1833. Ex parte ROBINSON. of partnership name on any negotiable security, even though such existed prior to the dissolution, or was for the purpose of liquidating the partnership debts, notIn the matter withstanding such partner may have had an authority HOUGHTON given him to settle the partnership affairs; and in and another. Wright v. Pullen, 1 Star. 375, Lord Ellenborough, following Lord Kenyon, decided, that where, after the actual dissolution of a partnership, one member accepted a bill in the partnership name, bearing date before the dissolution, an indorsee, who takes the bill without notice of the dissolution, could not enforce the bill against the other member. That a dissolution by bankruptcy is, by relation, from the time of the act of bankruptcy, when followed by a commission and assignment, is established by a variety of cases. Fox v. Hanbury, Cowp. 450; Smith v. Oriel, 1 East. 308. Lacy v. Woolcott, 2 Dow. & R. 460, has, however, been chiefly relied upon; but that case does not warrant the proposition contended for by the appellant. It was decided upon a different ground. The bankrupt partner and the solvent partner had, after the act of bankruptcy, recognized their liability, by holding themselves out as partners; and in that case the question was not as between creditors. It is submitted, therefore, that it is not competent for a partner, after dissolution by bankruptcy, to create a liability upon which proof can be made against the joint estate. Sir Edward Sugden in reply : It is admitted, that if the bankruptcy had not happened the partners would have been liable; but it is said that a solvent partner cannot make the estate of 10 1833. Er parte ROBINSON. In the matter of and another. himself and the assignees of the bankrupt liable for a subsequent debt. But here that question does not arise; for the bill was given for a pre-existing joint demand in pursuance of a previous engagement. But it is contended that this joint creditor cannot follow the joint HOUGHTON property, because the bill was accepted after the act of bankruptcy of one partner; and Kilgour v. Finlayson (a), ex parte Ruffin (b), and more particularly Dutton v. Morrison (c), have been relied on; but those cases were before the 49 Geo. 3, c. 135.; since which statute the rights of a party can only be affected by notice of the act of bankruptcy. It is not pretended that it is not a valid debt, but it is said that the right of proof does not exist; and it is admitted that a solvent partner might deal with the partnership effects. But if he may deal with the property, why may he not accept a bill? As to ex parte Ruffin (b), and the cases of that class, they merely decide, that, if property is transferred by the old to the new firm, the creditors of the old firm have no right in preference to the new creditors. With regard to the equity of the case, it has been said that the question is to be considered the same as if it were with Davies. But not so; for whatever equities might have existed as against Davies, they cannot affect the right of Robinson, who took the bills in regular course of business, without notice either of the bankruptcy or of any equities which might have existed. If the doctrine contended for by the assignees is right, there cannot be any dealing with any partnership without instituting enquiries whether one of the partners may not have committed an act of bankruptcy. The appellant is, therefore, entitled to prove, and the decision of the Court of Review must be reversed. Curia advisare vult. (a) 1 H. B. 155. (b) 6 V. 119. (e) 17 V. 197. 1833. Ex parte ROBINSON. of LORD CHANCELLOR:- The question which arises here is of great importance, and is one on which conflicting dicta, rather than decision, are to be found in In the matter the books. It is, whether or not a solvent partner in a firm, one of whom had committed an act of bankruptcy, can bind the firm by his acceptance for a partnership debt, the acceptance being, by indorsement, in the hands of a bond fide holder for value, without notice of the act of bankruptcy. HOUGHTON and another. The firm of Houghton and Watts were liable to Davis: and, after Houghton became bankrupt, Watts, cognizant of his bankruptcy, gave Davis the acceptance of the firm, which he, Davis, indorsed to Robinson. Watts afterwards became bankrupt, and a joint commission issued, under which Robinson sought to prove against the joint estate. The commissioner before whom the point was raised allowed the proof; the Court of Review ordered it to be expunged; and the question comes here on a special case, stating in effect the case which I have now given in substance. It must be admitted that the consequences would be most unfortunate were it still to be the law, that the bona fide holder of a bill accepted by a firm could not prove on it, if it turned out to have been accepted after a secret act of bankruptcy committed by one of the partners. The extent to which this position is put, and its mischievous tendency, need not be pointed out. The ground of the decision below appears to have been, that the bankruptcy dissolving the partnership, the assignees are, by relation, tenants in common with the solvent partner, from the act of bankruptcy; so that nothing done by the solvent partner, without the concurrence of the assignees, can, from that event, bind the joint property. In the very short note of the reasons given by the learned Judges below, that is the 1833. Ex parte ROBINSON. of ground of the judgment. But from thence another inference of a wholly different nature must be made, before the present case can be decided as their Honors have determined, namely, that because of the tenancy In the matter in common the solvent partner cannot bind the property of the firm, therefore he cannot render the firm and another. liable by his contracts with parties ignorant of the dissolution and bankruptcy, even although those contracts relate to prior liabilities of the firm. That bankruptcy dissolves a partnership when a commission issues, and there is an adjudication and assignment, and that the cesser of the partnership connection takes place from the act of bankruptcy by relation, as a general position, is unquestionable; but that it has every effect of a dissolution; that it determines the partnership by relation to all intents and purposes, and makes it as if no such connection had ever subsisted, is not law. The dissolution being unknown to the world, all men are safe in contracting with the firm. No one can doubt, that if two parties secretly agree to dissolve on the 1st of January, entering into a regular instrument of dissolution, and yet go on trading together as before, either may validly bind both on the 1st of February, by accepting a bill in the partnership name, and paying it away to a party ignorant of the dissolution. Does the circumstance of the dissolution having been effected by bankruptcy make any difference in the position of the bona fide and ignorant holder? The case, as decided below, can only rest on the supposition that this does make a difference, by letting in the assignees as tenants in common of the solvent partner. But suppose them so as regards the property, it does not prove their being let in prevents the solvent partner from binding the firm, by con HOUGHTON 1833. Ex parte of HOUGHTON and another. tracting a new liability for an existing debt of the firm. Suppose there had been no partnership at all, that the bankrupt had been a sole trader, had accepted the bill himself, and had paid it to one ignorant of his having committed an act of bankruptcy, it is clear that the holder could have proved. The bankrupt could not have validly transferred property after his act of bankruptcy, unless within the statutory exception. He could not have indorsed the acceptance of another person, so as to give his indorsee an action against the acceptor, but he could bind himself, the indorser, by that indorsement, in case the bill were dishonoured; and his acceptance would certainly bind him in the hands of an innocent holder, and entitle such holder to prove under his commission. It can make no difference, that the acceptance is by the solvent partner of a firm, and not by the bankrupt himself; the acceptance binds both, unless the bankruptcy is known. The indorsement by Davis to Robinson, in this case, puts him in the position which I have been assuming. The party receiving the bill stands in that of the innocent holder, if it be clear, which indeed cannot for a moment be questioned, that, on a secret dissolution without bankruptcy, an innocent holder of the partnership acceptance given by one partner could sue both. But ought the bankruptcy, which takes one partner out of the firm, to place that innocent holder in a worse situation, or ought it to place the assignees of the partner going out in a better situation, than he could himself have been in? It might rather be contended the other way, at least that there is a reason more in favour of the holder, where the secret act does not complete the dissolution, than where the dissolution is completed before the acceptance was given; for in truth the act of bankruptcy is only an inchoate dissolution, to |