H.L. (E.)

Kendall v. Hamilton.

1879

Priestley v. Fernie (') may be mentioned. But the reasons why this must be the case are, I think, obvious. It would be clearly contrary to every principle of justice that the creditor who has seen and known and dealt with and given credit to the agent, should be driven to sue the principal if he does not wish to sue him, and, on the other hand, it would be equally contrary to justice that the creditor on discovering the principal, who really has had the benefit of the loan, should be prevented suing him if he wishes to do so. But it would be no less contrary to justice that the creditor should be able to sue first the agent and then the principal, when there was no contract, and when it was never the intention of any of the parties that he should do so. Again, if an action were brought and judgment recovered against the agent, he, the agent, would have a right of action for *indemnity against his principal, while, if the prin- [515] cipal were liable also to be sued, he would be vexed with a double action. Farther than this, if actions could be brought and judgments recovered, first against the agent and afterwards against the principal, you would have two judgments in existence for the same debt or cause of action; they might not necessarily be for the same amounts, and there might be recoveries had, or liens and charges created, by means of both, and there would be no mode, upon the face of the judgments, or by any means short of a fresh proceeding, of showing that the two judgments were really of the same debt or cause of action; and that satisfaction of one was, or would be, satisfaction of both. In the present case I think that when the appellants sued Wilson & McLay, and obtained judgment against them, they adopted a course which was clearly within their power, and to which Wilson & McLay could have made no opposition, and that, having taken this course, they exhausted their right of action, not necessarily by reason of any election between two courses open to them, which would imply that, in order to an election, the fact of both courses being open was known, but because the right of action which they pursued could not, after judgment obtained, coexist with a right of action on the same facts against another person. If Wilson & McLay had been the agents, and Hamilton alone the undisclosed principal, the case could hardly have admitted of a doubt; and I think that it makes no difference that Wilson & McLay were the agents and the undisclosed principals were Wilson, McLay, and Hamilton.

My Lords, if the view which I have taken of the facts (1) 3 H. & C., 977.

1879

Kendall v. Hamilton.

H.L. (E.)

and of the law applicable to them is correct it is not necessary to look at Wilson, McLay, and Hamilton in the posi⚫tion of co-contractors; but, looking at them in this light, I must say that the case of King v. Hoare (') appears to me to have been decided on satisfactory grounds. It is the right of persons jointly liable to pay a debt to insist on being sued together. If then there are three persons so liable, and the creditor sues two of them, and those two make no objection, the creditor may recover judgment against those two. But should he afterwards bring a farther action against the third, 516] that third may justly contend that the three *should be sued together. It is no answer to him to say that the other two were first sued and made no objection, for the objection is the objection of the third, and not of the other two. Nor is it any answer to him to say that whatever he pays on the judgment against himself he may have allowed in account with the others, because he may fairly require, with a view to his right of account or contribution, to have the identity and the amount of the debt constituted and declared in one and the same judgment with his co-contractors. If, therefore, when the third is sued, and requires that the other two should be joined as parties, the creditor has to admit that he cannot join the other two because he has already recovered a judgment against them in the same cause of action, this is equivalent to saying that he has disabled himself from suing the third in the way in which the third has a right to be sued.

It has been suggested that even assuming the case of King v. Hoare (') to have been rightly decided, the law as laid down in that case has been altered by the Judicature Acts and by the abolition of the plea in abatement. I am unable to agree to this suggestion. I cannot think that the Judicature Acts have changed what was formerly a joint right of action into a right of bringing several and separate actions. And although the form of objecting, by means of a plea in abatement, to the non-joiner of a defendant who ought to be included in the action, is abolished, yet I conceive that the application to have the person so omitted included as a defendant ought to be granted or refused, on the same principles on which a plea in abatement would have succeeded or failed. In this particular case, indeed, I observe the judgment against Wilson & McLay was obtained before the Judicature Act came into operation: and if this judgment then became pleadable in bar (according to King v. Hoare (')) by Hamilton in answer to an action against himself, I can

(1) 13 M. & W., 494.

H.L. (E.)

Kendall v. Hamilton.

1879

not see how this defence is taken away from him by the Judicature Act subsequently coming into operation.

If, then, this was the attitude of defence which Hamilton was entitled to take up in opposition to the present action, it does not appear to me that any difference is made by the doctrines of the Court of Equity with regard to partnership debts. There is no doubt that in many cases and [517 text books we find the expression that a partnership debt is in equity joint and several. This, however, is only a compendious expression, which must be interpreted with reference to what were the functions of the Court of Equity as to partnership debts. The only interposition of a court of equity with regard to partnership debts, took place in the administration of the assets, either of the partnership or of a deceased member of the partnership. Where a member of the partnership died, the debts became in the eye of a court of law the debts of the survivors; but the survivors, on the other hand, in a court of equity, had the right, as against the estate of a deceased partner, to say that his representatives should not withdraw any part of the partnership property until all the debts were paid or provided for. If, therefore, a court of equity was administering the assets of a deceased partner, it would, in order to clear his estate, ascertain his liabilities to the partnership, and for this purpose would ascertain the debts due from the copartnership at his death. From this the transition was easy to giving the creditors of the partnership a direct right, and not merely an indirect right, through the surviving partners, to come for payment against the assets of the deceased partner; and from this again the transition was easy to the expression which said that partnership debts, in the eye of a court of equity, were joint and several-not thereby meaning that a court of equity altered or changed a legal contract, but merely that the court, in order, before distributing assets, to administer all the equities existing with regard to them, would go behind the legal doctrine that a partnership debt survived as a claim against the surviving partners only, and would give the creditor the benefit of the equity which the surviving partners might have insisted on.

