§ 40. Substitution. Bovill's Act. and of other partners abroad, and a creditor of the firm sued the partner here and recovered judgment against him, the debt of the firm was not so extinguished as to preclude the creditor from proving against its joint estate on the subsequent bankruptcy of the judgment debtor. There may also be the substitution of debtors, or a new right may be acquired, enabling a joint creditor to prove against the separate estate, or vice versa, but there can be no such substitution or acquisition unless there be also the consent of the creditor himself. So, if a partnership is dissolved, and by agreement between the partners, one of them is to continue the business and pay all the debts, the creditors of the firm do not become the separate creditors of the continuing partner, unless they accede to the arrangement so entered into between him and his co-partners (m). On the authority of Ex parte Bingham and Ex parte Clowes (n), Mr. Cooke, in his work on Bankruptcy Law (0), lays it down that if new partners come into a firm, and it is agreed that the stock and debts of the old firm shall become those of the new firm, and the latter becomes bankrupt, the creditors of the old firm may prove against the joint estate of the new firm; but it seems that the authority for this proposition is doubted. Mr. Justice Lindley, in his book, and in a note (p), referring to this rule, says, Ex parte Clowes was a very peculiar case, and if it was ever an authority for the doctrine that a separate debt can, as between the partner and the creditor, become a joint debt, or vice versâ, without the privity of the creditor, the case must be considered as no longer law. . . . Unless the creditor accedes to the arrangement (says the learned author in another place), he is not bound by it, nor can he avail himself of it; his position is in fact unaltered, he does not lose his old right nor does he gain any new one " (q). What constitutes a partnership. The 6th clause provides that nothing in this section shall (m) Lindley, p. 1176, and Ex (p) P. 1176. (q) And see Ex parte Jackson, 1 Ves. J. 130; Ex parte Williams, Buck, 13; Ex parte Parker, 2 M. D. & D. 511. lter the effect of Sect. 5 of the Act (28 & 29 Vict. c. 86) to 88 40, 41. amend the law of partnership (r). As a general principle a partnership (s) is : (1.) The result of an agreement to share profits and losses. (2.) It is prima facie the result of an agreement to share profits, although nothing may be said about losses, and although there may be no common stock. (3.) Or it is prima facie the result of an agreement to share profits, although community of loss is stipulated against. (4.) But it is not the result of an agreement to share gross returns. The 5th section of the Act above referred to is as follows: A lender is "In the event of any such trader as aforesaid being adjudged a postponed. bankrupt, or taking the benefit of any Act for the relief of insolvent debtors, or entering into any arrangement to pay his creditors less than twenty shillings in the pound, or dying in insolvent circumstances, the lender of any such loan (t) as aforesaid shall not be entitled to recover any portion of his principal, or of the profits or interest payable in respect of such loan, nor shall any such vendor of a goodwill as aforesaid be entitled to recover any such profits as aforesaid, until the claims of the other creditors of the said trader for valuable consideration in money or money's worth have been satisfied (u). claim in case 41. (1.) Where at the time of the presentation of the bank- Preferential ruptcy petition any person is apprenticed or is an articled of apprentice (r) This Act was passed in order to remove the difficulties created by the decision in Cox v. Hickman, 8 H. L. Ca. 268, which in effect decided that persons who share the profits of a business do not incur the liabilities of partners unless that business is carried on by themselves personally or by others as their real or ostensible agents. (s) These definitions are taken from the work of Mr. Justice Lindley, and see further definitions therein upon the same subject. Bk. I., Ch. 1. (t) S. 1.- An advance of money by way of loan to a person engaged or about to engage in trade, &c., upon a contract in writing that the (u) See Ex parte Mills, 8 Ch. 569. ship. Bankruptcy s. 33. §§ 41, 42. clerk to the bankrupt, the adjudication of bankruptcy shall, if either the bankrupt or apprentice or clerk gives notice in writing to the trustee to that effect, be a complete discharge of the indenture of apprenticeship or articles of agreement; and if any money has been paid by or on behalf of the apprentice or clerk to the bankrupt as a fee, the trustee may, on the application of the apprentice or clerk, or of some person on his behalf, pay such sum as the trustee, subject to an appeal to the Court, thinks reasonable, out of the bankrupt's property, to or for the use of the apprentice or clerk, regard being had to the amount paid by him or on his behalf, and to the time during which he served with the bankrupt under the indenture or articles before the commencement of the bankruptcy, and to the other circumstances of the Power to land for rent. case. (2.) Where it appears expedient to a trustee, he may, on the application of any apprentice or articled clerk to the bankrupt, or any person acting on behalf of such apprentice or articled clerk, instead of acting under the preceding provisions of this section, transfer the indenture of apprenticeship or articles of agreement to some other person. This section is identical with the similar provision of Sect. 33 of the 1869 Act. A similar enactment was contained in 12 & 13 Vict. c. 106, s. 170, but an articled clerk was not within that section (x); but was within the express words of the 1869 Act. 42. (1.) The landlord or other person to whom any lord to distrain rent is due from the bankrupt may at any time, either before or after the commencement of the bankruptcy, distrain upon the goods or effects of the bankrupt for the Bankruptcy Act, 1869, 8. 