residue of the debt, there being no stipulation as to giving up securities, and the acceptor having primâ facie no remedy over against the drawer (u). In this case the acceptor stood in a similar position to a surety who has agreed to abandon his rights against the principal. And in the case of Cowper v. Smith (v), where the effect of the composition deed was to extinguish the debt, it was held that the creditor might maintain an action upon a written guarantee originally given, and which empowered the creditor to compound with the debtor without affecting the surety's liability. It may perhaps be presumed, that the guarantor had no remedy over against the principal in this case, or otherwise the arrangement would seem to be a fraud upon the other creditors; and upon this supposition the case is a strong authority for the proposition above mentioned.

In one case it was held, that the taking by a creditor of an additional security for the amount of his composition was not only void, but disabled him from recovering the composition money (w); but this seems pushing the principle to an extreme (x).

A joint creditor having a security for his debt on the separate estates of the debtors, may proceed against the joint estate without giving up his other security (y); and the converse is equally true (z).

The late act for amending and consolidating the bankrupt law, contains some valuable provisions relating to composition deeds, or other arrangements between the creditors and a trader, both before and after an adjudication of bankruptcy, which are mostly quite novel (a). And, first, this act authorizes a trader who is unable to meet his engagements with his creditors, and desirous of laying the state of his affairs before them under the superintendence and control of the Court of Bankruptcy, to present a petition, supported by affidavit, for protection of his property and person from process until further order (b), which may be granted by the Court, and the petitioner released from imprisonment, except in case of certain offences enumerated in the act (c); the Court is thereupon to appoint a private sitting, and to name an official assignee to act in the matter of the petition, and the petitioner is to file in Court, ten days before such sitting, a full account of his debts and property, with his proposal for the payment or compromise of the former, and shall furnish the official assignee with a copy of such account (d); the creditors then at the private sitting before mentioned are to prove their debts, and if three-fifths, in number and value, who have each proved debts to the amount of 101., agree to the debtor's proposal, then a second private sitting is to be fixed for confirmation of the proposal, at which creditors who have not proved before may prove; and if the proposal is then confirmed by a like proportion of the creditors, the terms of it are to be reduced into writing and signed by the creditors; and such resolution

(u) Thomas v. Courtnay, supra.

(v) 4 Mees. & W. 519.

(w) Howden v. Haigh, 11 Ad. & Ell. 1033; 3 Per. & D. 661.

(r) Vide 8 Mees. & W. 763.

(y) Ex parte Peacock, 2 Glyn & Jam. 27; 1 D. & Ch. 135.

(z) In re Plummer, 1 Phill. 60.

(a) 12 & 13 Vict. c. 106, ss. 224-231.

(b) Sect. 211. This is an extension of the operation of a former act, the 5 & 6 Vict. c. 116, which, as to bankrupts, seems to be in effect though not in terms repealed, and this earlier act did not apply to the case of a trader owing debts to the amount in the whole of 300%. or more. (c) Sects. 211, 212. (d) Sects. 213, 214.

or agreement, subject to the subsequent confirmation of the Court, is to be binding upon all parties who were creditors at the date of the petition, and have had notice of the sittings. And the Court is to confirm the same, if they think fit, and cause it to be filed of record, and to grant the petitioner a certificate thereof, and indorse on the certificate from time to time a protection from arrest by any such creditor (e); and from the time of such confirmation, the estate of the petitioner is to vest in the official assignee, together with any other person, or in either alone, according to the terms of the resolution (ƒ); and after the resolution or agreement has been carried into effect, the Court is to give the petitioner a certificate, which is to have the effect of a certificate of conformity, except as to debts incurred in certain specified ways (g). But in case any difficulty arise in carrying out such resolution or agreement, a special sitting of the Court may be held, and such resolution or agreement may, by a majority of creditors, at such sitting, who have each proved to the above amount, be confirmed, altered, or annulled in whole or in part (h). And if the petitioner does not duly attend the sittings of the Court or file his account, the petition is to be dismissed; and if at the first sitting his proposal is not assented to, or in certain cases of misfeasance or fraud on his part, the Court has power to adjudge him a bankrupt, and to adjourn the proceedings into the public Court (i). And, secondly, every deed or memorandum of arrangement between a trader and his creditors, touching the trader's liabilities and his release therefrom, and the distribution and winding up of his estate or any of such matters, and signed by six-sevenths, in number and value, of creditors to the amount of 107. each, is made binding upon the creditors who have not signed such deed or memorandum, when three months have elapsed after such latter creditors have respectively received notice of the deed or memorandum, and of his suspension of payment, or if the trader has obtained from the Court a certificate that such deed or memorandum has been duly signed by such majority of creditors, and notice of such application to the Court was given to the creditors not signing, a fortnight before the application to the Court was made. And it is provided, that such deed or memorandum shall not be affected by a prior or subsequent act of bankruptcy; and that every creditor shall be considered a creditor in value in respect of such amount only as, upon an account fairly stated, after allowing the value of mortgaged property and other such available securities or liens from such trader, shall appear to be the balance due to him (k); and the creditors are to have the same rights respectively, as to set-off, mutual credit, lien, and priority, and joint and separate assets are to be distributed in the same manner, as in bankruptcy; and the creditors are not to lose their remedies against third persons (1); and in case of improper administration of the estate, the Court, upon the petition of any creditor supported by affidavit, has a general jurisdiction over the subjectmatter (m).

