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have issued had no notice of the act of bankruptcy at the time of executing or levying the execution. This enactment, though it clearly embraces executions against the partnership effects, where all the partners have committed acts of bankruptcy, does not seem to meet the objections raised by Lord Eldon to the validity of joint executions after the bankruptcy of one partner. Lord Eldon has held clearly, that where there is a bankrupt and a solvent partner, it is not competent for execution creditors to disappoint the arrangement made in bankruptcy for the equal distribution of the partnership property (a). And the grounds for this opinion appear to have been, that an execution levied on the partnership effects is overreached even at law by a previous act of bankruptcy committed by one partner. Therefore, where a bill was filed by the assignees of a bankrupt partner, for an injunction against a joint creditor, who had, after the bankruptcy, though before the commission, attached the partnership goods in the Lord Mayor's Court, and obtained judgment on the attachment, Lord Eldon granted the injunction, upon the principle, that a separate commission severs the joint tenancy, and vests the bankrupt partner's share of the joint property in the assignees, by relation to the act of bankruptcy; and that the action and attachment in the case before him were at variance with that principle, the issue averring the effects to be the joint property of the partners (6).
So in a subsequent case, in which a similar order was made (c), Lord Eldon is reported to have said, that if, after an execution against one partner, a commission of bankrupt issues against him upon an act of bankruptcy antecedent to the execution ex.
(a) 3 Mer. 283.
cy.” It might be inferred from (6) Barker v. Goodair, 11 Ves. these expressions that he thought, 78.
if the commission had not issued (c) Dutton v. Morrison, 17 Ves. until after the return of the verdict, 193. In one part of his judgment, the execution would have been in this case, Lord Eldon seems to lay available. But, in the very same some stress upon the circumstance judgment he says, “there was no of the commission being “ of even actual execution under the attachdate with the verdicts;" and in an- ments at the time the commission other part he says, “the question issued, and if there had been, it was is, what is the effect of the commis - immaterial ;” and the latter dictum sion, the attachments, under which is confirmed by his decision in verdicts of even date were obtained, Wait's case, infra, p. 592. and the preceding act of bankrupt
ecuted, whatever may have been taken under the execution, becomes by relation the property of his assignees, to be applied among all the joint creditors, exactly as the application is made in bankruptcy. And in a still later case Lord Eldon acted upon this opinion; holding that joint creditors, who had taken joint effects in execution after an act of bankruptcy by one of the partners, could not retain them against the assignees under a separate commission afterwards issued by another joint credi. tor against that partner (a).
The judgment of Lord Eldon in these cases is certainly in accordance with the strict legal principles, that upon a commission of bankrupt issuing against one partner the interest of the bankrupt ceases, and the solvent partners become tenants in common with the assignees of the partnership effects, by relation to the act of bankruptcy; and therefore, that an execution levied against the effects of the partners, after such bankruptcy, is void. But, perhaps, it may be doubted whether this state of the law is consonant with strict justice. It seems to bear hard upon a creditor who has used due diligence, and has without fraud obtained execution for his debt. It may here be remarked, that in Bristow v. Potts (6), Lord Loughborough held an opinion directly at variance with Lord Eldon, and decided that the assignees of one of two joint debtors had no equity to obtain an injunction against creditors who had attached the joint estate. It must be admitted, however, with reference to the principles just stated, that Lord Loughborough's conclusion, in effect that the creditors of the two debtors should have execution against what was no longer partnership property, was, to use Lord Eldon's words, “a difficult conclusion.”
The obstacles which arise to a joint creditor bringing a joint action, after an act of bankruptcy by one of the joint debtors, will not be remedied by his taking out a separate execution against the solvent partner, unless execution be levied against that partner's separate estate. If he levy execution upon the joint estate, taking what he conceives to be the solvent partner's share, he can only hold it subject to all the partnership dealings (c). And it is clear that a joint creditor, bringing an ac
(a) In re Wait, 1 Jac. & Walk. 605.
(6) 11 Ves, 81, note (b).
(c) Ex parte Ruffin, 6 Ves, 119; West v. Skip, 1 Vez, 240.
tion against three persons in partnership, after an act of bankruptcy committed by one, cannot take out execution against the property of the two remaining partners. “Admitting," said Lord Eldon, “that he could, what is it that he can take? Is it more than what will appear to be property of the two, after an account of the estate of the three, and the joint demands upon them (a)?”
