enants, applies also to negative ones. They must touch and concern," or "extend to the support of the thing" conveyed. 5 Co. Rep. 16 a, Ibid 24 b. They must be "for the benefit of the estate." Cockson v. Cock, Cro. Jac. 125. Or as it is said more broadly, new and unusual incidents cannot be attached to land, by way either of benefit or of burden. Keppell v. Bailey, 2 My. & K. 517, 535; Ackroyd v. Smith, 10 C. B. 164; Hill v. Tupper, 2 H. & C. 121.

The covenant under consideration, as it stands on the report, falls outside the limits of this rule, even in the narrower form. In what way does it extend to the support of the plaintiff's quarry? It does not make the use or occupation of it more convenient. It does not in any way affect the use or occupation; it simply tends indirectly to increase its value, by excluding a competitor from the market for its products. If it be asked, what is the difference in principle between an easement to have land unbuilt upon, such as was recognized in Brooks v. Reynolds, 108 Mass. 31; and an easement to have a quarry left unopened, the answer is, that whether a difference of degree or of kind, the distinction is plain between a grant or covenant that looks to direct physical advantage in the occupation of the dominant estate, such as light and air, and one which only concerns it in the indirect way which we have mentioned. The scope of the covenant and the circumstances show that it is not directed to the quiet enjoyment of the dominant land.

If

Again, this covenant illustrates the further meaning of the rule against unusual incidents. it is of a nature to be attached to land, as the plaintiff contends, it creates an easement of monopoly, an easement not to be competed with,and in that interest alone a right to prohibit one owner from exercising the usual incidents of property. It is true that a man could accomplish the same results by buying the whole land, and regulating production. But it does not follow, because you can do a thing in one way, that you can do it in all; and we think that if this covenant were regarded as one which bound all subsequent owners of the land to keep its products out of commerce, there would be much greater difficulty in sustaining its validity than if it be treated as merely personal in its burden. Whether that is its true construction, as well as its only legal operation, and whether, so construed, it is or is not valid, are matters on which we express no opinion.

Bill dismissed.

NOTE ON COVENANTS RUNNING WITH THE LAND. -A covenant is said to run with the land when either the liability to perform it, or the right to take advantage of it passes to the assignee of the land. The question as to whether a covenant does or does not run with the land, is most apt to arise in regard to covenants in leases. Is it such that if the lessee assigns his lease, his assignee can sue or be sued in his own name for breach of its stipulations? Or if the owner of the

fee or reversion sell his interest in the property, what are the purchaser's rights and liabilities as to the covenants in the lease?

The leading case on this subject is known as Spencers Case, reported by Coke in the year 1583.1 Spencer, by an indenture demised a house and certain land to S. for a term of years, by which indenture S. covenanted for himself, his executors and administrators (not assigns) that he, his executors, administrators and assigns would build a brick wall on part of the demised premises. S. assigned over his term to J., and J. to the defendant. For not making the wall the plaintiff brought his action against the defendant as assignee. It was decided that he could not recover, for the reason that if the covenant does not extend to a thing in esse, and part and parcel of the devise, it does not run with the land so as to bind the assignee of the covenantor, unless he is specifically so bound in the contract itself. The subject matter of the covenant must be in existence at the time of the devise, in order to bind any but the contracting parties and their personal representatives, unless he is specifically named therein. Although, as has been said, "the good sense of this is not very easily discernible." it has continued to be the law for three hundred years.2 All covenants, however, concerning real estate will not bind the assignee of the covenantor, even though the lease or deed in direct terms states that he is so bound. It is necessary, in addition, that the thing to be done must touch or concern the thing demised, and not be merely collateral to it.3 Whether this is so in a particular case is not unfrequently a question of considerable difficulty. As Washburn says, the distinction is often subtle and refined. Baily, J., in Congleton v. 'Pattison5 states that the thing to be done must be on the land itself in order to run with it. This is clearly not the law. It is sufficient that it affects the nature, quality or value of the estate independent of collateral circumstances, or that it restricts the mode of enjoyment.6 A covenant that the lessee must constantly reside on the premises will run with the land, because it restricts the mode of enjoyment, and also the value of the term. So a covenant to cultivate the land in a particular manner.8 It is important that the covenant should affect the value of the estate independent of collateral circumstances, in order to have it run with the land. Thus in Congleton v. Pattison the lessee of a water privilege covenanted not to employ in the mill to be erected on the premises, any persons settled in other parishes without a parish certificate. It was argued that this was a covenant affecting the value of the property, for the reason that if it was not complied with, the workman might become a burden to the parish, and the taxes on the mill increased. It was held that this would not affect the property or its value per se, but only collaterally, and so could not run with the land. The case of Norman v. Wells,9 goes to the extreme limit of the law in applying the principle that a covenant will run with the land when it affects the value of the property or term. A lease was executed of a mill cite on a certain stream, the lessor covenant

