CHAN.] Re THE AGRICULTURAL CATTLE INSURANCE COMPANY. STANHOPE'S CASE. [CHAN. lapse of time, refused to make any such order, and the Lords Justices, on appeal, concurred with the M. R. Turner, L. J. made an observation which was entitled to great weight, "that after such a lapse of time, the whole of the circumstances having been communicated to two consecutive meetings of the shareholders, and the names having been all struck out, he should have no difficulty as a juryman in inferring, as a matter of fact, that every one of the shareholders knew of it, and assented to it. But whatever was the ground of their decision, the Lords Justices thought that the M. R. was right. The next case was Spackman's; he was also one of the original shareholders, and he declined to come in under the Chippenham compromise; but early in the year 1849 he presented a petition for winding-up the company. That petition was, however, dismissed, and thereupon he and six other shareholders, who were also anxious to get out of the company, entered into a negotiation with the directors in order to try whether they could not get released upon terms similar in character to those which constituted the Chippenham compromise. Eventually, after some negotiation, it was stipulated that these seven shareholders should pay to the directors a sum of 4000l., and that thereupon their shares should be declared forfeited as for failure in paying the Chippenham call, and that their shares should be then assigned away, and that they should be thereby released from all further connection with the company. That was carried into effect; but that transaction, unlike the transaction of Mr. Brotherhood, was never brought before any general meeting. An application was made to the M. R. in the summer of 1864, to place Mr. Spackman's name on the list of contributories, on the ground that he had never validly ceased to be a shareholder. The M. R. heard the subject argued at great length, but he refused the application chiefly in consequence of the great lapse of time and the alterations that had been made in the company and in the amount of the shares, after Spackman had practically ceased to be a member. From that judgment there was an appeal to Lord Westbury, who reversed the order of the M. R. and placed Mr. Spackman on the list. After that case came another application to place on the list the name of Lord Belhaven. Now, Lord Belhaven stood in a different position from either Brotherhood and those who were with him, or Spackman and those who were with him, for he had never executed the deed, and he repudiated all liability; and after a good deal of discussion had taken place between the directors and those who acted for Lord Belhaven, the directors at last agreed to accept 50%. and release him from all further liability. That was in 1855, and nothing more was heard of it by Lord Belhaven until an application was made after the winding-up order, and after that was decided as to the shareholders, to place Lord Belhaven on the list. The M. R., to whom the application was made, was of opinion that Lord Belhaven ought not to be placed on the list; but he considered that, as Spackman had been placed on the list, Lord Belhaven must be. That case was carried, by way of appeal, to the Lords Justices, who heard it in the month of June 1865, and struck him off the list, not because they thought the decision in Spackman's case was wrong, but because he stood on a different footing from all the others. Whether rightly or wrongly, certainly honestly thinking himself not a shareholder, he denied all liability; and what the Lords Justices said was, that by one of the terms of the deed there was an express power given to the directors to compromise any suits with persons with whom they were in litigation, and that there was no question that they acted perfectly bonâ fide, and did release Lord Belhaven, because they thought it was a doubtful matter whether they had any claim against him. That was the ground on which the Lords Justices acted in striking off Lord Belhaven's name. The case then came before me by way of appeal, and was very fully argued shortly before the Christmas holidays. It appears to me impossible to find any distinction between this case and that of Spackman. In this case, as in that of Spackman, the shareholders refused to retire under what is called the Chippenham compromise, supposing that could be validly done. In both cases the real arrangement was a release by the directors in consideration of a sum of money paid by the shareholder. The machinery used in both cases was a forfeiture, which I must call a pretended forfeiture of shares on account of nonpayment of a call, and in neither case was the truth disclosed to the body of shareholders at large. Lord Westbury evidently bestowed great care on the case, and the terms of his prepared judgment leave no doubt as to the grounds of his decision. Now when the present case came before the M. R., I think I may assume from his Lordship's language that, if Lord Belhaven's case had not been decided as it was by the Lords Justices, he would have felt bound by the decision of Lord Westbury in Spackman's case. But thinking that the two cases were in conflict, his Lordship acted on what he considered the soundest