sureties.

Proof by livered up to the surety, this is not equivalent to payment by the surety, so as to enable him to prove under the combankrupt's mission; for the transaction amounts to an entire release certificate. of the old debt by the obligee, and the surety stands afterwards in quite a different character, being no longer surety for the bankrupt's estate, but for a new obligation created subsequent to the certificate. (1)

of a differ

ent instru

ment gives hima claim against the other cosurety.

Whether It was decided by the late Vice-Chancellor, that the the substisubstitution by one co-surety, without the knowledge of the tution by a co-surety other, of a different security, in the place of that on which they were severally liable, does not give such co-surety any claim against the other, as having paid the debt, for which each was liable on the original instrument. Thus, where R., for the accommodation of C. & Co., drew on J. & Co. a bill, which they accepted - J. & Co. drawing on R. another bill, which he accepted — and both bills were indorsed to C. & Co.; and (J. & Co. before their acceptance fell due having become insolvent) the holders called upon R. as. drawer for payment - who thereupon, for the accommodation still of C. & Co., obtained an acceptance of T. in lieu of that given by J. & Co. — and R. proved the amount of such acceptance under a commission against J. & Co.; — Sir J. Leach, under these circumstances, ordered the proof to be expunged, the dividends repaid, and the acceptance delivered up; as he considered, that the new security given by R. was one with which J. & Co. had no concern, and that their estate could not, therefore, be charged with the consequences of it. (2) But Lord Eldon, when this case came before him upon appeal, thought that the question was merely who were sureties, and who were principals, in these counter-acceptances; and that R. being the surety (as drawer) for J. & Co., as to those bills drawn by him and accepted by them, the question was to be decided by the general law between acceptors and drawers, when the drawers pay for the acceptors; and the ViceChancellor's order was reversed. (3)

(1) Ex parte Sergeant, 1 G. & J. 185. 2 G. & J. 23.

(2) Ex parte Hunter, 5 Mad. 165. (3) Ex parte Hunter, 2 G. & J. 7.

Where partners dissolve their partnership- one partner Sureties. retiring, and the other continuing the business, and cove- A retiring nanting to pay all the debts, if the latter becomes bank- partner in rupt, and the retiring partner is obliged to pay any of the the nature of a surety. debts, he can prove such payment under the commission; as he is in the nature of a surety for the continuing partner. (1)

SECTION XXII.

Creditors by Composition.

not bound

Where a creditor agrees with his debtor to take a com- Where position in lieu of his debt, on condition that the money is creditor paid on a certain day, and after failure in such payment, by compothe debtor becomes a bankrupt, the creditor is entitled in sition; that case to prove for the whole of his original debt, or for such part as remains unpaid—and not merely for the amount of the composition. For the general rule in equity is, that the Court will not dispense with the point of time in the composition of debts, as they will where it would work a forfeiture; and that where a creditor thus agrees to take less than his debt, so that it be paid precisely at the day, and the debtor fails in payment, the latter cannot (2) be released.

the resi

Therefore, where a trader entered into a deed of com- and may position with his creditors, by which they agreed to take prove for 10s. in the pound on their respective debts by instalments, due of his to be secured by his promissory notes, and the creditors debt recovenanted that they would, as soon as such promissory unpaid. maining notes should be paid, release and discharge the traderand the deed also contained a proviso, that in case of default made in such payment, or if any commission should issue before the whole of the composition should be paid, then the covenants, on the part of the creditors whose

(1) Wood v. Dodgson, 2 M. & S. 195.; and see post, title "Part

ners."

(2) Sewell v. Masson, 1 Vern. 210. Eq. Ca. Ab. 28. s. 5. Heathcote v Crookshanks, 2 T. R. 24.

Composi

tion.

debts should be so unsatisfied, should be null and voidthe first instalment was paid, the second was due and unpaid, and a commission having issued against the trader, -Lord Eldon under these circumstances held, that the creditors were entitled to retain the first instalment, and to prove for the residue of their original debts.(1) So, where a trader assigned certain book-debts, in trust to pay the creditors who should execute the deed, and covenanted that if the creditors should not, out of that fund, be paid in full within two years, he would pay the deficiency within a month afterwards and before the end of the two years the debtor became a bankrupt, — it was held, that the creditors under the deed were entitled to have the remaining debts of the trust fund sold, and the produce divided amongst the creditors under the trust deed, pari passu, having regard to what had been already received; and that, after such application of the trust fund, the creditors were entitled to prove for the deficiency under the commission. (2) But if a creditor under a composition has not received his instalments before the bankruptcy takes place, and there is no fund separated for the payment of them, he cannot have them out of the bankrupt's estate, and prove the residue of the debt; but he must then come in as the other creditors (3) at the date of the bankruptcy. Where he cannot prove for residue.