1 Spencer's Case, 5 Rep. 1.

2 Platt. Cov. 466, 471; Hunt v. Danforth, 21 Curt. C. C. 604; Sampson v. Easterby, 9 B. & C. 505; Bean v. Dickinson, 2 Hump. 126; Doughty v. Bowman, 11 Q. B. 44; Wilkinson v. Rogers, 10 Jur. N. S. 5.

3 Twiningham v. Pickard, 2 B. & Ald. 105. 41 Washburn Real Prop. 496.

5 Congleton v. Pattison 10 East, 130.

6 Vyvyan v. Arthur, 1 B. & 9.410; Baily v. Wells, 3 Wils 27; Dean & Chapter of Windsor's Case, 5 Rep. 24. 7 Tattern v. Chaplin, 2 H. Bl. 133. 8 Cockson v. Cock, Cro. Jac. 125.

9 Norman v. Wells, 17 Wend. 136.

ing that he would not let or establish any other place or cite on the same stream to be used for the same business as that carried on by the lessee. The court held that a subsequent demise by the covenantor of another site on the same stream, without condition or restriction as to its use, and the erection of a mill for that purpose was a breach of the covenant, and that action could be brought by the assignee of the first lease on the ground that the covenant ran with the land because it affected the value of the property. A nearly similar case, a quite recent one, Thomas v. Hayward is decided the other way. A lessor of property to be used as a public house covenanted with the lessee not to build, erect or keep a house for the sale of spirituous liquors within half a mile of the premises. It was held that this covenant did not run with the land and that the assignee of the lessee could not sue for breach thereof, as it affected the value of the land only collaterally, and not per se.10 While both courts agree as to the principles of law, they differ widely in applying them. A somewhat similar case is that of Taylor v. Owen." A. being the owner of a town in fee, leased one of the houses to B. for a term of years, covenanting in the lease that B. should have the exclusive privilege of vending merchandise in the town during his term. After the execution of this lease, A. leased another house in the town to C. without any restrictions as to the business to be carried on there, and the sale of merchandise was commenced therein. This case differs from Norman v. Wells and Thomas v. Hayward in that the original lessee brings the suit against the assignee of the lessor, instead of the assignee of the lessee suing the original lessor; so that the point decided may not have been precisely the same But the court said, in rendering the decision, that such covenants are merely of a personal nature; that a bona fide vendee or iessee of real estate is not affected by such a personal covenant. Cowen, J., in Norman v. Wells, after an elaborate review of former decisions concerning covenants, admits that they leave the application of old principles to new cases, a very nice exercise of the mind, and remaining in a greater degree a matter for judicial discretion than almost any other of equal importance in the law of property.