view of the law. I own, however, that I cannot think there is any such conflict. In Lord Belhaven's case there was no concealment; there was not, as Lord Westbury considered there was in Spackman's case, aliud simulatum, aliud actum. There was a bona fide question whether Lord Belhaven ever was liable as a shareholder, and the Lords Justices, carefully distinguishing his case from Spackman's, decided that under one of the clauses of the deed the directors had the power of compromising disputed claims, and that, acting on that power, they had validly compromised the dispute with Lord Belhaven, and that he was validly released. The decision, therefore, rested on grounds which are altogether absent in the present case, as they were in Spackman's case. I should feel myself bound by that decision, even if I did not think the reasoning on which it rested sound. But it is due to the parties interested in the affairs of this company to say, that my decision in the present case would have been the same, even if I had not felt the decision in Spackman's case to be a binding authority. I do not impute to Mr. Stanhope moral fraud in the course he took, an imputation from which it is less easy to exonerate the directors. But Mr. Stanhope, by executing the deed of settlement, came under obligations to all his fellow-shareholders, from which, without their consent, he could not be relieved. The directors could only bind the shareholders by acts coming within the scope of the authority delegated to them by the deed, and the releasing of shareholders was not within those powers. It is true that by the 125th clause the directors had the power of declaring forfeited the shares of any shareholder neglecting or refusing to pay his calls. But this obviously, looking to the context, refers to a case where the directors are unable to obtain payment of the call. It was not intended to supply them with machinery whereby, under the pretence of forfeiture, they should be able to deprive the continuing shareholders of the liability to all those for whose joint liability with themselves they had originally stipulated. That such a proceeding could not have been supported, if questioned at the time it originally took place, was hardly contested. But if so, lapse of time makes no difference, for there is nothing to show that any of the other shareholders, still less that all of them, were aware of what had been done. It is said that by examining books and accounts open to their inspection, and consulting the lists of shareholders as published from time to time, any shareholder might have discovered the truth. This is not to my apprehension very clear; but even supposing it to be so, that is not sufficient. It is no part of the duty of a shareholder to look into the management of the business. He has a right, acting on the terms of the deed, to leave the management in the hands of those to whom he had confided it, and to assume that they are doing their duty. It is not enough to show that they might have become acquainted with the mismanagement of their affairs; it must be shown that they did so. On these grounds, fully acting on and adopting the view taken by Lord Westbury in Spackman's case, I am of opinion that the order of Lord Romilly must be discharged, and that the name of Mrs. Stanhope, as executrix of her late husband, must be placed on the list of contributories in respect of 100 shares of 201. each. Mrs. Stanhope must refund any costs which she has received under Lord Romilly's order. Solicitors for the app., Dobinson and Geare. Solicitors for the official manager, Horn and Murray. Feb. 22, 24; April 25; May 25. WOOD v. Scoles. [CHAN. This was a suit for account upon the dissolution of a partnership, and in accordance with the direction of their Lordships at the hearing of an appeal from the original decree of the M. R., it now came before them upon the hearing for further consideration. The circumstances were as follows: The plt. and deft. in this case, in the year 1855, become partners in the trade and business of coal and stone merchants. By the articles of partnership between them, bearing date the 23rd March 1855, they agreed as follows:-That they were to become partners as from the 12th March 1855 up to the 25th Dec. 1855, and from the said last-mentioned day for the term of fourteen years thence next ensuing; provided, nevertheless, that if at the end of seven years, to be computed from the said 25th Dec. 1855, either of them, the said James Scoles and Octavius Wood, should be minded or desirous to put an end to the said copartnership, and of such his mind or desire should give six calendar months' notice, in writing, to the other of them, the said copartnership should absolutely cease and determine on the 25th Dec. 1862. Then that the said business should be carried on at the said leasehold premises of the said Octavius Wood, at Market Wharf aforesaid, or at such other place or places as the said copartners should thereafter mutually fix and agree upon, and that the bankers of the firm should be the London and Westminster Bank. Then, by the 7th clause, the said joint business, and all buyings and sellings, and other transactions relative Partnership-Articles-Dissolution-Shares in assets thereto, should be made and carried