judgment in Ex parte Elton.(1) Thus the rights of the joint and separate creditors, on their respective funds where there was a joint estate, was maintained, notwithstanding the alteration thus made in the order in bankruptcy. In Ex parte Elton, decided in 1796, the rule established in 1785, was deemed by the then chancellor to be an inconvenient one, because every order which he passed in bankruptcy, that the joint creditor should receive a dividend out of the separate estate, might give rise to a bill in equity, on the part of the separate creditors, to restrain this order and to secure the appropriation of the separate estate to the satisfaction of the separate debts; and it was adjudged, that a joint creditor might prove his claim under a separate commission, not for the purpose of receiving a dividend, until an account should be taken of what he had or might have received from the partnership effects. Thus the chancellor, in the modification which he gave to the order in bankruptcy, exercised his equity jurisdiction, and gave to each order the operation of an injunction, without the expense of a bill, whereby the joint creditor was restrained from coming on the separate fund until, in the final adjustment of the copartnership and individual accounts, equity should determine what portion of the separate fund should be allotted to the joint creditor. And he says, that the joint creditors are in the situation of a person having two funds. The court will not allow him to attach himself to one fund, to the prejudice of those who have no other, and to neglect the other fund. He has the law open to him, but if he comes to claim a distribution, the first consideration* is, what is that fund from which he seeks it? It is [*468 the separate estate which is particularly attached to the separate creditors. Upon the supposition there is a joint estate, the answer is, apply yourself to that, you have a right to come upon it. The separate creditors have not. Therefore do not affect the fund attached to them, till you have obtained what you can get from the joint fund. Thus it would appear that the ancient order of distribution was restored with this modification, that the joint creditors might prove, but could not, as before, receive dividends without the further order of the chancellor, which should be made after the settlement of accounts, which were directed to be kept as before, separate. This important principle also seems distinctly to be set up by this decision, that where there are no joint effects and no solvent partner, that the joint creditors might be permitted (1) 3 Vesey, Jr., 238.

to come in with the separate creditors, a doctrine which appears to have been first recognized by Lord Thurlow, in Ex parte Hayden,(1) for before that period it has been seen that they could only come upon the surplus. This doctrine Lord Eldon has uniformly adhered to, although it will be found that he repeatedly complains of it, as a rule producing some inconveniences, and liable to several objections. (2) In Ex parte Kensington,(3) the joint creditors were forbid receiving dividends with the separate creditors, on the ground that there was one solvent partner, although there was no joint estate. That the petitioner would have been allowed had the partner been bankrupt, is the necessary inference from the case; and in the former case the joint creditors were permitted to come in where there were no joint effects, upon the ground that the solvent partner was abroad, and that therefore the difficulty was increased in resorting to him.

Such is a succinct history of the law upon this subject, and the modern doctrine has been summarily stated by Eden,(4) by Vesey, Jr.,(5) and also by Maddock.(6) They all unite in saying (and they are fully supported by the authority cited by them respectively), "that the joint creditor may prove under a separate commission, for the purpose of assenting to, or dissenting from, the commission, or of going against the surplus after the satisfaction of the separate debts, not to vote on the choice of assignees, or receive dividends with the separate creditors (except a joint *creditor who is a petitioning creditor under the commission), *469] or where there are no joint effects, or no solvent partner, or no separate debts, or the joint creditors will pay twenty shillings in the pound to the separate creditors."

The case of Gray v. Chiswell, 9 Vesey, Jr., 124, as it is strongly illustrative of the above doctrines, and was a case, not in bankruptcy but in equity, will be particularly adverted to. A bill was filed by the creditors of Cook against the heir and executrix of Chiswell, claiming to come upon the real estate of Chiswell, for the amount of their debts, as the personal estate had been absorbed by specialty creditors. Chiswell had been a partner of Nantes:

(1) 1 Brown's Ch. 453.

(2) See Ex parte Pinkerton, 6 Vesey, Jr., 813 (note); Ex parte Kensington, 14 Id. 447; Ex parte Kendal, 17 Id. 521; Ex parte Abell, 4 Id. 837.

(3) 14 Vesey, Jr.

(4) See his notes to Ex parte Hodgson, 2 Bro. Ch. Rep. 5.

(5) In Ex parte Taitt, 16 Vesey, Jr., 194 (n).

(6) Treatise on the principles and practice of the Court of Chancery, vol. ii., p. 463.

Nantes had survived him, and had become bankrupt. The joint creditors of Nantes and Chiswell proved their claims before the master. The joint estate was insolvent, being only able to pay an inconsiderable dividend, and the sum supposed to be raised by a sale or mortgage of Chiswell's real estate, was not more than sufficient to pay the separate creditors. A contest arose between the joint and separate creditors, the former insisting on their right to come in pari passu with the separate creditors, upon this fund, thus proposed to be raised out of his separate estate. But the Chancellor (Lord Eldon) refused to permit them, upon the ground that in bankruptcy it could not be done, and that the accidental death of Chiswell ought not to put the joint creditors in a better situation than they would have been, had he lived and become bankrupt. If there be any estate for distribution among the joint creditors, although the surviving partner is bankrupt, they are not, in bankruptcy, permitted to come in with the separate creditors. The chancellor, therefore here, as in bankruptcy, would not permit the joint creditors, who had effectuated their claims under the commission against Nantes, although they had received but an inconsiderable dividend, to come in pari passu with the separate creditors. There was here some joint estate, and then the general rule applied, that each species of creditor must be satisfied out of the fund to which his debt particularly attaches itself; and the rule has been carried to this extent, that if there be a joint fund of any, even the smallest description which is capable of being realized, the rule is inflexible, and the joint creditors will not be permitted to receive dividends from the separate estate. (1) Thus we perceive from the case of Gray v. Chiswell, that the rule, which is applied in bankruptcy, is extended to cases in equity.