Another principle has been applied to the solution of this class of cases. If the covenant is such that it is beneficial only to the assignee of the estate, and ceases to be beneficial to him who has parted with his interest in the property, so that it may be said to be beneficial to the estate itself, it will generally run with the land.12 In Vyvyan v. Arthur, the owner of a mill and certain lands demised the lands the lessee besides covenanting to pay rent etc., covenanted also to have all his corn ground at the lessor's mill. It was held that, so long as the mill was owned by the owner of the reversion, the covenant would run with the land, not only because it was in the nature of rent, but also because beneficial to the owner of the reversion as such. As Best, J., expressed it, "If the performance of the covenant is beneficial to the reversioner, in respect to the lessors demand, and to no other person, his assignee may sue upon it; but if it is beneficial to the lessor without regard to his continuing the owner of the estate, it is a collateral covenant, and the assignee cannot sue.

A common law in England, covenants, while they might run with the land, so as to enable the assignee of the lessee to sue or be sued on them, would not run with the reversion. By the statute of 32 Hen. viii. c.

10 Thomas v. Hayward, L. R. Exch. 4 311.

11 Taylor v. Owen, 2 Blackf. (Ind.) 301.

12 Vernon v. Smith, 5 B. & Ald. 1; Aiken v. Albany R. Co., 26 Barb. 289; Laffan v. Naglee, 9 Cal. 677.

34, this was changed so that the assignee of the reversion may also sue or be sued in the same manner as the reversioner. It is, however, held that this statute only applies to such covenants as concern the thing demised and not to collateral covenants.13 This statute is in force either as part of our common law, or as reenacted by statute, in many of the States.14 A covenant to pay rent will run with the land and with the reversion. The question has often arisen, whether the lessor can assign the rent and retain the reversion, or can sell the reversion and reserve the rent. In other words,can the right to the rent be separated from the reversion? It has been generally held, in this country at least, that it can, and that the covenant to pay rent will run with the rent alone, and that the assignee of the rent may maintain an action in his own name, against the lessee or his assignee.15 Some cases, however, hold otherwise.16 At common law it was necessary that the tenant should attorn to the new landlord before he could sue for rent in his own name. This was changed in England by the statute. 4 Anne, c. 16, s. 9. As this statute was enacted before the Revolution, and being a rule in amendment of the common law, it is probably generally in force in this country. Where it is in force, attornment is not necessary.17 The assignee of the reversion of part of the premises may sue and be sued on covenants which run with the land;18 but such assignee cannot maintain an action for a breach of covement affecting the whole estate, as it cannot be apportioned.19 A public lessee is, of course, not liable on the lessee's covenants, as there is neither privity of contract nor estate existing between the lessor and such sub-lessee. To render one liable as assignee, he must take an assignment of the whole or part of the premises for the whole term.20

A covenant will often run with the land where the relation of lessor and lessee does not exist. It is stated that in such a case there is a distinction between the burden and the benefit of a covenant; that the benefit of a covenant may run with the land so as to be enforced in the name of the assignee, although made with a stranger to the title; but that the burden of the covenant will only run with the land when there exists a privity of estate between the parties; or that a

12a Vyvyan v. Arthur, 1 B. & C. 410. 13 Spencer's Case, 5 Rep. 1.

14 New Hampshire: Mussey v. Holt, 4 Foster, 248. Massachusetts: Pat'en v. Deshon, 1 Gray, 325. New York: Van Rensselaer v. Read, 26 N. Y. 558. Maryland: Funk v. Kincaid, 5 Md. 404. Pennsylvania: 3 Binn. 625. Alabama: English v. Key, 39 Ala. 113. New Jersey: Rev. Stat. 32, § 643. Missouri: Rev. Stat. 32, § 11. Illinois: Plum legh v. Cook, 13 Ill. 669. Connecticut: Baldwin v. Walker, 21 Conn. 163. It is not in force in Ohio. Mosury v. Southworth, 9 Ohio St. 346; Crawford v. Chapman, 17 Ohio,449. 15 Hunt v. Thompson, 2 Allen (Mass.), 341; Willard v, Tillman, 2 Hill (N. Y.), 274; Childs v. Clerk, 3 Barb. Ch. 52; Demorest v. Willard, 8 Cow. 206; Streaper v. Fisher, 1 Rawle (Pa.), 155; St. Mary's Church v. Miles, 1 Whart. 229; Scott v. Lunt, 7 Pet. 596; Van Rensselaer v. Hays, 19 N. Y. 68; Van Rensselaer v. Hays, 19 N. Y. 68; Van Rensselaer v. Read, 29 N. Y. 538; Tyler v. Heidon, 46 Barb. 439; Moffatt v. Smith, 4 Comst. 126; Allen v. Bryan, 5 B. & C. 512.

