v. Sutton (a), the defendant and one Poynter had carried on business in partnership, under the firm of "James Sutton & Co." The partnership had been dissolved, and due notice given. It appeared that the note on which the action was brought was an accommodation note, created after the dissolution of the partnership, although it bore date before, and that the partnership name was put on by Poynter alone, without authority from the defendant; or that, even if it existed prior to the dissolution, it had not been put into circulation until after. The jury, under the direction of Lord Kenyon, found a verdict for the defendant. "To contend," said his Lordship, "that this liability to be bound by the acts of his partner, extends to time subsequent to the dissolution, is, in my mind, a most monstrous proposition. A man, in that case, can never know when he is to be at peace, and retired from all concerns of the partnership."

The same point had been treated as settled, in the previous case of Kilgour v. Finlyson (b); in which, though the terms of

(a) 3 Esp. 108. See Heath v. Sansom, 4 B. & Ad. 172. Where, after the dissolution of a partnership, a person who has been a clerk in the concern, is employed to wind up the affairs, and in the course of such employment negotiates a bill in the name of the firm, it is doubtful whether he can be sued upon the bill, not being a party to it; and at all events, if an action be brought against him on the bill, some proof must be given that he had no authority to negotiate such bills, or that he acted malâ fide. Wilson v. Barthrop, 2 M. & W. 863.

(6) 1 H. Bl. 155. In this case it appeared, that Scott was indebted to the partnership of Finlyson & Co., and Finlyson & Co. indebted to Sterling. After the dissolution of the partnership, Finlyson drew a bill in the name of the firm, and indorsed it in the name of the firm, accepted by Scott, to Kilgour. Kilgour discounted the bill by giving his promissory note for it. Finly

son then indorsed the note to Sterling, who discounted it, but retained the discount in discharge of the debt due to him from the firm of Finlyson & Co. The note became due before the bill, and Kilgour paid Sterling the amount of the note, when due. It was admitted, that Kilgour could not recover on the bill; but the Court also held, that he could not recover in an action against the partnership for monies paid to the use of the partnership. Lord Loughborough said— "When this note became due, the plaintiff paid it to Sterling, but at that time no debt was owing to him from the partnership; the payment, therefore, of the plaintiff was not a payment to the use of the partnership. Though the money raised by discounting his note before it was due, was in fact paid in discharge of a partnership debt, yet he cannot follow the money through all the applications of it made by Finly

son.

the notice of the dissolution, in the Gazette, were that "all demands upon the above firm will be paid by A., (one of the partners), who is empowered to receive and discharge debts due to the said copartnership;" yet it was clearly admitted, that A. was not thus authorized to draw or indorse bills in the name of the partnership, after the dissolution; and that no action could be maintained on such bills.

There is no doubt, however, that a retired partner may give authority by parol to a continuing partner, to indorse bills in the partnership name, after the dissolution of the partnership. And where the retired partner stated that he left the effects and securities of the firm in the hands of the continuing partner, for the purpose of winding up the concern, and that he had no objection to his using the partnership name, it was held, that the jury were justified in finding that the continuing partner had authority to indorse promissory notes so left in his hands in the partnership name (a).

An acceptance given in the name of the firm by the remaining partner, after dissolution, is not binding on the retired partner (b), although the bill be dated before dissolution (c). So, an acceptance given under similar circumstances to a person who had notice that the partnership was intended to be dissolved, cannot be enforced against the firm (d).

Lord Kenyon, at Nisi Prius (e), expressed a doubt whether, even if a bill were actually indorsed before the dissolution, but not sent into the world until afterwards, such an indorsement would be valid. But it is to be remembered, that the signature and indorsement are the acts which are obligatory on the makers. If, therefore, those acts were performed on a blank paper, stamped with a bill stamp, before dissolution, and the bill were filled up and negotiated by the remaining partners after dissolution, the original partners would nevertheless be liable on the bill, and would be estopped, as against an innocent indorsee, from saying that it was irregularly negotiated (f). This is deducible from the case of Usher v. Dauncey (g); in

(a) Smith v. Winter, 4 Mees. & Wels. 454.

(b) Ex parte Liddiard, 2 M. & A. 87; 4 Dea. & Ch. 603.

(c) Wrightson v. Pullan, 1 Stark.

375.

(d) Paterson v. Zachariah, 1

Stark. 71.

