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Judgment
This question has been decided in England under the corresponding Section 48 of the Bankruptcy Act of 1883 in 1897 by Vaughan Williams,
J., in In re Paine: Ex parte Read (1897) 1 Q.B., 122 and in 1900 by Bockley, J. (now Lord Wrenbury, in In re Blackpool Motor Car Company,
Limited: Hamilton v. Blackpool Motor Car Company, Limited (1899) A.C. 419 In the latter case, the learned Judge after considering all the
authorities including the dicta in In re Mills; Ex parte The Official Receiver (1888) 5 Morrell, 55 held following the earlier decision, that a surety
being entitled to prove in bankruptcy, must be considered a creditor for the purposes of fraudulent preference, u/s 48 of the Act of 1883. That
decision has not since been questioned in England and may we think be accepted as settled law. This was apparently the view taken when the new
consolidated Bankruptcy Act of 1914 was passed. The defect disclosed in Section 48 of the Act of 1883 by the decisions in In re Mills; Ex parte
The Official Receiver (1889) 5 Morell, 55 In re Warren: Ex parte Trustees (1900) 2 Q.B., 138 and In re The Stenotyper, Limited, Hastings
Brothers v. The Stenotyper, Limited (1901) 1 Ch. 250 was then remedied by amending the section renumbered 44 so as to include expressly
payments made to a creditor with a view to prefer his surety. A similar amendment would no doubt have been made to meet the case of payments
to the surety himself with this view, if it had not been considered that they were already within the section as construed in these two cases. Such
payments are even more objectionable than payments to the creditor as they do not directly reduce the indebtedness of the estate.
We accordingly answer the question in the affirmative.