tors threatened him, made his son's creditors the following offer, viz., first, to secure to the creditors a dividend of 10s. in the pound on the amount of their debts, if they would accept that composition in full discharge of their respective debts, and would execute a composition deed, to be registered in bankruptcy; secondly, the payment of the composition to be secured by the joint and several promissory notes of the debtor, W. A. White, and his father, the now defendant, William White, such notes to be made and delivered to trustees for the creditors within seven days after the registration of the deed; thirdly, the assets of the estate of the debtor to belong to the defendant, William White.

The offer was embodied in an agreement, and was accepted by the creditors, and among them by the plaintiff, who was a creditor for 2,1151., and who signed the minutes of the agreement on the 29th of November, 1867.

A deed was accordingly prepared, which was executed by the debtor and by his father on the 16th of December. But on the 17th of December the plaintiff wrote a letter withdrawing his assent to the proposed arrangement, on the ground that the balance-sheet laid before the creditors by or on behalf of W. A. White was not correct, and that the consents of the creditors had therefore been obtained by

fraud.

But the solicitors to Messrs.

White returned answer that the deed was sufficiently executed to bind non-assenting creditors, and that it would be registered forthwith, and they denied that the balance-sheet was not correct.

The composition deed was registered on the next day, the 18th of December, under section 192 of the Bankruptcy Act, 1861, and within seven days after such registration the defendant and his son made and delivered to the trustees named in the deed their joint and several promissory notes for the payment to the several creditors of the son the respective amounts due to them as the composition of their respective debts; and soon after William White proceeded to realise the assets of his son, the debtor. On the 24th of December notice was sent to all the creditors of the delivery of the notes

to the trustees. the plaintiff and one other, accepted the promissory notes and executed the deed, and the notes so accepted were paid at maturity.

All the creditors, except

In February, 1868, the plaintiff commenced an action against W. A. White, the son, for the amount of his debt, and, when the promissory notes were formally tendered to him, he refused to accept them.

The action thus brought against the son was referred to an arbitrator, and the question raised before the arbitrator was as to the validity of the deed. But the son retired from the reference, and the award was made in favour of the plaintiff, the deed being thus found to be bad and not binding on dissenting creditors, and a verdict was subsequently entered up for the plaintiff for the amount he claimed.

In consequence of this action, brought against the son, he and his father served upon the trustees a notice, dated the 7th of January, 1869, not to deliver their joint and several promissory notes to the plaintiff if he should apply for them, and on the 1st of March, 1869, the son was adjudicated a bankrupt.

On the 16th of April, 1869, the plaintiff made a demand on the trustees for the promissory notes, but, in consequence of the notice of the 7th of January, the trustees refused to deliver them, assigning as a reason the notice of the 7th of January.

On the 21st of April the plaintiff commenced another action, this time against the father, for detinue of the above mentioned promissory notes, with the usual money counts. The defendant pleaded the above facts, and the verdict obtained by the plaintiff against W. A. White on the ground that the deed was bad and not binding on dissenting creditors. He also pleaded that he was not possessed of the notes and did not detain them.

By consent of all parties the record was withdrawn, and the opinion of the Court was sought upon a Special Case. The Special Case set out, with other facts, the facts above stated, from all of which one person might have drawn an inference that the deed was bad, another that it was a good deed; but the Special Case

did not state whether the deed was to be considered valid or invalid as against dissenting creditors, neither did it reserve for the Court the usual power to draw inferences.

In the Court of Queen's Bench the argument and the judgment proceeded on the question whether the plaintiff having withdrawn his assent from the composition deed, and having taken proceedings and recovered a verdict on his original debt against W. A. White, could then, be entitled to his composition of 10s. in the pound under the terms of the deed, and to enforce his right, if he had any, to recover from the defendant the notes or their value, the notes being in the possession of the trustees and being retained by them by the direction of the defendant, and it was held by Cockburn, C.J., and Mellor, J., that, on the facts stated in the Special Case, it must be taken that the deed was a valid deed, by which the plaintiff was bound, and that he was entitled to all the advantages it conferred notwithstanding he had sued the original debtor, and that as he could get nothing out of such debtor he was entitled to succeed in his action against the debtor's surety. But Lush, J., was of opinion that there was not enough to shew that the deed was valid, and also that the plaintiff was estopped from alleging that he was bound by the deed, or consequently entitled to its benefits, and that as he had not accepted the suretyship of the defendant he could not recover in that action against him.

