dissolved, and his trustees are tenants in common with the remaining partners.1 If the trustees happen to have firm assets, they must keep separate accounts of the joint and separate estates, and make distribution accordingly.2 The court has power to require them to assume the settlement of the partnership concerns. But if the remaining partners are within the jurisdiction, and are in fact solvent, or are able to give bonds, the winding up of the company's affairs is usually, if they desire it, intrusted to them. The dissolution of the partnership by the bankruptcy, as by the death of one partner, extends to all; the remaining members are no longer partners with each other. The actual interest of the trustees is, of course, the bankrupt's share of the surplus, and they may sell their interest to the other partners, or require an accounting. If, without a settlement, the remaining partners continue the business as if they were still partners, the trustees, like executors, may elect to take interest or profits.7

8

The law on this point is thus stated by Mr. Justice Lindley:& "The trustee [of one partner], it will be observed, does not become a co-partner with the solvent partners. Like purchasers from the sheriff under an execution against one partner, the trustee and the solvent partners become tenants in

1 Holderness v. Shackels, 8 B. & C. 612; Murray v. Murray, 5 Johns. Ch. 60; Morgan v. Marquis, 9 Exch. 145; Barker v. Goodair, 11 Ves. 78; Fox v. Hanbury, Cowp. 445 ; Smith v. Stokes, 1 East, 363, per Ld. Kenyon; Freeland v. Stansfield, 2 Sm. & G. 479.

2 Re Wait, 1 Jac. & W. 605; West v. Skip, 1 Ves. Sen. 239; Dutton v. Morrison, 17 Ves. 193; Murray v. Johnson, 5 Johns. Ch. 60; Barclay v. Phelps, 4 Met. 397; Re Shanahan, 6 Biss. 39, Fed. Cas. No. 12,701; Ex parte Rutherford, 1 Rose, 201; Act of 1898, § 5 d.

8 Parker v. Muggridge, 2 Story, 334, Fed. Cas. No. 10,743; Ayer v. Brastow, 5 Law Reporter, 498, Fed. Cas. No. 682. See infra, § 468.

4 Ex parte Owen, 13 Q. B. D. 113; Frazer v. Kershaw, 2 Kay & J. 496; Vetterlein v. Barnes, 6 Fed. Rep. 693; Allen v. Kilbre, 4 Madd. 464; Ex parte Finch, 1 Dea. & Ch. 274; Act of 1898, § 5 h, infra, § 468. [This rule does not apply when the solvent partner is an infant. Re Beauchamp, 3 Manson, 207.]

Hague v. Rolleston, 4 Burr. 2174; Fox v. Hanbury, Cowp. 445; Ex parte Smith, 5 Ves. 295; Crawshay v. Collins, 15 Ves. 218.

6 Ex parte Motion, L. R. 9 Ch. 192. 7 Ex parte Finch, 1 Dea. & Ch. 274; Ex parte Trueman, ib. 464.

Lindley, Partnership, 5th ed., p. 648. See Lindley, Partnership, 6th ed., p. 666.

common of the real and personal property belonging to the firm." He adds that the messenger is, in strictness, entitled to put a person in possession of the whole property of the firm. This, however, is seldom done, as the solvent partners, either by consent or through the intervention of the court, make arrangements for securing to the trustee payment of the bankrupt's share in the assets of the firm." In this country the messenger would not have even the technical right to the custody of the joint assets; but in other respects our practice agrees with this statement.

As the parties are tenants in common, they must join as plaintiffs in actions to recover joint property.1 If the trustee refuses to join, the solvent partners may use his name, if they first give him an indemnity against costs; and the converse may be true, though the point is not likely to arise.

1

If there are no joint debts, and the trustees of one partner acquire all the partnership assets, a suit lies against them by the solvent partners for their part of the assets.2

§ 128. Bankruptcy of One Partner, continued. The distribution between creditors of the firm and those of a bankrupt partner or partners are the same when one or more less than all are bankrupt. The joint creditors may prove their debts, but cannot receive dividends out of separate property in competition with the separate creditors. In England the petitioning creditor may elect to prove against either estate; but this exception does not prevail in this country. Thus Lindley: "And where, under a separate adjudication, the trustee possesses himself of the assets of the firm, he must keep similar distinct accounts, so as not to pay the separate creditors of the

1 Eckhardt v. Wilson, 8 T. R. 140; Thomason v. Frere, 10 East, 418; Halsey v. Norton, 45 Miss. 703. So as to partowners of ship. Stinson v. Fernald, 77 Maine, 576.

