IMAGE EVALUATION 
 TEST TARGET (MT-3) 
 
 1.0 !i: 
 
 I.I 
 
 3 "^ 
 
 25 
 2.2 
 
 ^ B:a lllllio 
 
 
 1.8 
 
 
 1.25 
 
 1.4 
 
 1.6 
 
 
 ^ 
 
 6" — 
 
 
 ► 
 
 # 
 
 <^ 
 
 /2 
 
 ^;; 
 
 
 
 uy% 
 
 jnic 
 Scmces 
 Corporation 
 
 23 WEST MAIN STREET 
 
 WEBSTER, N.Y. 14580 
 
 (716) 872-4503 
 
 V 
 
 ,v 
 
 % 
 
 V 
 
 ep 
 
 
 <^ 
 
 
 6^ 
 
^^^- 
 
 CIHM/ICMH 
 
 Microfiche 
 
 Series. 
 
 CIHIVI/ICIVIH 
 Collection de 
 microfiches. 
 
 Canadian Institute for Historical Microreproductions / Institut Canadian de microrepioductions historiques 
 
Technical and Bibliographic Notas/Notat tachnlqua* at bibliographiquaa 
 
 Tha Instituta has attamptsd to obtain tha beat 
 original copy availabia for filming. Faaturas of this 
 copy which may ba bibliographically uniqua. 
 which may altar any of tha images in tha 
 reproduction, or which may significantly change 
 the usual method of filming, are checked below. 
 
 n 
 
 n 
 
 n 
 
 □ 
 □ 
 
 □ 
 
 n 
 
 Coloured covers/ 
 Couverturs de couieur 
 
 Covers damaged/ 
 Couverture endommag^a 
 
 Covers restored and/or laminated/ 
 Couverture restaurie et/ou palliculAe 
 
 Cover title missing/ 
 
 La titre de couverture manque 
 
 Coloured maps/ 
 
 Cartes gingraphiques en couieur 
 
 Coloured ink (i.e. other than blue or black)/ 
 Encre de couieur (i.e. autre que bleue ou noire) 
 
 Coloured plates and/or illustrations/ 
 Planches et/ou illustrations en couieur 
 
 Bound with other material/ 
 ReliA avec d'autres documents 
 
 Tight binding 'nay cause shadows or distortion 
 along interior margin/ 
 
 Lareliura serree peut causer de I'ombre ou de la 
 distorsion le long de la marge int^rieure 
 
 Blank leaves added during restoration may 
 appear within the text. Whenever possible, these 
 have been omitted from filming/ 
 II se peut que certaines pages blanches ajout^es 
 lors dune restauration apparaissent dans le texte, 
 mais, lorsque cela 6tait possible, ces pages n'ont 
 pas iti filmies. 
 
 Additional comments:/ 
 Commentaires suppl^mentaires; 
 
 L Institut a microfilm^ le meilleur exemplaire 
 qu'il lui a *t* possible de se procurer. Las details 
 de cet exemplaire qui sont peut-dtre unicjues du 
 point de vue bibllographique, qui peuvent modifier 
 une image reproduite, ou qui peuvent exiger une 
 modification dans la mAthode normale de filmage 
 sont indiquAs ci-dessous. 
 
 r~| Coloured pages/ 
 
 Pages de couieur 
 
 Pages damaged/ 
 Pages endommagias 
 
 Pages restored and/oi 
 
 Pages restaur^es et/ou pellicul^es 
 
 r~~l Pages damaged/ 
 
 I I Pages restored and/or laminated/ 
 
 E Pages discoloured, stained or foxed/ 
 Pages ddcolor^es. tacheties ou piqu^es 
 
 □Pages detached/ 
 Pages c!6tachees 
 
 QShowthrough/ 
 Transparence 
 
 int varies/ 
 inigale de I'lmpression 
 
 □ Quality of prir 
 Quality inigal 
 
 Includes suppi 
 
 Comprend du materiel suppiementaire 
 
 Only edition available/ 
 Seule Edition disponible 
 
 |~n Includes supplementary material/ 
 r~n Only edition available/ 
 
 □ Pages wholly or partially obscured by errata 
 slips, tissues, etc.. have been refilmed to 
 ensure the best possible image/ 
 Lea pages totalement ou partiellement 
 obsrurcies par un feuillet d'errata, une pelure, 
 etc., cnt iti film^es i nouveau da facon i 
 obtenir la meilieure image possible. 
 
 This item is filmed at the reduction ^atio checked below/ 
 
 Ce document est Mlm^ au taux de reduction indiqud ci-dessous. 
 
