in the business or the profits thereof. On the 30th July, 1810, the surviving partners became bankrupt.

At the death of Devaynes, Clayton's cash balance in the hands of the partnership amounted to £1713 and a fraction.

After the death of Devaynes, and before Clayton paid in any further sums to his account with the bankers, he drew out of the house sums to the amount of £1260, thereby reducing his cash balance to £453 and a fraction.

From this time to the bankruptcy, Clayton both paid in and drew out considerable sums; but his payments were so much larger than his receipts that, at the time of the bankruptcy, his cash balance, in the hands of the surviving partners, exceeded £1713, the amount of the cash balance at Devaynes's death.

It appeared from the Master's Report, that a notice was given by the executors of Devaynes that they were not connected with the house, and that it had been drawn up by a firm of solicitors of which Clayton was a member, though it appeared that he knew nothing of such notice until after the bankruptcy.

It also appeared that Clayton kept his accounts with the partnership, according to the custom of bankers with their country customers. On the 30th of March, 1810, his account was made up and balanced by the surviving partners, and transmitted to him, and the balance carried forward, and the account continued to the time of the bankruptcy.

By the amount of the dividends received since the bankruptcy, (those dividends being apportioned to the whole debt proved under the Commission,) the balance of £1713 would be reduced to £1171 and a fraction; and it was this last sum which Clayton claimed against Devaynes's estate, and as to which the Master had reported that Clayton had, by his subsequent dealings with the surviving partners, released the said estate.

But now, upon the argument of the exception to the report, and in consequence of the decision in Miss Sleech's case (1 Mer. 539), that claim was abandoned to the whole extent of the cash balance at Devaynes's death above £153, the sum to which it had been reduced by drafts upon the house previous to any fresh payments made to it; and that which was now claimed is the last-mentioned sum of £453, minus its proportion of the dividends.

Bell and Palmer, Fonblanque and Clayton, in support of the exception.

This is a case, the decision of which will be of the greater importance, as it has lately been one of frequent occurrence, and has never been decided, either at law or in equity. Suppose that in this case, Devaynes, instead of dying, had merely quitted the partnership; and that public notice had been given of that event tantamount to the notice afforded by the advertisement of his death in the newspapers; and that the same transactions had taken place with the continuing partners which have now taken place with the surviving partners. In such case, the question would have been a mere legal question; and what we submit is, that in such a case the retiring partner would clearly be liable to the extent of the £453; and, if so, then that, in the present case, the rule of equity is strictly analogous to the rule of law.

If this view be correct, then all that remains to be considered is, whether there are here any special circumstances which would, in the case we are supposing, have discharged the legal liability.

The legal principle is that which is laid down in Bois v. Cranfield, Styles 239; Vin. Ab. tit. Payment, M. pl. 1; and appears to be this, viz.: that if a man owes another two debts, upon two distinct causes, and pays him a sum of money, he (the payor) has a right to say to which account the money so paid is to be appropriated.

Then follows Heyward v. Lomax, 1 Vern. 24, deciding that if a man, owing another money on a security carrying interest, and also on simple contract, pays money generally, without specifying on what specific account, it shall be taken to the advantage of the payor, in discharge of the debt carrying interest. This however has been overruled by subsequent cases.

The next is Perris v. Roberts, 1 Vern. 34, where there being a mortgage debt, and also a debt by simple contract, and both being cast into one stated account, and a bill of sale being made for securing the balance, which proved deficient, the payment was decreed to be apportioned. In this case there were strong circumstances to have exonerated the debtor altogether.

In Manning v. Westerne, 2 Vern. 606, however, the rule is strictly brought back within its former limits. There a man indebted both by specialty and by simple contract, having made payments and entered them in his book as made on account of what was due by specialty, this was held not a sufficient appropriation; and the Lord Chancellor (Lord Cowper) said, that the rule of law "quicquid solvitur solvitur secundum modum solventis" is to be understood only when at the time of payment the payor declares

the purpose. If he does not, the payee may direct how it shall be applied. See, to the same purpose, Anon., 2 Mod. 236, and Bowes v. Lucas, Andrews, 55.

Meggott v. Mills, Lord Raym. 287, must also be mentioned, because that is a case on which some stress will probably be laid. Lord C. J. Holt there expressed it to be his opinion that, where two sums were due, one of which might make the debtor a bankrupt, and the other (being a debt incurred after he ceased to trade) could not produce that consequence, the payment should be taken without more, as meant to be applied to the former debt. But this opinion of Lord Holt's has since been called in question.

It

Goddard v. Cox, 2 Stra. 1194, is next in order of time, and has been considered as a ruling case ever since its decision. There a widow, being indebted as executrix to her deceased husband, became also indebted on her own account, and afterwards married again, and her second husband became also indebted on his own account, and made payments without declaring the purpose. was agreed that he had the first right to appropriate his payments; but having neglected it, that it devolved on the payee, who might apply them as he pleased, either to the debt incurred by the wife. dum sola, for which the husband was answerable, or to the husband's own debt, but not to the debt of the wife as executrix. And a case of Bloss v. Cutting was there cited to the same effect as Manning v. Westerne, and the rest.

The next case is Hammersly v. Knowlys, 2 Esp. 665, which would have been against us if we had contended for the whole amount of Clayton's claim; but, taking it at the lesser sum only, is in our favour. In that case, Lord Kenyon held that the note of A. being deposited by B. at his bankers', as a security for money, the bankers knowing that it was an accommodation note, and B. afterwards paying money to his bankers without any specific appropriation, the moncy must be placed, as far as it would go, in discharge of the then existing debt; and the banker could not make the maker of the note responsible for more than the balance remaining due at the time of such payment, although he afterwards trusted his debtor with a further sum of money.

Then comes Dawe v. Holdsworth, Peake, N. P. 64, which was an action of trover. The defence was bankruptcy; and the question arose, as it did in the case of Lord Raymond, whether the petitioning 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 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.

Now, to apply this doctrine to the circumstances of the present case. 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