The Court of Exchequer Chamber reversed the judgment of the Queen's Bench on the ground that as no power was reserved to them to draw inferences, they could not decide whether the deed was a valid deed or not, and unless it were found acknowledged by the plaintiff that the deed was valid and binding on him he was estopped by the judgment he had obtained on the express ground that the deed was not valid or binding against him; that therefore he must fail so far as his action was founded on the money counts; and as to the count in detinue, as the defendant was not in possession of the notes, he could not be said to detain them, and the plaintiff must fail on that count also. The case in both the Courts

below is reported in 40 Law J. Rep. (N.S.) Q.B. pp. 12 and 163; in the report at p. 9 of that volume the Special Case is set out at length.

Error was brought to this House.

Sir J. Karslake, and Day (with them J. Murphy) for the plaintiff. The deed is a valid deed and binding on the plaintiff'; he is therefore entitled to all advantages under it. If the defendant wishes to resist the plaintiff's claim to those advantages he must make out that the deed is not a valid deed, but his whole conduct goes to shew that it is valid, especially as he has taken under it his son's, the plaintiff's debtor's, property.

The plaintiff is not estopped by anything he has done; it is true that he has obtained a verdict, but that is not enough; there must be action taken on the verdict or a judgment entered up to work an estoppel, and here there has been neither execution. judgment nor The notes being joint and several, and the amount secured by them still unpaid, the plaintiff's remedy against the father is not affected by any abortive proceedings he may have taken against the son. These notes have been made and delivered for the plaintiff's benefit. The burden of proving a failure of consideration for a bill of exchange or a promissory note lies on those who rely upon such failure. It is therefore for the defendant to prove such failure of consideration in this case; he can only do that by establishing that the deed was invalid. He cannot establish its invalidity, because the Special Case does not find that the deed was invalid, and it does find facts which tend to its validity.

The other side will rely on the fact, as alleged by them, that the notes were given in order to keep the debtor out of bankruptcy, and they will set up a pro tanto failure of the consideration for which the notes were given; but a partial failure of consideration is no answer to an action on a promissory note-Dell v. King (1). There must be a total failure, which of course in this case could not be found, for there remains the consideration of the release of 10s. in the pound of the debtor's obligations.

(1) 33 Law J. Rep. (N.s.) Exch. 47.

As to the judgment of the Lord Chief Baron, that the Court could not draw inferences from the facts stated in the Special Case, they referred to 23 & 24 Vict. c. 126. ss. 4-10.

Mr. Brown, Sir G. Honyman and Mr. Francis, for the defendant in error, were not called on.

THE LORD CHANCELLOR.-[His Lordship stated the facts, and said] The first question that arises here is as to the form of the action. It certainly appears to all of your Lordships that it was brought in a very singular form. The promissory notes were in the hands of the trustees; they had been placed in their hands, it is true, to be delivered over to the parties who should apply for them. This gentleman had originally refused to make any application for the notes. The notes remained in the hands of the trustees, and after all these proceedings had taken place against the son, then an application was made by the appellant for the notes. The parties who held them appear to me, I confess, to be in the position of stakeholders; they are stakeholders as between the son and the plaintiff in the present action. What happened was this-The father and the son together having executed the notes, and the father being dissatisfied with what had taken place in this course of proceeding against the son, gave notice to the holders of the notes not to part with them, and thereupon they declined parting with them. I should have thought that if an action could be brought at all, the proper form of action to have been adopted by the plaintiff would have been an action against the trustees for non-delivery of the notes; but instead of that he brought an action against the father in respect of this order, which it is said he gave for the non-delivery of the notes. The trustees chose to act upon that order, and to withhold the notes. The father did not ask to have them delivered back to him or to his son; he asked no such thing as that, he did not profess to be the sole owner of the notes, so as to be entitled to have a re-delivery of the notes to him; all that he said was, do not deliver them to the person who is making the present appliNEW SERIES, 41.-Q.B.

