Held, that he was afterwards entitled to come in as a creditor for the part of his debt remaining unpaid in a suit to administer the estate of the deceased partner, but was entitled to be paid only after the separate debts of the deceased partner had been provided for.

Notice of order for setting down the appeal dropped into a letter-box attached to the outer door of plaintiff's chambers, after the party serving it had called several times and always found the chambers closed:

Held, to be good service on plaintiff.

The question in dispute arose in the several suits to administer the estate of Adam Lodge.

Adam Lodge, who died in 1837, had previously carried on business in partnership with one Robert Graves, and the firm had become indebted to their bankers, Messrs. Moss & Co., in a large sum of money, which debt was still owing at the time of Lodge's death. After that event Graves became bankrupt, and Moss & Co. proved under his bankruptcy and received a dividend on their debt, leaving, however, a large balance of their debt remaining unpaid. Graves's estate was entirely distributed under the bankruptcy. Moss & Co. accordingly, after deducting the dividend received, proved for the balance against the estate of Lodge, under the decrees in the present and the collateral administration suits. The separate creditors of Lodge also proved their debts under those decrees, and the principal question involved in the administration was, whether the debt proved by Messrs. Moss & Co. ought to be paid out of the estate to Lodge pari passu with the debts proved by his separate creditors, or whether his separate creditors ought first to be paid in full, and the debt of Moss & Co. be paid only out of what might remain of the estate after such pay

ments.

Stuart, V.-C., decided in favour of the separate creditors. His judgment will be found in the report

of the case in the Court below, 1 N. R. 534.

A question also arose in the Court below as to the priority of costs between the different parties, but as their Lordships decided that the costs ought to be paid out of the assets before the debts, that question became immaterial, and was arranged by consent.

Southgate, Q.C., and Druce, for Messrs. Moss & Co. the appellants, contended that they were entitled, in the absence of any joint estate, to be paid pari passu

with the other separate creditors of Lodge, as their debt was joint and several.

They cited and commented on,
Cowell v. Sykes, 2 Russ. 191;

Sadler v. Jackson, 15 Ves. 52;

Wilkinson v. Henderson, 1 M. & K. 582;
Ex parte Kennedy, 2 De G. M. & G. 228;
Ex parte Kensington, 14 Ves. 447;
Devaynes v. Noble, 1 Mer. 566;

Ex parte Geller, 2 Madd. 262;
Ex parte Bauerman, 3 Deac. 476;
Ex parte Birley, 1 M. D. & D. 387;
Ex parte Kendall, 17 Ves. 519;
Ex parte Clay, 1 Mont. Part. 223.

The question to be considered in the present case is not whether there was a joint estate at the time of the testator's death, but at the date of the decree,

Ridgway v. Clare, 19 Beav. 111.

Bacon, Q.C., and Kay, for the exccutors (as to priority of costs).

Malins, Q.C., and Woodroofe, for Robert Morrell, the separate creditor of Adam Lodge, took their stand on the principle laid down in

Gray v. Chiswell, 9 Ves. 116.

They commented on the cases cited above, contested the construction put on the case of Ridgway v. Clare by the counsel for the appellants, and argued, if there has been any joint estate, it is immaterial when it was exhausted.

Druce, in reply.

In the course of the arguments it appeared, on the vivá voce evidence of a clerk to the appellants' solicitor, that a notice of the order for setting down the appeal had been dropped by him into a letter-box attached to the outer door of the plaintiff's chambers, after he had called seven times, and on each occasion had found the chambers closed. Their Lordships, without further evidence, held, that there was a reasonable presumption that the notice had come to the hands of the plaintiff, and declared it to be a good service.

