litoe, were acted upon by Lord Brougham, in the case of Er parte Cook (a). There, W. P. was in partnership with H. and others, as linendrapers, at Whitechapel, and he was likewise a partner with his brother, E. P., in the trade of linendraper, in the country. The country firm was carried on in the name of E. P. alone. The London firm supplied linendrapery goods to the country firm, such dealings being wholly distinct, and the same as if the London firm had dealt with any other purchaser. The London firm was afterwards dissolved, and W. P. carried on the business at Whitechapel on his own separate account. He continued to supply the country firm with goods, precisely in the same manner as the London firm had done; such dealings being wholly distinct, and the same as if the dealings had been with any other purchaser or customer. A separate commission of bankrupt issued against W. P. Afterwards, a joint one issued against the brothers. The question was, whether the sum of £635, due from the estate of the country firm to that of W. P., for goods supplied and money advanced, should be proved against the former estate. Lord Brougham ordered the whole debt to be proved, and dividends to be paid upon the goods sold, pari passu with the other creditors; and for the money advanced, a dividend to be paid out of the surplus, after payment of the general creditors. Upon the whole, therefore, the general principle to be gathered from these decisions is, that where one or more members of a firm carry on a distinct trade, proof will be admitted between the estate of the general and the particular firm, pari passu with the creditors, in all cases where the debt has arisen from goods furnished by one firm to the other, in a manner as if they had been utterly unconnected in trade; but that, except in the case of bankers, this rule will not be applicable where the debt has arisen only from money advanced by one firm to the other. But though such is apparently the settled law on the subject, we ought not to omit to notice the doubts entertained by Sir John Leach, on the doctrine as laid down by Lord Eldon in Ex parte Sillitoe, that there is no difference between the case of two or more partners carrying on a distinct trade, and the case of one partner carrying on a distinct trade. "As a general (a) Mont. 228. rule," said his Honour, "one partner cannot prove a personal debt against the joint firm, because the creditors of the joint firm are his creditors, and he would be taking from his own creditors what ought first to be applied in payment of their debts. But where a firm of two or more partners carry on a distinct trade, the creditors of the larger firm are not the creditors of the smaller firm; and, consequently, when the firm of two or more prove against the larger firm, they do not prove against their own creditors. Upon this reasoning, I cannot but still doubt whether the smaller firm of two or more is not in all cases entitled to prove against the larger firm, and whether it can make a difference that the debt due to the smaller firm is in respect of a dealing in the way of their distinct trade, or in respect of any other dealing with the larger firm (a).” If the opinion of Sir John Leach had been adopted, it should seem, that in cases of distinct firms, and all becoming bankrupt, proof would have been admissible between each estate in respect of every species of money transaction, except in one particular case—namely, where one partner, a distinct trader, sought proof against the general partnership. But it is to be remarked, that the exception to the general rule of proof, which has been allowed with regard to debts arising from distinct trading, is founded on a universal principle, which, if adopted in one case, ought also to be adopted in another. This principle is the same as that which suggested the doctrine of reputed ownership (b). On the occasion on which Sir John Leach made these observations, his Honour decided in favour of the proof in three different cases; but it was unnecessary to depart from any principle laid down in Ex parte Sillitoe. In the first of these cases, Ex parte Brenchley (c), the banking firm, consisting of three, claimed to prove against the distilling firm, consisting of two, for advances of money made by the bankers to the distillers: one of the two distillers was not a partner in the banking firm; but Sir John Leach said, that, if (a) 2 G. & J. 127. It should seem that the Court of Review adheres to the opinion of Sir John Leach. See Ex parte Dawson, 3 Dea. & C. 12; but that is not an express decision on the point. (b) The same principle would have warranted the double proof in Ex parte Moult, ante, p. 653, had not a positive rule in bankruptcy intervened. (c) 2 Glyn & Jam. 127. he had been, the advance of money by the bankers was a sufficient dealing in the way of their trade. Secondly, in Ex parte Stroud (a), the debt due by the minor firm to the larger firm was in respect of the employment of the surplus monies which the larger firm had in their hands as bankers; Sir John Leach observed, that the profit of a banker was made by the employment of such surplus monies, and the debt was to be considered as due to them in respect of a dealing in their trade. Lastly, the case of Ex parte Castell (b) was referred to the same principle. His Honour considered that the dealing of the one firm with the other was in the way of their trade, and proof was therefore to be made by the York firm against the Wakefield firm. In some cases contribution