where one of several partners, who had become bankrupt, after the bankruptcy and after procuring his certificate, took up many of the outstanding notes of the joint concern, the Vice Chancellor on petition permitted him to prove the notes on the joint estate upon his own affidavit, and in the confidence, as he was a partner, that he would not have paid the notes unless the holders had a valid claim upon them against the firm. Ex parte Atkins, Buck, 479. Upon the same principle, where the acceptor of a bill, which had been indorsed, became bankrupt, and after the bankruptcy, the indorser was compelled to take it up, it was held that he might prove the amount against the estate of the acceptor. Joseph v. Orme, I B. & P. N. R. 180. Mead v. Braham, 3 M. & S. 91. Ex parte Brymer, Co. B. L. 165. Cowley v. Dunlop, 7 T. R. 570. Ex parte Seddon, cited Ib. Though where, on the acceptor's becoming bankrupt, the indorser, who has indorsed the bill before the bankruptcy, and has taken it up, may prove, yet he cannnot set off a debt due from him to the estate. Ex parte Hale, 3 Ves. 304. Where the indorser of a bill lent his indorsement at the desire of the drawer, but without any privity with the acceptor, who had himself no consideration at the time for such acceptance, and the day before the bill became due the acceptor became bankrupt, and it was immediately afterwards taken up by the indorser out of the hands of the indorsee, it was held that the bill was proveable by the indorser as a debt under the acceptor's commission. Houle v. Baxter, 3 East, 177. But where the indorser paying the bill after the bankruptcy, indorses it merely for the accommodation of the bankrupt, it has been held that he is not entitled to prove, for he never had any claim against the bankrupt upon the bill before his bankruptcy, and the only cause of action arises by the payment of the bill after the bankruptcy. In an action by the payee against the drawer of a bill, it appeared that the defendant drew the bill in favor of the plaintiff, merely for the purpose of raising money, and that the plaintiff indorsed and discounted it, paying over the proceeds to the defendant; the defendant becoming bankrupt, the plaintiff was compelled to take up the bill and sued the defendant, who pleaded his bankruptcy. The court of Common Pleas held that the debt was not barred by the certificate, and that the plaintiff was entitled to recover. Brooks v. ·Rogers, 1 H. Bl. 640. It seems that the case of Howis v. Wiggins, 4 T. R. 714, was decided on the same principle. See Cowley v. Dunlop, 7 T. R. 577. Eden's B. L. 143. 2d ed.

A person who accepts a bill for the honor of the drawer, which bill has been previously accepted and dishonored, is entitled to stand in the place of the drawer, and on payment of the bill after the bankruptcy of the first acceptor, may prove the amount against his estate; Ex parte Wackerbarth, 5 Ves. 573; but if the drawer could not have recovered against the first ac

ceptor, as when he had no effects in his hands, the acceptor supra protest cannot prove the bill against the estate of the first acceptor, for he cannot make a title stronger than that of the drawer, and oust the assignees of the bankrupt of the defence which they would have had against him. Ex parte Lambert, 13 Ves. 179.

66

Proof of bills-accommodation bills in general.] In general the holder of a bill cannot prove it against the estate of any person, who for his accommodation has put his name upon it; see ante, Chapter V.; and although at law notice that the bill is an accommodation bill, will not prevent the party who takes it for a valuable consideration, from suing the person who has put his name upon it by way of accommodation, see ante, p. 111, yet in equity it has been considered that such a person does not take the bill bona fide, where he knows that the accommodating party has stopped payment. Thus, where the bankrupts for the accommodation of Collier, the acceptor, drew a bill and stopped payment, and Collier discounted the bill with Blyth, who knew that the drawers had stopped payment, but discounted the bill with the intention of setting off against part of it a debt due from himself to the drawers; on a petition to expunge the proof of the balance, Leach, V. C. said, The question is whether Blyth was the holder of this bill bona fide. At the time he received the bill, he must be taken to have known that Collier could have no demand upon it against the bankrupts : primâ facie the acceptor is to pay, and Blyth does not pretend that Collier represented to him that as between him, Collier, and the bankrupts, they were bound to pay the bill. As matters stood, there would have been no demand against the bankrupt's estate upon the bill, and Blyth would have had to pay to the bankrupt's estate the sum of 1361. 18s. 4d. If Blyth, therefore, really paid the consideration of the bill to Collier, without any secret understanding between them, his purpose was to enable Collier to spend the money which he knew belonged to the bankrupt's estate, and to convert the bankrupt's estate into a debtor for 100l. in the place of being a creditor for 1361. Under these circumstances, he cannot be considered the holder of the bill bona fide, and the debt must be expunged." Ex parte Stone, 1 Glyn & Jam. 191. Watkin had dealings with Garway, whose correspondent, Hatton, the bankrupt was, and it was agreed between Garway and Hatton that the latter should answer all drafts that Watkin should draw upon him on account of Garway. Watkin drew accordingly on Hatton for 4000l., who accepted it, though he had no effects of Garway's in his hands at the time; the payee, on the acceptor's non-payment, applied to Watkin, who paid it, and who was admitted to prove under the commission against Hat