on for the -Advances by partners. The plt. and the deft. entered into partnership in 1855 for a period of fourteen years, but determinable earlier upon notice; the articles provided that the business should be carried on for the benefit and at the equal risk of both; that the plt. should contribute 7501. and the deft. 1500l. to make up the capital, which should carry interest; that interest should be paid in respect of any additional capital brought in by either partner, such interest to be paid in priority over any other interest to the partners; that each partner should be allowed to draw fixed sums, and that any surplus of profits should not be drawn out, but should be carried to their respective accounts and accumulate; and that on the determination of the partnership by notice, or otherwise, an account should be taken between the partners, and after payment and satisfaction of all debts and liabilities, the remaining capital, stock, moneys, and credits, after allowance for possible bad debts, should be divided or received, or taken by the partners according to their respective shares or interests therein. The partnership was determined by notice given by the deft., and it was then agreed that the deft. should take over the business, and an account between the parties should be taken in the manner provided for by the last stated clause of the articles. The M. R. having declared by his decree that the surplus assets ought to be divided rateably between the parties according to the amount of their respective capitals at the dissolution, for that the first clause above mentioned applied only during the continuance of the partnership and not upon a dissolution: Their Lordships, upon appeal, affirmed that view; But they were of opinion that moneys brought into the partnership by the deft., and not derived from such accumulation as was provided for by the articles, must be considered as debts due from the firm, and entitled to interest before any other interest could be paid. The order therefore declared that the net assets were to be applied first in payment to the deft. of such his advances and the interest upon them, and the surplus divided between the parties according to the amounts of their respective capitals at the dissolution. mutual and common benefit of the said partners, and risk of profit and loss in equal shares and proportions. By the 8th clause, that the amount of capital to be brought into the said business by the said John Scoles should be the sum of 1500l., and the amount of capital to be brought into the said business by the said Octavius Wood should be the sum of 750%, and that the capital of each of the said copartners in the said business for the time being should carry interest after the rate of 5 per cent. per annum, and that such interest should be paid and allowed to each partner yearly, prior to the annual makingup of the accounts of the said copartnership as thereinafter mentioned. Then, by the 9th clause, the consent of the other of them, lend or bring into that if either of the said copartners should, with the said joint-stock trade, in aid of the capital thereof, any sum or sums of money beyond the amount of capital therein before agreed to be brought into the said business by each of the said copartners, he should be allowed and entitled to receive and take interest in respect thereof at the rate of 5 per cent. per annum before any other payment of interest should be made. Then there followed a provision for either party withdrawing any excess of capital upon giving notice. Then by article 10 it was provided that each of the said copartners should be allowed to draw out of the funds of the said copartnership in anticipation of their respective shares of the profit thereof during each year the sum of 31. per week, and that such sums should be accounted for in part of their respective shares of the net gains and profits of the said business, and that at the end of should be allowed to draw out the further sum of every year each of them, the said copartners, 501. in respect of his share if the net gains and profits of the said business would allow thereof, and that the remainder of the share of each of the said copartners in the net gains and profits of the said business (if any) should not be drawn out by them, but should remain in the said business, and be carried to the account of each of them in the books of the partnership, and accumulate in addition to CHAN.] WOOD v. SCOLES. the capital of each of them therein, and that each of them the said copartners should be allowed and paid interest yearly upon such additional capital at the rate of 5 per cent. per annum prior to the annual division of the net gains and profits of the said business. [CHAN. proceeded to get in the assets of the partnership, and got them in to a considerable amount, and paid the proceeds into the London and Westminster Bank to the joint account of himself and the plt. Out of the moneys which he thus paid in, the deft. discharged the debts due from the partnership; and after payment of these there remained a large balance, amounting, as alleged by the bill, to 18731. 