bankrupt, it was held that the holder of the note might prove against both the joint estate of the firm and the separate estate of the two partners who had signed the note. But the contracts must be distinct, although they may be contained in the same instrument.

Interest. It is provided by the Act that if there is any surplus after payment of the debts, it is to be applied in payment of interest from the date of the receiving order, at the rate of 4 per cent. on all debts proved in the bankruptcy. The Rules of the Second Schedule also provide that on any debt or sum certain, payable at a certain time or otherwise, whereon interest is not reserved or agreed for, and which is overdue at the date of the receiving order, and provable in bankruptcy, the creditor may prove for interest at a rate not exceeding 4 per cent. per annum to the date of the order from the time when the debt or sum was payable, if payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when a demand of payment in writing has been made; provided that by such demand notice has been given to the debtor that interest will thereafter be claimed (see Schedule 2, rule 20).

Debt payable at a Future Time. A creditor may prove for a debt not payable when the debtor committed an act of bankruptcy as if it were payable presently, and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the rate of 5 per cent. per annum, computed from the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted (see Schedule 2, rule 21).

Admission or Rejection of Proofs. The trustee

shall examine every proof and the grounds of the debt, and in writing admit or reject it, or require further evidence in support, and for the purpose of any of his duties in relation to proofs he may administer oaths.

If a proof is rejected, the trustee must state in writing to the creditor the grounds of the rejection; but if such creditor is dissatisfied with the decision given by the trustee, the Court may, on application, reverse or vary it. On the other hand, if the trustee thinks that a proof has been improperly admitted, the Court may, on his application, after notice to the creditor, either expunge it or reduce its amount. The Court may also expunge or reduce a proof upon the application of a creditor, if the trustee declines to interfere in the matter, or, in the case of a composition or scheme, upon the application of the debtor.

Before the appointment of a trustee the official receiver shall have all the powers of a trustee with respect to the examination, admission, and rejection of proofs (see Schedule 2, Rules 22-27).

How Debts Paid. Primâ facie, all debts proved in the bankruptcy are to be paid pari passu. To this

rule, however, there are some important exceptions of what are known as preferential debts; and in the distribution of the property of the bankrupt, preferential debts must be paid in priority to all others. It is worthy of notice, however, that in the present Act, as first drafted, a vigorous effort was made to obtain advantage for the general body of creditors, by limiting in a very great extent these priority claims. No less than two-the right of a landlord to claim for rent and the claim for rates and taxes-were originally omitted. Unfortunately for the general body of the creditors, in committee these were replaced as they existed in the old law.

Preferential Debts. The debts under the Act which are to be paid in priority to all other debts are as follows:

(1) All parochial or other local rates due from the bankrupt at the date of the receiving order, and having become due and payable within twelve months next before such time, and all assessed taxes, land tax, property or income tax assessed on him up to the 5th day of April next before the date of the receiving order, and not exceeding in the whole one year's assessment :

(2) All wages or salary of any clerk or servant, in respect of services rendered to the bankrupt during four months before the date of the receiving order, not exceeding 507.; and

(3) All wages of any labourer or workman not exceeding 50%., whether payable for time or piecework, in respect of services rendered to the bankrupt during four months before the date of the receiving order.

These debts rank equally between themselves and are to be paid in full, unless the property of the bankrupt

is insufficient to meet them, in which case they must abate in equal proportions (sect. 40).

In the case of partners the joint estate is applicable in the first instance in payment of their joint debts, and the separate estate of each partner for his separate debts. If there is a surplus of the separate estates, it is to be dealt with as part of the joint estate. If there is a surplus of the joint estate, it is to be dealt with as part of the respective separate estates, in proportion to the right and interest of each partner in the joint estate.

Special provision is also made for the case of an apprentice or articled clerk whose master becomes bankrupt (see sect. 41).

Landlord's right of Distress. And by sect. 42, "The landlord or other person to whom any rent is due from the bankrupt may at any time, either before or after the commencement of the bankruptcy, distrain upon the goods or effects of the bankrupt for the rent due to him from the bankrupt, with this limitation, that if such distress for rent be levied after the commencement of the bankruptcy, it shall be available only for one year's rent accrued due prior to the date of the order of adjudication; but the landlord or other person to whom the rent may be due from the bankrupt may prove under the bankruptcy for the surplus due, for which the distress may not have been available." The term "order of adjudication" in the above section includes an order for the administration of the estate of a debtor whose debts do not exceed 50%. (see post, p. 103), or of a deceased person who dies insolvent (see post, p. 113). And by Rule 19, schedule 2 of the Act, "when any rent or other payment falls due at stated periods, and the receiving order is made at any time

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other than one of those periods, the person entitled to the rent or payment may prove for a proportionate part thereof up to the date of the order, as if the rent or payment grew due from day to day."

Rights of Friendly Societies, &c. It is further provided that nothing in the section shall alter the effect of sect. 5 of the Act 28 & 29 Vict. c. 86, "to amend the Law of Partnership," or "shall prejudice the provisions of the Friendly Societies Act, 1875."

The statute 28 & 29 Vict. c. 86, after declaring certain persons not to be partners, though they may be interested in a trade or undertaking carried on by another person; and that the advance of money by way of loan to a person engaged in any trade or undertaking, upon a contract in writing that the lender shall receive a rate of interest varying with the profits or shall receive a share of the profits, shall not constitute such lender a partner, enacts, by section 5, that "in the event of any such trader as aforesaid being adjudged a bankrupt, or taking the benefit of any act for the relief of insolvent debtors, or entering into an arrangement to pay his creditors less than 20s. in the pound, or dying in insolvent circumstances, the lender of any such loan as aforesaid shall not be entitled to recover any portion of his principal or of the profits or interest payable in respect of such loan. . . . until the claims of the other creditors of the said trader for valuable consideration in money or money's worth have been satisfied."

Under the Friendly Societies Act if the bankrupt is an officer of a friendly society, and has at the time of his bankruptcy any money or property belonging to the society in his hands, the trustees of such society have a preferential claim thereon in priority to any