(e) In Abel v. Sutton, 3 Esp. 108. (f) See Russell v. Langstaff, 1 Doug. 513; Snaith v. Mingay, 1 Mau. & Sel. 87. (g) 4 Camp. 97.

which, however, the dissolution took place by the death of one partner; and consequently, the surviving partners only, and not the representatives of the deceased, were liable in the action; but, on the principles of that case, a retiring partner would be held liable under similar circumstances. The facts were as follows:-The defendants, together with Frederick Dauncey, had traded under the style of Daunceys, Cock, & Co.; and they had been in the habit, for the purposes of raising money, of drawing bills on H., which were discounted through the medium of a bill-broker. These bills were annually drawn, and indorsed in blank, and filled up with dates and sums, as the urgencies of business required. The bill, which was the subject of the action, had been drawn and indorsed in blank by Frederick Dauncey, in the partnership firm of Daunceys, Cock, & Co., in February, 1814, and given by him to a clerk, with a number of similar blanks, to be filled up for the use of the partnership. He died in March. The style of the firm was then changed to Daunceys & Squire. Afterwards, in April, the clerk of the defendants (not having, as he alleged, any blanks in the new firm) filled up the bill in question by inserting the date and sum, as usual. The bill was accepted by H., and discounted by the plaintiffs, who brought their action on the bill against the surviving partners. At the trial, Lord Ellenborough expressed his opinion, that, after the death of Frederick Dauncey, the bill might still be filled up so as to bind the survivors. The plaintiffs had a verdict, which the Court of King's Bench afterwards refused to set aside.

The moment the partnership ceases, the partners become tenants in common of the partnership property undisposed of from that time. They become, therefore, tenants in common of all partnership securities unindorsed, which were not issued before the dissolution. If, therefore, it be necessary to put such securities in circulation while the accounts are unliquidated, all the late partners must join in making them negotiable. In the words of Lord Kenyon—“If a bill is sent into circulation after the dissolution of a partnership, beyond all controversy, all the partners must join in the indorsement; and one, by putting the partnership name, cannot bind the rest (a)."

(a) 3 Esp. 110; and see Carvick v. Vickery, Doug. 653. In Adams v. Bingley, 1 M. & W. 192, A. & B.

being partners, C. borrowed money of the firm, and gave a promissory note for it, payable to B. only. A.

And, if a bill be drawn by A. after dissolution of his partnership with B., and the proceeds of the bill are applied to pay the partnership debts of A. & B., which A., on the dissolution, had assumed to pay, the holder of the bill can have no claim on B., in consequence of the particular appropriation of the proceeds (a).

IV. 1. In what has preceded, we have directed our attention to the liability which a retiring partner may possibly incur in respect of contracts made by the remaining partners. We have likewise seen that this liability may be avoided by proper caution. It now remains to consider by what means the retiring partner's responsibility for contracts made by the firm while he was a member, may be discharged either by operation of law or by special agreement with the creditor. The various degrees of liability of a retiring partner, or (as it will be seen afterwards) of a deceased partner's estate, to the creditors of the original firm, is strongly illustrated by those cases where there are cash accounts current between the firm and its customers.

Generally, where divers debts are due from a person, and he pays money to his creditor, the debtor may, if he pleases, appropriate the payment to the discharge of any one or other of those debts; if he does not appropriate it, the creditor may make an appropriation; but if there is no appropriation by either party, and there is a current account between them, as between banker and customer, the law makes an appropriation according to the order of the items of the account, the first item on the debit side of the account being discharged or reduced by the first item on the credit side (b). These general principles were fully established and enforced by Sir William Grant, in Clayton's case (c), “which was a case decided upon great

consideration, and is an authority of great weight (a)." There, the claim of Clayton against the estate of the deceased partner, Devaynes, under an account current with the house of Devaynes & Co., was limited and adjusted according to the principles above stated.

To apply these principles to cases of retiring partners. Where there is a cash account current between a firm and a customer, and the account is in favour of the latter, a retiring partner will be liable for the balance of this account at the time of his retirement. But if the account be continued, the balance for which the retiring partner is liable will be diminished by every payment which is made by the new firm, supposing such payments not to be appropriated to the discharge of any specific item; because, in this case, it is the first item on the debit side of the account which is discharged or reduced by the first item on the credit side. In the case of Brooke v. Enderby (b), Enderby was partner with Gilpin, in the business of woollen-draper, army clothier, and army agent, for the term of ten years. The plaintiff, Brooke, a lieutenant-colonel in the army, employed Gilpin as his agent, and likewise kept a running account with Gilpin, as his banker; Gilpin from time to time receiving the pay and allowances, and also the dividends due to the plaintiff on stock and other monies, on his account. Gilpin carried on business in his own name only. Enderby never interfered with the business, and was unknown to the plaintiff as a partner with Gilpin, until after the bankruptcy of Gilpin. After the 24th September, 1817, the day on which the partnership of Gilpin & Enderby expired by effluxion of time, and until Gilpin's bankruptcy, the dealings between Brooke and Gilpin were continued in the same manner as before, and the account between them was kept as before; no rest being made, nor balance struck in the account, from the 1st July, 1816, down to the bankruptcy of Gilpin. There was at all times a considerable balance due to Brooke. After the bankruptcy of Gilpin, Brooke brought his action against the partners, to recover the amount due to him; to which action Gilpin pleaded his certificate, and Enderby pleaded the general

(a) D. Abbott, J., 2 Barn. & Ald. 46.

(b) 4 Moore, 501; 2 Brod. & Bing. 70.