3s. 8d. Beyond this, there remained a considerable amount of outstanding debts due to the partnership. It was then provided that the plt. Wood should devote the whole of his time and attention to the said business, and should not be engaged in or carry on any other trade or business whatsoever, but that the said deft. James Scoles should have full liberty and licence to engage in and carry on The capital of the deft. in the partnership at the any other business and occupation on his individual time of the dissolution very largely exceeded that of account as he might think proper, and should be the plt., and in this state of circumstances the deft. bound to devote no more of his time and attention insisted that he was entitled to apply the balance to the business of the said copartnership than he remaining in the bank, after payment of the debts of the should think fit. The 21st provision was that upon partnership, in payment of the excess of his capital the expiration of the said partnership by effluxion above the capital of the plt.; and he further insisted of time, or upon the said copartnership being that, as the balance at the bank was insufficient to so dissolved in pursuance of the powers lastly pay the full amount of that excess, the plt. was thereinbefore for that purpose contained (powers bound to pay him the deficiency, which amounted, which is unnecessary here to mention), or in case as he alleged, to 700l. 7s. 3d.; and in justification of of either of the said copartners having given such this contention he relied upon the 7th clause of the notice of his intention to put an end to and deter- articles. He accordingly applied a great part of the mine the said copartnership as mentioned, then balance at the bank in payment to himself of this and in either of the said cases within one calendar excess of capital; and upon his doing this the plt., month after the said copartnership should be so put in March 1864, filed the present bill, which prayed an end to and determined, a true and particular for a declaration of the respective rights of the plt. account in writing should be stated, settled, and and the deft.; that the deft. might be ordered to signed between and by the said partners of all the refund to the account of the plt. and himself, at moneys, stock-in-trade, including plant and fixtures, the London and Westminster Bank, the sum of lease of premises, debts and effects then belonging or 1873l. 3s. 8d. so appropriated by the deft. as already due or owing to the said partnership, and of all debts mentioned, or so much thereof as the court should and sums of money due or owing from or on account think fit; for an injunction to restrain the deft. from of the same to any person or persons whomsoever, commencing and prosecuting any action at law or and that after payment of all the same debts and other proceeding against the plt. in respect of the sums of money, and performance of all outstanding alleged debt of 700l. 78. 3d. until it should have been engagements which should have been entered into ascertained that the plt. was justly indebted to the by or on account of the said partnership, the re- deft. in that amount, and that the debts due to the maining capital, stock, moneys, and credit belong-partnership and the other outstanding assets thereof ing to the said partnership should, after making due allowance for any desperate or dubious debts which might be outstanding, be divided or received or taken by the said partners according to their respective shares or interest therein; and the articles provided that the accounts were not to be opened in case of any error, unless such error should be discovered within a stated and fixed time. The partnership continued until the 25th Dec. 1862, when it was dissolved, in pursuance of a notice given by the deft. under the power contained in the articles; but during the pendency of this notice, and before the determination of the partnership took effect, a further agreement was made between the pit. and the deft., which bore date the 19th Dec. 1862. By this instrument it was agreed that the deft. Scoles should exclusively get in all the debts and moneys due and owing and payable to the said partnership, and should pay the same when received into the London and Westminster Bank, in the joint names of the plt. and the deft., but that the deft. should alone have power to draw out the same, and that out of the partnership moneys, as and when they should be got in and received, the deft. should pay all the debts and demands owing by the said partnership; next, that as soon as conveniently might be after the 25th Dec. following an account should be had and stated by and between the parties in respect of the partnership estate and effects, and a division made of the assets of the partnership after paying or providing for the payment of the debts and demands thereon, which contemplated account was to be had and taken in the manner provided by the 21st article of the articles of partnership, except as otherwise provided for by the now stating agreement. In consequence of this latter agreement the deft. might be got in and collected; the bill then prayed for the usual partnership accounts and for the appointment of a receiver. Upon the hearing of the cause before the M. R., his Lordship declared that, in the opinion of the court, the surplus assets of the partnership between the plt. and the