Such being the nature of the engagement, the accounts shew, and, in fact, it is not in dispute, that the amount due from the firm of John Finch & Sons to the Low Moor Company is £46,961, 3s. 11d.

[488] I come now to the second question in the case, viz., whether, at the date of the deed of inspection, any and what amount was due from the firm of Finch & Willey to the Low Moor Iron Company. In considering this question I shall pass over for the present the sums of £1540, 19s. 1d. and £6370, 15s. 1d.; and I shall consider whether, at the date of the deed of inspection, any other amount was due to the company from the firm of Finch & Willey.

That there once was a debt due from that firm to the company is sufficiently apparent, for all invoices were made out in the name of the Low Moor Iron Company, and the customers were supplied distinctly on the footing of their becoming debtors to that company. But the difficulty, and the only difficulty, in the case is occasioned by the circumstance that the firm of John Finch & Sons (doubtless from inadvertence), instead of keeping separate books for the entry of accounts of all goods supplied by them to the several customers of the Low Moor Company (which was the course they had engaged with the company to pursue), in fact kept accounts in which there was no distinction between the goods so supplied by them as the agents of the company, and the goods supplied by them on their own behalf, except in this respect, that, from time to time, the goods were entered as "Low Moor iron." In other respects the whole was kept in one general account, their transactions on behalf of the company being blended with all their other transactions with the firms of Smith & Willey and Finch & Willey. In this general account, which, as early as 1846, shewed a very heavy balance due to John Finch & Sons, entries were made from time to time on one side and on the other until Willey's death, when it resulted in a balance of £22,000 due from the firm of Finch & Willey to the firm of Finch & Sons.

In this state of things, there is no doubt that if Edward [489] Finch had not been a partner both in the firm of John Finch & Sons and in that of Smith & Willey-if the partners in the latter firm had been strangers to the transactions between the firm of John Finch & Sons and the Low Moor Company, then the firm of Smith & Willey would have been at liberty to apply, in dealing with their accounts, the ordinary rule relative to the appropriation of payments-the rule in Clayton's case (1 Mer. 572), which has been always followed, according to which the party against whom the balance is eventually due is at liberty to appropriate all the successive payments made by him. in reduction, from time to time, of the earlier portion of the account. And it is said (although this is not made out by the evidence) that if the rule in question were strictly applied in the present instance, and the payments made by the firm of Smith & Willey were appropriated successively in reduction of the earlier items due from that firm, the result would be the wiping out of the whole debt due in respect of the Low Moor iron from the firm of Smith & Willey.

But the fact is that Edward Finch was a partner both in the firm of John Finch & Sons and in the firm of Smith & Willey. In 1833 he became a partner in the firm of John Finch & Sons. In January 1844 he became a partner, although his name did not appear as a partner, in the firm of Smith & Willey; and while he was occupying that double position communications passed between the firm of John Finch & Sons, of which he was a partner, and the Low Moor Iron Company, which, in my judgment, render it impossible to apply the rule in Clayton's case to these accounts.

His Honor read these communications to the effect stated above, and proceeded.] That it was competent to Edward Finch, as a member of [490] the successive firms of Smith & Willey and Finch & Willey, to make arrangements for the reduction of debts due from those firms, is plain. His house being under liabilities, it became his proper business to make arrangements for their liquidation, and to enter into such correspondence with creditors as might be necessary for that purpose. And after such representations made by him, or by the firm of John Finch & Sons, of which he was a partner-representations not for the benefit of John Finch & Sons only, but most materially affecting the interest of the firms of Smith & Willey and Finch & Willey (because it was on the faith of those representations that the company forbore suing the latter firms-it was on the faith of those admissions by Edward Finch, as a member of those successive firms, to the effect that there was this large debt outstand

ing and still due to the company, and that the company had therefore the security of Mr. Smith whatever it might be worth, and the security of Mr. Willey whatever it might be worth, in addition to the security which they had already from the firm of John Finch & Sons, that the company forbore to sue the firms of Smith & Willey and Finch & Willey)-after all these representations it is impossible, alike for the firm of Finch & Willey and for that of John Finch & Sons to say that, notwithstanding all that had passed, there was an arrangement between their firms by which they kept their accounts all as one joint account, and that, by applying the doctrine of appropriation of payments to all moneys paid in by Smith & Willey or Finch & Willey to the firm of John Finch & Sons, they are entitled to consider that debt, which one of their partners so admitted to be due, as a debt which has been liquidated by the appropriation of those payments in order of date. As between John Finch & Sons and the successive firms of Smith & Willey and Finch & Willey that doctrine would no doubt apply; but as between the Low Moor Company and those firms it was not competent for either of such firms so to arrange their accounts as to re-[491]-sult in the liquidation of a debt, which a common member of both firms had thus represented to the company as outstanding. It appears to me, therefore, that when I direct an inquiry as to the amount due to the company in respect of these transactions, I must give such directions as will prevent the doctrine of appropriation from being thus applied by the Defendants.