 IPX 14X 18X 22X 
 
 I I I I I I I I I I I I I 
 
 26X 
 
 30X 
 
 12X 
 
 16X 
 
 20X 
 
 24X 
 
 28X 
 
 32X 
 
ailf 
 
 du 
 
 difier 
 
 une 
 
 lage 
 
 Th« copy filmed h«r« hat b««n rat^roducad thanka 
 to tha ganai-oaity of: 
 
 Dcpartnwnt of Rare Books 
 
 and Spacial Collectioni, 
 
 MoGill Univenity, Montreal. 
 
 Tha Imagaa appaaring haro arm tha boat quality 
 poa^lblo conaidarinfi tha condition and lagibiilty 
 of tha original copy and in koaping with tha 
 filming i;on tract spaciflcatlons. 
 
 Original copiaa in printad papor covars ara fllmad 
 beginning with tha front covar and anding on 
 :ha laat paga with a printad or iliuatratad impraa- 
 aion, or tha back covar whan appropriate. All 
 othar iginal copiaa ara fllmad beginning on the 
 firat paga with a printad or iliuatratad imprea- 
 alon. and anding on the !u8t paga with a printad 
 or iliuatratad impraaaian. 
 
 The laat recorded frame on each microfiche 
 ahall contain the symbol —^^ (meaning "CON- 
 TINUED"), or the symbol T (meaning "END"), 
 whcchaver appliee. 
 
 L'exemplaire film4 fut reproduit grice i la 
 ginAroait* da: 
 
 Department of Rare Books 
 
 and Special Collectioni, 
 
 McQill Univerfity, Montreal. 
 
 Lea imagea suivantae ont tit§ raproduitea avec le 
 plua grand soin. compta tenu de le condition et 
 de la nenet* de Texemplaira film*, at «n 
 conformiti avec lea conditions du contrat de 
 fllmage. 
 
 Lea axemplairee originaux dont la couverture en 
 papier oat imprim^e sont fllmte en commenpant 
 par le premier plat at an tarminant soit par la 
 darni^re page qui comporte une cmpreinte 
 d'Impreeaion ou d'illustration, soit par !e second 
 plat, salon le eas. Toua lee autrea axamplairea 
 originaux sont fllmis an comnancant par la 
 premiAre page qui comporte une amprainte 
 d'Impreeaion ou d'llluatration at an tarminant par 
 la darnlAre page qui comporte une telle 
 empreinte. 
 
 Un dee symbolea suivants apparaitrs sur la 
 demlAre image de cheque microfiche, seion le 
 caa: le symbole — *> signifie "A SUIVRE", le 
 aymbole TT signifie "FIN". 
 
 Maps, platea. cnarta. etc.. may be filmed at 
 different reduction ratioa. Thoae too large to be 
 entirely included in one exporure are filmed 
 beginning in the upper left hand corner, left to 
 right and top to bottom, aa many frames aa 
 required. The following diagrama illuatrata the 
 method: 
 
 Lee cartea, planchee. tableaux, etc.. pauvent itra 
 film4e A dee taux de rAduction diffirents. 
 Lorsque le document eat trop grand pour itra 
 reproduit en un saul ciich*. il eat filmi i partir 
 da I'angie supAriaur gauche, de gauche d droite, 
 at de haut en baa, an prenant le ncmbre 
 d'imegea n^casaeira. Lea diagrammea suivants 
 illuatrent la mithoda. 
 
 ata 
 
 ilure. 
 
 _j 
 
 2X 
 
 1 2 3 
 
 1 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 

 >} 
 
 r^ 
 
 BROWN, GILLESPIE & CO.'S 
 
 K/EFXj"Z" 
 
 AND LEGAIi OPINIONS ON TIIEIE CASE 
 
 M' ■ ^y^' 
 
 WlTu 
 
 URl 
 
 KERE, BROWN & MACKENZIE. 
 
 1870. 
 
 •• 
 
 
k'o 
 
 Mc« t K<?v-vane 
 
 i 
 
 Pi 
 
i 
 
 ft. 
 
 Messrs. Kerr, Brown & McKenzie, having 
 thought fit to bring before the public, in the shape 
 of a pamphlet, a correspondence between our respec- 
 tive firms, arising out of their endeavour to become 
 preferred creditors on our estate, at the time of our 
 suspension, we have no alternative but to reply in 
 the same manner, although we had hoped that the 
 public would not have been troubled with a dispute 
 m which it can take but little interest. 
 