It is necessary to notice in this place the case of Brickwood v. Miller (6), in which a joint creditor, who had attached partnership property in the West Indies, after an act of bankruptcy committed by one of the partners, was held entitled to retain what he had attached, to the extent of satisfying his joint debts, and liable to account only for the overplus. In the course of his elaborate judgment of this case, Sir William Grant seems to throw some doubt on the decisions in Barker v. Goodair, and Dutton v. Morrison ; but he rests his judgment on the fact, that the partnership in the principal case was in the West Indies; and he argued that it was impossible to tell a creditor, that because he happened to reside in England, and his debt had been contracted there, he should not be allowed to take such remedies against his foreign debtor as the law of their country might permit.
Upon the whole, with the exception of particular cases, as that of Brickwood v. Miller, there seems ground to contend on the authority of the cases before Lord Eldon, that when one partner becomes a bankrupt, and a separate fiat issues against him, the Lord Chancellor may, on strict legal grounds, annul any
execution which has been levied on the partnership effects, after the act of bankruptcy committed. On the other hand, when execution is levied against the partnership effects, and afterwards a joint fiat issues against the whole firm, it seems clear that the extent and validity of such execution must be the same as in cases where there is no partnership (c); and will be regulated by the stat. 2 & 3 Vict. c. 29, the provisions of which have been already noticed.
IX. We ought not to conclude this chapter without obserying, that, until a man has actually become a bankrupt, and a
(a) 17 Ves. 211. (6) 3 Mer. 279.
(c) But see the judgment In re
Wait, 1 Jac. & Walk. 610.
fiat has been taken out against him, he may sue his debtors. Therefore, before the 6 Geo. 4, c. 16, there was some peril in paying a man who was known to be insolvent, though not a bankrupt. For instance, in Prickett v. Down (a), two partners stopped payment, and a commission of bankruptcy issued against one. It was held, that a debtor of the firm, who knew of the stoppage, could not refuse to pay his debt, on the ground that the other partner might have committed an act of bankruptcy, in which case his assignees might call upon the debtor to account for the money a second time.
But now, by the 6 Geo. 4, c. 16, s. 82, all payments (6) to a bankrupt are protected, provided the debtor had not, at the time of such payment, notice of any act of bankruptcy by such bankrupt committed. The protection, therefore, to the debtor ceases only after notice of his creditor's bankruptcy. In this case, if the bankrupt, before a fiat issued, require payment of his debt, it will be prudent for the debtor to wait till he is compelled by suit to discharge it. For payments enforced by coercion of law are valid against the assignees, in case a fiat be afterwards sued out (c).
(a) 3 Camp. 131.
(6) This enactment is now extended to all contracts, dealings, and transactions, by and with any bank
rupt. See 2 & 3 Vict. c. 29.
(c) Eden, B.L. 266; Mont. Partn. 248.
OF THE ADMINISTRATION IN BANKRUPTCY.
Of Joint and Separate Estate.
IN the words of Eyre, C. J.-"If all the partners become bankrupts, all the joint and all the separate property will vest in the assignees, whether the commissions are joint or several. If a separate commission issue against one partner, his assig. nees will take all his separate property, and all his interest in the joint property; if a joint commission issues against all, the assignees will take all the joint property, and all the separate property of each individual partner (a).” Now, as the rule of distribution in bankruptcy is this, "that the joint estate shall be applied to the joint debts, the separate to the separate debts, and the surplus of each reciprocally to the creditors remaining on the other (6),” it will be of the utmost importance to consider what is joint and what separate estate.
Joint estate is that in which the partners are jointly interested for the purposes of the partnership, at the time of the bankruptcy.
Separate estate is that in which the partners are each separately interested at the time of the bankruptcy.
It is not unusual to confine the term separate estate to that part of a partner's property which is unconnected with the partnership. But it may be applied to property used for the purposes of a partnership, if belonging to one or more partners,
(a) Bolton v. Puller, 1 Bos. & Pull. 539.
(6) Per Lord Loughborough, Ex parte Elton, 3 Ves. 242 ; post, sect. 3.