vency, or rule in Ex parte Waring. Double insol- those parties holds goods or securities of the other's1 as cover for the bills, the holders are entitled to have the proceeds of those goods and securities applied in payment of the bill,3 provided that the goods or securities remained unrealised at the time of the failure of the party holding them.* If the proceeds of the goods and securities do not equal the amount of the bill, the holders are entitled to prove as creditors for the balance.5 ILLUSTRATIONS. 1. The drawer and acceptor of a bill both become bankrupt. The acceptor holds short bills belonging to the drawer as cover for his acceptance. The holder is entitled to the proceeds of these bills when realized." 2. The drawer of a bill becomes bankrupt. The acceptor dies insolvent. By agreement with the acceptor the drawer holds certain goods as security for the amount of the bill. The holder is entitled to the proceeds of these goods." 3. The drawer and acceptor of a bill become bankrupt. The acceptor accepted under a guarantee from a bank that the drawer should provide funds to meet the bill and keep him out of cash advance. The holder is not entitled to the benefit of the guarantee.8 4. The drawer and acceptor of a bill become bankrupt. The acceptor holds securities which were deposited by the drawer as security for his current account, before the bill was drawn, and without reference to it. The holder is not entitled to the benefit of those securities.9 Ex parte Lambton (1875), L. R. 10 Ch. Ap. 405, see at pp. 416, 417; Ex parte Banner (1876), 2 Ch. D. at p. 287, C. A.; and see Banner v. Johnston (1871), L. R. 5 H. L. at p. 174. 2 Levi & Co.'s Case (1869), L. R. 7 Eq. 449; Ex parte Alliance Bank (1869), L. R. 4 Ch. Ap. 423. 3 Ex parte Waring (1815), 19 Ves. 345; Ex parte Parr (1818), Buck. 191; City Bank v. Luckie (1870), L. R. 5 Ch. Ap. 773; Bank of Ireland v. Perry (1871), L. R. 7 Ex. 14; Ex parte Dewhurst (1873), L. R. 8 Ch. Ap. 695. 4 Ex parte Dever, Re Suse (No. 2) (1885), 14 Q. B. D. 611, C. A.; aliter, if realised rightfully or wrongfully; per Brett, M. R., at p. 622. 5 Powles v. Hargreaves (1853), 3 De G. M. & G. 430; see at p. 452, and form of order at p. 445; also form of decree in City Bank v. Luckie (1870), L. R. 5 Ch. Ap. at 778; Ex parte Joint Stock Discount Co. (1875), L. R. 10 Ch. Ap. 198, reduction of proof. Quære, if Loder's Case (1868), L. R. 6 Eq. 491, be right? 6 Ex parte Waring (1815), 19 Ves. 345. 7 Powles v. Hargreaves (1853), 3 De G. M. & G. 430. 8 Ex parte Stephens (1868), L. R. 3 Ch. Ap. 753. 9 Levi & Co.'s Case (1869), L. R. 7 Eq. 449. 5. The drawer and acceptor of a bill, who are distinct firms in Double insolIndia and England respectively, but engaged in a joint adventure, vency, or rule become bankrupt. The bill is drawn specifically against a consign- in Ex parte ment of goods from the drawer to the acceptor. The holder is Waring. entitled to the proceeds of the consignment, subject to claims of the aggregate creditors of the two firms against the aggregate assets.1 6. The drawer and acceptor of a bill become bankrupt, the drawer having sold goods to the acceptor and drawn on him for the price according to agreement. The holder is not entitled to the proceeds of the goods.2 7. The drawer and acceptor of a series of bills become bankrupt. According to the terms of the credit under which the bills are drawn, securities are remitted as cover for specific bills. The bill-holders are entitled to the benefit of the securities which remain unrealized in the hands of the acceptor at the time of his failure. The securities must be appropriated for the benefit of the holder of the bill they were remitted to cover, and not for the benefit of the holders of other bills drawn under the same credit.3 The rule above stated is generally known as the rule or doctrine of Ex parte Waring. It has been much misunderstood. The principle on which it is founded is the necessity of working out the equities between the two insolvent estates, each of which has a claim on the goods or securities forming the cover for the bill, which can only be satisfied by the application of the proceeds to meet the bill. It is not founded on, nor does it imply any property or interest in, the goods or securities on the part of the bill-holder. See per Lord Cranworth, and Turner, L.J.,* Lord Hatherley, per per Lord Cairns, per James, L.J.7 5 The rule in Ex parte Waring is a rule positivi juris, peculiar to English law. It embodies no universal principle of equity, and does not extend to Scotland.s See the rule criticised by Lord Selborne. Explanation 1.-Each of the insolvent parties must be liable to the bill-holder in respect of the bill transaction, but it is not necessary that both of them should be liable as parties to the bill." 1 Ex parte Dewhurst (1873), L. R. 8 Ch. Ap. 965; cf. Ex parte Manchester Bank (1879), 12 Ch. D. at 779. 2 Ex parte Lambton (1875), L. R. 10 Ch. Ap. 405. 3 Ex parte Dever, Re Suse (No. 2) (1885), 14 Q. B. D. 611, C. A. 4 Powles v. Hargreaves (1853), 8 De G. M. & G. at 447, 458. City Bank v. Luckie (1870), L. R. 5 Ch. Ap. at 776. 