held to exist in Hooper v. Keay, L. R. 1 Q. B. D. 178; and, secondly, whether there was evidence to shew that McGuire, having the right to make the appropriation of the payments, did actually make them.

In Hooper v. Keay the plaintiffs continued to give credit to Keay just as before, and received payments from him on account. An account was rendered headed "Mr. Keay, Dr. to Hooper & Co.," commencing with an acceptance of the old firm, then items supplied to Keay alone-no distinction drawn, and no explanation attempted to be given—so that the presumption was, that all parties had consented that it should be considered as one entire account; and the payments were credited generally.

It was intimated by Blackburn, J., that if this account had been only in the plaintiffs' ledger it would not have bound them; but, having been rendered as one entire account, it was held to be impossible to say that the general principle did not apply, viz., that the payments should be appropriated in the order of date to the items of debit in order of date. But it is obvious that transactions may be, and often are, entered together in the form of one general account for the purpose of more readily ascertaining the state of all the affairs between them, or for some purpose of mere personal convenience: Dulles v. DeForest, 19 Conn. 190. And it would be highly unreasonable if an inflexible rule of inference should be adopted which would preclude the parties from shewing in such a case what was their real object and intention.

In Simson v. Ingham, 2 B. & C. 65, the bankers had kept the transactions of the old and new firms in one entire account in their books; but it was held that the rule in question did not apply, for the reason that the creditors had when rendering the account separated the accounts of the new and old firms, and had applied the payments made by the late firm to the indebtedness of that firm, although it was strenuously insisted that at that period of time they had no right so to do, because they were precluded by the entries which they had already made in their books in the intermediate space of time.

The case of Williams v. Rawlinson, 10 J. B. Moore 362, is the converse of this case, and was one of principal and surety, but is important as shewing the effect of conduct in governing the application of payments. Chief Justice Best, in the course of his judment, remarks: "One fact is extremely strong against the defendant, viz., that his principal agreed to the application of the payments by the plaintiffs to the old balance, as he saw the accounts every fortnight and received vouchers half yearly, and he must consequently have seen, when the first half yearly vouchers were sent in, that the sums remitted by him subsequently to the giving of the bond had been applied by the plaintiffs in liquidation of the old balance. If, therefore, the principal consented to such an appropriation there is an end of the question, for he clearly had an option as to which account the payments should be applied to, and he alone had an unfettered right in this respect, and over which the defendant as surety could have no control unless there was an express or distinct agreement entered into at the time of the execution. of the bond, which cannot be collected or even inferred from anything that appears on the face of that instrument." In partnership transactions no unusual principles or mode of application are called into requisition.

In Smith v. Wigley, 3 M. & Scott, 174, it was held that in the absence of any specific appropriation by either party payments made by the continuing partner after the dissolution must go in reduction of the entire account, and consequently must discharge the earlier items, following the rule laid down in Clayton's case, 1 Mer. 172; Bodenham v. Purchas, 2 B. & A. 39, and Simson v. Ingham, 2 B. & C. 65.

In Simson v. Cooke, 1 Bing. 452, the Chief Justice said: "The only remaining question is, whether on the evidence adduced at the trial any part of the balance due from Cooke & Co at the time of the death of Thomas Cooke is still due. Now, at the time of his death no rest or distinction was made in the accounts, but they still went on as if nothing had happened, and the remittances subsequent to the death of Thomas Cooke are more than sufficient

to cover the balance then due. Several cases have been referred to, particularly that of Bodenham v. Purchas, which establish it as a principle that where a debtor makes no specific appropriation of a sum remitted to account, the creditor is bound to apply it in liquidation of the earliest balance due from the debtor. That principle applies here."

In Pemberton v. Oakes, 4 Russ. 154; Hooper v. Keay, above referred to; Toulmin v. Copland, 3 Y. & C. 625, and 2 Cl. & F. 681; and Bank of Scotland v. Christie, 8 Cl. & F. 214, the facts were not distinguishable in substance from those in Smith v. Wigley and Simson v. Cooke, and they were similarly decided, the last two by the House of Lords.

