lies on the company (Blackburn Building Society v. Cunliffe, Brooks & Co., 22 Ch. D. 61, 71), and in satisfying that burden, they cannot have the benefit of the rule established in Clayton's Case (1 Mer: 572), which is simply applicable where a person having a right to appropriate moneys received as he pleased is shown to have appropriated them in the manner appearing in his books.. Ib.

Appropriation by the Law when not made by the Debtor or Creditor. -According to the Roman Law, where neither party made an appropriation, the payment was applied to the most burdensome debt; to one that carried interest, rather than to that which carried none; to one secured by a penalty rather than to that which rested on a simple stipulation; and if the debts were equal, then to that which had been first. contracted. Dig. lib. xlvi., tit. 3, § 5, and see ante, p. 13, per Sir Wm. Grant, M. R.. It seems that this rule of the law was formerly followed by the English Courts. Thus, in an old case where a man owed money on a mortgage, and other monies to the same person on account, for which he was not to pay any interest, and he made a general payment, without mentioning it to be in discharge of the mortgage, or of the monies due upon account, it was held that it should be taken to have been paid towards the discharge of the money due on the mortgage because it was said, it was natural to suppose that a man

would rather elect to pay off the money, for which interest was to be paid, than the money due on ac count, for which no interest was payable. Heyward v. Lomax,1 Vern. 24. See also Perris v. Roberts, 1 Vern. 34.

However, by the English law as now existing, according to the more recent decisions of our Courts, where neither party makes an appropriation, the law will appropriate the payment to the earlier, and not, as the Roman law, to the most burdensome debt.

Thus it will be observed, Devaynes and others were in partnership as bankers, Clayton had a running account with the firm, and was in the habit of paying in and drawing out money. At the time of Devaynes's death, there was a balance in favour of Clayton, and against the firm of £1713. After the death of Devaynes, his late partners became bankrupt: but before their bankruptcy, Clayton had drawn out sums to more than the amount of £1713, and had paid in sums yet more considerable. Upon the bankruptcy of the surviving partners, Clayton was desirous of having recourse to the estate of Devaynes, but it.

was held that the sums drawn out by Clayton since the death, must be appropriated to the payment of the balance of £1713 then due, and that as the total amount of those sums was greater than the balance, the debt due from the firm at the death of Devaynes had been discharged, and his estate exonerated; the sum paid in by Clayton since the death constituting a new debt, for which the survivors only could be held liable. The result therefore is, as in the principal case, that the liability of a retired partner or a retired partner's estate to a creditor or customer, will be reduced by the amount of all payments made by the continuing partners since the dissolution of the partnership to such creditor or customer.

In Clayton's Case it will be remarked, that payments made by the surviving partners to Clayton, with whom there was a general account, extinguished the old debt; the converse of that proposition is also applicable, and the payment by a debtor to the surviving partners from time to time, upon one general account, including the old debt, will upon the same principle extinguish that debt (Bodenham v. Purchas, 2 B. & Ald. 39), even if it be guaranteed (Ib.); but if the guaranteed debt is not extinguished by the operation of the rule, the surety will not be discharged (Williams v. Rawlinson, 3 Bing.71; Bodenham v. Purchas, 2 B. & Ald. 39; Taylor v. Kymer, 3 B. & Ad. 333; Field v. Carr, 5.

Bing. 13; Ex parte Whitworth, 2 Mont. Deac. & De G. 164; Pemberton v. Oakes, 4 Russ. 154; Simson v. Ingham, 2 B. & C. 65. See also Hollond v. Teed, 7 Hare, 50; Siebel v. Springfield, 12 W. R. (Q. B.) 73;) and it is immaterial that the parties were ignorant of the rule of law. Bank of Scotland v. Christie, 8 C. & F. 214, 226; Re Medewe's Trust, 26 Beav. 592; Merriman v. Ward, 1 J. & H. 371, 377; Scott v. Beale, 6 Jur. N. S. 559; Fearendside v. Derham, 13 L. J. (N. S.) Ch. 354; In re Boys, 10 L. R. Eq. 467.