ton.

Hatton's assignees petitioned against this admission. Per

Lord Hardwicke, C. "I will consider it first as it stands between Watkin and Hatton. If the payee receive the money comprised in the draft of Watkin, he may bring an action against Hatton in the name of the payee, who will be considered as a trustee for the drawer, or he may bring an action in his own name against Hatton, if he had effects of Watkin at the time of the acceptance sufficient to answer the draft; but if he had not effects, but only honored the draft, such action cannot be maintained, or if in this case Hatton had paid it, instead of being a debtor to Watkin, he would have been indebted to Hatton pro tanto, and so it was determined in the House of Lords, on a writ of error from the court of King's Bench. But, consider it now as it stands, between Garway, Watkin and Hatton; Watkin appears at the time he drew on Hatton to have had effects in Garway's hands of more value than the amount of this draft, and as there was such an agreement as I have before mentioned, between Garway and Hatton, the latter is to all intents and purposes just in the same situation as Garway himself, and, therefore, though he had no effects in his hands at the time, has, by his agreement, made himself liable. The same rule will hold, therefore, under a commission of bankruptcy, as in an action at law, and under these circumstances Watkin has a right to come in as a creditor, under the commission, against Hatton." Ex parte Marshall, 1 Atk. 131. and see Ex parte Matthews, 6 Ves. 285.

Proof on accommodation bills, by the party accommodating, against the estate of the party accommodated.] Before the stat. 49 Geo. 3. c. 121. s. 8. where one person, for the accommodation of another, put his name upon a bill or note, and the party thus accommodated became bankrupt, and afterwards the party accommodating was compelled to pay the amount of the bill or note, he could not prove it under the estate of the person for whose accommodation he paid it, for no debt accrues until payment of the bill or note. Young v. Hockley, 2 W. Bl. 839. 3 Wils. 346. S. C. Ex parte Walton, 14 tk. 122. Brooks v. Rogers, 1 H. Bl. 640. ante, p. 326. »nd see Ex parte Holding, 1 G. & J. 97. ante, p. 320. Howis v. Wiggins, 4 T. R. 714. To remedy this grievance, the 49 Geo. 3. c. 21. s. 8. was passed, which was re-enacted in substance by 6 Geo. 4. c. 16. s. 52. whereby any person, who at the issuing of the commission shall be surety, or liable for any debt of the bankrupt, or bail for the bankrupt, either to the sheriff or to the action, if he shall have paid the debt, or any part thereof in discharge of the whole debt, (although he may have paid the same after the commission issued) if the creditor shall have proved his debt under the commission, shall be entitled to stand in the place of such creditor, as to the dividends, and all other rights under the said commission, which such creditor

possessed, or would be entitled to, in respect of such proof; or if the creditor shall not have proved under the commission, such surety, or person liable, or bail, shall be entitled to prove his demand, in respect of such payment, as a debt under the commission, not disturbing the former dividends, and may receive dividends with the other creditors, although he may have become surety, liable, or bail as aforesaid, after an act of bankruptcy committed by such bankrupt, provided that such person had not, when he became such surety or bail, or so liable as aforesaid, notice of any act of bankruptcy by such bankrupt committed. Although, in strictness, an accommodation acceptor is not a surety, yet he is a person liable within the words of this act. Per Lord Eldon, Ex parte Yonge, 3 V. & B. 40. Ex parte Lloyd, 1 Rose, 9. Where the accommodation acceptor assigns his debt, his assignee may call upon him to prove it for his benefit. Ex parte Lloyd, 1 Rose, 4. When the accommodation acceptor has sustained special damage, an action for such damage is barred by the certificate. Vansandau v.