6 Banner v. Johnston (1871), L. R. 5 H. L. at 174. H. L. Vaughan v. Halliday (1874), L. R. Ch. Ap. at 567. Royal Bank of Scotland v. Commercial Bank (1882), 7 App. Cas. 366, • Vaughan v. Halliday (1874), L. R. 9 Ch. Ap. at 568. ILLUSTRATIONS. 1. A bill is drawn specifically against a consignment of goods. Drawer and drawee both become bankrupt, and the drawee refuses to accept. The holder is not entitled to the proceeds of the goods.1 2. A. in Scotland employs S. as his correspondent at Havannah, and B. as his correspondent in London. A. sends goods to S., and by arrangement between all parties, draws on B. for the price. B. accepts. S. sends remittances in bills to B. to cover his acceptance. S. and B. become bankrupt. A. is entitled to the proceeds of the remittances if he takes up the bill." Explanation 2.-It is not necessary that the two insolvent estates should be administered in bankruptcy. It is sufficient that they are both administered for the benefit of creditors under the control of a court of justice.3 The term generally used is that both insolvent estates must be under a "forced administration." 4 It is possible that where a debtor enters into a composition with his creditors under the Bankruptcy Act, 1883, his estate is sufficiently administered under the control of a court of justice to allow the doctrine of Ex parte Waring to apply. By s. 10 of the Judicature Act, 1875, the bankruptcy rules as to proof, &c., are applied to the winding up of insolvent companies and to the administration of the estates of persons who have died insolvent. Right of surety com pelled to pay to securities. Rights of Surety on Bill. Rule 8. (1.) Where a bill, which was accepted for value, is dishonoured, and the drawer or an indorser is compelled to pay it, he is entitled to the benefit of any securities deposited by the acceptor with the holder to secure the payment of the bill which the holder had in his possession at the time of the dishonour of the bill.6 1 Vaughan v. Halliday (1874), L. R. 9 Ch. Ap. at 568. 3 Powles v. Hargreaves (1853), 3 De G. M. & G. 430, at 451, 458; Hickie's Case (1867), L. R. 4 Eq. 226; Ex parte General South American Co. (1875), L. R. 10 Ch. Ap. 635; Ex parte Gomez (1875), L. R. 10 Ch. Ap. at 647, 648. Ex parte Dever, (No. 2) (1885), 14 Q. B. D. 611, at pp. 621, 625, C. A. 5 Cf. Ex parte Gomez (1875), L. R. 10 Ch. Ap. at 648; and see the status of a composition discussed in Ex parte Rumboll (1871), 6 Ch. Ap. 842, and Gray v. Megrath (1874), L. R. 9 C. P. at 230. 6 Duncan, Fox & Co. v. N. & S. Wales Bank (1880), 6 App. Cas. 1, When a bill is accepted for value the drawer and indorsers are quasi sureties for the acceptor, see ante, p. 184. See the limits of the relationship discussed by Lord Blackburn and Lord Watson.' And see the whole subject discussed under the head of Principal and Surety, ante, p. 223. (2.) Where an accommodation party is compelled to pay a bill, he is entitled to the benefit of any securities deposited by the person accommodated with the holder as security for the payment of the bill.2 H. L., overruling C. A.; see First National Bank v. Word (1877), 71 New York R. 405. 1 Duncan, Fox & Co. v. N. & S. Wales Bank, supra, at pp. 19, 22. 2 Bechervaise v. Lewis (1872), L. R. 7 C. P. at p. 377, per Willes, J.; Gray v. Seckham (1872), L. R. 7 Ch. 680; cf. Pearl v. Deacon (1857), 1 De G. & J. 461. General rule as to pay. ment. Collateral security. PAYMENT BY BILL, NOTE, OR CHEQUE. The general rule of English law is that when a debt becomes due, it is the duty of the debtor, in the absence of any different agreement, to seek out his creditor, if in England, and tender him the exact amount of his debt in cash or other legal tender.1 On the one hand the debtor is under no obligation to honour a bill drawn on him by a creditor, unless he has agreed to do so, ante, p. 181; and on the other hand the creditor is under no obligation to receive a bill, note, or cheque in discharge of his debt. But tender of a cheque or other negotiable instrument may be a good tender if the creditor objects only to the amount, and not to the quality of the tender.2 Where, however, a creditor has taken a bill, note, or cheque from his debtor various questions may arise as to the effect of the transaction. Where a bill or note is given by a debtor to his creditor it may be given either by way of payment or as collateral security, the presumption being in favour of payment.s If it is given by way of collateral security it does not suspend the creditor's right to sue for his debt, but the 1 Cf. Fessard v. Mugnier (1865), 34 L. J. C. P. 126. As to requiring change, see Robinson v. Cook (1815), 6 Taunt. 336, and cf. Dean v. James (1833), 4 B. & Ad. 546. As to legal tender, see the Coinage Act, 1870. As to payment post diem, see Beaumont v. Greathead (1846), 2 C. B. 494. 2 Iolglass v. Oliver (1831), 2 Cr. & J. 15. Where an auctioneer received payment from a purchaser partly in cash and partly by bill, it was held he had no authority to do so, and that the purchaser was not discharged: Williams v. Erans (1866), L. R. 1 Q. B. 352. See, too, as to a cheque, Papè v. We tacott, (1894) 1 Q. B. 272, C. A. 3 Re Boys (1870,, L. R. 10 Eq. 467; 27 L. J. Ex. 138. cf. Attenborough v. Clarke (1858), |