Page:Harvard Law Review Volume 4.djvu/349

333 Harvard Law Review. Published monthly, during the Acadennic Year, by Harvard Law Students. SUBSCRIPTION PRICE, $2.50 PER ANNUM 35 CENTS PER NUMBER. Editorial Board. Wilfred Bolster, .... Editor-in-Chief. Guy Cunningham, Herbert H. Darling, Treasurefy David T. Dickinson, Stephen A. Foster, Louis Hicks, Carleton Hunneman, Francis C. Huntington, Ralph A. Kellogg, M. Day Kimball, James G. King, James M. Newell, Oliver Prescott, Jr., Ezra R. Thayer, Frank B. Williams. Bankruptcy of Partners. — Mr. A. Tumour Murray, in an article in the current number of The Law Quarterly Review,"^ suggests a new rule for the distribution in bankruptcy of the joint and separate estates of partners. His principal objections to the English rule are that it is artificial, being founded on no intelligible principle, and is incon- sistent with the principles of the law of partnership," and that "it is unfair in practice to the partnership creditors in cases where the partnership property is small and disproportionate with the separate estates." The Scotch rule, on the other hand, which applies the separate estates "to the payment pari passu of their respective separate debts, and of so much of the partnership debts as the partnership estate is insufficient to satisfy," Mr. Murray finds open to the opposite objection, viz., that "in practice it produces great hardship to the separate creditors ; " and further, that it is based upon the principle that the firm is a distinct person, which is inconsistent with the English conception of partnership. His own rule is a mean between these two, and is said not only to be consistent with Eng- lish law, but also to give the "fairest " practical results. As for principle, his rule is based upon the theory that as far as debts are concerned partnership property is a fund set aside as a provision against loss, and that while a partnership creditor is a creditor of each of the partners, any partner who pays out of his own pocket a partnership debt is entitled to indemnity from the common fund. In bankruptcy, therefore, let the partnership creditors in the first instance come against each separate estate pari passu with the separate creditors. Then let the separate creditors look to the joint estate for indemnity. Exactly stated, the rule is as follows : — "Apply each separate estate in payment of its separate debts pari passu with partnership debts; "Apply the partnership property in paying separate creditors their un- paid debts to an amount not exceeding the amount contributed to partner- ship debts by each respective separate estate; "And subject thereto in paying partnership creditors their unpaid debts." ^
 * Bankruptcy of Partners, 7 Law Quar. Rev. 53.