the estate of the original partners in respect of the original debt, or against that of the remaining partners in respect of the security, for the security, though void as to the original, is valid as to the remaining partners (a).

In accordance likewise with this rule, if a bill be drawn by one of several partners upon the firm, or by the firm upon an individual partner, the holder of such security, if not ignorant at the time of taking it of the connexion between the drawers and acceptors, must elect whether he will prove against the joint estate or against the estate of the individual partner. In Ex parte Bigg (b), C. drew a bill of exchange upon H. & Co., which they accepted. The firm of H. & Co. consisted of C. himself, and four others. Upon the bankruptcy of H. & Co., the holders who had proved the bill against the joint estate in respect of the acceptance, sought to establish an additional proof against the separate estate of the drawer. The objection to the application was, that at the time of taking the bill, the holders were not ignorant that C. was included in H. & Co. Lord Eldon refused the application, considering that, under the circumstances, the petitioners had only a right to elect; and that they had made their election. His Lordship said— "Where the object appears to be to give the bill a character of respectability by such distribution of the names of a partnership, the Court has said that the parties to such arrangement shall not avail themselves of it, against their knowledge of the method in which the obligation of the firm ought regularly to be created."

From this case an inference might be drawn, that where the holder of the bills is ignorant at the time he takes them of the partnership between the drawers and acceptors, he will be entitled to double proof (c), although the holders and acceptors are not in distinct partnerships, as well as in an aggregate partnership. Lord Eldon also in another case (d) appears to establish this inference; for he says, "In all the cases in which the holder has been allowed to avail himself of his security to the extent of its utmost liability, there has either been an ignorance of the union of the parties in one partnership, or a subdivision

(a) Ex parte Liddiard, 2 Mont. & A. 87; 4 Dea. & C. 603.

(b) 2 Rose, 37.

(c) See post, section 8.

(d) Ex parte Bank of England, Rose, 82.

of them into distinct trading establishments." On the other hand, a learned writer seems to think that ignorance or no ignorance of the connexion of the parties is not a question to be weighed in favour of the holder, in cases where the general partnership is not subdivided into distinct firms (a). And this opinion seems to rest on a fair foundation; for, in another report of Ex parte Bigg (b), it does not appear that Lord Eldon laid any stress upon the circumstance of the holder's being ignorant of the connexion between the parties to the bill. On the contrary, he is there reported to have said, that "whatever might be the right of the holder of such bill without notice that the parties were the same, the present petitioner had such notice, and was not entitled to a double proof."

Upon the whole, it may be laid down, that where the drawers and acceptors or indorsers of a bill together form a partnership, but do not also form distinct firms respectively, the holder of such bill must, in all cases, elect whether he will prove it against the joint estate, or against the separate estates of the several parties to the bill.

But the case is otherwise when the drawers and acceptors or indorsers of a bill together form a partnership, and likewise form distinct firms respectively (c).

II. When a debt has been converted with extinguishment, it is obvious that the creditor can only prove it according to its new quality (d). But, where it has been converted without extinguishment, the creditor may elect whether he will prove it according to its old or new quality. Therefore, where the creditor of a partnership took a joint and several bond from a firm, and afterwards took a bill indorsed to him by the firm in part satisfaction of his debt, and the bill was proved under a commission against the acceptor, it was held, that the creditor might prove under the bond, and, consequently, might proceed against either the joint or separate estate (e). Upon the same principle, where a joint creditor took, as a collateral security, a draft from a solvent partner (f)—and again, where a joint cre

(a) Eden, B. L. 183, 184.
(b) 1 Mont. Partn. 130.
(c) Post, section 8.

(e) Ex parte Hay, 15 Ves. 4, ante,

p. 617.

(f) Ex parte Roxby, ante, p. 616.

(d) See ante, p. 614, et seq.

ditor took a separate bill for his joint debt (a)-it was held, that he might elect to prove according to the quality either of the original or the converted debt. Similarly, where a separate creditor took a joint note (b)—and again, where a separate creditor took a joint bill (c)-it was held, that he might elect in like manner.

Where debts have been adopted or converted without the creditor's taking a new security, but only giving his assent to the arrangement, this is, à fortiori, a conversion without extinguishment. And therefore, where a partnership agreed to consolidate their separate debts, it was held, that a separate creditor who had assented might elect (d). So, where the remaining partner agreed to take the joint property and pay the partnership debts, and the partnership was dissolved on these terms, and the trade was continued by the remaining partner, it was held that a joint creditor who had assented might elect (e).

III. We have already observed, that where a debt has been converted by a debtor, by means of collusion with his (the debtor's) copartners, the debt may be treated as joint or several (f). Therefore, where a partner held property as a trustee, and, with the knowledge of the firm, applied it to the use of the firm, it was held, that the cestui que trust might prove against the joint estate, or against the separate estate of the trustee (g).

(a) Ex parte Hodgkinson, ante, p. 616.

(b) Ex parte Seddon, ante, p. 615. (c) Ex parte Lobb, Ibid.; Ex parte Meinhertzhagen, ante, p. 616.