I

cation. I apprehend that in such a state of things as that he has no right to bring an action of detinue against a person who neither has the notes nor is entitled to demand them back from the trustees. see no reason why he should be considered to be in a position in which he had absolute control over the notes. And certainly nothing that has been stated of the facts in this case makes it clear to me that the trustees were his servants or his agents, so as to be in a condition to act solely on his account, so as to be able to say in a Court that what was done by them was done by him, the defendant, in the present action. He gave this order either rightly or wrongly. Whether he was entitled to give it or not, is not in that respect of consequence, because the sole question is whether or not at that time. the trustees were holding the notes as mere stakeholders, and were bound to hold them for the party entitled, but not bound to hold them absolutely for him. He gave them an order not to part with them; of course if they were simply his servants the action was properly brought against him, but if they were in any other position than that of his servants, the action was wrongly brought against him. Here was a stakeholder holding the notes, and one party said, "Deliver them to me;" the other party said, "Do not deliver them, I forbid it." The consequence is that the course of procedure should have been some mode of proceedings to bring that matter to an issue, but not I apprehend by bringing an action of detinue against the person who had not the notes at all, nor any power over them, but had simply given an order to the persons having the notes in their possession not to part with them.

Then the action takes another form. There are counts in which the notes are declared upon as if the plaintiff were the holder of them. Manifestly he was not the holder of them, they have never been parted with to him. He says it must be one of two things, either the trustees are agents holding them for me, in which case, clearly and simpliciter, I am the holder, or they must be holding them for the defendant in the action, and then I am right in bringing my action of detinue

2 Y

against him. But it appears to me that a third case may be that these gentlemen are holding the notes for the proper person, whoever he may be, who may eventually turn out to be entitled to them, but it would be absolutely inconsistent with his action of detinue to say that the defendant holds them, because, as it appears to me, the defendant is only asserting a right to stop the party who is attempting to get possession of them, and it does not on that account follow that he is the proper object of an action of detinue, and that the notes can be recovered from him, he not being in possession of them, and the plaintiff on the other hand not being in possession of them either, the true state of the case being simply that they are in the possession of these trustees who are holding the property in dispute.

That appears to me at once to be a fatal blot in this case. But there is another circumstance in the case. We ought to determine according to the view of either the one side or the other, whether or not this deed is a valid or invalid deed, assuming that the action could go on if this difficulty in the form of action did not occur. The plaintiff has strongly argued, I am here prevented by the Law of Bankruptcy from taking out execution in respect of my original debt. I cannot recover from the debtor my original debt, and that being so, although I have in fact proceeded as far as to get a verdict in another course of proceeding in asserting my original right, yet I find myself stopped in that action just upon the threshold of my obtaining the fruits of my victory, by this deed being a valid deed executed in such manner as to bind me according to the statute. Then we have to inquire whether it is or is not a valid deed. On the other hand the defendant asserts in the action that it is an invalid deed. And it is said that the one side or the other ought to prove that. It is argued on behalf of the plaintiff that the defendant's duty is to prove the invalidity of the deed. And if we had heard the counsel for the defendant, we should have heard an equally ingenious argument, insisting that the plaintiff ought to have established its validity. But I apprehend that we are bound upon the case stated, and that it is