16 Milnes v. Branch, 5 Maule & S. 411; Randall v. Rigby, 4 M. & W. 135.

17 Moss v. Gallimore, 1 Doug. 279; Burden v. Thayer, 3 Met. 76. It is not in force in Illinois. Fisher v. Deering, 60 Ill. 114.

18 Twynam v. Pickard, 2 B. & Ald. 105; Daniels v. Rich-, ardson, 22 Pick. 565; Gammon v. Vernon, 2 Lev. 231. 19 Doe v. Lewis, 5 A. & E. 277.

20 Holford v. Hatch, 1 Doug. 183; Campbell v. Stetson' 2 Met. 504; Shattuck v. Lovejoy, 8 Grey, 204; Patten v. Deshon, 1 Gray, 329; Bedford v. Terhune, 30 N. Y. 460.

covenant with the owner of land will run with it, if touching or concerning the estate, whether there is privity of estate or not; but that in a covenant by the owner of land, privity of estate is essential. This view is supported by several authorities, including that of Coke.21 The American editor of Smith's Leading Cases, advocates this doctrine, and States that the burden of a covenant will only run where the relation of landlord and tenant exists.22 He is clearly wrong in this, and the better and more modern authorities hold that neither the benefit nor burden of a covenant will run with the land unless there is privity of estate between the parties. The term privity of estate is, however, not used in this connection in its technical meaning. It is generally said to exist only when there is the relation of landlord and tenant, or an identity of title, as between the owner of a life estate, or an estate for years and the reversioner. It is, however, stated that any interest in the nature of an easement, created by the covenant between the grantor and the grantee, constitutes a sufficient privity of estate to enable the covenant to run with the land both as to the burden and the benefit.23 Thus in Bronson v. Coffin24 the grantor of certain land in fee to a railroad company covenanted for himself and his heirs and assigns to erect and forever maintain a fence between his remaining land and the part conveyed to the company. This was held to run with the land and to constitute an incumbrance on the remaining land of the grantor. This principle suggests to conveyancers the necessity, in examining titles to real estate, of examining deeds by the owner of the property of his adjoining lands, to see that no incumbrances in the way of covenants or easements are created therein.

A covenant in a deed of land adjoining a plat of ground belonging to the grantor, and which he has thrown open to the public, and called a public square, that he will not build thereon, runs with the land and can be enforced by the grantee of the first purchaser.25 So, a description in a deed bounding property by a way, estops the grantor and those claiming under him from denying the existence of such way.26 A deed bounding land on a street described on a plan of lots referred to in the deed raises a covenant that such a street exists of the full extent and[width as laid down in the plan, and also a covenant that the grantee and his assigns shall have the use thereof.28

There is a class of English cases which hold that restrictive covenants may sometimes be enforced against the assignee of the covenantor when he has had notice of the covenant before purchasing, which otherwise would not run with the land.29 This doctrine is not

21 Allen v. Culver, 3 Denio, 184, 301; Dickinson v. Hoomes, 8 Gratt. 353, 403; Cole v. Hughes, 54 N. Y. 444; Co. Lit. 384. b.

22 Smith's Leading Cases, 5th Am. ed.; notes to Spencer's Case.

23 Webb v. Russell, 3 T. R. 393; Hurd v. Curtis, 19 Pick. 459; Van Rensselaer v. Bonested, 24 Barb. 365; Scott v. Burton, 1 Ashmead, 321; Hirst v. Rodney, 1 Wash. C. C. Rep. 375; Royer v. Ake, 3 Pa. 461; Herbaugh v. Zentmyer, 2 Rawle, 159.