Where moreover debts due to a former partnership are agreed, upon the formation of a new partnership between a partner of the old and a new partner of the new partnership, to be transferred to the new firm, as part of the capital of the new partnership, against the debts due from the old partnership, the moneys received by the new partnership must, in the absence of appropriation by the customers or agreement between the parties, be applied in payment of the earlier debts of the old partnership. Copland v. Toulmin, 1 West, H. of Lords Cas. 164; 7 C. & F. 349; and see S. C. in Court below, 3 Y. & C. 625; Jones v. Maund, ib. 347; and see and consider Pemberton v. Oakes, 4 Russ. 154; Wickham v. Wickham, 2 K. & J. 478; Beale v. Caddick, 2 H. & Norm. 326; Geake v. Jackson, 15 W. R. (C. P.) 338; Hooper v. Keay, 1 Q. B. D. 178.

Where one of several partners

dies, and the partnership is in debt, and the surviving partners continue their dealings with a particular creditor, and the latter joins the transactions of the old and new firms in one entire account, then the payments made from time to time by the surviving partners must be applied to the old debt. Simson v. Ingham, 2 B. & C. 72, per Bailey, J.

And the result is the same where under similar circumstances the dissolution is occasioned by the retirement of a partner. See Hooper v. Keay, 1 Q. B. D. 178: there the plaintiffs supplied goods to K. & D. who were in partnership, and they gave the plaintiffs their acceptance for £132, the amount. Before the bill was due, K. & D. dissolved partnership, and gave notice to the plaintiffs, with the intimation that K. would carry on the business, and would receive and pay the accounts due to and from the old firm. The plaintiffs continued to supply K. with goods, and he gave them his acceptance for the amount, and also paid them several sums on account, but without any specific appropriation. After some months the plaintiffs sent in their account to K. beginning on the debit side with the acceptance of £132 and after giving him credit for the sums paid, shewing a balance against K. of £92. After this K. paid the plaintiffs two other sums, which, with the sums already paid, amounted to more than £132. The plaintiffs having sued K. & D. on their acceptance for

£132, D. pleaded payment. It was held by the Queen's Bench Division that the plaintiffs having sent in their statement to K., treating the whole as one account, the subsequent payments must be appropriated to the earlier items of the account, and that consequently the plea was proved. S

The rule is also applicable to a retired dormant partner (Brooke v. Enderby, 2 Brod. & B. 70; Newmarchy. Clay, 14 East, 239), to a single partner carrying on the business after a dissolution (Smith v. Wigley, 3 Moo. & Sc. 174), and to the case where a business is carried on by an executor. Sterndale v. Hankinson, 1 Sim. 393; Gallagher v. Ferris, 7 Ir. Rep. Ch. D. 489.

The rule, however, applies only to an entire unbroken account, and has no application to cases where one person is indebted to another, in respect of several matters each of which forms the subject of a distinct account. In such a case, if the debtor does not appropriate the payment when he makes it, the creditor is at liberty to apply the payment to whichever account he thinks proper. Moreover, where a change takes place in a firm by the retirement or death of a member, a creditor of the firm is under no obligation to assent to a carrying over of his debt, so that it shall form the first item in a fresh account with the new firm. He is at liberty to keep the accounts of the two firms distinct, and if he does so, payments made generally by the new firm, will not necessa

rily go, by virtue of the rule in Clayton's Case, in liquidation of the debt owing by the old firm. 1 Lind. Part. 427, 4th ed. ; Simson v. Ingham, 2 B. & C. 65; Jones v. Maund, 8 Y. & C. Ex. 347; Pemberton v. Oakes, 4 Russ. 154.

A creditor, however, of a firm cannot exercise his right to allow accounts to be blended or to keep them distinct, to the prejudice of a new partner without his consent expressed or implied. Without such consent the creditor has no right to appropriate a payment made by a new partner to a debt owing by somebody else, nor to run two distinct accounts together, and treat a general payment as made in respect of the earliest items. Lind. Part. 429, 4th ed.; Burland v. Nash, 2 Fos. & Fin. 687.

If, however, a new partner or successor in business allows two accounts which he has a right to keep separate to be blended, the rule will be applicable against him, Ib. 430; and see Laing v. Campbell, 36 Beav. 3.

