Judgment. is taken. The language is very clear. I think this view of HAGARTY the law has never been altered, and that no action could be brought by a creditor on the partnership deed.

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There are American cases pointing the other way, such as White v. Thielens, 106 Pa. St. 173; Arnold v. Nicholls, 64 N. Y. 117, a case not unlike the present. But the general law is stated in Parsons on Partnership, 2nd ed., p. 434, against any such right, quoting the cases in Buck, &c., &c.

Most of the cases arose in claims to prove debts on either joint or separate commissions.

One of the principal modern cases is Rolfe v. Flower, L. R. 1 P. C. 27. A firm of Rutledge & Co., dealing largely with a firm of Flower & Co., took two clerks into partnership, there being no agreement in the articles as to assuming the existing liabilities. The dealings with Flower & Co. continued for three years, then the firm became bankrupt. Flower & Co., proved against the joint estate. It was sought to expunge their proof, but it was held, affirming the Australian decree, that there was sufficient proof in the dealings and transactions of the several parties to shew that the new firm on its formation adopted the liabilities of the old firm, and that Flower & Co., had consented to adopt the new firm as their debtors and to discharge the old firm, their original debtors.

That conclusion was arrived at from the various facts in evidence, and not from express stipulation.

The case is very full in its notice of the authorities in the argument and judgment.

In delivering the judgment, Lord Chelmsford says: "The question is not to be decided upon probabilities, but upon evidence, although much evidence is not required to establish the assumption by the new firm of the debts of the old. Lord Thurlow in Ex parte Jackson, 1 Ves. Jr. 132, said: 'If one man having debts, takes another into partnership with him, a very little matter respecting those debts will make them both liable.' And Lord Eldon, in Ex parte Peel, 6 Ves. 604, thought that slight circumstances,*

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might be sufficient to prove an agreement to undertake Judgment. such a liability." Again, he says, after holding that the HAGARTY new firm had assumed the liabilities: "The only remaining question to be considered is, whether Flower & Co., being aware of this arrangement, consented to accept the liability of the new firm, and to discharge their original debtors. Upon this question, as upon that of the agreement of the parties inter se, it was said by Lord Eldon, in Ex parte Williams, Buck, 13, 'A very little will do to make out an assent by the creditors to the agreement.'

It was held that, if Flower & Co. had sued the old firm, there would have been ample evidence to satisfy a jury that they had discharged the old firm, and had accepted the new one as their debtor.

No direct evidence was given on that head. It is an inference of fact deduced from the facts and dealings.

A difficulty has been suggested as to the evidence, that we could not infer from it that the plaintiff had consented to abandon or release her claim against her original debtor ; in other words, though she fully assents to accepting the new firm as her debtors that she does not abandon or discharge the others, and it is pointed out that she retains Killey's notes to Muirhead, her brother, and includes him as indorser in this suit in which he suffers judgment by default.

The case of Re The Commercial Bank Corporation of India and the East, 16 W. R. 958, is noticed, and there is no doubt that Sir W. P. Wood, and Selwyn, L.JJ., seem to consider that the evidence must amount to a kind of novation-a discharge of the old debtor and the acceptance of the new in lieu thereof.

That was not a case of a partnership continuing, or of a retiring or incoming partner. The Commercial Bank of India was in liquidation, and a new company obtained a charter to take over all the assets and assume the liabilities of the old. Captain Jones was a depositor of the old company, receiving dividends on his money. He knew nothing of the change, and continued for some time to receive his

Judgment. dividend from the new company-the name being slightly HAGARTY changed-and from the office in Bombay as before. The C.J.O. new company also went into liquidation, and he proved his claim. He had never done any other act or had any other knowledge.

Wood, L. J., says: "No doubt very slight knowledge and recognition by Captain Jones of these facts would have been sufficient to bind him." His proof was expunged, the Court holding that the novation was not complete, his old debtors remaining liable to him.

I can hardly think that the rule would apply with so much rigidness to a case like this where the old debtor continues in the new firm, and is liable in it and with it.

The case before the Lords Justices was of two wholly separate and independent debtors, and even there it was stated that slight evidence would have altered the decision. The oft cited Ex parte Jackson, 1 Ves. Jr. 130, supports my view.