24 Bronson v. Coffin, 108 Mass. 175; Demorest v. Willard, 8 Cow. 206; Willard v. Tillman, 2 Hill, 274; Burbank v. Pillsbury, 58 N. H. 475.

25 Watertown v. Cohen, 4 Paige, 510.

28 Parker v. Smith, 17 Mass. 412.

27 Thomas v. Poole, 7 Grey, 83; Livingston v. Mayor of New York, 8 Wend. 98; Farnsworth v. Taylor, 9 Gray, 162; Morgan v. Moore, 3 Gray, 319.

28 Moale v. Mayor of Baltimore, 5 Md. 314; Greenwood v. Wilton Railroad, 23 N. H. 261: Matter of Twenty-Third Street, 19 Wend. 128.

29 Tuck v. Moxley, 2 Ph. 774; Cox v. Bishop, 8 DeG. M. & G. 815; Wilson v. Hart, L. R. 1 Ch. 463.

extended to covenants not restrictive, such as those requiring an expenditure of money, or any affirmative act.30 I do not find this principle supported by any American authorities,31 although in all cases actual notice, or constructive notice by way of record, of incumbrances on land created by such instruments as by the registry laws are required to be recorded in order to affect third parties, is necessary in order to bind a subsequent purchaser from the covenantor.

Covenants only run with the land until breach; they then become choses in action which cannot be assigned. Therefore suit cannot be brought by or against an assignee for breach of covenants that have fully occurred before assignment.32 Thus it is held generally in this country that covenants of seisin, of a right to convey, and against incumbrances will not pass to an assignee, for the reason that if they are not true, they are broken as soon as made, and so become mere choses in action.33 But in England and Indiana, Ohio, Missouri, Wisconsin, and South Carolina, the courts argue that these covenants are continuing in their nature, and will therefore run with the land.34 Covenants for quiet enjoyment, warranty, and further assurance, as well as all implied covenants, will run with the land. The lessee remains liable on his express covenants, although he has assigned over his lease.36 An assignee, however, is only liable for covenants broken while he is in possession of the estate. He can rid himself of liability for future breaches of covenant by assigning over his interest, but continues liable for covenants broken while the privity of estate existed.37

In actions of covenant where the suit is founded on privity of contract, the action is transitory; but where the covenant has passed to an assignee, so that the ground by which it may be enforced is privity of estate only, it is a local action, and must be brought in the county where the land lies.38 By the statute of 32 Hen.

30 Heyward v. Brunswick, etc., L. R. Q. B 8 403; Cooke v. Chilcott, 3 Ch. D. 694.

81 Taylor v. Owen, 2 Blackf. 301.

32 Shelby v. Hearne, 6 Yerg. 512; St. Saviour v. Smith, Burr. 1271; Grescott v. Green, 1 Salk. 199; Tillotson v. Boyd, 4 Sandf. 516; Cuthbertson v. Irving, 4 Hurl. & Norm. 742; Walton v. Crowly, 14 Wend. 62; Hentze v Thomas, 7 Md. 346; Paul v. Nurse, 8 B. & C. 486; Patten v. Deshon, 1 Gray, 329; Johnson v. Sherman, 15 Cal. 287; Quackenbush v. Clarke, 12 Wend. 557; Armstrong v Wheeler, 9 Cowen, 89.

83 Hacker v. Storer, 8 Greenleaf, 228; Heath v. Widden, 24 Maine, 283; Garfield v. Williams, 2 Vt. 324; Mitchell v. Warner, 5 Ct. 497; Davis v. Lyman, 6 Ct. 249; Bickford v. Page, 2 Mass. 455; Wheelock v. Thayer, 16 Pick. 68; Clark v. Swift, 3 Met. 390; Hamilton v. Wilson, ▲ Johnson, 72; Townsend v. Morris, 6 Cohen, 123; Bedloe v. Wadsworth, 21 Wend. 120;, Garrison v. Sandford, 7 N. J. 261; Rice v. Spotteswood, 6 Monroe (Ky.), 94; Ross v. Turner, 2 Eng. (Ark.) 132; Pillsbury v. Mitchell, 5 Wis 21; Rawle Covenants for Title, 333.