That an inquiry must be directed is clear. I cannot hold that the mere statement of one partner in a firm, to the effect that there is a debt due from such firm, is in itself sufficient to bind his co-partner as to the amount so admitted to be due; and as I cannot say, upon the evidence in this case, that the amount due from the Defendants, Finch & Willey, in respect of the transactions now in question, is distinctly ascertained, the proper course will be to direct an inquiry upon the subject, in the terms which I shall presently mention.

There remain the two sums of £1540, 19s. 1d. and £6370, 15s. 1d. already mentioned, which, being clearly due from the firm of Finch & Willey, would, under any circumstances, have made it necessary to determine the third question in this cause. The £1540, 19s. 1d. is due for iron supplied through John Finch & Sons to the firm of Finch & Willey after the 31st of March 1851. And as to the £6370, 15s. 1d., the amount of dishonoured bills drawn by John Finch & Sons on Finch & Willey, accepted by Finch & Willey, and indorsed by John Finch & Sons to the Low Moor Company, I apprehend that the bills so indorsed gave the company a good claim on the estate of Finch & Willey. In cases of bankruptcy the rule as to the right of proof by a creditor holding a security is that, where the security is that of the bankrupt alone, the creditor cannot prove without giving up his security; but where it is the security, not of the bankrupt only, but of a third party, then the creditor may prove [492] for the full amount of the debt, and still retain the security for the amount for which he has the additional security of such third party. That is the position in which the Low Moor Company stands with reference to the bills accepted by the firm of Finch & Willey. The rule last mentioned has a direct bearing upon the third and last question in this case.

The third and last question is whether the Plaintiffs and the Defendant, Wickham, are entitled, under the deed of inspection, to a double demand, or double proof as it is called, against the two estates.

Whatever may be the true construction of the deed of inspection upon other points, as to which some discussion arose in the argument, it is admitted to have operated as an agreement by all the parties that the estates of the two firms should be administered as if both firms had committed acts of bankruptcy on the 4th of June 1851.

The question therefore is, what would be the effect of holding both these firms to have committed acts of bankruptcy on that day?

It was argued that, Edward Finch having survived his partner, Willey, the whole estate was in truth the estate of Edward Finch. That of course is not so. The point is expressly determined in Ex parte Leaf (Mont. & C. 662), where an attempt was made to take a distinction upon the question of order and disposition, and the facts were, in some respects, favourable to that view. There, a sum of money standing

in the books of the bank to the credit of the deceased partner and of the surviving partner, who became bankrupt, had been drawn out by the surviving partner for a particular purpose, upon an undertaking to return it if the purpose failed; and [493] the purpose did fail. It was argued that the money was left in the order and disposition of the surviving partner, and that his drawing it out of the bank raised a strong inference to that effect; but the Court held that, the purpose having failed, the whole was remitted to its former position; and that, there not having occurred a sufficient lapse of time (for time would be an important ingredient in estimating the question of order and disposition), it was impossible to say that the money ceased to be part of the joint estate; consequently, the money so dealt with must be treated as joint estate, and applicable for payment of the joint debts of the partnership. The same point was assumed in Ex parte Taylor (Mont. 240), where again the whole question turned on reputed ownership. It was conceded that a large part of the property was to be administered as the joint estate of the bankrupt partners and of their deceased partner; but, as to certain of them, there was a dispute whether there was reputed ownership; and it was held that as to some parts of the property in question there was, but as to others there was not. Here there can be no question of reputed ownership. Willey died in March 1851, and according to the deed of inspection the firm is to be deemed to have committed an act of bankruptcy on the 4th of June following. It does not appear that administration was taken out; but, if it was, that circumstance is not material. There evidently had not been such a lapse of time as would induce the Court to say that Edward Finch had acquired (or rather that his assignees would have acquired) the whole of this property by any doctrine of reputed ownership. It remained part of the joint estate of Finch & Willey.