Where, however, there is an actual release of the debt in the composition deed, and no default made before the bankruptcy in the payment of any of the instalments, then the creditor cannot prove for the residue of the original debt, but only for the remaining instalments. As, where a deed of composition stipulated that if the instalments should not be duly and regularly paid, the release thereby given by the creditors should be void — and all the instalments, which had become due before the bankruptcy, were regularly paid; — in this

(1) Ex parte Verc, 1 Rose, 281. 19 Ves. 93.

(2) Ex parte Richardson, 14 Ves.

(3) Ex parte D'Oliviera. Ex parte Von Hulle, 14 Ves. 184.

tion.

case Lord Eldon held, that the creditor ought not to prove Composithe residue of the debt, but only the outstanding instalments: for that, as there had been no default before the bankruptcy, and the bankrupt had been released from his debts, nothing whatever was then due to the creditor.(1) In a former case, however, where the bankrupt had paid the first instalment — and though the creditor had waived the default in the payment of the second, by accepting two notes of hand which were not due at the time of the bankruptcy, Lord Hardwicke thought it would be a hard case, if the creditor was not admitted to prove the whole of the remainder of his original debt. (2)

sentation.

If a creditor, to induce another creditor to come to an Where a arrangement with his debtor by composition, or otherwise, party bound by conceals his own debt, holding out that he is no creditor, his own the party is bound by such misrepresentation, and, in case misreprethe composition take effect, will be precluded from proving his own debt. (3) But when the proposed composition or arrangement does not take effect, then the party, however fraudulent his intention, will not be bound (4) by such misrepresentation.

SECTION XXIII.

Friendly Society Act.

By the 33 Geo. 3. c. 54. s. 10. for the encouragement and relief of friendly societies, it is provided, that if any person appointed to any office by any such society, and being entrusted with, or having in his hands or possession, any monies or effects belonging to such society, or any securities relating to the same, shall die, or become a

(1) Ex parte Peele, 1 Rose, 435. (2) Ex parte Bennett, 2 Atk.

527.

(3). Montefiori v. Montefiori, 1 Bl. 363. Cecil v. Plaistow,

1 Anst. 202.

Eastabrook v. Scott, 3 Ves. 456. Holmer v. Viner, 1 Esp. 152. Ex parte Gardner, 11 Ves. 244.

(4) Ex parte Oakley, 1 Rosc, 158.

Friendly bankrupt, or insolvent, his executors or administrators, or society. assignees, shall within forty days after demand made by the order of the society, deliver over all things belonging to such society, to such person as the society shall appoint; and shall pay out of the assets all sums remaining due, which such person received by virtue of his said office, before any of his debts are paid or satisfied.

Operation of act con

fined to money

due from officers of the so

ciety, by virtue of

their office.

In the first cases that were determined under this act, its provisions, were construed to extend to all persons, who had the property of the society in their hands, although they were not officers of the society (1); but, upon a revision of those cases, such a construction was found to be too large, and the statute was afterwards confined to cases where persons were duly and formally appointed officers of the society and was therefore held not to extend to a person, to whom the money of the society has been paid as a banker, or to whom money has been lent by them upon security paying interest. (2) And even money lent to a treasurer duly appointed, upon his promissory note, has been held to be not within the operation of the act; for the preference is given by the statute, in respect of money which gets into the hands of the officers of the society, only by virtue of their office, and independently of contract. (3)

But in a case where money was paid to trustees, AS TRUSTEES, and they gave separate notes for it, and voluntarily agreed to pay interest, for the purpose of serving the society, it was held, that here, the money being paid to them as trustees duly appointed, their agreeing to pay interest did not alter the case, so as to make the money in their hands to be considered only a loan to them in their private character; and the claim under the statute was allowed. (4)

(1) 1 C. B. L. 255.

(2) Ex parte Askwith, 1 C. B. L. 255. Ex parte Amicable Society of Lancaster, 6 Ves. 98. Ex parte Ashley, ibid. 441. Ex parte Corser, ibid. Ex parte Ross, ibid. 804.

(3) Ex parte Stamford Friendly Society, 15 Ves. 280. Ex parte Buckland, Buck. 214.

(4) Ex parte Friendly Society of Wickwar, Whitmarsh, 297.