Sleech's Case
| Jurisdiction | England & Wales |
| Judgment Date | 22 July 1816 |
| Date | 22 July 1816 |
| Court | High Court of Chancery |
English Reports Citation: 35 E.R. 771
HIGH COURT OF CHANCERY
slekch's Case. July 15-17, 18-22, 1816. Creditors, at the death of I)., who continued to deal with the surviving partners, and were paid by them in part. (Including, also, creditors whose debts remained unaltered, either by receipt or payment, and those whose debts had been subsequently increased by payments to the surviving partners.) Hold no discharge of the deceased partner's estate. .First, the case of Miss Sleech, representing that class of claimants, who were creditors of the house at the death of Devaynes, and afterwards continued to deal with the surviving partners, the operation upon whose debts by the subsequent dealings was merely a payment, or payments, to or to the use of the creditors, by the surviving partners. As to these, the Master reported his opinion to be, [540] that such creditors had a right to resort to the estate of Devaynes, for the balance due to them, after deducting such, payments made by the surviving partners. The representatives of Devaynes excepted to this report, on the general ground, that, by the subsequent dealings, the creditors had released his estate, and assumed the surviving partners as their debtors. [There were two other classes of claimants,- whose cases, it was conceived, would be disposed of by the judgment respecting this class, and whose claims were consequently not made the subjects of selection ; viz. those upon whose debts there had been no operation, either by receipt or payment, since Devaynes's death ; and those, where the operation had been, merely a payment, or payments, to the surviving partners.] The only special circumstances in Miss Sleech's case were the following. At the death of Devaynes, she had a balance of £36(5 on. her account with, the partnership. On. the 31st of January 1810 (two months after his decease), she drew a draft or check, on the house, in the name of the old firm, for £50 which was paid to ths bearer. No other receipts or payments took place till the bankruptcy, under which, she proved for £316 (the balance remaining), received dividends upon that debt, which reduced it to £216, and, afterwards, signed the certificate of the bankrupts. Hart, Wether ell, and Sideboltom, Martin, and Hazlewood, and Abercromby, for different representatives of Devaynes, in support of the exception. Bell and Palmer, for Miss Sleech, and Fonblangue and Clayton, for the assignees of the surviving partner, sustained the Master's report. fay [541] In support of the Exceptions. The question lies within a narrow compas&f and is, Whether, inasmuch as the debt is extinguished in law by the death of Mr. Devaynes, Miss Sleech knowing of his death, and, with that knowledge, continuing to deal with the surviving partners (which in fact amounts to an authority to the surviving partners to keep her money at their disposal), these circumstances do not amount, in fact, to an acquittance of Devaynes's estate. In general, it must be admitted that, where a loan is made to two persons, one of whom dies, and the lender afterwards receives his interest from the survivor, that circumstance will not discharge the estate of the deceased. But there is a peculiarity in the custom of dealing between bankers and their customers, which renders their case quite distinct from that of ordinary borrowers and lenders. A banker is rather the bailee of his customer's funds than his debtor.(2) The contract between them is, that the banker shall [542] not so dispose of those funds as not to have them forthcoming at a moment's warning. If the money (which, for this purpose, must be taken as any ordinary merchandize) be deposited in the hands of several, as partners, and one dies ; and if the bailor, by continuing [543] to deal DKVAYXKS V. KOBI.E ; SLKKCrl's CASK :1 MEJ.l. 5-54. with the survivors, is not to he considered as therehy indicating his determination, amounting to an authority, by which the survivors are to hold the fund absolutely as against the representatives of the deceased partner; the consequence must bo that the moment a banker so circumstanced dies, his Executor is bound, for the safety of his estate, to lay his hands upon every farthing of money in the banking-house, in order to see that it is properly divided and appi'opriated among the customers. But an interference of [544] this sort would be quite inconsistent with the custom of bankers. The, Executor of Mr. Devaynes would have had a right to go into the banking-house immediately after his decease, and insist upon having a joint controul over the funds with the surviving partners. But that right would cease from the moment that tho surviving partners could satisfy them that such controul was unnecessary for their indemnity ; which it becomes, in fact, by the circumstance that tho customers who had deposited the money with the fire, knowing that one of tho five was gone out, and that tho legal responsibility survived to the four, continued to deal with the fund by drawing on the four, and, by so doing, authorized the four to hold it, as the parties responsible to them for it. The present claimant, in her affidavit before tho Master, says, that the firm continuing the same after the death of Mr. Devaynes, and no settlement of accounts having taken place with her, the impression upon her mind was, that she continued to have the responsibility of his estate, or of his family. But, whatever was the impression under which this lady