose; he might have demanded payment, and then the insolvent debtor might lawfully have paid it. No valid reason can be urged to show that in accepting full payment of his debt before the debtor’s bankruptcy the preferred creditor commits an act of injustice against the other creditors. If he does not commit an act of injustice against them, he is not bound to make restitution to them, At least, this opinion would seem not to be destitute of all probability in its favour.

¹ Encyclopedia of Laws, s.v. Bankruptcy.

² [bid., s.v. Executors and Administrators.