And, further, a bankrupt is empowered, after passing his final

(e) Sect. 216. (f) Sect. 218. (g) Sect. 221. (h) Sect. 220.

Sect. 223.

(k) Sects. 224, 225.

(1) Sect. 228. Vide infra, lien on this subject.

(m) Sect. 229.

examination, to summon a meeting of his creditors, and make them an offer of a composition, which, if accepted by nine-tenths, in number and value, of the creditors present at two successive meetings, shall bind the rest, and the Court may, upon such acceptance being testified by the creditors in writing, and upon payment of such sum as the Court shall direct, annul the adjudication of bankruptcy, and supersede or dismiss the fiat or petition for adjudication (n). But it is provided, that a creditor whose debt is below 201., shall be reckoned in value, and not in number; and that any creditor accepting any gratuity or higher composition for assenting to such offer, shall forfeit the debt due to him, together with the gratuity or composition (o).

An agreement by a debtor, in a composition deed, to pay 15007. by three yearly payments of 500Z each, and to insure his life for 1500Z. by way of security, is not satisfied by payment of an instalment of 500%, and insuring then in the sum of 1000l. (p). And though a party taking a benefit under the 500l. payment could not perhaps, even at law, allege breach of covenant for not insuring prior thereto, yet he can recover his original debt, on the ground that the composition deed is avoided by the subsequent breach in not continuing to insure in the proper sum (q). The conduct of such party (creditor) may, however, amount to a waiver even of future breaches (r).

We will add a few words on the merger of securities. A merger of the old security generally takes place, where a higher security is given between the same parties, as where a simple contract debtor gives a bond or is sued to judgment (s). So where the payee of a promissory note took a cognovit for the amount due (t). And it has been even held, that a joint and several bond given by a debtor and his surety to secure a smaller sum by instalments in lieu of the old debt, with interest in case of default of payment of the instalments, but where the exact terms of the agreement are not clearly made out and are not reduced into writing, operates as an extinguishment of the old debt, even though the debtor become bankrupt before the instalments are paid (u). But it is otherwise where the higher security is given by way of a collateral security; thus, where the customer of a banker, with a surety, gives the banker a bond to secure all sums then advanced or thereafter to be advanced, the banker may still sue upon the simple contract (v). So the interposition of a trustee will prevent the higher security operating as a merger (w).

A bond accepted by a creditor from the executor of his debtor in lieu of the original bond given by the testator, operates to discharge the former security; nor can such creditor take advantage of a general devise by the testator for payment of his debts; nor is the case altered

(n) Sect. 230.

(0) Sect. 231. In such case the remedies against sureties would seem to be left to the general law on the subject.

(p) Watts v. Hyde, 2 Phill. 406; 17 L. J., Ch. 409, N. S. Hyde v. Watts, 12 M. & W. 254; 13 L. J., Exch. 41, N. S.

(7) 12 M. & W. 254. (r) 2 Phill. 406.

(s) Per Lord Ellenborough, in Duke v. Mitchell, 3 East, 258; Payley's case, cited 2 Leon. 110.

(t) Siddall v. Rancliffe, 1 C. & M. 487, but see Bell v. Banks, 3 M. & G. 258. (u) Ex parte Hernaman; In re Ewens, 17 L. J., Bankr. 17, N. S.