acted, if it can be shewn that it originated in a mistake of law, the estate of Mr. Devaynes cannot be affected by it. In point of fact, she kept her money in, and continued to transact business with, the banking-house, after she knew of the death of Devaynes, thinking it more convenient to herself to have her money there at her demand whenever she might require it, than to have to call upon the Executors of the deceased partner to see that it was paid her directly. The language of the Lord Chancellor in Ex parte Kendall,(S) (a case which arose out of this very bank-[545]-ruptcy), justifies the view which we take of the nature of those transactions. In the present case, the debt is extinguished at law. A Court of Equity has (undoubtedly), upon general principles, said, that there shall be a recourse against tho assets of a deceased partner. But we fix upon the peculiar relation between a hanker and his customer, and the acts of the customer, as justifying the surviving partners in retaining the balance in their hands ; for the business of a banker would be mischievous, if, the instant a death happened, the surviving partners would he under the necessity of refusing payment to the customer until it should appear how the accounts stood between them and their deceased partner ; or, on tho other hand, if tho Executor of the deceased partner could stop the business of the house by saying, let me see how the accounts stand before you pay another shilling, for my Testator's estate may be answerable, and therefore I insist upon knowing before you act any further. The several cases which have established the right, [546] in equity, of a joint creditor to follow the assets of a deceased partner, will he cited on the other side ; but it is right to notice them here, in order to point out in what particulars they do not apply to the present. The first, after Lane v. Williams (2 Yern. 277, 292), which is generally resorted to as laying down the principle, is Heath v. Percival (1 P. W. 688); in which (as in many of the other cases that will be mentioned), the creditor held the joint bond of the partners ; and, although there had been such dealings between the creditor and the surviving partner as would have raised an equity sufficient to rebut (according to Lord. Ilanhoicke's phrase (in Bishop v. Glmrch. the next case cited)), the equity of the creditor claiming against the estate of the deceased partner ; yet the Court held that the legal right attached to tho bond could not be removed ; and on that ground, and that only, decided in favour of the claimant. In Bishop v. Church (2 Yes. [Son.] 100, 3,71) also, there was a joint bond; and here it is that Lord Ilardwicke lays down the principle already alluded to, and which ought to be kept closely in view throughout the present discussion, lie does not say that the creditors of a firm, not obtaining payment from the surviving partners, have an unconditional, absolute right to fix, in equity, the assets of a deceased partner ; but that theirs is an equity " which may bo rebutted by circumstances." (Note : " The Plaintiff must come as from a pure fountain.') 547. DEVAYNES V. NOBLE ; SLEECHS CASK 778 [547] In Iloare v. Gontencin (1 Bro. 27), Lord Thurlow dismissed the Bill. It will probably be alleged that, in that case, it did not appear the surviving partners were insolvent; but that was not the ground of Lord Thurlow's decision, nor was it so understood to be by the present Lord Chancellor, who, in Ex parte Rendal (17 Ves. 514, p. 582), says, " It was contended that, though at law the debt survives, a demand may, under circumstances, be maintained in equity against the assets ; and, that it is so in many cases, is established ; though doubted extremely by Lord Thurlow in Iloare v. Gontencin." And, in another place (17 Vcs. p. 25), adverting again to " Lord Thurlow's doubt in Iloare v. Gontencin," he couples it with " his own surprise, that a Court of Equity should have interposed to enlarge the effect of a legal contract," although he adds, " the modern doctrine certainly is, that where a man has chosen to take the joint credit of several, though at law his security is wearing out, as each of his debtors dies, yet it is fit that the creditor, whose debt remains at law only against the survivors, should resort to the assets of a deceased debtor ; and a Court of Equity will, under certain modifications, constitute that demand." In Iloare v. Contencin, therefore, Lord Thurlow...
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Between William Devaynes and Louisa his Wife, and Thomas Monsell (an Infant), Plaintiffs and Wm. Noble, Sam. Pepys Cockerell, Fred. Booth, Mary Devaynes. Elizabeth Smith, Lestock Wilson, John Morris, and Joseph Down, Defendants. and between Sir Thomas Baring, Bart., and Sir Frank Standish, Bart. (on behalf of themselves, and all other the Creditors of the partnership of William Devaynes, John Dawes, William Noble, Richard Henry Croft, and Richard Barwick, who shall come in and contribute, Company), Plaintiffs and the said william Noble, Samuel Pepys Cockerell. Frederick Booth, Lestock Wilson, John Morris, Joseph Dorien, Wm. Devaynes, and Louisa his Wife, Mary Devaynes, Elizabeth Smith, and Thomas Monsell, Defendants
...M. & G. 384; Harford v. Lloyd, 1855, 20 Beav. 321; Brown v. Societe des Affreteurs du Great Eastern, 1867, 17 L. T. 494. For Sleech's Case, 1 Mer. 539, see Beresford v. Browning, 1875, L. R. 20 Eq. 573; Kendall v. Hamilton, 1878, 3 C. P. D. 407; In re Hallett's Estate, 1880, 13 Ch. D. 735; ......
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