Then, since the property remained the joint estate of Finch & Willey, it follows as a necessary consequence that the doctrine of Ex parte Moult (Mont. & B. 28), as it was termed in argument, has no application. That doctrine, which in truth had been [494] acted upon after some conflict of opinion, in many earlier cases, is simply this, that you cannot claim through the medium of one partner against the partnership. Consequently where, as in Ex parte Moult, a party is engaged in two trades-engaged alone in one trade, but with a co-partner in another-you cannot, in respect of his dealings as such sole trader, have any right of proof against the estate of his co-partner. That doctrine was followed by the Chief Judge in bankruptcy, the present Lord Justice Knight Bruce, who considered himself bound by it, although he expressed that he did not himself acquiesce in it. In a case in which three persons, partners in a firm of six, were engaged in a separate trade, he seemed to consider that the same rule was applicable. (Ex parte Hinton, 1 De Gex, 550.) But in the present case there is a stranger introduced. The securities are not the securities of Edward Finch alone, but of Finch & Willey, and Willey had no concern whatever in the firm of John Finch & Sons. It is, therefore, a collateral security which the company has acquired, and one on which they have a distinct right of proof.

It was scarcely disputed that the company would be entitled to a right of double proof, provided the estate were held (as I have held it) to be the joint estate of Finch & Willey, and not that of Edward Finch alone. But if authority were required, Ex parte Adam (2 Rose, 36; S. C. 1 V. & B. 493) is an express authority in point. There a stranger was introduced into one of the two firms, and that circumstance was held to bring the case within the application of the rule to which Ex parte Moult was an exception; viz., that where there are two firms, and one of them contains one partner who is a stranger to, as well as one partner who is a member of, the other, there you may prove the paper of both firms against the estates of both.

Such being the rule, the right of double proof in case both the firms now in question had become bankrupt would be clear.

[495] The result therefore is that, under the deed of inspection, the company is entitled to prove the whole £46,961, 3s. 11d. against the estate of John Finch & Sons; and to prove the £1540, 19s. 1d., the £6370, 15s. 1d., and such further sum as shall be found due upon the account which I am about to direct, against the estate

of Finch & Willey, subject of course to their not receiving more than 20s. in the pound.

Declare that the Plaintiffs and the Defendant, Wickham, the partners in the firm of the Low Moor Company, are entitled, under the trusts of the deed of inspection, to rank as creditors upon the estate of John Finch & Sons for the debt or sum of £46,961, 3s. 11d.; and also to rank as creditors upon the estate of Finch & Willey for the following sums, part of such last-mentioned sum (that is to say), the sum of £6370, 15s. Id., being the amount of the bills drawn by John Finch & Sons, and accepted by the firm of Finch & Willey, and indorsed by John Finch & Sons to the said company; the sum of £1540, 19s. 1d., being the balance due from Finch & Willey to the said company for Low Moor iron sold to them after the 31st day of March 1851; and such further sum as on the inquiry hereinafter directed shall be found to have been due to the said company from the firm of Finch & Willey on the 4th day of June 1851, but so as not to receive from the estates of John Finch & Sons a greater dividend on the amount for which the said company shall rank as creditors on the estate of Finch & Willey, than with the dividends to be received from the last-mentioned estate shall amount in the whole to 20s. in the pound.

And let an inquiry be made what sum of money, other than the said two sums of £6370, 15s. 1d. and £1540, 19s. 1d., was, on the 4th day of June 1851, due from the firm of Finch & Willey to the said company on the whole of the transactions between the firm of John Finch & Sons, as agents of the said company, and the successive firms of Smith & Willey and Finch & Willey; and in making such inquiry all sums of money which shall be credited to the said firms of Smith & Willey and Finch & Willey in the accounts between the firm of John Finch & Sons and the respective firms of Smith & Willey and Finch & Willey, and shall not have been expressly appropriated to the payment of moneys due to the said company, shall, in the first instance, be appropriated in satisfaction of any moneys due at the date of such credit to the firm of John Finch & Sons on their own account, and not as agents of the said

company.

[496] FRASER v. KERSHAW. March 15, 1856.

[S. C. 25 L. J. Ch. 445; 2 Jur. (N. S.) 880; 4 W. R. 431.]

Partnership. Bankruptcy. Right to sell of solvent Partner. Of Execution Creditor. Injunction. Tenant in Common. Trover.

The power of a solvent partner, upon the bankruptcy of his co-partner, to sell the partnership property is given him in his personal capacity, to enable him to wind up the affairs of the partnership, and cannot be transferred by him to another, either by assignment of "all his share and interest" in the partnership, or by exposing himself, although bonâ fide, to a judgment under which all such share and interest is taken in execution.

