bills of exchange drawn by persons at Demerara, under the firm of A., B., & Co., and accepted by C. and D., who were in the firm of A., B., & Co., but likewise carried on a distinct partnership at Liverpool. The acceptors being unable to take them up, the petitioners resorted to the drawers, who, instead of satisfying the bills, assigned to the petitioners a plantation in South America, as a security for the balance due upon the bills, and the interest. A joint commission of bankrupt having issued against C. and D., the petitioners applied to prove the amount of the bills and interest; but the Commissioners refused to admit their proof, without deducting the value of the security. A petition was then presented to the Lord Chancellor to the same effect, and the claim of the petitioners was allowed. Lord Eldon-"The deduction of a security is never to be made in bankruptcy but when it is the property of the bankrupt; it is said that it must be so considered in this case, as the house in Demerara and that in Liverpool were partners; but it is quite familiar, that the same firm may be in one character drawers, and in another acceptors; and the question, whether the mortgage is the property of the firm, must be met in another way. The Commissioners must call another meeting; the petitioners to prove without deducting their security."

Again, in Ex parte Peacock (a), A. and B., partners, being largely indebted to C., executed to him a joint bond, to secure the amount of the sums due. As a farther security to C., A. alone executed a mortgage to him of certain freehold and copyhold premises. A. died, and a commission of bankrupt issued against B., as surviving partner of A. Lord Eldon held, that C. might prove the whole debt against the joint estate of A. & B., without giving up his security on the separate estate of A. The separate estate, he said, could only be considered as security for the joint estate. So, in a more recent case, A. and B., partners, being indebted to C. in £10,000 on bills, A. alone assigned to a trustee for C. certain debts and other securities belonging to A. Under these securities the sum of £8414 was received by C.'s trustee. On the bankruptcy of A.

perty of which A. and B. are the real owners. See, however, an exception to this rule in the ensuing section, Art. II,

(a) Ex parte Peacock, 2 Glyn & Jam. 27; Ex parte Bowden, 1 D. & C. 135; Ex parte Smyth, 3 Dea. 597.

& B., it was held that C. might prove for £10,000, without deducting the £8414 from the proof (a).

The case of Ex parte Connell (b), lately decided by the Court of Review, is at variance with the preceding authorities. In that case, A. and B., partners, had shares in a joint stock bank. By the deed establishing the bank, it was provided, that all debts due to the company from any proprietor on any account, should be the first lien and charge on the shares of such proprietor; and it was declared unlawful for two or more persons to hold shares jointly. Notwithstanding this last-mentioned provision, A. and B. agreed that their shares should be partnership property, and they dealt with them accordingly, although the shares stood in their separate names. A. and B. became largely indebted to the Bank on their partnership account, and afterwards became bankrupts. The Bank then petitioned to prove the debt against the joint estate, without giving up or selling the shares, or having the value deducted from the joint proof of debt; but the Court of Review dismissed the petition. It appears, however, that Cross, J., dissented from the opinions of the other Judges, and it cannot be denied that his judgment is founded on very satisfactory reasoning (c).

But notwithstanding this decision, it seems clear upon the other authorities which have been mentioned, that a separate security by way of pledge or mortgage, for a joint demand, does not diminish the claims of the creditor as a joint creditor; and that, consequently, his security is twofold. But a joint security given for a demand against the partnership, does diminish the creditor's right of proof to the extent of the value of the security. Therefore, where goods in which the bankrupts were jointly interested, were pledged with a creditor to secure the payment of an acceptance of the bankrupts, and part of the proceeds were received by the creditor before he applied to prove, it was held, that he must deduct the amount so received before he could prove on the acceptance (d). And, of course, a security for a separate demand does not extend to

(a) Ex parte Adams, 3 Mont. & A. 157; Ex parte Groom, 2 Deac. 265.

(b) 3 Dea. 201; 3 Mont. & A. 581. See Ex parte Bowden, 1 D. & C. 135.

(c) The other Judges seemed to rely on the rule in Ex parte Rowlandson, ante, p. 634, which, however, was not a case of lien.

23.

(d) Ex parte Prescott, 4 D. & C.

secure a joint demand. Where, therefore, a partner deposited title-deeds in his own name, as a security for any payments or guaranties which the creditor should make for that partner, and, upon the faith of the deposit, the creditor negotiated and guaranteed the payment of the bills of the firm; it was held that the security was separate only, and did not extend to guarantee the creditor against his liability on the bills (a).

SECTION VIII.

Of Double Proof.

WHERE the parties to an instrument are partners, and a creditor is permitted to prove against them, according to, and to the full extent of their respective liabilities, as apparent on the face of the instrument, without regard to the connexion subsisting between them, such mode of proof may be designated as double proof (b).

