J. C. 1865 ROLFE AND THE BANK OF AUSTRALASIA บ. FLOWER, SALTING & Co. respecting the insolvent estate as creditor only for the balance, &c. And in case any creditor shall hold any security or lien for payment of his debt, &c., upon any part of the said estate, the amount or value of such security or lien shall be deducted from his debt, and he shall only be ranked for, or receive payment of, or a dividend for, the balance after such deduction." Held, that this enactment does not destroy the distinction between the joint and separate estate of an insolvent, so as to compel a creditor, holding a mortgage security on the separate estate, to estimate and deduct its value before he can be allowed to prove against the joint estate. The English law of Bankruptcy which allows a joint creditor, though holding a security on the separate estate, to prove against the joint estate without giving up his security, prevails in the Colony of Victoria, and is not altered or varied by the Insolvent Acts of that Colony. THESE The Appellants, Rolfe and Bailey, who were creditors to a considerable amount of the late firm of Rutledge & Co., insisted that it ought to be expunged, on the ground that it was not a debt of the firm, but a separate debt of two only of the three partners of the firm. In the second case, the Appellants, the Bank of Australasia, who were creditors to a very large amount of the late firm of Rutledge & Co., insisted that as the Respondents, Flower, Salting, & Co., held securities for their debt on the real estate of one of the partners, and made no deduction from the amount which they claimed in respect of the value of these securities, the proof which they tendered was wholly irregular and inad missible. The Respondents were traders at Sydney, New South Wales, under the style or firm of Flower, Salting, & Co., and at Melbourne, under the firm of Flower, Macdonald, & Co. They were also traders in London, under the firm of P. W. Flower & Co. All the three firms consisted of the same partners, though trading in different places, and bearing different names. J. C. 1865 w ROLFE AND THE In both cases the questions were raised by the Appellants respectively, and were throughout severally contested between them and the Respondents, Flower and Salting, exclusively, with- AUSTRALASIA out any intervention on the part of the official assignee, though FLOWER, he was named as a formal party in the proceedings below. The firm of W. Rutledge & Co. carried on business at Belfast, in the Colony of Victoria. The founders and original members of it were William Rutledge and Horace Flower; Lloyd Rutledge afterwards became a member of the firm; he died in the year 1858, and the firm, until 1859, consisted only of the two original members. On the 7th of April, 1859, the then members of the firm agreed to admit two new partners, D. Talbot and F. Forster, who had both been and then were clerks of the firm, and both of whom were admitted as from the 7th of April, 1859, to the 1st of July, then next ensuing, and thenceforth for a period of three years. This partnership was created by a deed bearing date the 7th of April, 1859; by which it was declared that the partnership should commence from the date thereof, but that neither D. Talbot or F. Forster should "be entitled to any share of the profits, or be subject to any losses connected with the partnership from the day of the date thereof until the 1st of July then next." On the 30th of June, 1859, a balance-sheet was drawn out, shewing the position of the firm at that date; by which an excess of assets over the liabilities appeared which was treated as capital belonging to W. Rutledge and H. Flower, in certain ascertained proportions, which were separately placed to their respective credits. Neither D. Talbot or F. Forster brought in any capital. Upon the complete constitution of the new partnership, all the assets and liabilities of the old firm were, with the consent of all the partners, transferred to and assumed by the new firm, with the exception that by the 18th article of the deed of partnership it was declared that in taking the yearly accounts of the partnership" the said D. Talbot and F. Forster should not be debited or credited with any loss or gain connected with any freehold or leasehold property belonging to or held by W. Rutledge and H. Flower as security. No new books were opened by the new v. SALTING & Co. J. C. 1866 firm, but the accounts were continued in the old books in the same manner as they would have been if no change had been made in the members of the firm, and the Respondents, who were well aware of the change in the firm, continued to deal with the AUSTRALASIA new firm as they had done with the old one. ROLFE AND THE BANK OF v. FLOWER, It appeared that previous to and pending these arrangements, SALTING & Co. W. Rutledge had by a deed, dated the 25th of September, 1857, and by another dated the 30th of June, 1859, mortgaged certain freehold estates which were his private property to the Respondents as a security to them for the debt due from W. Rutledge & Co. Talbot died in February, 1862; and the firm of William Rutledge & Co., from that time until its insolvency, consisted of the three surviving partners. In the month of April, 1862, William Rutledge & Co. stopped payment; and on the 4th of June, 1862, an order was made by a Judge of the Supreme Court, on the petition of W. Rutledge, H. Flower, and F. Forster (the three existing members of the firm), by which order the Court accepted the surrender of the joint estate of the firm for the benefit of their creditors. The