It is difficult to say upon what the rule in equity and in bankruptcy, with the modification above stated, is founded. The joint estate is benefited to the extent of every credit which is [*470 given to the firm, and so is the separate estate in the same manner enlarged by the debt it may create with any individual, and there would be unquestionably a clear equity in confining the creditors to each estate respectively, which has thus been benefited by their transactions. So far the rule is sensible and intelligible; and although at law the joint creditors may pursue both the joint and separate estate to the extent of each, for the satisfaction of their joint demands, which are at law considered both joint and

(1) Ex parte Peake, Gow on Partnership, 408.

several, without the possibility of the interposition of any restraining power of a court of equity; yet when, by the death of one of the parties, the legal right survives against the surviving partner, and is extinguished against the deceased partner, a court of equity will give to the separate creditors all the advantages thus by accident thrown upon them, and will not, by adopting the rigorous rule of the law merchant, thereby injure and prejudice the separate creditor, upon whom, viewed in connection with the separate fund, it always looks upon as meritorious and entitled to the distribution of assets to the preference. But although a court of equity, as against the separate creditors, will not adopt the law merchant, which considers the contract both joint and several; yet whatever doubts have heretofore been entertained on the subject, where the claims of these joint creditors do not come in conflict with the separate creditors, but only with the interests of the representatives of the deceased partner, it is now undeniably settled, that equity will, as against such representatives, decree to joint creditors a satisfaction of their claims, by considering them, as they are considered at law, both joint and several.

But although these distinctions are built on the solid foundations of reason and justice, it is not altogether so easy to perceive why, when there is no joint fund and no solvent partner (by no solvent partner is meant bankrupt partner), the joint creditor should thereby acquire the equitable right of coming in with the separate creditors pari passu, upon a fund in no manner benefited by the creation of his debt. Such, however, is the settled and established rule, as we are enabled to collect it both in bankruptcy and in equity; and according to this rule the complainant could not, in this case, be permitted to seek indemnity for his claim, from the separate estate pari passu with the separate creditors, as it is a conceded fact in the cause, that there are joint funds, although very inconsiderable, and greatly insufficient to pay the debt of the complainant.

But were this not the fact, this court would have no difficulty in saying, that the complainant should be postponed to the separate creditors; and that whether there was any joint *471.] estate or not, he should not be permitted to divide with the separate creditors a fund insufficient to pay them. We are, therefore, disposed to adopt the ancient rule as more consonant to equity and justice, that the joint creditors can only look to the surplus after the payment of the separate debts; and on the other

hand, that the separate creditors can only seek indemnity from the surplus of the joint fund after the satisfaction of the joint creditors.

It is believed that the case of Tucker v. Oxley, 5 Cranch, 34, somewhat militates against the views which we have taken of the English law upon this subject, and it has been pressed upon the court, by the appellant's counsel, as coutaining principles decisive of this case. It was there determined, that under the bankrupt law of the United States (and the bankrupt law of England and that of the United States, so far as connected with the matter there decided, are nearly identical), that a joint debt may be set off against the separate claim of the assignee of one of the partners, but that such set-off could not be made at law, independent of the bankrupt system. The particular decision in this case, it is not material perhaps to examine, because it was a case at law, and the relations of the parties were materially different. It would perhaps be sufficient to say, that the Supreme Court, although they conceive a legal right exists in the joint creditors to prove and receive dividends out of the separate estate, explicitly admit, that such right it is competent for a court of equity to restrain, and to compel the exercise of such right in such manner as not to prejudice or to do injustice to others. We might in any view of the cause before us, dismiss without further observation, the case of Tucker v. Oxley; but we cannot forbear remarking, that the case upon which the court there build their opinion, that a legal right universally exists in the joint creditors upon a separate commission to come on the separate estate pari passu with the separate creditors, is the case where a joint creditor is the petitioning creditor, and is an excepted case from the general rule.(1) Maddock in his 1st vol., 463, considers this a singular exception to the general rule; and the reason assigned for the adoption of the exception is, that the joint creditor, having petitioned for the commission of bankruptcy, it might be considered in the nature of a modified execution, taken out by him, as well for his own benefit as for that of the separate creditors; and that it would be against all equity to permit the separate creditors to prevent the joint creditor from reaping the fruits of an execution taken out for his and their mutual benefit.

(1) See argument of Sir Samuel Romily in Ex parte Ackerman, 14 Vesey, Jr., 604, and the authorities referred to by Vesey.

VOL. I.-37