34 Kingdom v. Nottle, 1 Maule & S. 355; King v. Jones, 5 Taunt. 418; Jones v. King, 4 Maule & S. 188; Martin v. Baker, 5 Blackf. 232; Devore v. Sunderland, 17 Ohio, 52; Dickson v. Desire, 23 Mo, 151; Jeter v. Green, 9 Richardson (S. C.), 376; Wickam v. Blake, 22 Wis 472.

35 Suydam v. Jones, 10 Wend. 180; Hunt v. Amidon, Hill, 345; Campbell v. Lewis, 2 B. & A. 392; Roe v. Hay. ley, 12 East, 414; Colby v. Osgood, 29 Barb. 339; 4 Kent Com. 473; Russ v. Steele, 40 Vt. 310.

36 Anrive v. Mills, 4 T. R. 98; Knupton v. Walker, 9 Vt 199; Walker v. Physick, 5 Pa. St. 193.

37 London v. Richmond, 2 Vern. 421; Pitcher v. Tovey, 4 Mod. 71; Armstrong v. Wheeler, 9 Cow. 88; Thursby v. Plant, 1 Saund. 240; Church v. Brown, 15 Ves. 265; Derby v. Taylor, 1 East, 502; Goddard v. Keate, 1 Vernon, 87; Davis v. Morris, 36 N. Y. 569; Valliant v. Dodemede, 2 Atk. 546.

38 1 Chitty on Pleading, 283; Clark v. Scudder, 6 Gray

SUBROGATION. [Negotiable Paper.] Right of Holder of Bill of Exchange in Respect of Collateral Securities in Case of Bankruptcy of Both Drawer and Acceptor. Where,as between the drawer and the acceptor of a bill of exchange, a security has, by virtue of a contract between them, been specifically appropriated to meet that bill at maturity, and has been lodged for that purpose by the drawer with the acceptor, then, if both drawer and acceptor become insolvent, and their estates are brought under a forced administration, the bill-holder, though neither party nor privy to the contract, is entitled to have the specifically appropriated security applied in or towards payment of the bill. Rule in Ex parte Waring, 2 Rose, 182; 19 Ves. 344, as stated in the above terms in Eddis's Treatise on the rule, page 5, adopted and applied.

This was an appeal by Mr. Dever, the trustee in liquidation of the debtors Suse and Sibeth, from an order of Mr. Registrar Pepys directing that the proceeds of certain bills of exchange which were in the hands of the trustee should be applied to the payment of certain other bills accepted by the debtors. Messrs. Suse and Sibeth were merchants and bankers in London. Messrs. Fryer, Schultze, and Co. were merchants trading at Colombo, in Ceylon. On the 15th Sept. 1882 Suse and Sibeth sent to Fryer, Schultze, and Co., at their request, a letter of credit in the following

terms:

"We hereby authorize you to draw on us at three, four, or six months' sight, for any sums not exceeding £10,000 at one time, such draft or drafts to be covered within two, three, or five months, (according as they have been issued at three, four, or six months) by your remittances on good London houses, with bills of lading, and invoices of the produce to which such remittances refer, attached. This credit resumes its original force as soon as your drafts have been covered in the manner described above. And we hereby agree with you, and also as a separate engagement with the bona fide holders respectively of the bills

S. C., 53 L. T. (N. S.) 131; reported by B. P. Hutchins, Esq., Barrister at Law.

drawn in compliance with the terms of this credit, that the same shall be duly accepted on presentation, and paid at maturity, if drawn or negotiated up to the 1st of September, 1883.

