Page:Harvard Law Review Volume 1.djvu/341

  bills of Bracken & Co., and had received from the latter securities against their acceptances. First Brickwood & Co., then Bracken & Co. became bankrupt. The holders of acceptances had proved their debts under both commissions, and the assignees of the drawers’ estate sought to recover from the acceptors such surplus as would remain from the proceeds of the securities after payment of the dividends due the several bill-holders. The latter petitioned to have the funds applied in discharge of the acceptances on the ground that they were held not merely for the personal indemnity of the acceptors, but for the ultimate payment of the bills. The court, while emphatically denying that the bill-holders had any personal claim to the securities, decide that where two bankrupt estates are being administered, since it would be inequitable for the one to keep the securities and equally inequitable for the other to get them back (as the latter only had a right to them on tendering their value or on relieving the acceptors’ estate of all liability), the only way to adjust the equities between the two estates is to order the one in possession of the securities to apply them in discharge of the bill-holders’ claims. “Accidentally another person gets an advantage for which he had not stipulated, by reason of the adjustment of equities between the parties.”

In order to bring a case within the rule of Ex parte Waring, the contract between the drawers and acceptors must be still in existence and incapable of alteration. Hence if only one of the parties be bankrupt, and the other’s estate, though insolvent, has not been brought under any forced administration, the rule does not apply. “Where there is no right of double proof, whatever may be the equities as between the two firms that are insolvent, I cannot see how there can be any difficulty in settling those equities between the parties without the necessity of giving to the bill-holder, who is simply a creditor without any security, the security which he has never bargained for.” The case of Powles v. Hargreaves shows that the two estates need not be bankrupt in the technical sense, but that the rule is properly invoked where they are being wound up through the medium of a court of chancery. It is there also expressly decided that the rule applies, whether the