My Lords, this is so clearly expressed by Lord Eldon in the case of Ex parte Williams ('), that I will take leave to read his expressions, which appear to me to render unnecessary any comment on the numerous authorities which were cited on this head at your Lordships' bar. Lord Eldon says ("), “Among partners clear equities subsist, amount(1) 11 Ves., 3. (2) 11 Ves., at p. 5.

1879

Kendall v. Hamilton.

H.L. (E.)

ing to something like lien. The property is joint; the debts and credits are jointly due. They have equities to discharge each of them from liability, and then to divide 518] *the surplus according to their proportions. . . But, while they remain solvent, and the partnership is going on, the creditor has no equity against the effects of the partnership. He may bring an action against the partners and get judgment, and may execute his judgment against the effects of the partnership. But, when he has got them into his hands, he has then by force of the execution, as the fruit of the judgment, clearly not in respect of any interest he had in the partnership effects, while he was a mere creditor, not seeking to substantiate or create an interest by suit. There are various ways of dissolving a partnership-effluxion of time, the death of one partner, the bankruptcy of one, which operates like death, or, as in this instance, a dry, naked agreement that the partnership shall be dissolved. In no one of those cases can it be said that to all intents and purposes the partnership is dissolved, for the connection still remains until the affairs are wound up. The representative of a deceased partner, or the assignees of a bankrupt partner, are not strictly partners with the survivor or the solvent partner, but still, in either of those cases, that community of interest remains, that is necessary, until the affairs are wound up; and that requires, that what was partnership property before shall continue for the purpose of a distribution, not as the rights of the creditors, but as the rights of the partners themselves require; and it is through the operation of administering the equities, as between the partners themselves, that the creditors have that opportunity; as in the case of death it is the equity of the deceased. partner, that enables the creditors to bring forward the distribution." I imagine that the words "bring forward" are probably an inaccurate report; but it obviously means to insist upon the distribution.

If, therefore, this case is to be looked at as a case in which judgment has been recovered for a partnership debt against two out of three copartners, it appears to me that, on the principle of King v. Hoare ('), the judgment would be a bar at law to a subsequent action against the third copartner; and I know of no principle on which a court of equity could hold the debt to be several for the purpose of preventing such a result.

In any view of the case, therefore, I am of opinion that 519] the *judgment of the court of appeal was correct, and (1) 13 M. & W., 494.

H.L. (E.)

Kendall v. Hamilton.

1879

I have to move your Lordships to dismiss the appeal with costs.

LORD HATHERLEY: My Lords, I am of the same opinion as to the result which must be arrived at in this case. The question here is, whether or not a person who was unknown to the plaintiffs at the time they were advancing their money, as being one of the borrowers of the money, and who was acting through the agency of Messrs. Wilson & McLay, is now, in consequence of anything which has taken place. under the Judicature Act (for that was the principle of the argument at the bar) placed in a different position from that in which he would have been if that act had not been passed. If it had not been passed, I think his position would have been sufficiently clear.

Now if King v. Hoare (') is to subsist as an authorityand having stood so long I apprehend it would be difficult to shake it as an authority now-then the plaintiffs in this case having sued two of the partners and having omitted to sue the other partner, of whose existence they were unconscious (as I think the whole of the evidence goes to show), having proceeded against two partners and obtained a judgment against them, their co-contractor could not, according to King v. Hoare ('), be sued, because the debt, which was a simple contract debt in the first instance, contracted by the firm, had passed into rem judicatam under the operation of the judgment which had been obtained against the two.

My Lords, I would therefore, for the purpose of considering this case, which has been discussed by my noble and learned friend the Lord Chancellor upon the general question of agency, prefer to consider it as a simple question of partnership, in which a debt has been contracted; and I assume for the present purpose that it was originally joint, in order that we may see what remedies were at the time open to the plaintiffs, independently of death. This case not being like the numerous cases cited, in which the Court of Chancery held a partnership deed to be joint as well as several (there being no death in this case), it is obvious *that such remedy as the plaintiffs then had was en- [520 tirely at law. The Court of Chancery could offer no assistance in the case where there was a legal contract, unless there was found in that contract some element which made it inequitable that the debtor should be allowed to set up the defence now relied on. In the case of a person setting up a term of years at law the Court of Chancery can interfere by injunction, and prevent his doing so, but that case (1) 13 M. & W., 494.