23 JULY, 1863.

TURNER, L.J., said, that the question as to the rights of joint creditors against the estates of demuch difficulty, but fortunately authorities rendered ceased partners, had always been felt to be one of it unnecessary for their Lordships to consider the grounds on which the question, if untouched by the cases, ought to be decided. It had long been settled in Bankruptcy that the joint estate was to be applied in payment of the joint debts, and the separate estate in payment of the separate, debts any surplus that there might be of either estate being carried over to the other. That rule might, perhaps, proceed upon the ground, that the joint estate was clearly liable, both at Law and in Equity, for the joint debts,—at Law, by reason of the survivorship; in Equity, by virtue of the rights of the partners inter se to have it so applied—

and the separate estate was as clearly liable both at Law and in Equity for the separate debts. Consequently, the carrying over the surplus of the one estate to the other, although it might not strictly work out the rights, perhaps, afforded the best means of adjusting the complications which arose―(1st) from the joint estate being liable to the separate debts, only so far as the interest of the partners from whom the debts were due might extend; (2nd) from the separate estates, if taken for the joint debts, having recourse over against the joint estates; and (3rd) from the equities existing between the partners; but whether that rule was strictly correct, it was not for them to say. It had undoubtedly been adopted and acted upon by successive Chancellors for a very great length of time, and could not now be altered by their Lordships.

According to that rule, therefore, joint creditors took the surplus of the separate estates only after payment of the separate debts. Now the jurisdiction in Bankruptcy was equitable as well as legal. The rights of creditors, therefore, as settled in Bankruptcy must be taken to be settled with reference to their equitable as well as to their legal rights, and that being so, that rule must, as it seemed to his Lordship, be held to apply no less to cases in which estates fell to be administered in Equity, than to cases in which they fell to be administered in Bankruptcy. Accordingly, in Gray v. Chiswell, (loc. cit.) the joint creditors were only let in upon the separate estate after payment in full of the separate debts, and that case had been constantly recognised and treated as having been well decided. It was so recognised and treated by Lord Eldon in Ex parte Kendal (loc. cit.), by Sir William Grant in Devaynes v. Noble, Sleech's Case (loc. cit.), and again in Vulliamy v. Noble (3 Mer. 619); by Lord Brougham on the appeal in Devaynes v. Noble (2 Russ. & M. 505); and by Sir John Leach in Wilkinson v. Henderson (loc. cit.). That view of the rights of joint creditors against the separate estates of deceased partners was also borne out by the form of the decree of the Court in such cases, of which Fisher v. Farrington (Seton on Decrees, 280, 2nd ed.*) was an instance; and it was strengthened further by the consideration, that if the joint creditors were permitted to resort to both the joint and separate estates, they were let in upon two funds, whilst the separate creditors were limited to one only.

It was said, however, on the part of the appellants, that, in the cases referred to above, there was joint estate remaining to be administered; and the further rule in Bankruptcy that joint creditors might prove against the separate estate, when there was no joint estate and no solvent partner, was relied upon in support of the appeal, and contended to be applicable in the present case; but in the present case there had been joint estate, and the above rule would be applicable only if it could be made out that the joint creditors

* Omitted in the third edition.

were entitled in bankruptcy, when the joint estate had been exhausted, to come upon the separate estate for so much of their debts as might not have been satisfied out of the joint estate.

His Lordship did not think, however, that the rule in bankruptcy had ever been carried, or could be carried, to that length. If it were, he did not see how any dividend could be paid out of the separate estate until the joint estate was exhausted, as it would depend upon the produce of that estate, whether the joint creditors would come in upon the separate estate; and besides, if such an effect were given to that rule, the consequence would be, as already pointed out, that the joint creditors would have a double fund to resort to, while the separate creditors could resort to one fund only, which would hardly be conformable to the ordinary rule of making a just and equal distribution.

The cases cited on the part of the appellants in support of their contention on this point, did not seem to his Lordship to bear out their argument. In Cowell v. Sykes (loc. cit.) there was not, and never had been, any joint estate. Ex parte Geller (loc. cit.) was the case of a pledge. Ex parte Bauerman (loc. cit.) went no further than that the right of the joint creditor to proceed against the separate estate, where there was no joint estate, was not destroyed by a partner who had become insolvent, having been solvent for a limited time; and he saw nothing in the case Ex parte Birley (loc. cit.) which could at all help the appellants. It was suggested on their part, that the right of the joint creditor to be paid out of the separate estate where there were no joint assets, arose from the debt being joint and several, and this might well be so; but the debt was several in Equity only, and it did not follow that because there was a several debt in Equity, the Court would give the same effect to it as if it was to all intents and purposes a separate debt. The doctrine of marshalling was also sought to be called in aid on the part of the appellant, but Lord Eldon seemed to him to have disposed of that view in Ex parte Kendal (loc. cit.).