deft. remaining after payment of all the partnership debts and liabilities, ought to be divided rateably between the partners according to the amounts of the respective capitals of the partners at the date of the dissolution of the partnership, and the decree went on to direct that accounts should be taken upon the footing of that declaration. His Lordship further ordered that the deft. should, without prejudice to any question in the cause, pay into the bank the sum of 4007., to be invested in the purchase of stock, and that the interest and dividends upon it should be accumulated. This sum of 400l. was fixed as the estimated amount which would be coming to the plt. in respect of his share of the balance at the bank, upon the footing of the M. R.'s opinion, but the sum was merely an estimate and not an ascertained amount. The deft. having appealed from this decree, their Lordships varied it by omitting the declaration of opinion inserted by the M. R., and they directed that the partnership accounts should be taken in the first instance, and they adjourned the further consideration of the cause, which they directed should come on before themselves instead of the M. R. The chief clerk duly made his certificate, whereby he certified the amount of capital belonging, at the time of the dissolution, to the plt. and the deft. respectively; and also the amounts of the assets and liabilities of, and of the outstanding debts due to, the partnership, into the particulars of which it is unnecessary to enter; but the brief effect of the certificate was to show that the assets, after dis CHAN.] LEES v. WHITELEY. [V.C. K. charging the liabilities of the firm, would be insuf- | capital. But surely the capitals of partners in a ficient to make good to the deft. his excess of capital beyond that contributed by the plt. The case now came on for further consideration, and the questions originally raised by the appeal from the M. R.'s decree were now argued. The nature of the contention of the parties fully appears from the judgment of Turner, L. J. below. Hobhouse, Q. C. and Bristowe for the plt. Baggallay, Q. C. and Bagshawe for the deft. partnership cannot be considered otherwise than as interests in the assets of the partnership. They, in fact, constitute the principal interest which the partners have in the partnership after its dissolution. Besides, the 10th clause of the articles, providing for the accumulation of the capital by means of the profits, seems to me to go far to explain the meaning of these words. It is to be observed, too, that if the intention had been such as is contended for by the app., it can hardly be supposed that the 21st clause of the articles would have been framed as it is. It would have been more appo Hobhouse, Q. C. having replied, judgment was site, and quite as easy to have met that view, reserved until the 25th April, when Lord Justice TURNER, after stating the facts of the case, said:-Upon the opening of the appeal from the original decree we thought it desirable that the partnership accounts should be taken before any declaration of the rights was made, and we accordingly made an order to that effect. In pursuance of this order the partnership accounts have been taken by the chief clerk. It is unnecessary to enter into the details of them. It is sufficient for the purposes of this appeal to say that they showed that the realised assets of the partnership remaining after payment of the debts are insufficient to make good to the deft. the excess of the capital which he had in the partnership at the time of the dissolution, beyond the capital which the plt. then had therein. We have now to dispose of this appeal. It was insisted by the deft. in support of the appeal that the opinion of the M. R. embodied in the decree, and on which it proceeds, is altogether erroneous; or, at all events, is erroneous in so far as it extends to moneys which were brought by the deft. into the partnership, and were not derived from the accumulation of profits provided for by the 10th clause of the articles, and that these moneys at least (and it was admitted on the part of the plt. that some moneys were so brought in by the deft.) ought to be considered as loans to the partnership. The argument upon the part of the app. was based upon this, that the risk of profit and loss was according to the 7th clause of the articles to be taken and borne by the partners in equal shares and proportions, and it was clearly pointed out in the argument that if the construction put by the M. R. upon these articles was supported, the proportion of loss which would fall upon the deft. would be much greater than that which would fall upon the plt. That this would, in fact, be the case, I see no reason to doubt; but this fact does not seem to me to displace the view which the M. R. has taken of the case. His Lordship's opinion, as I understand his judgment, was that this 7th clause of the articles was meant to apply, and in fact applied, only during the continuance of the partnership, and the principal, if not the only, question in this case seems to me to be whether this opinion is right or not. Upon considering the whole of these articles, the conclusion at which I have arrived is, that it is right. The 21st clause of the articles provides