no longer a question with us as to whether the one party or the other is bound to submit proof, but that the question for your Lordships is whether now having all the facts of the case before you, your Lordships can arrive at a complete conclusion whether the one or the other party has made that clear which ought in some form to be made clear to us. It should be made clear in some way or other whether the deed is valid or invalid. We are in a complete state of doubt and uncertainty upon it from this circumstance that simply a number of facts are stated, and the common precaution has not been taken of allowing the Court to draw inferences from the facts so stated. The statute which was referred to just now with reference to proceedings in error, only says this-that the Court of Error may find any inferences which the Court below ought to have found. That only means that when the parties have entrusted the Court below with the duty of drawing inferences, then the Court above may draw inferences. If the Court below has drawn inferences which the Court above thinks erroneous inferences, as drawn from the statements, the Court above may correct the inferences, not feeling themselves bound by the inferences drawn by the Court below. And they find such inferences as they think proper and just from the whole case stated in the case. But when the Court below has no power to draw inferences, the Court above is just in the same position. It has no greater power than the Court below in that matter. It has simply the power of correcting an imperfection in their decision which may have arisen from an erroneous exercise of the power given to the Court below. So that we are left in a state of complete uncertainty with regard to the condition of this deed. The whole of this unfortunate litigation and the expense, inconvenience and annoyance which it has caused to all parties, seems to have arisen from the failure to take a very simple course in the first instance, for some reason or other it is impossible to know why-whether it was a mistake or whether there was some purpose in it. The plaintiff has not gone to the very tribunal which could have

administered complete relief to him if he be right in all respects, namely, the Court of Bankruptcy, which has complete power over the trustees holding these promissory notes-which has complete power to deal with them as if they were assignees in bankruptcy, and which therefore can administer justice between all parties, not only as between this single creditor on the one hand, and the father and the son on the other; but as between this creditor on the one hand, the father and the son on the other hand, and the whole body of creditors in the third instance. It was pressed upon us very much in the argument, that what is wanted to bind all the creditors in this transaction, is some such power as the Court of Bankruptcy has. That Court having all the parties before it, would be able to say as regards all the creditors, not only these two who are in litigation, but all of them, what the rights of each and all of them were, under this instrument which has been here executed.

It appears to me, therefore, my Lords, that the only mode of arriving at justice in this case, or rather of enabling the parties to arrive, if they think fit, at justice in the case, will be for your Lordships to affirm the judgment of the Court below, and dismiss the appeal as usual with costs; and to say that this affirmance shall be without prejudice to any application which the appellant may be advised to make to the Court of Bankruptcy with respect to the matters in question.

LORD COLONSAY concurred.

LORD CAIRNS.-This case has been argued with very great ability both by Sir John Karslake and by Mr. Day, and they certainly have in many respects placed it to my mind in a more satisfactory position than it seems to have assumed in the minds of some of the learned judges in the Court below. They have contended that supposing you have got a creditors' deed which is valid under the Bankruptcy Act of 1861, a creditor, who has not assented to the deed but who is bound by the operation of the words of the statute, may bring an action for his original debt, in order to test the validity of the deed, and

that the mere bringing of the action will not forfeit any benefits to which he may be entitled under the deed. Then they have contended, that if the matter goes beyond the bringing of an action, and if it results in a verdict or judgment which decides that the deed is valid, that verdict or judgment will not disentitle the creditor to any benefits to which he would be entitled under the deed. And they have further contended, that if the action should result in a verdict or a judgment not affirming the deed, but proving that the deed was invalid, and if the creditor should think afterwards that that was a verdict or judgment which could not be sustained as against the body of creditors at large, and that notwithstanding that verdict or judgment, the deed is valid, still he ought not to be precluded from asking for the benefits to which he is entitled under the deed.

Now, it is not absolutely necessary in this case to decide these questions which have been thus argued with great ability, and I do not desire to be taken as expressing any final opinion upon them, but I am very much disposed to concur with all those arguments. But the difficulties which we have to encounter in the present case, before we can arrive at a decision upon these arguments, are these. In the first place, we have an action of detinue brought for the recovery of these promissory notes, not against the person or persons who hold the promissory notes, but against another person who has given notice to the holders of the notes not to part with them. The persons who hold the notes are clearly not his servants or agents, they are independent persons, trustees appointed in medio between him and the creditors under the deed-and his notice may be right or it may be wrong, but it appears to me to be impossible to say that the possession of the notes by the trustees is the possession of the defendant in the action, and that therefore the defendant is liable to an action of detinue for detaining these notes which are not in his possession.

I am sorry to say that this appears to me to be an absolutely fatal impediment in the way of the plaintiff. I think if your Lordships were to disregard that