.1833. Ex parte ROBINSON. In the matter of HOUGHTON and another. 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 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 bona fide holder for value, without notice of the act of bankruptcy. 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 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 and another. 1833. Ex parte ROBINSON. In the matter 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 1833. Ex parte ROBINSON. of be perfected by the assignment under the commission; and it would be difficult to show why a party, who takes the acceptance of a firm during the interval between the inception and the completion of the severance, and at In the matter a time when events might perfect their completion altogether, should be in a worse situation than if he had taken it after the severance was completed, and the partnership wholly determined. If we look to the cases we shall find, that while there are none directly against the view which I take of this question; while at law there is no case either directly or indirectly against it, and while there is a current of authority plainly in its favour, yet there are one or two cases which proceed upon principles not easily reconcileable with others of high authority and recent date. The only case in Banc that I know of, which materially differs from Harvey v. Crickett, 5 M. & Sel. 337, is that of Thompson and Freere, 10 East, 418, where it was held, that an indorsement by two partners, after acts of bankruptcy committed by them, did not transfer the partnership interest in an acceptance, separate commissions having afterwards issued against them, and the solvent partner being abroad, and ignorant of the whole transaction. It must, however, be observed, that in this case the Court only granted a rule for a new trial, being of opinion that the facts were not well ascertained, and that some of the matters of law which the case involved required more deliberate consideration. It does not, however, appear ever to have been afterwards brought under the notice of the Court, although the reported case has been again and again referred to, and particularly was urged on the Court as an authority in Lacy and Woolcott, 2 Dow. & R. 460, without effect, as it did not bear directly on the point then before the Court, HOUGHTON and another. 1833. Ex parte ROBINSON. In the matter of HOUGHTON and another. Then the decisions in Dutton and Morrison, 17 Vesey, |