ing creditor's debt could be established by reason of the bankruptcy. To establish the bankruptcy, the defendant proved that Pittard was a trader, and so continued till 1785, when he became. indebted to one creditor in £200, upon whose petition the commission issued. This debt was originally a simple contract debt, but a bond was given after he had ceased to be a trader; and Lord Kenyon held that the question was, not when the bond was given, but when the debt was contracted. There had been dealings between the bankrupt and the petitioning creditor since he ceased to be a trader; and it proved that, though at the time of the commission issued, there was a larger balance than £200 due to the creditor, yet more than £200 had also been paid on account between the time when the trading ceased and the issuing of the commission. Lord Kenyon further held that, as no particular directions had been given for the application of the money paid on account, it must be placed to pay off the old debt first. Consequently, no part of the debt contracted while Pittard was a trader remained due when the commission issued; and the commission itself was therefore unsupported.

Now, prima facie, this seems to be an authority unfavourable to us. But in Peters v. Anderson, 5 Taunt. 596, after all the cases. on the subject had been fully gone through, it was laid down that, although the payor may apply his payment to which of two or more accounts he pleases, and although his election may be either expressed or inferred from the circumstances of the transaction, yet, if not paid specifically, the receiver might afterwards appropriate the payment to the discharge of either account as he pleases. And Lord C. J. Gibbs, referring to the cases of Meggott v. Mills and Dawe v. Holdsworth, observes that, in both, the debts arose on the same account, and it was totally immaterial to which end of the account the payment should be applied; but that Lord C. J. Holt, and after him Lord Kenyon, went upon this ground, that it would be too hard if a man having made a payment sufficient to exempt him from the operation of the bankrupt laws, should not have the benefit of paying off that part of his debt which subjected him to their operation. "It is an exception," he said, "and founded on the circumstance of bankruptcy."

There is one more case, of Newmarch v. Clay, 14 East, 239, where Lord Ellenborough said, there might be a special application of a payment made, arising out of the nature of the transaction, though not expressed at the time in terms by the party making it.

And he said, the payment in that case was evidenced by the conduct of the parties to have been made for the purpose of taking up the bills which had been antecedently dishonoured; for that, upon receiving that payment, the dishonoured bills were delivered up. And upon that ground, the Court of King's Bench were of opinion there ought to be a new trial; the present Lord Chief Baron (Richards, C. B.) having previously decided it upon the general principle that, where there is no express appropriation, the payee has a right to apply the payment at his own option; which general principle is also admitted by the very ground on which the Court of King's Bench granted the new trial. Upon this, therefore, the doctrine of courts of common law rests at the present day.

case.

Now, to apply this doctrine to the circumstances of the present In none of those cited does it appear that the payee had actually appropriated the payments made until the matter came into question; and the last case, of Newmarch v. Clay (as well as the principle of Goddard v. Cox) shows that the doctrine applies equally in the case of a partnership. Then it is shown that the Court may, from circumstances, infer the intention to apply a payment in discharge of the old debt;-but what were the circumstances from which that inference was drawn in the case referred to? They were of such a nature that no doubt could arise respecting their tendency. Accordingly, the counsel acquiesced immediately, and did not even urge an inquiry. The case of Dawe v. Holdsworth proves, what we do not mean to dispute, that, when the old debt is completely discharged, the payments subsequently made must be applied in discharge of the new debt. This is the only case in which we hear of applying the payments to a first debt in priority to a subsequent debt; and this is the case which Lord C. J. Gibbs afterwards says was rightly decided, upon the principle that one debt would have exposed the party to a commission of bankruptcy, stating that "it is an exception founded on the circumstance of bankruptcy."

Now, still considering the present case as involving the legal question, let us suppose that Devaynes retired from the partnership in November, 1809; from that time till the commission issued in July, 1810, Mr. Clayton continued to deal with the house, both by paying in and drawing out; and in making his payments, he had a right to apply them to whatever demand he thought proper. But it is said there are special circumstances.

What are they? First, that Mr. Clayton's partner gave notice to the house that Devaynes would have nothing more to do with the house. What would be the effect at law of such a notice? Does it discharge the debt? A release cannot be by parol. How then could the debt be discharged? Not by subsequent payments; for, those payments being made generally, the payee had a right to attribute them to whatever account he pleased. In fact, there was no payment made to the account of the old debt, except as it was actually reduced on the entire balance. Then, was it in any manner altered in consequence of Clayton's accepting the new house as his debtors? He never did accept them as his debtors, any otherwise than as they were and continued to be his debtors in law. But he never, by any acts of his, specifically accepted them as such. This might have been more strongly urged in Newmarch v. Clay. Devaynes's executors could not, by giving notice, withdraw themselves from their responsibility. Then what does the notice amount to? Besides, notice to a partner does not bind, except in the case of a co-partnership transaction; and, therefore, even if this notice could operate as a discharge, (but which it cannot,) if both had been privy to it, it could not at all events have any effect whatever on Mr. Clayton.