(d) Ex parte Clowes, ante, p. 618; Ex parte Apsey, 3 Bro. 265. As to assent being necessary, see ante, p. 622.

(e) Ex parte Freeman, ante, p. 620; Ex parte Fry, ante, p. 621.

(ƒ) Ante, p. 622.

(g) Ex parte Watson, 2 Ves. & Bea. 414; Ex parte Heaton, Buck, 386. In such case the copartners who have notice of the appropriation of the trust-money to the use of the firm, become, constructively, trustees consenting to a breach of trust:

and trustees committing breach of trust are jointly and severally liable. Keble v. Thompson, 3 Bro. 112. Where A. and B., trustees, lent trust-money to a firm of which A. had been a member, B. receiving indemnity for the loan from the cestui que trusts-upon the bankruptcy of the firm, and also of A., B. was allowed to prove the whole sum lent against the estate of the firm; and one of the cestui que trusts, who, upon coming of age, indemnified B., but did not ratify the loan, was allowed to prove her share of the trust-money against the separate estate of A. Ex parte Beilby, 1 Glyn & Jam. 167.

So, where a partner had money intrusted to him as assignee of a bankrupt, which, with the knowledge of his copartner, he applied to the uses of the firm, it was held, that the sum so applied might be proved against the joint estate, or against the separate estate of the assignee (a). But where a partner applied trust-money to the uses of the firm, without the knowledge of his copartner, it was held that the debt did not thereby become joint, and therefore, that the cestui que trust was not entitled to elect (b).

Where A. employed B. & C. as his stock-brokers, and, for the purpose of more convenient transfer, allowed certain stock belonging to him to stand in the name of B. alone, and B., without the knowledge of his copartner, sold the stock and paid the produce into the partnership funds, Sir L. Shadwell held, that, upon the bankruptcy of B. & C., A. was entitled to prove against the separate estate of B., or against the joint estate of B. & C. (c).

IV. Where a firm, consisting of a dormant and an ostensible partner, become bankrupts, it has been invariably held, that a creditor who dealt with the ostensible partner, not knowing that he had a dormant partner, may prove either against the joint estate or against the separate estate of the ostensible partner (d). And where there is a joint commission against A. and B., as partners, but the latter is a dormant partner, and the joint creditors have resorted to the separate estate of A., thereby diminishing A.'s separate estate, and exonerating the joint estate, so as to produce a surplus of it, the separate creditors of A. have a lien upon that surplus to the extent that their funds have been diminished by the election of the joint creditors (e).

V. Although it is a general rule that a creditor cannot split a demand, and prove part under the fiat, and proceed at law

(a) Smith v. Jameson, 5 T. R.

601.

(b) Ex parte Apsey, 3 Bro. 265. (c) Ex parte Turner, Mont. & M'A. 255.

(d) Ex parte Norfolk, 19 Ves.

458; Ex parte Watson, Id. 459: and see Binford v. Dommett, 4 Ves. 434; Ex parte Hamper, 17 Ves. 412; Ex parte Matthews, 3 Ves. & Bea. 125; Ex parte Hodgkinson, Coop. 101.

(e) Ex parte Reid, 2 Rose, 84.

for the remainder (a); yet, it seems, that where a demand against a partnership is secured, as to part of it, by a joint security, and as to the rest, by a joint and separate security, the creditor may prove the former part against the joint estate, and the latter part against the separate estate. In Ex parte Ladbrooke (b), A., B., and C. were partners. At the time of their bankruptcy, £27,620 was due from them to their bankers, on a balance of account. Such balance was covered by joint promissory notes of the bankrupts, to the extent of £18,000, and also by a mortgage of some property belonging to A., with joint and several covenants from each of them for the payment of the whole balance. It was held, that the partners were entitled to pursue the joint liability of the bankrupts on the promissory notes, to the extent of the amount of those notes; in other words, to prove against the joint estate for £18,000; and that, with regard to the residue, after deducting the mortgage security, which fetched only £300, they were entitled to prove the ultimate remainder of £9320 against the separate estate of A., by virtue of his several covenant.

Again, A., B., C., and D., partners, gave to their bankers a joint and several promissory note for £2000, to secure future advances. When the advances had amounted to £1950, A. executed a separate mortgage to the bankers, to secure that sum and all future advances, with a proviso, that such advances, together with the sum of £1950, should not exceed £3000. The advances made to the partners considerably exceeded £3000, and they afterwards became bankrupt. It was held, on the authority of Ex parte Ladbrooke, that the bankers who had obtained repayment of the £3000 by sale of the mortgage security given by A., might prove the balance of the debt on the promissory note, against the separate estate of one of the other partners. In this case it may be remarked, that on the execution of the mortgage, the promissory note was not given up to be cancelled, and further, that the bankers, on petitioning for liberty to prove, swore that the mortgage was intended to be an additional security to the promissory note (c).

Conversely, where the separate debt of one partner is secured

(a) Ex parte Matthews, 3 Atk. 816; Ex parte Crinsoz, 1 Bro. 270. (b) 1 Glyn & Jam. 81.

(c) Ex parte Bate, 3 Dea. 358. Dissentiente, Erskine, C. J.