Morley to pay the joint debts, without any concurrence on the part of the joint creditors, before the bankruptcy, does ipso facto, in the case of bankruptcy, convert these joint creditors into separate creditors of Henderson, either absolutely, or at their option. It is admitted, that, if bankruptcy were out of the question, the joint creditor could not sustain an action at law against Henderson alone, upon the same naked effect of the covenant. My first difficulty is, to apprehend the distinction in this respect between bankruptcy and no bankruptcy. I cannot apprehend how the fact of bankruptcy makes a man my creditor who does not otherwise sustain that character. I have always considered it to be essential to proof, that the bankrupt should be indebted to the party proving at and before the bankruptcy. The engagement of one partner with the other to pay the debts of the firm, can, as to the creditors of the firm, be considered only as a proposal that he is willing to become their sole debtor. If they accede to this proposal before the bankruptcy, then a contract to that effect is concluded, and under the bankruptcy they are his separate creditors. But their acceptance of him as their separate debtor, after the bankruptcy, comes too late, for he is then incapable of contract. For these reasons I am of opinion that the petitioners cannot be considered as separate creditors of Henderson."

This case of Ex parte Freeman seems to be consistent with most of those on the same subject that preceded it. It was, however, overruled by Lord Eldon. Nevertheless, as the grounds of Lord Eldon's decision do not appear, and as Sir John Leach decided the subsequent case of Ex parte Fry (a) in the same manner, there seems just reason to suppose, notwithstanding the observations of a learned writer (b), that the case of Ex parte Freeman was rightly decided.

In the two last cases, the agreement between the partners for conversion of their debts was contained in a deed inter partes. It is true, therefore, that in each case the creditors, as being strangers to it, had no remedy at law under the deed (c). It is apprehended, however, that these decisions did not turn merely on the circumstance of the creditors not having shewn

(a) 1 Glyn & Jam. 96.

(b) 1 Mont. Partn. 117.

(e) Barford v. Stuckey, 5 Moore,

23; and see the cases cited, Buck, 15, note (a).

their assent by executing the deed, but on their not having given any assent; that, in bankruptcy, the question of the conversion must depend on the assent, in whatever manner the assent is evidenced; that, although there be a deed, bare assent will be sufficient, though it would be insufficient at law; and that, where there is no deed, assent will be necessary (a), although perhaps it might be unnecessary at law (b).

The latter proposition is borne out by the case of Ex parte Hitchcock (c). There, A. gave his guarantee for the payment of certain bills accepted by B. Afterwards, A. and B. became partners. They paid part of the bills, and solicited the creditor's indulgence as to the remainder. Their solicitations, which were by writing, received no answer from the creditor, but he took no hostile proceedings against them. Upon the bankruptcy of A. & B., it was held that there was not sufficient evidence of assent by the creditor, to the conversion of the debt into a joint debt, to enable him to prove against the joint

estate.

But a debt may be treated by the creditor as joint or several, in all cases where it has been converted by the fraud of the debtor partner and his copartners (d).

Judgment of outlawry against two of three joint debtors does not make the debt a separate one as against the third debtor (e); nor does a separate execution, taken out against one of several partners, for a joint debt, convert that debt into a separate debt (f).

(a) Ex parte Hunter, 1 Atk. 223. (b) See the observations of Bayley, J., 2 Dow. & Ryl. 527. (e) 3 Dea. 507.

83.

(d) See post, sect. 5.

(e) Ex parte Dunlop, Buck, 253. (f) Ex parte Stanborough, 5 Madd.

SECTION III.

Of Proof in General.

In the words of Lord Hardwicke " Joint creditors, as they gave credit to the joint estate, have first their demand on the joint estate; and separate creditors, as they gave credit to the separate estate, have first their demand on the separate estate (a)." Again, in the words of Lord King (b) "It is settled, and is a resolution of convenience, that the joint creditors shall be first paid out of the partnership or joint estate, and the separate creditors out of the separate estate of each partner; and if there be a surplus of the joint estate, besides what will pay the joint creditors, the same shall be applied to pay the separate creditors; and if there be, on the other hand, a surplus of the separate estate, beyond what will satisfy the separate creditors, it shall go to supply any deficiency that may remain as to the joint creditors." This rule was afterwards deviated from by Lord Thurlow (c), but restored by Lord Loughborough (d), and followed by Lord Eldon (e).

It appears, therefore, that, putting out of the question the equitable right which either class of creditors has upon the surplus of either estate after payment of the other class of creditors, the joint creditors can only prove and receive dividends as against the joint estate, and the separate creditors as against the separate estate (f).

The rule has occasionally been productive of hardship. Thus, in Ex parte Jackson (g), W., a trader, died indebted to J., leaving all his personal property to his widow. After his death the

(a) Twiss v. Massey, 1 Atk. 67.
(b) Ex parte Cooke, 2 P. Wms.

500.

(c) Ex parte Hodgson, 2 Bro. 5; Ex parte Page, Id. 119; Ex parte Flintum, Id. 120; Ex parte Copland, Co. B. L. 248.