Then there is the circumstance of the account delivered in March, 1814. What conclusion can be drawn from that circumstance? Clayton had continued to deal with the house; so had the parties in Newmarch v. Clay; so they had in Meggott v. Mill, and in Peters v. Anderson. There can be no distinction between a banking co-partnership and any other co-partnership. The question is, was the sending this account any admission by Clayton that, so far as his debt had not been paid, he considered this account as a payment? The proper way to try this would be by supposing that the account consisted only of sums drawn out. And this, as your Honour has already decided in Miss Sleech's case, would not have operated in discharge. Does the circumstance of the creditor having paid in, as well as drawn out, make any distinction? It proves that he credited the house for the sums so paid in, not that he credited it for an already existing debt of Devaynes: that remains just as it did before; upon that security he rested, and had a right to rest.

So it would be at law, if Devaynes had only retired from the partnership. What then discharges his estate in equity? We have already your Honour's opinion that, although in this case it

is a mere equitable demand, yet it is an equity founded upon the principles of law; and, if so, it is impossible to conceive of any defence in equity that would not have been an available defence at law, supposing the circumstances of the case were such as to constitute it a legal demand instead of an equitable.

The following cases were also cited in support of this exception : Wilkinson v. Sterne, 9 Mod. 427; Hall v. Wood, 14 East, 243 n.; Kirby v. Duke of Marlborough, 2 Maú. & Selw. 18.

'Hart, Wetherell and Sidebottom, and Hazlewood, for different parties against the exception.

The four surviving partners, having possessed themselves of all the funds of the five, were bound first to discharge the obligations of the five; and, in taking the accounts between the parties, the Court must consider every subsequent payment as to be carried to the account of that debt which, in a fair and equitable understanding between the parties, was first to be discharged, in exoneration of Devaynes's estate.

The rule of law to which it has been attempted to adapt this case, stands on a principle quite foreign to that with which the Court has now to deal. It is that where there are debtor and creditor, and the debtor owes more than one debt, and pays a sum of money, he has a right to direct to which of the debts that payment shall be applied; and, if he omits to do so, then the law implies that it is immaterial to him to which the payment is applied, and, by his omission, he has left the application to the option of the creditor; and again, that if the creditor neglects to exercise that option, still the application may be regulated by circumstances.

But how is it in the absence of all circumstances except that of the order of time? Suppose A. owes B. a debt of £100 contracted five years ago, and another debt of £100 contracted half a year ago, and pays money equal to the discharge of either of the two debts, without directing to which it is to be applied, and without the creditor's doing any act to appropriate it to either. What then? shall it not, in common sense, be taken as applied to the payment of that debt for which there has been the longest forbearance, and against which, if remaining unsatisfied, the Statute of Limitations will soonest operate? (Wentworth v. Manning, 2 Eq. Ca. Ab. 261.)

This, however, is not a case between the same debtor and cre

ditor. The relations of the parties are altered. What are the terms to be implied in the very first draft drawn by Clayton after Devaynes's death? He must be considered as saying to the surviving partners, "You are my debtors in respect of a debt contracted by you and your deceased partner; and I now call upon you to pay me a certain sum in discharge of that debt." He draws a second and a third draft on the same terms. He then pays in an additional sum, not expressing that he pays it to any new account, and afterwards draws a fourth draft. What is there to show that this fourth draft was drawn upon any other terms than the three preceding? He knows that it is the duty of the four to pay the debts due from the five. He knows equally well that it is not competent to him, by giving credit to the four, to charge the estate of the deceased partner with any sums to which it was not previously liable.

If Mr. Clayton had been asked, when he began to draw upon and pay money to the surviving partners, knowing that Devaynes's representatives had nothing to do with the firm, whether he did so considering Devaynes's estate as responsible to him, or whether he did not deal upon the sole responsibility of the surviving partners, would he not, as a man of honour and integrity, have answered, "Certainly, I never had any conception that any other but the surviving partners were responsible"? If he had been asked whether he did not consider that as the ordinary course of his former dealings with the partnership, the first draft he drew on the new partnership was in like manner applicable to the old balance, would he have hesitated for a moment to say, "I drew this draft considering that, whenever there is an item on one side. of an account, it is supposed to be in satisfaction of the old standing items on the other side, and that, whenever a balance is struck, there is an extinction pro tanto of the existing debt "? If, on the other hand, Mr. Clayton had done these acts in contemplation of reserving to himself the double responsibility of the surviving partners, and of the estate of the deceased partner, would not a court of equity have said, this is a fraud in him, to endeavour so to deal with the surviving partners as to be guaranteed by the estate of the deceased partner, without communicating to the representatives of the deceased partner that he is dealing with that intention.

When Lord Eldon said, in Ex parte Kendall, 17 Ves. 514, that there may be dealings between the surviving partners and the