creditors of the old partnership which would discharge the estate of the deceased partner, could he by possibility have contemplated a stronger case in respect of such dealings than the present? If it were competent to the creditor thus to deal with the surviving partners, keeping to himself in reserve the responsibility of the deceased partner's estate for nine months after his death, why not for nine years? Why not for thirty years, during which he might have paid in hundreds of thousands; and if at the end of thirty years, one of the survivors were to become insolvent, he might even then, upon this principle, resort to the account ab initio, and fixing upon the sum to which the balance was at one time reduced, call upon the Court to give him out of the estate of the deceased partner the amount of that balance?

Now, if Mr. Clayton could show, at any period, he attributed his payments into the banking-house to any particular account, and that he attributed his drafts accordingly to those payments, that might have considerable weight; for he might say, having no doubt his old balance would ultimately be paid, but doubting whether the new house would be able to pay back the sums he paid in, he had taken care to draw upon the recent payments, reserving to himself the liability of Devaynes's estate. Even then, it would be said, "Whatever was your intention, it was one upon which, if you acted, you were bound to disclose it to Devaynes's representatives. Otherwise you have acted fraudulently towards them, and a court of equity will give you no assistance." But that is not the present case. There was no such intention on the part of Mr. Clayton; and it comes simply to this, whether his dealings with the surviving partners are not such as come within the meaning of Lord Eldon when he says, there may be dealings which would discharge the estate.

In addition to the cases already cited, the following were mentioned: Simpson v. Vaughan, 2 Atk. 31; Strange v. Lee, 3 East, 484.

Bell, in reply.

If a man is bound in any one bond jointly with another, as principal and surety, and in another bond by himself alone, and pays money on account, nobody can doubt he means to pay off the bond in which he is solely bound, in preference to that in which another is bound with him. If it is asked on one side, how did Mr. Clayton mean to apply this payment? I would ask on the other, how did Mr. Devaynes's partners mean that it should

be applied? Certainly in payment of their own debts, not of the debts of the five.

Where is the authority for the alleged rule as to the priority of the debts? In Newmarch v. Clay, the Lord Chief Baron was of opinion the payment was not applicable to the first debt, notwithstanding there was a partner concerned in the first who was not concerned in the second; and the Court of King's Bench afterwards varied the decision, not on that ground, but on a ground which was perfectly distinct. If that ground existed, why did Lord C. J. Gibbs say, that Dawe v. Holdsworth was distinguishable on account of its being a case of bankruptcy? Every argument applicable to this case might have been applied to Kirby v. Duke of Marlborough, for Devaynes's estate cannot be placed in a higher degree of responsibility than that of a surety.

In Ex parte Kendall, Lord Eldon expressly declared he would not decide the question. Then why refer to that case as containing his Lordship's decision of this?

Whether the continuation of payments and receipts alone amounts to a discharge is a mere legal question in the case of a withdrawing partner, and must be decided on the same principles in the case of a partner who dies. Does a single payment or a single receipt alter the case? They say, Yes. But where is the authority? Newmarch v. Clay is an authority against them. So are all the cases. They are all cases which decide that it may be inferred from circumstances. But the question remains, what is a sufficient foundation for the inference ? The continuance of the transactions, it has been held over and over again, is not enough. It must be a continuance attended with other circumstances.

Then they say, the new firm ought first to pay off the old debts. That depends upon whether they have assets of Devaynes's in their hands. If he was a debtor to them, where was the obligation between them? The obligation, if there was any, must depend on their having assets of his in their hands. But if there had been such an obligation, how would that affect Mr. Clayton as a creditor? Crawshaw v. Collins, 15 Ves. 218; Featherstonhaugh v. Fenwick, 17 Ves. 298.

The house was not trading on Devaynes's assets. In fact, the assets of the house, at the period when Mr. Devaynes quitted it, were not got in; and that creates the insolvency of the house. The house had been paying off the debts contracted in Devaynes's

lifetime by their new credit; and in this very case of Mr. Clayton's where we claim only £453, the difference between that sum and the £1171 has been paid by money lodged with these gentlemen, and obtained on their own credit; for the assets of the house are still outstanding..

Then what is the equity of this case? What circumstances are there which apply to the case of a dying partner, and do not apply to the case of a retiring partner? It is said the debt is extinguished at law; and that equity will not revive it, where there is a superior equity. But this is a fallacy. The debt was not extinguished for though the remedy was gone at law, it continued in equity; as in Lane v. Williams, 2 Vern. 277, 292; Bishop v. Church, 3 Atk. 691, etc., as soon as the securities were found to be given for a partnership debt, they were considered as joint and several. The simple questions therefore are, whether the continuing to deal, by drawing out and paying in, has 'operated to extinguish the debt, or whether it has been so extinguished by the circumstances of the account delivered. And these questions must be taken as the facts stand upon the report; that is, without any inquiry how the affairs of the. house stood as between Devaynes and his partners.