The leading case on this subject is Ex parte La Forest (c). There Corson and Gordon, partners and turpentine manufacturers, entered into partnership with Whincup and Griffin, soap manufacturers. The latter business was carried on under the firm of Whincup & Griffin. A joint commission issued against the four, under which they were found bankrupts; and the assignees possessed themselves of the joint fund of the four, and also the joint fund of Corson and Gordon, and their respective separate estates. Corson and Gordon, in their partnership firm, drew bills of exchange upon the firm of Whincup & Griffin, who accepted such bills. The petitioners discounted many of these bills. The petitioners alleged, that, at the time

(a) Ex parte Freen, 2 Glyn &

Jam. 246.

(b) It is laid down by Mr. Cooke, in relation to double proof, that where the same persons are concerned in several firms, and issue bills on which the names of the re

spective firms stand as drawers, indorsers, or acceptors, a party taking such bills, conceiving them to be distinct houses of trade, may prove against each estate. Co. B. L. 261. (c) Co. B. L. 261.

of such discount, they were ignorant of any partnership existing between the four, but that they considered Corson and Gordon, the drawers, and Whincup and Griffin, the acceptors, as two distinct firms; and thought that they had the security of the funds of both those firms. The petitioners applied to the Commissioners to be admitted to prove against the respective joint estates of Corson and Gordon, and of Whincup and Griffin; but the Commissioners refused, conceiving that the bills ought to be proved only against the joint estate of Whincup, Griffin, Corson, and Gordon. Lord Loughborough held, that, admitting the allegation of ignorance on the part of the petitioners to be true, they were entitled to the proof which they required (a).

Again, A., B., and C. were partners in a cotton manufactory, and B. and C. carried on a distinct trade in partnership, as grocers. The petitioner sold goods to B. and C. as grocers, for which they remitted to him a bill drawn by A. in their favour, upon one Z., and indorsed by B. and C. Z. accepted the bill, but it was protested for non-payment. The drawer, indorsers, and acceptor, all became bankrupts. The petitioner did not know that A. had any connexion in trade with B. and C. Lord Loughborough ordered that the petitioner should be at liberty to prove the amount of the bill against the joint estate of B. and C., and also against the separate estate of A., and be paid dividends upon both estates (b).

(a) His Lordship accordingly ordered the Commissioners to inquire, by examination of the respective parties upon oath, and otherwise, whether the petitioners, or either of them, at the time of their respectively taking the respective bills of exchange and promissory notes, in the petition mentioned, knew that Alexander Corson and James Gordon, and Whincup and Griffin, were concerned and engaged in one partnership, carried on under the firm of Whincup & Griffin, or not. And if the petitioners knew of such partnership, then they were to be at liberty to apply to the Court, as

they should be advised, for further directions; but if the petitioners did not know of such partnership at the time of their receiving the said bills of exchange and promissory notes, of which they were respectively possessed, then such of the petitioners as did not know of such partnership, were to be admitted to prove against the respective joint estates of Corson and Gordon, and of Whincup and Griffin, and to receive dividends therefrom with the other creditors.

(b) Ex parte Benson, Co. B. L.

263.

Again, five persons, trading under the firm of C. & Co., drew a bill of exchange on two of the members of the copartnership, who carried on a distinct trade as H. and G. The bill was accepted, negotiated, and, in the course of circulation, came into the hands of the petitioner, without any knowledge, on his part, of the connexion between the parties. Upon the bankruptcy of C. & Co., the petitioner claimed to prove both against the drawers and acceptors. Lord Eldon held that the petitioner, as ignorant of the connexion of the parties, was entitled to such proof (a).

In all these cases, the partners, who appeared as distinct parties to the bills, were also in distinct partnerships; and yet, the holders of the bills, in order to obtain double proof, were required to prove their ignorance that these distinct partnerships also formed an aggregate partnership. Nevertheless, according to a learned writer (b), Lord Eldon has determined, that, where the firms are in fact distinct, it is not material that the ignorance of the holder that the same parties were also united in one firm, should be requisite to entitle him to proof. Now, although this remark does not seem to be supported by any express authority, yet it is justified by several dicta of Lord Eldon, and by the case of Ex parte Walker (c), which is in point. There, A., a sole trader, B. and C., partners, and D., also a sole trader, engaged in a joint adventure; and for a joint purchase of goods by them, the vendor, with a knowledge of their joint interest, received in payment a bill drawn by A. on, and accepted by B. and C. Lord Eldon held, that on the bankruptcy of A., and of B. and C., the vendor was entitled to prove the bill against both their estates. On other occasions, likewise, Lord Eldon appears to have adverted to double proof, without ever referring to the ignorance of the holder of the double security, that the distinct firms constituted one general firm (d).

On the other hand, there is a recent case, in which Sir George Rose is reported to have said, that the holder of a bill is not entitled to double proof if he knew the different persons

(a) Ex parte Adam, 2 Rose, 36. (b) Eden, B. L. 182. And see ante, p. 636.

(c) 1 Rose, 441.

(d) Er parte Bonbonus, 8 Ves. 546; Ex parte Bank of England, 2 Rose, 83.