The rule in Clayton's Case is applicable to all accounts in the nature of a debit and credit account, independently of the question of partnership, and although in running accounts such as in ordinary banking accounts, as is laid down in the principal case, the presumption arises that it was intended that the first item of the debit side of the account is to be discharged or reduced by the first item on the credit side, that presumption may

be rebutted by the particular mode of dealing, or by any stipulation between the parties, as for instance, one which shows that the original liability was to be regarded as still continuing. Henniker v. Wigg, 4 Q. B. 792; 1 Dav. & Mer. 160. See also Williams v. Rawlinson, 10 J. B. Moore, 371; Simson v. Ingham, 2 B. & C. 65 ; Pease v. Hirst, 10 B. & C. 122; Jones v. Maund, 3 Y. & Coll. Exch. Cas. 357, and note at p. 358; Wickham v. Wickham, 2 K. & J. 478; Merriman v. Ward, 1 J. & H. 371; Laing v. Campbell, 36 Beav. 3.

Where it appears from the usual course of business, that general payments which were made had reference to and were connected with particular items, they will not be applicable in reduction of the earliest items. Taylor v. Kymer, 3 Barn. & Ad. 320, 333; Lysaght v. Walker, 5 Bli. N. S. 1. The result will be the same where it appears to have been the intention that the earliest item should be kept separate from the others. Thus, in a recent case where the earlier items of the account constituting a sum of £5,000, were secured by a mortgage, and a guarantee for two years, it was held that such sum could not be treated as paid off by the appropriation of payments within six months, since it was obvious that it was the intention of the parties that the £5,000 should stand over and be treated independently of subsequent transactions, and also, that although the accounts rendered raised a presumption of the appropriation of the pay

ments to the earlier items constituting the £5,000, nevertheless, that presumption was rebutted by the evident intention of the parties. City Discount Company v. McLean, 9 L. R. C. P. 692. And the delivery of new bills in lieu of dishonoured ones delivered up at the same time, will be held to be an appropriation to meet that particular debt for which they were a security. Newmarch v. Clay, 14 East, 240.

The rule that where money is paid generally, without any appropriation, it ought to be applied to the first items in the account, is subject also to this qualification, that when there are distinct demands, one against persons in partnership, and another against one only of the partners, if the money paid be the money of the partners, the creditor is not at liberty to apply it to the payment of the debt of the individual: that would be allowing the creditor to pay the debt of one person with the money of others. Thompson v. Brown, 1 Mood. & Malk. 40. See also Sloveld v. Eade, 4 Bing. 154; Nottidge v. Pritchard, 2 C. & F. 379, affirming Pritchard v. Draper, 1 R. & M. 191.

Another exception from the rule appropriating a payment to the earlier debt is where there is an equity on the part of the creditor, that it should be applied in pay ment of another debt. Thus, where there are two debts due to the creditor, one of which is guaranteed and secured by the assignment of goods, and the other not

guaranteed, but for which the same goods under a distress have become liable, and there is no appropriation by the debtor on makinga payment, the creditor is bound to appropriate the payment first to the guaranteed debt. See Pearl v. Deacon, 1 De G. & Jo. 461; there a tenant borrowed money from his landlord on the security of goods, and a surety joined in the obligation. The landlord used his common law right of distress against the goods, an 1 it was held that he could not thereby derogate from the right of the surety to the benefit of the security. By seizing the goods, which were the surety's security, the landlord to that extent extinguished the obligation in which the surety was bound.

And where a surety, knowing that there is a current account between the debtor and bankers, in effect stipulates that if any money is paid into the bank by the debtor sufficient to cover the amount for which he is surety he shall be released, monies paid by the debtor to the account will be first attributable to the discharge of the debt for which the surety is liable, even although the account of the debtor be all the time overdrawn. Kinnaird v. Webster, 10 Ch. D. 139.

It seems, however, that where both the debts are blended together in a stated account between the debtor and creditor, and a security given for the whole amount, upon the sale of the property comprised in the security for a sum insufficient to pay the whole amount due, it will be applied proportionably in