C. J. Sibeth, one of the partners in the firm of Suse and Sibeth, made an affidavit which contained the following statements:

"In accordance with the course of dealing between the respective firms of Suse and Sibeth and Fryer, Schultze, and Co., acceptance commission was payable to Suse and Sibeth upon all drafts drawn upon and accepted by them under the letter of credit, and where, as was generally the case, the remittances sent as cover for the drafts matured later than the drafts accepted, interest was debited by Suse and Sibeth against Fryer, Schultze, and Co. from the date of maturity of the acceptances to that of the maturity of the remittances; while in the converse case, where the remittances matured earlier than the acceptances, interest was credited to Fryer, Schultze, and Co., and Suse and Sibeth in all cases dealt with the remittances as they thought most expedient, and the proceeds were paid into the general banking account of the firm. Under the terms of the letter of credit, Fryer, Schultze, and Co. would be at liberty, after having covered their drafts drawn thereunder in the way provided for by the letter of credit, to draw another £10,000, to be covered in like manner, such a credit being known in the mercantile world by the name of a "revolving credit.""

On the 4th Oct. 1883, Suse and Sibeth stopped payment; on the 9th Oct. they filed a liquidation petition. H. Dever was appointed receiver of their estate and manager of their business. The creditors afterwards resolved on a liquidation by arrangement, and appointed Dever trustee.

At the time when the petition was filed Suse and Sibeth had accepted drafts to the amount of £11,535 under the letter of credit, for the accommodation of Fryer, Schultze and Co. Against these drafts Suse and Sibeth had received from Fryer, Schultze, and Co. remittances in cash or bills to the amount of £3,009 15s. 8d., out of which two bills remained unconverted when the petition was filed, viz., a bill for £255 4s. 2d., dated the 11th Aug. 1883, and another bill for £640 14s. 1d., dated the 5th Sept. 1883. After Dever had been appointed receiver and manager, but before he was appointed trustee, he received two bills, one for £768 18s. and one for £762 10s., sent to Suse and Sibeth by Fryer, Schultze, and Co. as cover under the letter of credit. Among the bills drawn by Fryer, Schultze, and Co., and accepted by Suse and Sibeth, under the letter of credit, was one for £1,000, numbered 753, due the 2nd Nov. 1883; one for £1850, numbered 772, due the 5th Nov., 1883; and one for £950, numbered 778, due the 26th Nov. 1883. These three bills were all held for value, the two first-mentioned by the Chartered Mercantile Bank, and the third by the Comptoir d'Escompte de Paris.

in further cover of our draft (No. 772) for £1,850. We also inclose B L for 200 bags native coffee, to be delivered against payment of draft No. 813, and B L for fifty bales cinnamon, to be delivered against payment of draft No. 814."

On the 5th Sept. 1883, Fryer, Schultze, and Co. wrote to Suse and Sibeth:

"Inclosed we beg to remit our draft No. 824, £640 14s. Id., at 3d m s on J. B. Bastide & Fils, Marseilles, payable London, with BL for 200 bags native coffee, per Yangtse, which is to be delivered against payment of our above draft. Please to apply £150 in final cover of our draft No. 772 for £1,850 and the balance of £490 14s. 1d. in part cover our draft No. 753 for £1,000.”

The documents referred to in the above two letters were received by Suse and Sibeth:

On the 18th Sept. 1883, Fryer, Schultze and Co. wrote to Suse and Sibeth:

"Inclosed we beg to. remit our draft No. 837 for £768 15s., 3 m s of Kleinwort, Cohn, and Co., with BL of 200 bales cinnamon, per Clan Grant, to be delivered against acceptance. Please to apply £580 out of this draft as final cover for our draft No. 753 for £1,000 (due the 26th Nov.), and the balance (£238 15s.) as part cover for No. 778 for £950 due same date."

On the 28th Sept. 1883, Fryer, Schultze, and Co. wrote to Suse and Sibeth:

"We beg to remit inclosed our draft No. 842 for £762 10s., 2d ms of Messrs. Tesdorf and Co., in final cover of our draft No. 778, for £950, due 26th Nov. We also enclose B L for 200 bales cinnamon, to be delivered against acceptance of our draft."