(v) Holmes v. Bell, 3 M. & G. 213. (w) Holmes v. Bell, supra.

by the fact that the substitution of the bonds arose from a mistaken notion, that the remedy on the original bond would otherwise have been liable to be barred by the statute (w).

The general principle that where a debt is secured by bond, covenant or other specialty, the obligation by simple contract is gone, applies, of course, to a mortgage with a covenant, and if the mortgaged property be sold and an account be taken between the mortgagor and mortgagee, that will not warrant an action of debt upon an account stated for the residue of the debt (x).

But to work a merger the remedy given by the higher security must be co-extensive with that given by the original lower security, and even then the merger will be prevented, if it appears to be the intention of the parties that the original security should remain in force, although a surety under the original instrument is not a party to the giving of the subsequent higher security (y). And the principle of transit in rem judicatam only relates to the particular cause of action in which the judgment is recovered, and does not operate upon any concurrent remedy which the creditor may have, until it be made productive in satisfaction to the party; and, therefore, in a case where three joint covenantors made default in payment of a debt secured by the covenant, and one of them thereupon gave a bill for the amount, upon which bill judgment was recovered in an action against him, it was held that the judgment was no bar to an action on the covenant against the three (z).

A creditor, having a charge on certain funds of his debtor for a part of his debt, does not, it seems, necessarily extinguish that charge by taking a subsequent charge on the same fund for the whole of the debt; and the same applies to a man, having a charge for his own debt, taking a security on the same funds either alone or jointly with another for both their debts (a).

(w) Shore v Shore, 2 Phill. 378. (x) Middleditch v. Ellis, 17 L. J., Exch. 365, N. S.; vide supra.

(y) Twopenny v. Young, 3 B. & C. 208. Bell v. Banks, supra.

(2) Drake v. Mitchell, 3 East, 251; and vide Bell v. Banks, supra.

(a) Miln v. Walton, 2 Y. & C. 354, 361, N. S.

CHAPTER XX.

OF ASSIGNMENTS OF MORTGAGE.

In equity, the mortgage debt is the principal, the land the accessary. An assignment of mortgage is, therefore, in equity, a transfer of a debt with its attendant securities; and, as the accessary always follows the principal, it results that, when the debt is satisfied, the security is determined.

On this principle equity holds, that on an assignment of mortgage, without the concurrence of the mortgagor, the assignee, standing in the place of the original creditor, is subject in all respects to the like equities and settlement of accounts as the mortgagee himself would be (a). In Matthews v. Wallwyn (b), Matthews mortgaged to Baker for 2000. The mortgage being paid off by Shepheard, who was Matthew's attorney, Matthews executed to Shepheard a bond for 20004, and Baker assigned the mortgaged premises to Shepheard, who afterwards deposited the bond and deed with Hercy & Co. for 20007. Hercy & Co. requiring payment, Shepheard applied to Wallwyn & Co. to lend him 2000l. They agreed to open an account with him on a deposit of the securities and his own note of hand. The securities were accordingly redeemed out of the hands of Hercy & Co., and deposited by Shepheard with Wallwyn & Co. Shepheard became bankrupt; and subsequently, under a decree of Chancery, his assignees executed an assignment of the mortgage to Wallwyn & Co. Matthews had no notice of the dealings with Hercy & Co. and Wallwyn & Co. Shepheard had been in the habit of receiving and paying large sums on account of Matthews. The bill was filed by Matthews against Wallwyn & Co. for redemption; and it is stated that, subsequently to the settlement of an account between Matthews and Shepheard in October, 1794, which was subsequent to the deposit to Wallwyn, Matthews had discovered that Shepheard had received divers sums of money not accounted for by him, and that the latter had, since the settlement, received other sums, and that on deducting these sums, a considerable balance would be due to Matthews. Wallwyn & Co. submitted that they had a specific lien for their balance. The Lord Chancellor, after stating the question to be, whether the assignee of a mortgage had a right to be paid according

(a) Earl of Macclesfield v. Fitton, 1 Vern. 169; 1 Ch. Ca. 68. Matthews v. Wallwyn, 4 Ves. jun. 118. Williams v.

Sorrell, ibid. Bradwell v. Catchpole, 3
Swanst. 79, note.

(b) Supra.