(d) Ex parte Elton, 3 Ves. 240; Ex parte Abell, 4 Ves. 837.

(e) Ex parte Clay, 6 Ves. 833; Ex parte Pinkerton, and Ex parte

Nuttal, there cited; and see Dutton v. Morrison, 17 Ves. 206.

(f) Ord. Loughborough, Mar. 1794, and 6 Geo. 4, c. 16, s. 62. Where a creditor has proved against the wrong estate by mistake, he will be permitted to transfer his proof to the other. Ex parte Vining, 1 Dea. 555.

(g) 1 Ves. jun. 131.

widow carried on the trade, and, having borrowed another sum from J., gave him a bond for the whole. Afterwards, she took into the trade her son, being a minor, and her nephew, who before was her servant. The new partners did not bring any property into the trade, nor were they to have any of the profits, nor bear any loss, but the nephew received wages, as before. The partnership lasted almost two years, till a commission of bankrupt issued against the widow and nephew, but not against the son. The petition was, that J. might be at liberty to prove his debt, and receive dividends under the joint commission. Lord Thurlow, though with great reluctance, felt himself bound to refuse the prayer of the petition, there being no fraud in the widow.

The rule is the same, whether the fiat be joint or separate. When the fiat is joint, the separate creditors may, under Lord Loughborough's general order (a), prove their debts and receive dividends out of the separate estate, that order directing that distinct accounts shall be kept of the joint and separate estates respectively. So, when the fiat is separate, and the assignees get possession of the joint property, the Court, upon the petition of the joint creditors, will order the assignees to keep distinct accounts of the separate and joint estate, and apply them to the payment of the separate and joint debts respectively, as when separate creditors prove under a joint fiat (b).

II. There are, however, three exceptions to the rule that a joint creditor shall not receive dividends with the separate creditors. 1st. Where a joint creditor is the petitioning creditor under a separate fiat (c); 2nd. Where there is no joint estate, and no solvent partner (d); 3rd. Where there are no separate debts (e). In the first case, the petitioning creditor, and, in the second, all the joint creditors, may prove against the sepa

(a) Ord. Mar. 1794. See Ex parte Crowder, 2 Vern. 706; Twiss v. Massey, 2 Atk. 67; where the relief, afterwards provided for by Lord Loughborough's general order, was granted on petition.

(b) Ex parte Tate, Co. B. L. 253; Ex parte Aspinwall, Id. 256; Ex parte Mervey, Ex parte Hill, Ibid. Formerly, the application must have

been made by bill, unless by consent. Ex parte Voguel, 1 Atk. 135; Hankey v. Garratt, 3 Bro. 457.

(c) Ex parte Hall, 9 Ves. 349; Ex parte Ackerman, 14 Ves. 604; Ex parte De Tastet, 1 Rose, 10; Ex parte Buckle, 1 Glyn & Jam. 34. (d) Ex parte Kensington, 14 Ves. 447. (e) Ex pere Chandler, 9 Ves. 35.

rate estate pari passu with the separate creditors. In the last case, as there are no separate creditors, the joint creditors will be admitted pari passu with each other, upon the separate

estate.

1. As to the first of these exceptions.

It was decided in Ex parte Crispe (a), that a commission or fiat may issue against one partner for a joint debt, though an action cannot be maintained against one, without joining the other parties; a commission being considered as an execution, and not as an action. Hence, a separate commission taken out by a joint creditor, being in the nature of an execution for his legal debt, it follows that he is entitled to take the dividends due upon his legal proof. Where, therefore, M., being an indorsee of A., B., & Co.'s acceptances for £1364, sued out a separate commission against A., and at the time of suing out the commission, L., the person for whom A. had discounted the acceptances, had, by payments on account, reduced the debt to £420-it was held, that M. was entitled to prove for the whole amount; that, for all that was received above £420, M. was a trustee for L.; and that the commissioners could not interfere with the trust (b).

This exception in favour of the petitioning creditor under a fiat against one partner, is expressly reserved by the 6 Geo. 4, c. 16, s. 62, which enacts, that a joint creditor shall not receive a dividend out of the separate estate, until all the separate creditors have been paid in full, "unless such creditor shall be a petitioning creditor in a commission [fiat] against one member of a firm." From which also it appears, that there is no exception in favour of a joint creditor taking out a commission against several members, part of the whole firm.

If a joint creditor sue out a joint fiat, he thereby binds himself to resort to the joint property only (c). And where a fiat is issued against a trader, as "surviving partner" of another, this being deemed a joint fiat, the petitioning creditor will not be allowed to claim upon the separate property (d).

Where a joint creditor takes out a separate fiat, which is re

(a) 1 Atk. 133; Crispe v. Perritt, Willes, 467.

(b) Ex parte De Tastet, 1 Rose,

(c) Ex parte Bolton, 2 Rose, 389. (d) Ex parte Barned, 1 Glyn & Jam. 309.