latter was held to be a specialty creditor of the estate of the deceased; it being settled, that if a covenant is broken, though the damages are unliquidated, the covenantee is a specialty creditor. And it was likewise held, that against this debt by specialty, the administrator of the deceased partner could not retain his own simple contract debt, though he might retain a debt in equal degree (a).

IX. 2. It frequently happens, as we have already had occasion to remark, that a partner appoints his copartner to be his executor. If the executor is indebted to the testator, his debt must be placed in the account, notwithstanding that it is extinguished at law. Generally speaking, this must have been the case even before the statute of 11 Geo. 4 & 1 Will. 4, c. 40; for, except where the executor took the residue as being undisposed of, his debt, which was included in the residue (b), was not extinguished in the consideration of a Court of equity (c). Now, however, even fewer cases can occur in the extinguishment of the executor's debt, because the above-mentioned statute gives the residue undisposed of to the next of kin, unless it appear by the will, that the executor is to take it beneficially.

A legacy by one partner to another of a certain sum, if he does not draw it out of trade, is a specific legacy (d).

X. We have already, in speaking of the claims of a surviving partner in certain cases, had occasion to mention just allowances (e). It should here be remarked, that, although the Court will not usually determine, in the first instance, what is

his personal estate, equally to be divided; and he made B. his executor. At A.'s death, B. owed A. two several sums, one secured by bond, the other unsecured. Lord Nottingham was of opinion, that the debts which the executor owed to the testator were not discharged, but ought to come into the account. See Carey v. Goodinge, 3 Bro. 110; Berry v. Usher, 11 Ves. 87.

(d) Ellis v. Walker, Ambl. 309. (e) Ante, p. 226.

a just allowance, yet it will direct that a positive allowance, fixed by the articles, shall be paid. Thus, in Hibbert v. Hibbert (a), the Master was directed to take an account of all dealings between the parties, who were wine merchants, and state what was due from any or either of the parties to the other, and to allow £200, agreed to be allowed by the articles, to the person occupying the house, in consideration of his entertaining the customers, but to the time only when the same had been allowed in the last account.

It is doubtful whether an allowance for treating the customers will, under any circumstances, or at any period of the cause, be sanctioned by the Court, unless it be expressly provided for or referred to by the articles. In the case of Thornton v. Procter (b), the plaintiff and defendant were partners in the wine trade. The plaintiff, for a space of nine years, and until the dissolution of the partnership, managed the whole business, and was at considerable expense in treating the customers, which was found to be necessary in that trade. The plaintiff had kept a cash account of all profits and expenses, and struck a balance every year. In such accounts there was no charge for entertaining customers. There was no proof of the plaintiff having ever, during the partnership, demanded any allowance on that ground. The plaintiff proved that £50 per annum would be a reasonable allowance to him for such expenses in entertainments, and that such an allowance was usual in the trade; and it was admitted that an article of that nature is commonly inserted in the agreement of copartnership. On reference to the Master, he allowed the plaintiff the £50 a-year for entertainments of customers. Exceptions being taken to the Master's report, the Court of Exchequer held, that there being no universal custom in the trade to make such an allowance to the acting partner, and it being, on the contrary, the common practice to insert such a clause in the agreement where it is intended to be made, this should have been inserted in the original articles of copartnership; and there being no such agreement, the Court could not make one. If the plaintiff were entitled to any such allowance at all, he must claim it as being a gross article of expenditure; and therefore, it should have been included in the account; but, having struck a balance (b) 1 Anstr. 94,

(a) Rolls, Trin. T. 1807.

yearly, without any such article in it, he should be concluded thereby.

When the bill charges a specific loss, occasioned by the misconduct of a partner on particular occasions, an inquiry will be directed on that point (a). This, however, is not of course, but upon a case made out of sufficient doubt to induce the Court to direct the inquiry (6).

XI. Before we quit this subject, it ought to be considered when, and at what rate, interest will be computed on the profits in the hands of any of the partners. It has been laid down by a learned writer, that, in all cases in which it is thought that justice would not be satisfied by the mere payment to the party of the balances to which he is entitled in the hands of another, and that he ought to have the advantage which has, or which, at the least, might have been made of the money, a Court of equity, in decreeing an account, will direct interest to be calculated accordingly (c). Therefore, in an account of the profits made by the remaining partners with the partnership stock in their hands after the dissolution, interest will be calculated on those profits (d). And in a case where the sale of a partner's share by his executors was set aside as irregular, one of his executors, who was also a partner, being in fact the purchaser, though in a circuitous manner-interest at £5 per cent. was directed to be computed on the purchase-money advanced, although no fraud was intended by any of the parties (e).