will be permitted between the joint and separate estate. As, where joint creditors have been permitted under an order to go against the separate estate, or joint creditors of a dormant and visible partner have proved against the visible partner alone. So, in a case where both the joint and separate estates were liable to a debt to the Crown, and, by process, more had been levied upon the joint estate than its proportion, contribution was decreed between the two estates, and it was referred to the Master to settle the proportion (c). SECTION XI. Of Set-off. FORMERLY, if a creditor of the bankrupt were also indebted to the bankrupt, the assignees might sue him for and recover the amount of the latter debt, and the creditor might prove upon the bankrupt's estate for the amount of the debt due to him. This was extremely disadvantageous to creditors, where there happened to be mutual dealings between them and the (a) 2 Glyn & Jam. 127. (c) Rogers v. Mackenzie, 4 Ves. 752. bankrupt. They would have to pay the whole of the debts due by them, and receive probably but a fractional part of the debts due to them. This was remedied by the 5 Geo. 2, c. 30, s. 28, and 46 Geo. 3, c. 135, s. 3, which made the balance of the accounts between the parties, the debt in law to be proved by the creditor or recovered by the assignees (a). Although those statutes are now repealed, their provisions are contained in the stat. 6 Geo. 4, c. 16, s. 50, by which it is enacted, that "where there has been mutual credit given by the bankrupt and any other person, or where there are mutual debts between the bankrupt and any other person, the Commissioners shall state the account between them, and one debt or demand may be set against another, notwithstanding any prior act of bankruptcy committed by such bankrupt before the credit given to or the debt contracted by him; and what shall appear due on either side on the balance of such account, and no more, shall be claimed and paid on either side respectively and every debt or demand hereby made proveable against the estate of the bankrupt, may also be set off in manner aforesaid against such estate; provided the person claiming the benefit of such set-off had not, when such credit was given, notice of an act of bankruptcy (b) by such bankrupt committed." : The term mutual credits imports something more than that of "mutual debts." Nevertheless, it has been held to mean such credits only as must in their nature terminate in debts; as where a debt is due from one party, and credit given by him on the other side for a sum of money payable at a future day, and which will then become a debt; or where there is a debt on one side, and a receipt of property with directions to turn it into money, on the other; but where there is a mere deposit of property, without any authority to turn it into money, unless the deposit be made with one who has a general lien, no debt can ever arise out of it; and, therefore, it is not a credit within the meaning of the statute (c). (a) Archb. B. L. Book 1, ch. 1, s.7. (b) Notice of the bankrupt's insolvency, does not prevent the creditor's right of set-off. Hawkins v. Whitten, 10 Barn. & Cres. 217. (c) Rose v. Hart, 2 Moore, 547; Rose v. Sims, 1 Barn. & Ad. 521; Groom v. West, 8 Ad. & Ell. 758. Where there is a trust between the parties, that is a mutual credit within the statutes. Therefore, where three persons joined in an adventure to Mutual debts, of course, consist of a debt due from the bankrupt to the creditor, and a debt due by the creditor to the bankrupt's estate (a). The debt due to the bankrupt must be such as might be proved under the commission, but those debts may be set off which are made proveable by the bankrupt act (b). With respect to the debt due by the creditor to the bankrupt's estate, formerly it must have been due before the act of bankruptcy on which the commission was founded. But, by the present statute, the accounts of mutual debts and credits, as far as regards paper and money transactions, may be brought down to the date of the fiat, and set-off will be allowed under such accounts, unless the creditor, at the time of his dealing with the bankrupt, had notice of an act of bankruptcy. The statute enacts "that all payments really and bona fide made, or which shall hereafter be made by any bankrupt, or by any person on his behalf, before the date and issuing of the commission against such bankrupt, to any creditor of such bankrupt, (such payment not being a fraudulent preference of such creditor), shall be deemed valid, notwithstanding any prior act of bankruptcy by such bankrupt committed; and all payments really and bond fide made, or which shall be made to buy and sell pearls, one to advance the money and to sell the pearls, the profit and loss to be divided between the three; upon the bankruptcy of one, the holder of the pearls was allowed to set off a debt due by him to the bankrupt against the bankrupt's share of the pearls, although the pearls were not sold, nor the produce received before the bankruptcy. French v. Fenn, Co. B. L. 536. But mutual credit may be constituted, although the parties do not mean particularly to trust each other; thus, where a bill of exchange, accepted by A., got into the hands of B., and B. bought goods of A., it was holden that there was a mutual credit between A. and B., although A. did not know that the bill was in B.'s hands. Hankey v. Smith, 3 T. R. 507, n. In these cases, what was allowed as a mutual credit, was of such a nature as must |