Upon the whole case his Lordship's opinion was, that the Vice-Chancellor's conclusion upon that point was correct, and ought to be affirmed.

KNIGHT Bruce, L.J., said he concurred with the Lord Justice Turner's conclusion, although at first his opinion had fluctuated.

submitted the statements and accounts furnished to him by the parties to C & Co., and made his award, founded on the report of C & Co., without communicating such report to the parties:—

Held (1), that he had unduly delegated his functions; (2), that the report of C & Co. was evidence, upon which each party had a right to be heard.

This was a motion to set aside an award which had been made a rule of Court, and to discharge an order of Wood, V.-C., refusing a similar motion with costs, see ante, 441.

By an agreement made between the Eastern Counties and Eastern Union Railway Companies certain questions of account, which were left unsettled by an Act of Parliament amalgamating the companies, were referred to an arbitrator to be determined by him upon the principles adopted in certain accounts prepared by Coleman & Co., accountants.

The discussion before the arbitrator was conducted as follows:-one side submitted a written statement of their claims; the other side replied by another written statement. The former replied in like manner, and

so on.

The arbitrator then submitted the whole of the statements to Coleman & Co., and requested them to examine the accounts of the Eastern Union Company; and, upon receiving their report, made his award in accordance with their report without any further communication with the parties. The principal ground upon which the motion was founded was the alleged irregularity of the arbitrator,

1st. In delegating the decision of the question to Coleman & Co.; and,

2nd. In receiving and acting upon their report in the absence of the parties.

The Solicitor-General, Daniel, Q.C., and Bird, in support of the motion.

The arbitrator never looked into the accounts, which were a material part of the case. The award, therefore, is the award of Coleman & Co., and the case is

not within the rule laid down in

Anderson v. Wallace, 3 Cl. & Fin. 41. As to the second objection they cited, Walker v. Frobisher, 6 Ves. 70; Dobson v. Groves, 6 Q. B. 237; Harvey v. Shelton, 7 Beav. 455.

Rolt, Q.C., and Knox Wigram, contrà.

The agreement having fixed the principle upon which the question was to be decided, the arbitrator was justified in consulting the accountants as to details.

The appellants knew that Coleman & Co. were investigating the accounts, and did not apply to be allowed to see, or comment upon, their report. They are, therefore, bound by acquiescence.

The Solicitor-General, in reply.

The award was issued before the appellants knew that Coleman & Co. had made their report.

KNIGHT BRUCE, L.J., said, that with the best intentions on the part of the arbitrator, there had been an extent of delegation, in matters mainly of account, to professional accountants, not justified by the terms of the reference.

The arbitrator having received from the accountants what must be considered as evidence, it was the right of each party to know what that evidence was, and to be heard upon it, with the view of showing errors, if any, in the accountants' view of the facts.

TURNER, L.J., said, that he had reluctantly come to the conclusion that the award could not stand. The appellants had a right to be heard before the arbitrator upon the report of the accountants, whom they had allowed to investigate their accounts, and also upon the question how far the principle agreed upon by the reference was applicable to the several items of the account; but they had had no opportunity of being heard on either of these points. The objection that they ought to have applied for a hearing was met by the fact that the award was issued in such a manner as to take them by surprise.

The delegation by the arbitrator had been too great, the decision of the whole matter having been virtually

left to the accountants.

Will-Election Rights of disappointed
Devisees.

If a person be put to election and renounce the benefits conferred on him by a will, such benefits must be applied to compensate the disappointed devisees or legatees in proportion to the benefits of which they are deprived by the election.

This case came on by way of appeal from the decision of Wood, V.-C., reported 1 N. R. 469.

The facts of the case are stated in the previous reports, 1 N. R. 17, 469, and more fully in 2 J. & H. 706. It may be mentioned, however, that the will of Lewis Jenkins directed that in case either William or Elizabeth Jenkins should die without leaving issue, the share of the one so dying should go over to the other of them.

Willcock, Q.C., and F. J. Wood, appeared for the defendant Elizabeth Jenkins, and repeated the arguments used on the previous occasion.

Without calling on

W. M. James, Q. C., and Freeling, for the plaintiffs,