In these instances, the partner against whom interest is decreed, is considered by a Court of equity as a trustee for the partnership; and with regard to a trustee, the general rule is, that he is chargeable with interest, whenever he appears to have

(a) Hibbert v. Hibbert, supra. (b) Cooke's MSS.

(c) Jer. Eq. Jur. 543.

(d) 2 Russ. 348. This must surely mean profits invested, and not again employed in trade; for the party seeking relief must make his election between profits or interest. In Burden v. Burden, ante, p. 226, it was declared that the infant children of the testator were entitled to an account of the profits made since

his death; and it was referred to the Master to take the accounts, and inquire whether it would be most for the benefit of the infants to take the testator's share of the stock in trade and the profits, or the value of it at the time of his death, with interest. The Master reported the balance in favour of the profits, and the option was accordingly given for the larger sum. 1 Jac. & W. 134.

(e) Jac. 623.

made interest, and with the whole of the profits, whenever, by trading or otherwise, he has derived profits beyond the rate of interest (a). Where interest is decreed, it is usually simple interest only-£5 per cent. in the case of mismanagement, otherwise only £4 per cent. (b).

We ought here to notice another important question connected with the subject of interest, arising from a state of circumstances almost the converse of those which have just been considered; it is this-Whether, and under what restrictions, a partner winding up the affairs of the concern, and using due diligence for that purpose, is entitled to charge his copartner with interest on the excess of his payments beyond his receipts, on account of the late partnership? There seems to have been no express decision on this subject; and it is conceived, that if a partner have a right to interest under such circumstances, that right will be a legal, not an equitable right; and will depend, not on any general principles of law-for, generally, money lent does not carry interest-but upon the usage of trade; the usage raising an implied contract at law to receive interest on the principal advanced.

The usage of bankers to receive interest on advances made to their customers, has been expressly sanctioned by the Courts (c). There is likewise sufficient authority for insisting, that a similar usage extends to traders in general, upon an advance of capital for partnership purposes (d); this at least has always been the opinion of traders and accomptants in the city of London. On the other hand, it is manifest that a general custom of this kind might work great injustice, in cases where the party sought to be charged has not been regularly apprized of the advances made. The right, therefore, to demand in

(a) See 2 Fonbl. Eq. 186. (b) Jer. Eq. Jur. 544.

(c) Wright v. Bonter, 3 Chit. Laws of Commerce, 310; Gwyn v. Godby, 4 Taunt. 346; Arnot v. Redfern, 9 Moore, 209. As to the custom of India, see Boddam v. Riley, 2 Bro. 2.

(d) See Denton v. Rodie, 3 Camp. 493; and the dicta in Higgins v. Sargent, 2 Barn. & Cres. 348, 3 Dowl. & Ryl. 613; Page v. New

man, 9 Barn. & Cres. 378. There is a short note in Ridgway's Rep. temp. Hardwicke as follows:-" If in a current account between merchants, one of them has laid out a gross sum of money, the Court (i. e. of Chancery) will allow interest, notwithstanding it is a current account."-Omychund v. Barker, Ridgw. 285. But see 3 Price, 250. See further as to Interest, stat. 3 & 4 Will. 4, c. 42, sect. 28.

terest, under such circumstances, if it should ever be established by express decision, must be accompanied with some qualification in respect of notice to the party charged.

XII. With regard to costs, the general rule is, that the party against whom the balance is reported is, prima facie, the person to pay them. It has even been laid down, that the plaintiff always pays costs where an account turns against him (a). But Mr. Beames observes, that this passage expresses the rule too largely; for that, although costs usually follow the event of an account, yet it has been decided by the highest authority, that where the account is intricate and doubtful, there should be no costs (b); and this remark seems applicable to partnership accounts. And even where a bill filed by a partner for an account is dismissed on a point of law which was previously doubtful, it may possibly be dismissed without costs, if he was morally justified in proceeding. In Sumner v. Powell (c), the executor of a deceased partner had received from the survivors a joint covenant of indemnity from the partnership debts. Having afterwards been compelled to pay partnership debts, he brought his bill for an account and repayment against one of the other partners, the rest having become bankrupt; it was held, that having disposed of his original equity against the firm, he had no equity against this partner severally, the covenant being joint and not several; but the bill was dismissed, without costs.

It is the usual course of the Court, where mutual account is decreed, to reserve costs till after the report (d); but, where a partner is guilty of fraud, or of excluding his copartners from a due proportion of the profits, by means of a secret agreement, costs may be decreed against him up to the hearing, and the subsequent costs may be reserved (e).