2 Hobbs v. McLean, 117 U. S. 567. 3 Murray v. Murray, 5 Johns. Ch. 60 Ex parte Elton, 3 Ves. 238; Freeland v. Stansfield, 2 Sm. & G. 479; Ex parte Taitt, 16 Ves. 193; Re Brick, 4

Fed. Rep. 804; Re O'Reardon, L. R. 9 Ch. 74. See cases cited supra; Ex parte Rutherford, 1 Rose, 201; Barclay v. Phelps, 4 Met. 397; Burnside v. Merrick, 4 Met. 537; Agawam Bank v. Morris, 4 Cush. 99; Re Stevens, 1 Sawyer, 397, Fed. Cas. No. 13,393; Wilkins v. Davis, 2 Lowell, 511, Fed. Cas. No. 17,664; Clarke v. Stanwood, 166 Mass. 379.

bankrupt out of the assets of the firm, nor the creditors of the firm out of the separate property of the bankrupt."1 The right of proof in such cases is involved in the decisions that a discharge in bankruptcy relieves the debtor from his partnership debts.2

This principle was overlooked in one or two cases under the late bankrupt law, from the circumstance that the statute mentioned only the bankruptcy of all the partners. But it is equally true in England and Massachusetts that, until recently, the case of a separate adjudication was not mentioned in the rule (having the force of law) which regulated this distribution. At this point the argument may well be applied that we take the law with its judicial construction, and it would be idle to suppose that the rule can be evaded by an accident of this sort.3

Death of Partner.

§ 129. Upon the death of a partner, the survivor not only has a right to wind up the affairs, but is at law the owner of the firm's property; and if he becomes bankrupt, his assignees may recover the joint assets from the representatives of the deceased partner.

The rule of marshalling is the same as if the partners were living. And in administering the insolvent estates of deceased persons, in England and most of the States, the joint assets go

1 2 Lindley, 4th ed., 1165, citing Dutton v. Morrison, 17 Ves. 193; Re Wait, 1 J. & W. 605; and see Ex parte Good, 5 Ch. D. 46. The order to keep separate accounts of joint and separate property when one partner is bankrupt is "the usual order." Ex parte Farlow, 1 Rose, 421; Ex parte Hall, 9 Ves. 349.

2 Heath v. Hall, 4 Taunt. 326; Ex parte Crisp, 1 Atk. 133; Crispe v. Perrit, Willes, 467; Thomson v. Harding, 3 C. B. N. s. 254; Willson v. Gompartz, 11 Johns. 193. And therefore no judgment should be given against a bankrupt partner joined as defendant with his co-partners. Noke v. Ingham, 1 Wils. 89; Bovill v. Wood,

2 M. & S. 23; Booth v. Middlecoat, 6 Bing. 445; Ex parte Read, 1 Rose, 460; Ex parte Stanton, 1 M. D. & De G. 273; Ex parte Mills, L. R. 6 Ch. 594. 8 See decision and reasons, Barclay v. Phelps, 4 Met. 397.

4 Burnside v. Merrick, 4 Met. 537; Howard v. Priest, 5 Met. 582. See Rice, Appellant, 7 Allen, 112; Shearer v. Paine, 12 Allen, 289; Re Stevens, 1 Sawyer, 397, Fed. Cas. No. 13,393.

5 Ex parte Leaf, 4 Dea. 287; Ex parte Morley, L. R. 8 Ch. 1026; Ex parte Dear, 1 Ch. D. 514; Ex parte Manchester Bank, 12 Ch. D. 917; Re Clap, 2 Lowell, 168, Fed. Cas. No. 2783; Farley v. Moog, 79 Ala. 148; Tillinghast v. Champlin, 4 R. I. 173.

to partnership creditors, and the separate assets to separate creditors. In some States, statutes sever the debts upon the death of a partner, and this may vary the rule.2

§ 130. Partners in a Single Adventure. It is hardly necessary to say that partners in a single adventure come under the rule, and that in case of the bankruptcy of one or more of them, the creditors of the adventure will have a lien on the joint assets.3

Two firms may, as such, become partners in a joint adventure or series of adventures, and upon questions of distribution the conjoint firm will be treated as if it were a single firm.1

§ 131. Dormant Partners. -If the firm contains a dormant partner, the creditors of the firm, who have no notice of the dormant partner, may elect to prove against the separate estate of the ostensible partner or partners.5 It would seem that a like election exists in case of a merely nominal partner.