that, upon the determination of the partnership, the surplus assets, after payment of the debts, shall be divided between the partners according to their respective shares or interests therein. If the debts referred to in this clause be meant to include the capitals of the partners as debts, then each of the partners would have to be paid rateably according to his capital; and if, on the other hand, the debts referred to in this clause were not, as I think they were not, meant to include the capitals of the partners, then what is the meaning of the words "according to their respective shares and interests therein ?" It was said for the app. that these words mean shares and interests in the assets, and not in by saying that, after payment of the debts and of the excess of the deft.'s capital, the surplus should be divided equally between the partners. I may add that there is nothing, as it seems to me, unreasonable in this construction of the articles. During the continuance of the partnership the plt.'s larger share of the labour might well be set against the deft.'s larger share of the capital, and the risk of profit and loss be therefore equally divided. But upon the determination of the partnership a new state of circumstances would arise, and new provisions might well be introduced for meeting it. For these reasons I agree, as I have said, with the M. R. upon this part of the case. But as to the other question, the rights of the deft. in respect of moneys which were brought by him into the partnership, and were not derived from the accumulation of profits, I think the deft. has a better case. These moneys ought, I think, to be considered as loans to the partnership, and as debts due from it, for by the 9th article they are treated as lcans, and the interest upon them is to be paid before any other payment of interest is to be made. Upon the whole case, therefore, my opinion is that, according to the true construction of these articles, the assets of the partnership after payment of what may be called the outside debts ought to be applied in payment to the deft. of the moneys which I have last mentioned, with any interest which may be due upon them, and that the surplus ought to be divided between the partners according to the declaration contained in the decree of the M. R. The parties may probably be able, of course, without prejudice to any further appeal, to arrange an order upon the footing which I have mentioned, but if not, I fear the case must go back to the chief clerk for further inquiry. Lord Justice KNIGHT BRUCE said :---I agree with my learned brother on both parts of the case. day to be spoken to on the minutes, but the discusMay 25.-The cause was put into the paper this sion was confined to matters of detail which require no further notice. Solicitor for the plt., Lawrence. Solicitors for the deft., Wilde, Rees, Humphrey, and Wilde. V. C. KINDERSLEY'S COURT. Reported by G. T. EDWARDS, Esq., Barrister-at-Law. March 7 and 9. Covenant-Bill of sale-Insurance-Act of bankruptcy-Notice. The plt. having supplied to the defts. articles of machinery for their mill, the defts. gave him a bill of sale of those articles to secure payment for them; the bill of sale containing a covenant by the defts. to insure the articles, which they did. The defts. mill was afterwards V.C. K.] LEES v. WHITELEY. [V.C. K. destroyed by fire, and the defts., on the day of the fire, assigned their property to trustees for their creditors, but the deed of assignment was never executed by the creditors. The plt. having notice of the deed of assignment, instituted a suit asking that he might be declared to have a lien on the amount secured by the policy of insurance: Held, that the plt. was disentitled to relief, as, first, a covenant that the proceeds of the policy should be applied in liquidation of the mortgage-debt could not be implied from the covenant to insure contained in the bill of sale; and, secondly, that the assignment by the defts. for the benefit of their creditors, being an ineffectual attempt to withdraw property from the operation of the bankrupt law, was an act of bankruptcy of which the plt. had notice. This suit related to the right of the plt. under a bill of sale to claim the benefit of a policy of insurance against fire effected by the defts., who had covenanted with the plt. by the bill of sale that they would insure the property thereby mortgaged to him. There was also a question whether the execution by the defts. of a deed of assignment to trustees for the benefit of their creditors, which was never executed by the creditors, was an act of bankruptcy, and whether, assuming it was an act of bankruptcy, the plt. had notice of it, and was thereby disentitled to relief. The facts are referred to in the V. C.'s judgment. Osborne, Q. C. and Taylor for the plt. De Ger, Q. C. and Jolliffe for the defts. Cases cited: Garden v. Ingram, 23 L. J. 478, Ch. ; Re Styan, 1 Ph. 108; | creditors. This deed was executed by the members of the firm, and by the trustees, but was never executed by any one else. On the 24th of the same month the plt. gave notice to the agent of the insurance office of his claim under the bill of sale. The defts.' firm were adjudicated bankrupts in August following. The present bill was