The documents referred to in the letters of the 18th and 28th Sept. were received by Dever as receiver and manager after the filing of the liquidation petition, and the proceeds of the remitted bills were received by him as trustee in the liquidation.

The failure of Suse and Sibeth, caused Fryer, Schultze and Co. also to stop payment. There were two partners in the firm, W. D. Schultze and N. D. Schultze. W. D. Schultze had executed a power of attorney to enable his partner to carry on the business, and had afterwards become, and still was at the date of the failure, of unsound mind; he had been for some years resident in Germany. N. D. Schultze made the following statement, which was contradicted:

not

"Acting upon the requirement of the creditors of my firm, and with a view to securing, as far as

possible, the winding-up of our affairs by the court, I, in the month of Nov. 1883, procured myself to be duly adjudicated insolvent by the District Court of Colombo, in Ceylon, the court within the jurisdiction of which my firm carried on business, and under this insolvency R. L. M. Browne has been duly appointed, and is now, the assignee, and my estate, and also the estate of my firm, as far as legally can be, is now being administered and wound-up."

An application having been made by the Chartered Mercantile Bank and the Comptoir D'Escompte, Mr. Registrar Pepys held that the remitted bills had been specifically appropria ed to the payment of the particular acceptances which they were sent to cover, and that the joint estate of Fryer, Schultze, and Co., as well as that of Suse and Sibeth, was insolvent, and was brought under a forced administration, and therefore the rule in ex parte Waring, 19 Vesey, 344; 2 Rose, 182; applied, and he accordingly made an order declaring that the proceeds of the four remitted bills for £255 4s. 2d., £640 14s. 1d., £768 15s., and £762 10s., were specifically applicable to the payment of the three bills held by the Chartered Mercantile Bank and the Comptoir d'Escompte, and ordered that the proceeds should be applied by the trustee as follows, viz.: the proceeds of the bill for £255 4s. 2d. and £150, part of the proceeds of the bill for £640 148. 1d., to the payment of the bill No. 772 for £1750; £490 14s. 1d., the balance of the proceeds of the bill for £640 14s. 1d., £530, part of the proceeds of the bill for £768 15s., to the payment of the bill No. 753 for £1,000; and £238 158., the balance of the proceeds of the bill for £768 15s., and the proceeds of the bill for £762 10s., to the payment of the bill No. 778 for £950.

The present appeal was from this order.

Cohen, Q. C., and Sidney Woolf for Dever, the trustee of Suse and Sibeth, in support of the appeal; Winslow, Q. C., and A. C. Nicoll for the Chartered Mercantile Bank and the Comptoir D'Escompte; Brabant for Brown, the assignee of Fryer, Schultze, and Co. in the insolvency in Ceylon. The following authorities were referred to: Ex parte Waring, 2 Rose, 182; 19 Vesey, 344; Re The Gothenburg Commercial Company, 42 L. T. Rep. N. S. 174; reversed, 44 L. T. Rep. N. S. 166; Royal Bank of Scotland v. Commercial Bank of Scotland, 47 L. T. Rep. N. S. 360; 7 App. Case 366; Powles v. Hargreaves, 3 De G. M. & G. 430; re Barned's Banking Company, 31 L. T. Rep. N. S. 862; L. Rep. 19 Eq. 1. L. Rep. 10 Ch. 198; ex parte Broad; re Neck, 51 L. T. Rep. N. S. 388; 13 Q. B. Div. 740; ex parte Dever; re Suse, 51 L. T. Rep. N. S. 437; 13 Q. B. Div. 766; Tooke v. Hollingworth, 5 T. R. 215; ex parte Gomez; re Yglesias, L. Rep. 10 Ch. 639; Barker v. Goodair, 11 Vesey, 78; City Bank v. Luckie, L. Rep. 5 Ch. 773.

BRETT, M. R.-I decline to discuss how the rule