Corsbie, 8 Taunt. 550. 2 B. Moore, 602. S. C. in error, 3 B. & A. 13. Where the plaintiff accepted a bill for the accommodation of the drawer, the defendant, who afterwards, and before the bill became due, committed an act of bankruptcy, upon which a commission issued, which was afterwards superseded, and another bill was drawn by the defendant, and accepted by the plaintiff for the same debt, with the addition merely of interest and the stamp, and afterwards an effectual commission issued, and the plaintiff paid the second bill, and sued the bankrupt for money paid; it was held, that this was a case within the 49 Geo. 3. c. 121; that the giving the second acceptance did not discharge the original debt for which the plaintiff had become surety before the act of bankruptcy, and that on paying that second bill, the plaintiff was only paying the same debt which he was liable to pay as surety for the defendant on the first bill. Stedman v. Martinnant, 13 East, 427. This statute does not merely contemplate legal, but equitable liability, and therefore, where on the dissolution of a partnership, one of the partners covenants to indemnify his copartner against payment of the debts, and becomes bankrupt, and the co-partners are compelled to pay, they may prove against the estate of their co-partner. Wood v. Dodgson, 2 M. & S. 196. Ex parte Ogilby, 3 V. & B. 133. and see Ex parte Yonge, Id. 31. 2 Rose, 40. S. C. The statute does not compel the surety to prove, and therefore before the bankrupt has obtained his certificate, the surety may, on being compelled to pay, sue the bankrupt, although the holder has proved the bill under the commission, against the bankrupt drawer. Mead v. Braham, 3 M. & S. 91.

Proof of bills-cross bills in general.] A bill, which on

account of the want of consideration, could not be enforced between the parties at law, see ante, Chapter V., is not proveable. But where there is an exchange of acceptances, as where A. draws bills upon B., and B. in return draws upon A., there is on both sides a good consideration, and if either A. or B. becomes bankrupt, the other may prove the bills accepted by him against his estate, as if they had been taken for value in the usual course of business. Thus, where A. accepted a bill drawn by B., and B. accepted a bill drawn by A. for the same amount for their mutual accommodation, and before the bills became due, A. became bankrupt, and B. having paid the amount of his own acceptance, (deducting the dividend received by the holder from the estate of A.), sued A. on his acceptance, who pleaded his bankruptcy, the court of Common Pleas were of opinion that the two bills were mutual engagements, constituting on each part a debt, the one being a consideration for the other; that the bill in question was not given as an indemnity, which was in its nature conditional, but created an absolute debt from the beginning which was capable of being proved under the commission, and being so proveable, was necessarily barred by the certificate. Rolfe ". Caslon, 2 H. Bl. 571; and see Ex parte Greenwood, Buck, 239. The Peters's and the Dunlops exchanged acceptances to a large amount, and it was agreed, that each were to pay their own acceptances. Both became bankrupt and obtained their certificates. Peters's acceptances were partly paid by them before their bankruptcy and were proved for the residue. Dunlops' acceptances were also proved against the Peters's estate as drawers, and the full amount thus paid by the Peters's, and their assignees, exceeded the amount of their acceptances, for which they were bound to provide, by a considerable sum, for which the assignees of the Peters's sued the Dunlops as for money paid to their use. The Dunlops pleaded their bankruptcy, and the court of K. B. were divided on the question, whether the bankruptcy operated as a discharge. Lawrence J. and Grose J., on the authority of Rolfe v. Caslon (supra), thought that the certificate was a bar; but Ashhurst J. and Lord Kenyon C. J. were of a different opinion. Cowley v. Dunlop, 7 T. R. 565.

It is not material that the acceptances given in exchange are not the acceptances of the party giving them; nor is it necessary in order to constitute an exchange of securities, that the bills should be precisely of the same amount or for the same time, provided the circumstances of the case shew that it is an exchange. Thus, where the defendants gave the plaintiff their own bills, accepted by third persons, in exchange for bills of the defendants upon, and accepted by, the plaintiff, and the different sets tallied in the gross amount, except a few shillings in one instance, which were paid at the time, in order as it was