Where partnership goods had been taken in execution upon a bona fide judgment against a solvent partner whose co-partner was bankrupt, upon bill filed by the assignee, an injunction was granted to restrain the judgment creditor, who had purchased all the share, right and interest of the solvent partner in the goods, and had subsequently professed to sell the whole as her own property, from delivering possession of the goods to the purchaser.

And held, that the Plaintiff had not deprived himself of his right to this injunction by his own misconduct in violently putting the Defendant out of possession. Observations on the rule that one tenant in common cannot maintain trover against another.

John Travis and Thomas Kershaw, from March 1855 to the end of January 1856, carried on business as cotton spinners in co-partnership, under the firm of Travis & Kershaw.

On the 12th of February 1856 the Defendant, Ann Kershaw, being a creditor of Thomas Kershaw, obtained a judgment against him for £1621, 8s. 7d.

On the 19th Travis was adjudicated a bankrupt. The Plaintiff was appointed assignee of his estate and effects, of which possession was taken by the messenger of the Court of Bankruptcy on the same day.

On the 20th machinery, materials and utensils in or about the cotton mill, and which formed part of the co-partnership property, were seized by the sheriff under a writ of fieri facias issued upon the judgment obtained by the Defendant; and, on the same day, the share, right and interest of Thomas Kershaw in the said machinery, materials and utensils were sold by the sheriff to the Defendant.

Shortly afterwards the same machinery, materials and utensils were advertised for sale by auction, to be held on the 27th of February. Such sale was advertised as being [497] on the instructions of the Defendant, who was described as the owner of the property.

On the 26th of February Travis and Thomas Kershaw were adjudicated bankrupts, and the Plaintiff was appointed official assignee of their joint estate and effects, of which, on the same day, possession was taken by the messenger of the Court.

Notices stating that the goods advertised for sale were part of the property of the co-partnership, and requiring that no sale should be attempted, were served by the Plaintiff on the Defendant, her solicitor and the auctioneer, before the time fixed for the sale. The Plaintiff also issued an advertisement, stating that the goods in question were part of the co-partnership property, and were then vested in the Plaintiff as official assignee, and cautioning the public against purchasing.

The Defendant thereupon issued a counter advertisement, stating that the machinery and effects advertised for sale were her absolute property under a purchase made by her for full value from the sheriff; that the Plaintiff had no title; and that she would indemnify the purchasers.

The sale proceeded, all the said machinery, materials and utensils were sold, and the Defendants received deposits from the purchasers.

The Plaintiff then filed his bill for an account, and to have the rights of the parties declared; and for an injunction to restrain the Defendants from delivering possession of the said machinery, materials and utensils to the purchaser or alleged purchaser, and from otherwise selling or disposing thereof, and from in any manner intermeddling with the co-partnership property so as to interfere with the rights of [498] the Plaintiff as official assignee of the estate and effects of John Travis and Thomas Kershaw; and for a receiver.

It appeared that the Plaintiff had violently put the Defendant out of possession of her moiety of the goods in question; upon which the Defendant was about to recover possession by force but was deterred by the opposition to be encountered.

Mr. Rolt, Q.C., and Mr. Field now moved for an injunction and receiver, as prayed.

The Defendant, purchasing of the sheriff, became tenant in common with the Plaintiff per Lord Holt (1 Salk. 392); Collyer on Partnership, 2d edit. p. 560. The Plaintiff might have filed a bill against the sheriff to restrain him from proceeding under the execution, and selling the stock and effects; much more is the Plaintiff entitled to this injunction.

[They referred to the cases cited in Collyer on Partnership, pp. 560, 564, and Young v. Keighly (15 Ves. 557, 559, et seq.), Taylor v. Fields (Id. 559, n.), Bevan v. Lewis (1 Sim. 376), West v. Skip (1 Ves. sen. 242).]

Mr. Daniel, Q.C., and Mr. Rogers, for the Defendant.

The motion must be refused. In such a case as this trover would not lie against the Defendant, for one tenant in common cannot maintain trover against another: Mayhew v. Herrick (7 C. B. 229); and the Plaintiff is tenant in common with the Defendant.

Besides, the bankruptcy of Travis gave Thomas Kershaw, as the solvent partner in the firm, a right to sell the part-[499]-nership property for payment of partnership debts: Fox v. Hanbury (Cowp. 445). And this right has passed through the sheriff to the Defendant. The Defendant selling may be liable to account; but the motion assumes that the sale is so radically vicious that the Court ab ante can interfere.