34. (x) As to set off of an unpaid Soames, 3 D. & C. 320. apprenticeship fee, see Ex parte rent due to him from the bankrupt, with this limitation, that if such distress for rent be levied after the commencement of the bankruptcy it shall be available only for one year's rent accrued due prior to the date of the order of adjudication, but the landlord or other person to whom the rent may be due from the bankrupt may prove under the bankruptcy for the surplus due for which the distress may not have been available. (2.) For the purposes of this section the term "order of adjudication" shall be deemed to include an order for the administration of the estate of a debtor whose debts do not exceed fifty pounds, or of a deceased person who dies insolvent. After some hesitation (the section was omitted from the Bill) this important provision is enacted. The first portion of the section is identical with the well-known Sect. 34 of the 1869 Act, except that the word "surplus" instead of "overplus," as in that section, is here used. And sub-s. 2 extends the right to administration orders where the debts are not over 501. under Sect. 122, and also to the case of a deceased insolvent under Sect. 125. Landlord or other person, &c. 8 42. These words have been held to apply to cases where the Mortgagees. rent is due in respect of a tenancy created by an attornment clause in a mortgage deed, although such relationship may not come within the popular acceptation of the term "landlord," but the words will not include the case of a company entitled to sums for gas supplied, although described as "rent" in the Gasworks Clauses Act, 1847 (10 & 11 Vict. c. 15) (y). Although if the company have statutory powers to recover money due "by the same process as landlords are by law empowered to recover rent in arrear," then the case will be otherwise (z). (y) Ex parte Hill re Roberts, 6 Ch. D. 63; 46 L. J. Bank. 116. (z) Ex parte Birmingham Gaslight Co. re Fanshaw, L. R. 11 Eq. 615: 40 L. J. Bank. 52; and see as to agreement to hire waggons at a fixed yearly rent with the option of pur- 8 42. Mortgagee's principal and interest. Rent. As to distress for double rent, see 11 Geo. II., c. 19, s. 18. This term is more comprehensive than the word as ordinarily used; so a mortgage deed containing an attornment clause is valid if it constitutes a real relation of landlord and tenant between the mortgagor and mortgagee, and a distress for the rent fixed by the clause will be good as against the trustee in the bankruptcy of the mortgagor, and so enable the mortgagee to obtain a security upon the mortgagor's chattels; but if the rent fixed by the clause be so excessive as to cause the Court to conclude that it was not intended to create a real rent or a real tenancy, but that the clause is a mere device to enable the mortgagee, in the event of the bankruptcy of the mortgagor, to obtain an additional security upon chattels which would otherwise have been distributed among creditors, the clause, and any distress levied under it, even though before the commencement of the bankruptcy, will be invalid as against the trustee, as being a fraud on the bankruptcy law (a). And the rent need not be limited to the principal, but may include the interest also; so where the rent is more than sufficient to cover the interest the mortgagee can apply it in reduction of the capital, subject to the question whether the interest was in arrear at the time when possession is taken (b). And it is no objection to the attornment clause that a monthly rent is of a fluctuating amount, or which fluctuates according to the happening of certain events (c). A tenancy under an attornment clause is not made by Sect. 1 of the Statute of Frauds a tenancy at When accrued. will (d). And a distress in such a case will be good as against the trustee both for rent accrued due before and after the commencement of the bankruptcy (e). (a) Ex parte Jackson re Bowes, 14 Ch. D. 725; 43 L. T. 272, and see also as to exorbitant rent, Ex parte Williams re Thompson, 7 Ch. D. 138, and as to a fair rent, Re Stockton Iron Furnace Co., 10 Ch. D. 335; 48 L. J. Ch. 417, and see also Jolly v. Arbuthnot, 28 L. J. Ch. 274; 4 De G. & J. 224; Morton v. Woods, L. R. 4, Q. B. 293. (b) Ex parte Jackson, supra, and vide Baggally, L.J., at p. 740, and see Ex parte Punnett, 16 Ch. D. 226, and Ex parte Harrison re Betts, 18 Ch. D. 127. (c) And see as to fines, Provident Permanent Building Society v. Greenhill, 9 Ch. D. 122. (d) Ex parte Voisey re Knight, 21 Ch. D. 442. (e) Ib., and see Re Threlfall, 16 Ch. D. 274, in which it was held that a tenancy under an attornment clause was a tenancy from year to year. As to when a mortgagee under an attornment is to be deemed in |