In such a case, the proofs having been made as separate debts, there was a surplus of the joint estate, and the separate creditors of the ostensible partner succeeded to his lien, and were permitted to recoup themselves from the surplus before anything was paid to the separate creditors of the dormant partner.

§ 132. Executor of Deceased Partner. -The executor of a deceased partner stands precisely in the situation of his testator. If money is, by order of the testator, left in the firm as capital, no proof can, of course, be made for that, or for any balance of account, except from the surplus, until all just debts are paid. If money is left by order of the testator, or in ac

1 Craft v. Pyke, 3 P. Wms. 180; Addis v. Knight, 2 Mer. 117; Lodge v. Prichard, 1 De G. J. & S. 610; Gray v. Chiswell, 9 Ves. 118; Hills v. McRae, 9 Hare, 297; Re Gray, 111 N. Y.

404.

2 Pearce v. Cooke, 13 R. I. 184; Sparhawk v. Russell, 10 Met. 305. Changed by statute in Massachusetts. Pub. Sts., c. 137, § 21; Jewett v. Phillips, 5 Allen, 150.

471, 3 Dea. 91; Hobbs v. McLean, 117 U. S. 567.

4 Re Hamilton, 1 Fed. Rep. 800. See Gilbert's Ass't, 94 Wis. 108.

5 Ex parte Hodgkinson, 19 Ves. 291; Ex parte Norfolk, ib. 455; Ex parte Law, 3 Dea. 541.

Ex parte Reid, 2 Rose, 84.

7 Ex parte Carter, 2 Gl. & J. 233; Re Dixon, L. R. 10 Ch. 160.

8 Ex parte Butterfield, De G. 570;

8 Ex parte Brown, 3 Mont. & A. Scott v. Izon, 34 Beav. 434.

cordance with the partnership articles, as a loan, its amount may be proved if the old debts are paid.1 If the executor wrongly leaves money in the firm, it is a devastavit, which authorizes a proof, whether the old debts have been paid or not.2

§ 133. Solvent Partner paying Joint Debts may prove. A solvent partner, though his co-partner had assumed the debts, cannot share in the joint assets of his bankrupt partner if any of the debts for which he is liable are outstanding, because he would be competing with his own creditors; nor against the separate assets, because the surplus of those assets will go to increase the joint assets. But if he has paid the joint debts, he can prove against the separate estate, and if all the joint debts are paid in bankruptcy he can prove. So if he is no longer bound for any joint debts, because the Statute of Limitations, or a release, protects him; or if he has been discharged in bankruptcy, and afterwards becomes a creditor of his former partner.5

§ 134. Proof by Partners. In settling the estates of insolvent partners, whether in one proceeding or several, no contribution is to be allowed, or proof made, in respect to any inequality between the partners, whether in their contributions to capital or indebtedness to or from the firm, unless there is a surplus after paying the joint debts.

To this rule there is the exception that, if one partner has fraudulently abstracted funds of the firm, there may be proof for that amount against his separate estate (or adjustment equivalent to proof, if the assignees of all the partners are the

1 Ex parte Edmonds, 4 De G. F. & J. 488; Ex parte Coster, 6 L. T. N. s. 199.

2 Ex parte Butterfield, De G. 570, 572; Ex parte Westcott, L. R. 9 Ch.

626.

8 Scott v. Izon, 34 Beav. 434; Ex parte Ellis, 2 Gl. & J. 312; Ex parte Mande, L. R. 2 Ch. 550; Ex parte Collinge, 4 De G. J. & S. 533. See infra, § 182.

5 Ex parte Grazebrook, 2 Dea. & Ch. 186; Ex parte Hall, 3 Dea. 125.

6 Ex parte Harris, 2 V. & B. 210; Ex parte Smith, 1 Gl. & J. 74; Ex parte Thompson, 2 M. D. & De G. 761; Ex parte Bass, 36 L. J. Bkey. 39; Harmon v. Clark, 13 Gray, 114; Houseal's Appeal, 45 Penn. St. 484; Re Lane, 10 N. B. R. 135, Fed. Cas. No. 8044; Ex parte Butterfield, 1 De G. 570; Re McEwen, 12 N. B. R. 11, Fed. Cas.

4 Ex parte Watson, 4 Mad. 477; Ex No. 8783. [The rule is otherwise under parte Ogilvy, 2 Rose, 177.

the act of 1898. See infra, § 468.]