The case of Wentworth v. Manning was one of a specific payment, and therefore does not apply. But if it were applicable, it would be contradictory to the case of Goddard v. Cox, and the others which have been cited, and therefore of no authority, considering the book in which it is printed (2 Eq. Ca. Ab. 261).

SIR WILLIAM GRANT, M.R.-Though the report following (I presume) the words of the inquiry directed by the Decree, states the Master's opinion to be that Mr. Clayton has, by his dealings and transactions with the surviving partners, subsequent to the death of Mr. Devaynes, released his estate from the payment of the cash balance of £1713, yet the ground of that opinion is, not that the acts done amount constructively to an exoneration of Mr. Devaynes's estate, but that the balance due at his death has been actually paid off,--and, consequently, that the claim now made is an attempt to revive a debt that has once been completely extinguished.

To a certain extent, it has been admitted at the bar, that such would be the effect of the claim made before the Master, and

insisted upon by the exception. To that extent it is therefore. very properly abandoned; and all that is claimed is the sum to which the debt had at one time been reduced.".

It would indeed be impossible to contend that after the balance, for which alone Mr. Devaynes was. liable, had once been diminished to any given amount, it could, as against his estate, be again augmented, by subsequent payments made, or subsequent credit given, to the surviving partners. On the part of Mr. Devaynes's representatives however it is denied that any portion of the debt due at his death now remains unsatisfied. That depends on the manner in which the payments made by the house are to be considered as having been applied. In all, they have paid much more than would be sufficient to discharge the balance due at Devaynes's death;-and it is only by applying the payments to subsequent debts that any part of that balance will remain unpaid.

This state of the case has given rise to much discussion as to the rules by which the application of indefinite payments is to be governed. Those rules we probably borrowed in the first instance from the civil law. The leading rule, with regard to the option given, in the first place to the debtor, and to the creditor in the second, we have taken literally from thence. But, according to that law, the election was to be made at the time of payment, as well in the case of the creditor, as in that of the debtor, "in re præsenti, hoc est statim, atque solutum est, cæterum postea non permittitur." (Dig. lib. 46, tit. 3, § 1.) If neither applied the payment, the law made the appropriation according to certain rules of presumption, depending on the nature of the debts, or the priority in which they were incurred. And, as it was the actual intention of the debtor that would in the first instance have governed; so it was his presumable intention that was first resorted to as the rule by which the application was to be determined. In the absence therefore of any express declaration by either, the inquiry was, what application would be most beneficial to the debtor. The payment was consequently applied to the most burdensome debt; to one that carried interest, rather than to that which carried none; to one secured by a penalty rather than to that which rested on a simple stipulation; and, if the debts were equal, then to that which had been first contracted. "In his, quæ præsenti die debentur, constat, quotiens indistinctè quid solvitur, in graviorem causam videri solutum. Si autem nulla prægravet

(id est, si omnia nomina similia fuerint), in antiquiorem." (Dig. lib. 46, tit. 3, § 5.)

But it has been contended that, in this respect, our Courts have entirely reversed the principle of decision, and that in the absence of express appropriation by either party, it is the presumed intention of the creditor that is to govern; or at least that the creditor may at any time elect how the payments made to him shall retrospectively receive their application. There is certainly a great deal of authority for this doctrine. With some shades of distinction, it is sanctioned by the case of Goddard v. Cox, 2 Stra. 1194; by Wilkinson v. Sterne, 9 Mod. 427; by the ruling of the Lord Chief Baron in Newmarch v. Clay, 14 East, 239; and by Peters v. Anderson, 5 Taunt. 596, in the Common Pleas. From these cases I should collect, that a proposition which, in one sense of it, is indisputably true, namely, that if the debtor does not apply the payment, the creditor may make the application to what debt he pleases, has been extended much beyond its original meaning, so as, in general, to authorize the creditor to make his election when he thinks fit, instead of confining it to the period of payment, and allowing the rules of Law to operate where no express declaration is then made.

There are, however, other cases which are irreconcileable with this indefinite right of election in the creditor, and which seem, on the contrary, to imply a recognition of the civil law principle of decision. Such are, in particular, the cases of Meggott v. Mills, Lord Raymond, 287; and Dawe v. Holdsworth, Peake, N. P. 64. The creditor, in each of these cases, elected ex post facto to apply the payment to the last debt. It was, in each case, held incompetent for him so to do. There are but two grounds on which these decisions could proceed;-either that the application was to be made to the oldest debt, or that it was to be made to the debt which it was most for the interest of the debtor to discharge. Either way, the decision would agree with the rule of the civil law, which is, that if the debts are equal, the payment is to be applied to the first in point of time; if one be more burdensome, or more penal than another, it is to that the payment shall be first imputed. A debt on which a man could be made a bankrupt, would undoubtedly fall within this rule.

The Lord Chief Justice of the Common Pleas explains the ground and reason of the case of Dawe v. Holdsworth in precise conformity to the principle of the civil law.