One Weldon, a trader, died owing money to Jackson. His widow continued the business and borrowed more money from Jackson giving her bond for the whole. She afterwards took her son and nephew into partnership and after two years a commission in bankruptcy is issued against her and her nephew. Jackson petitioned to be allowed to prove under the joint commission. It was objected that he was only a separate creditor, having taken her bond.

Lord Thurlow said he would do what he could to allow the proof, and said: "I asked if any interest had been paid upon the bond by both, for, if so, I should have considered it as adopting the debt and making the partnership liable to it. Then I could do it consistently with the principle. If they have in any way considered the debt as a joint debt, I will understand it so, as it ought to be." He then adds the words already cited in Lord Chelmsford's judgment.

There is surely sufficient in this case to satisfy Lord Thurlow's views. We have payment of two of the notes by the new firm, and payment of interest on another note and propositions for time and payments at extended periods,

to say nothing of the original agreement to assume Killey's Judgment. scheduled debts, of which the plaintiff's was one.

I cannot see that the inclusion of the endorser as a defendant can alter the substantial merits of the claim.

I suppose the plaintiff never gave the matter a thought as to whether she should formally abandon all pretext of a claim against Killey's separate estate if he had any— nor as to any claim against Muirhead as the endorser. We may safely assume that she knew nothing of the intricacies of the law on this point.

I think the evidence warrants the conclusion, as one of fact, that she has adopted the new firm as her debtors instead of any shadowy claim she might have against Killey's separate estate.

Lord Eldon, in Ex parte Williams, Buck, 13, after saying that very little will do to make out an assent to the agreement (i. e., as to the assumption of former debts) says: "If any of the creditors named in the schedule think they can make out such a case, they may apply on that ground to prove their debts against the joint estate."

In Ex parte Kedie, 2 Dea. & Ch., 321, the Chief Judge says: "It cannot be doubted, after the case of Ex parte Jackson, under a commission of bankrupt the amount of a bond debt due from one partner, which has been adopted by both partners, may be proved against the joint estate."

In Ex parte Lane, DeG. 300, the Chief Judge says, "If A. be a creditor of B., and B. and C. propose to enter into, or have entered into, partnership and say to A., ' We wish this debt to be a debt from us both and we will pay it,' and A. accedes to that, although there is no writing, the agreement is valid and effectual, and is not impeached or affected by the Statute of Frauds. The effect of such an agreement is to extinguish the first debt and for a valuable consideration to substitute the second debt. These very words need not be used by the parties if there was sufficient to shew that the intention was so; that will be as effectual as if the most formal expression had been given to the intention."

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Judgment. In Ex parte Freeman, Buck. 471, it is said that the HAGARTY agreement of the new firm to assume the debts of the old may be considered only as a proposal to become sole debtors. If the creditor assent to this before the bankruptcy, then a contract to that effect is concluded.

He denies that the proposal inter se, without assent or recognition, can be sufficient.

On the whole, I am of opinion that the appeal must be dismissed.

I would not have discussed the first question as to the partnership deed in itself supporting the action, but for a different view as to the effect of Gregory v. Williams, 3 Mer. 582, being pressed on us and apparently sanctioned by part of the Court.

I decide in favour of the plaintiff on the second ground.

BURTON, J. A. :

I am unable to agree in the view that there was any evidence to support a recovery on the ground of a novation, in other words, an agreement on the part of the plaintiff to accept the joint liability of the partners of the new firm and discharge the original debtor.

The course pursued by the plaintiff in this action in treating the note of Killey as still in force and suing the endorser upon it negatives any such agreement, and is I think sufficient to dispose of that branch of the case, nor have I been able to convince myself that the Queen's Bench Division were wrong in holding the new firm liable on the ground that a trust was created at the time of the transfer of the property which this plaintiff is in a position to enforce.

The whole subject was much discussed and considered in the recent case of Mitchell v. City of London Assurance Co., 15 A. R. 262, in this Court, in which I was unable to concur with the other members of the Court, purely and simply on the ground that I could see nothing in the case but an agreement made by one party with a second to pay money to a third.