filed on the 30th July against the firm and the insurance company for a declaration that the plt. had a lien on the amount secured by the policy, and to restrain the company from paying to any one but the plt. The bill was subsequently dismissed as against the company, who paid the money into court, and the cause has now come on upon the hearing. Two questions are presented: First, what is the effect of the bill of sale or mortgage by Messrs. Whiteley and Co. to the plt.? And the second point only arises on the assumption that the first is decided in the plt.'s favour, and it is this: whether, having regard to the notice given under the circumstances, the money belonged to the assignees as having been, at the time an act of bankruptcy was committed by the persons who executed the deed to the plt., in their reputed ownership. The machinery having now been destroyed by fire, the question arises whether the plt. is entitled, as between himself and Messrs. Whiteley and Co., to have the amount of the policy applied in payment of the debt which remains due to him on the security. Now, at first sight, it seems consistent with a sort of natural equity and justice that there should be that right, and one naturally asks, why should the plt. have required this covenant if it was not intended that, in case the insurance was called into action, the plt., to whom the covenant was given, should have the benefit of it? That seems consonant with natural justice; and the case before Lord St. Leonards of Garden v. Ingram (sup.) was cited, in which a question, somewhat of the same kind, was decided in favour of the mort Re Tresidder, ex parte Somerville, 1 L. R. App. 21; gagees. But when we look at that case, it is 13 L. T. Rep. N. S. 350; Leeds v. Cheetham, 1 Sim. 146; Reeve v. Whitmore, 12 L. T. Rep. N. S. 724; Sadlers' Company v. Badcock, 2 Atk. 554; materially different, not only in its circumstances, but in the principle on which it was decided. In that case a lease was granted, and one term was Simpson v. Scottish Union Insurance Company, 8 L. T. that the lessee should insure against fire in the Rep. N. S. 112; 1 H. & M. 618; Hutchinson v. Wright, 25 Beav. 444; names of himself and the lessor; and that in case the premises were destroyed by fire the policy Edwards v. Martin, 1 L. R. 121, Eq.; 13 L. T. Rep. money should be applied in restoring the premises. N. S. 236; Jones v. Smith, 1 Hare, 43; Garrard v. Lord Lauderdale, 3 Sim. 1; 1 Hayes Conv. (5th edit.) 454. In that state of things the lessee mortgaged his leasehold interest, and there was no mention whatever in the mortgage-deed of the fact of the insurance, though of course there was a recital of the lease which would include a reference to the fact of The VICE-CHANCELLOR.-The plt. in this case is there being such a clause. As I have mentioned, a manufacturer of machinery, and supplied the the premises were injured by a fire, and the mortdefts., Messrs. Whiteley and Co., who carried on gagee restored them without waiting to get in the business as cottonspinners at Raistrick in York-policy money; and the lessee filed a bill to compel shire, certain articles of machinery for carrying on their business. By a bill of sale dated the 1st Nov. 1861, Messrs. Whiteley and Co., in order to secure to the plt. the price of the articles with which he had thus supplied them, mortgaged these articles to him. The bill of sale contained a clause that, during the continuance of the security, the mortgagors would keep the machinery in good and perfect working order to the satisfaction of the plt., and would, as long as any money remained owing by virtue of the security, keep the same insured from loss by fire in some good office, and that, in case of default in insuring, it should be lawful for the plt. to insure the same for 23001, and charge the premiums and duty in respect thereof upon the same machinery. The mortgaged articles, together with other stock-in-trade, were insured by the defts. for 38007. On the 16th June 1864 the defts.'mill was destroyed by fire, and the machinery was greatly damaged. The defts., the same day, executed a deed under the B. A. 1861, vesting their property in trustees for the benefit of their the mortgagor to join in authorising the office to pay the money to the mortgagee to recoup him for the money laid out. How does that case apply to this? The present is not a case of preexisting policy; nor of a mortgage of premises upon which a policy had previously been effected; nor of a covenant that the money should be applied in restoring the premises. It is the case of an assignment of a bill of sale, by way of mortgage, of machinery, and in the mortgage-deed itself there was a covenant to insure. One thing is obvious, that it is impossible to say, as Lord St. Leonards said in that case, that the benefit of the policy passed by the assignment; it could not pass, because it did not exist; and it appears to me that that case does not govern this. If the plt.'s contention can be maintained it must stand on the footing that, by reason of a covenant to insure, there is an implied covenant that the person to whom the covenant was given should bave the benefit of the insurance, and that the policy money should be applied in liquidation of his mortgage-debt. It |