insolvents filed a joint schedule, to the truth of which they all deposed, and from which it appeared that they were indebted to the Respondents, Messrs. Flower & Salting, for merchandize, in a sum exceeding £50,000, without security on the insolvents' estate, but secured on the private estate of W. Rutledge; and to the Appellants, the Bank of Australasia, for advances made by them, in a sum exceeding £30,000. The first meeting under the insolvency was held at Geelong on the 9th of July, 1862. At that meeting, the Respondents tendered a proof against the estate for £53,587 10s. 10d. It was contended by the Appellants, the Bank of Australasia, who had proved at the same meeting for the sum of £30,249 188., that the Respondents were, according to the Acts and Ordinances relating to insolvency in force in the Colony, bound to set off against, and deduct from their proof the value of the before-mentioned mortgage securities which they held against the separate estate of W. Rutledge. The Commissioner before whom the meeting was held, con sidered the contention valid, and required the Respondents to value their debt accordingly. The Respondents refused to do this, and the Commissioner thereupon, for the purpose of enabling them to bring the question before a Court of appeal, rejected the proof altogether. On the 25th of July, 1862, the Respondents' appeal from the Commissioner's decision was heard before Mr. Justice Chapman, who held that they were not bound to value their security, and accordingly admitted the proof. The Appellants, the Bank of Australasia, appealed to the Supreme Court from this decision. The case was argued at length before the Chief Justice, Sir William Foster Stawell, Mr. Justice Molesworth, and Mr. Justice Chapman, who, by an order of the 24th of September, 1862, dismissed the appeal, without costs. Against this order the Bank of Australasia appealed to Her Majesty in Council. On the 1st of August, 1862, the Appellants, Rolfe and Bailey, who carried on business as merchants at Melbourne, in the Colony of Victoria, under the firm of Rolfe & Bailey, proved against the insolvent estate two debts, amounting in the aggregate to £288 13s. 2d. The Appellants Rolfe and Bailey, alleging that the Respondents were not creditors of the firm of W. Routledge & Co., the joint estate of which was being administered under the insolvency, applied on the 11th of December, 1862, before Mr. Justice Chapman, for, and obtained, a rule nisi to expunge the Respondents' proof, on the ground that their alleged debt was not a joint debt of all the partners in the firm of W. Rutledge & Co., but in fact a separate debt of W. Rutledge and H. Flower, for which Forster, their partner in the firm, was in no ways liable. In support of their application to expunge the Respondents' proof, the Appellants filed an affidavit made by Foster, one of the insolvents, to shew that on the 1st of July, when he and Talbot (both then clerks of the firm, as before stated) became partners in the firm of W. Rutledge & Co., a debt of much more than £80,000 was due from W. Rutledge and H. Flower (the then partners) to the Respondents, under one or other of the names under which the Respondents traded; and that they, Forster and Talbot, became partners under, as they alleged, a distinct agreement between themselves on the one hand, and J. C. 1865 ROLFE AND THE BANK OF AUSTRALASIA 2. FLOWER, SALTING & Co. J. C. 1865 W. Rutledge and H. Flower on the other, that the debt to the Respondents was to remain exclusively the debt of the latter two persons. The affidavit in question further affirmed that F. Forster, while a partner in the firm, had done nothing whatever to make AUSTRALASIA himself liable to the debt so due to the Respondents, either as between himself and the Respondents or as between himself and his partners. ROLFE AND THE BANK OF V. FLOWER, SALTING & Co. The Respondents filed affidavits in opposition to the Appellants' application, the purport of which was to establish: First, that according to the articles of partnership under which Talbot and Forster were admitted into the firm of W. Rutledge & Co., F. Forster had, as between himself and his partners, made himself jointly liable with them for the debt which the Respondents proved, and, secondly, that Forster had, as between himself and the Respondents, made himself a joint debtor for it to the Respondents with the other partners in the firm constituted in 1859. In answer to this evidence, affidavits were filed by the Appellants and by the insolvent, Forster, in support of the Respondents' claim on the separate estate of Rutledge & Co. The evidence was conflicting; and is stated and commented on, so far as is requisite for the decision of the case in the judgment of their Lordships on the appeal. On the 2nd of March, 1863, Mr. Justice Molesworth pronounced judgment on the application made by the Appellants, Messrs. Rolfe & Bailey, to expunge the proof. After considering the facts of the case, he expressed his opinion that Talbot and Forster had never adopted or become liable for the debt to the Respondents, and he accordingly ordered the Respondents' proof to be expunged. The Respondents appealed from the decision of Mr. Justice Molesworth to the Supreme Court of the Colony in banco. On the 12th of May, 1863, the Supreme Court made an order allowing the appeal, and discharging with costs the rule nisi to expunge the proof. The Appellants applied for leave to appeal against the lastmentioned decision to Her Majesty in Council. On the 28th of May, 1863, this leave was refused by Mr. Justice Molesworth, on |