In Toulmin v. Copland,3 Y.& C. 625, the principle on which these decisions are based is well stated, and the judgment concludes as follows: "From the very nature of the account, without the application of any legal rule, the old balance becomes a balance in which the new house is interested, and becomes absorbed and satisfied by the subsequent payments made, unless there be some agreement to the contrary. So, on the other hand, with respect to the accounts of the creditors of the house. Some of the customers have money in their hands, the house renders accounts to those customers, giving them credit for the moneys which the old house owed to them and carrying on the account with them, soliciting a continuance of their favours and making themselves their debtors."

A similar rule has been adopted in the United States, where it has been held that the payments and credits made by one partner after a dissolution of the partnership and joint agency, and after a new individual agency (sic in the report) in him, cannot rightly be applied to the extinguishment of a debt of the partnership, unless the attendant circumstances justify a presumption that the debt of the partnership has been adopted as his individual debt, and brought into account as such, or the payments and credits were intended by the parties to be so actually applied: Gass v. Stinson, 3 Sumn. 98; Johnston v. Boone, 2 Harr.

172; the presumption being, that a payment is made on account of the separate debt, unless a different appropriation is proved to have been intended, as by the adoption of the joint as a several debt in a subsequent account, and payments made on the general account. See Livermore v. Claridge, 33 Maine 428.

This then being the state of the law, what were the facts in this case established in evidence?

The evidence of Mr. Bell is not in the slightest point contradicted or impugned, and taken in connection with the letter of the 24th November 1876, what does it establish?

The dissolution was upon the 14th October, 1876. The letter to McGuire, I refer to, was on the 24th of the following month.

In that letter the plaintiffs refer to the fact that Hutton under legal advice had refused to sign an agreement to grant renewal notes for the then existing indebtedness of the firm, and state, that under those circumstances, they could give no renewals of the old firm's paper, but must ask him to make special efforts to have it paid upthat they should specially like to have those drafts which they had made upon the old firm due 20th December and 20th January taken out of the way.

It goes on to warn McGuire not to pay Hutton in competition with the creditors of the firm, and then proceeds: Keep your old indebtedness (that is the indebtedness of the old firm) separate from your new liabilities (and for this purpose you should get a new ledger), and then when you remit on old indebtedness say so.”

It is evident therefore that the plaintiffs were fully alive to the necessity of keeping the accounts distinct, and desired McGuire if he wished that any payments made should be credited on the firm's indebtedness to say so. In the absence of such directions the plaintiffs would seem to have been at liberty to regard it as a specific appropriation by the debtor to his separate account, or to be at liberty to make the appropriation themselves; but the credits when made were communicated monthly to McGuire and assented to 9-VOL. VII A.R.

by him. Mr. Bell then says: "I rendered statements to McGuire tacked together and marked M. [the statements printed are specimens of these statements]. In all the statements rendered McGuire I kept the two accounts of Hutton and McGuire distinct after the dissolution.

The course of dealing was in this way: When McGuire would buy a bill of goods we would take his note to close that transaction, and so on; and we also took notes on account of the Hutton and McGuire indebtedness, but not to the exact amount of it. We did not want to close the old account with McGuire or part from Hutton, and that is the reason we kept the debt floating and used the notes for banking purposes. The notes were taken on the firm account for arbitrary sums as we might require them. It was our intention to retain the liability of McGuire and Hutton until the firm debt was paid. The cash payments credited in Exhibit P, were specially applied on the old account, and the drafts appearing to have been made and paid by McGuire were so done on the distinct understanding with McGuire that they were to be applied on the firm account. We wrote him so at the time. The credits in Exhibit J. were made and applied at the time on McGuire's own purchases."

He further shews that the statements were not all of the same character, some being made up without interest for the purpose of shewing approximately the amount due and uncovered, with a view to getting accommodation paper to cover a portion of it, or, in other words, to satisfy McGuire that he was not giving paper in excess of his actual indebtedness on both accounts. The other shewing the actual indebtedness, with interest, and the actual appropriation of the payments.

to

It is further to be noted in this connection that up the 18th June, 1878, notes taken from McGuire for his own purchases were taken for the exact amount; after that for arbitrary amounts; and drafts in the same way.

It is clear that applying the rule I have quoted to the present case, if McGuire had desired the payments made