 We would not h vVe taken any notice of their 
 publication, had it contained simply the correspond- 
 ence between us, as we should have been quite content 
 to abide by the verdict of public opinion, grounded 
 on its perusal, but inasmuch as Messrs. K., B. & McK. 
 have interspersed it with comments of their own 
 and correspondence with parties to whom they have 
 appealed for support, we have merely to ask those 
 who peruse it, to form their judgment on the true 
 merits of the case, ap irt ^rom Messrs. K. P. & McK's 
 comments or correspondence with their friends, as 
 these are based on erroneous premises and have 
 nothing in them bearing on the legal points of the 
 dispute. We, therefore, consider it quite unnecessary 
 to enter into any elaborate vindication of our actions 
 or motives, or to publish the opinions of merchants 
 and others, approving of the course we have pursued, 
 as we will not be parties to the extension of this 
 controversy by dragging in others, nor does the 
 position we have taken necessitate the leanino- on 
 the testimony of our friends. * 
 
 Great stress is laid upon Mr. Blake's opinion upon 
 an A. B. C, case, submitted to him, but this case does 
 not fully state the facts necessary to decide the ques- 
 
The answers Mr. Blako has given to the questions 
 proposed to hini, arc most probably oorrect as far as 
 they go, but neither in uur opinion or iii that of our 
 counsel, do they cover the ground. 
 
 For our guidance, we laid the actial facts of the 
 case beiore several eminent counsel, whose opinions 
 are herewith aj)pended. 
 
 We adhere to tlie intention expressed in our letter 
 of I'lnd March last, to divid(» the sum in question 
 amongst^ our creditors, and are deternined that 
 Messrs. K. 13. & McK. shall not be paid 20s in the C 
 whilst our other creditors only get a dividend. 
 
 BROWN, GILLESPIE & CO. 
 Hamiltox, 31st Oct., 1870. 
 
 Hamiltox, Feby. 7th, 1868. 
 MESSRS. BROWX, GILLESPIE, k CO. 
 Dear Sirs : 
 
 Referring to the conversations we have had in 
 regard to the position of the note for $10,000 made 
 by your firm and endorsed by Kerr, Brown & Mac- 
 kenzie, and one half of which would, but for your 
 suspension, have been paid by each firm. We are 
 clearly of opinion that the present holders of the note 
 are entitled to rank on your estate for the full 
 amount, and to receive dividends thereon, and that 
 only in the event of the dividends exceeding the 
 half of the amount of the note, which, under the ar- 
 rangement between you and Kerr, Brown & Mac- 
 kenzie, you were to pay ; will your estate be entitled 
 to call on them to make good any such excess. 
 
 
If the note is retired by Kerr, Brown & Macken- 
 zie, they of course can rank on your entate onlv for 
 the amount which niioukl have been paid by yoia. 
 
 Yours truly, 
 
 BURTON & BRUCE. 
 
 Hamilton, April 13th, 1870. 
 MESSRS. BROWN, GILLESPIE & CO., 
 
 Hamilton. 
 
 G^^ntlemen : 
 
 1 understand that you desire my opinion on the 
 i'niVi^ hereir. stated,' as to the rights of Kerr, Brown & 
 McK*>nzie to rank on the estate of Brown, Gillespie 
 t- ih , in reirpect of the note for $10,155, mentioned 
 below. The facts are as follows :— 
 
 1. In the autumn of 1867, Kerr, Brown &McKen- 
 zie and Brown, Gillespie & Co., jointly, Ijought certain 
 sterling exchange from the Bank of Montreal, 
 amounting (in round figures) to |30,000 in value, 
 which they divided equally between them, the Bank 
 received from these firms, in payment of this exchange 
 Brown, Gillespie & Co.'s three notes for even amounts, 
 payable to Kerr, Brown & McKenzie at three, four, 
 and five months, respectively ; the first of these notes 
 was paid in full by Brown, Gillespie & Co., the second 
 by Kerr, Brown & McKenzie, and the third for 
 $10,155, (the note in question) by agreement between 
 these two firms, was to have been met by each firm 
 paying half thereof, when due. The $10,155 note 
 fell due after the date of the composition deed below 
 mentioned, and was then held by the Bank of Mont- 
 real. 
 
2. Korr, Brown & McKonzio wore also creditorn of 
 Brown, (lillespic & Co., at the date of the composition, 
 tor $GGt) 32, in rt-spoct oi" other transactions. 
 
 3. Brown, Gillespie & Co became emharransed in 
 their afiairs, and suspended payment in the end of 
 December, 1807, ami made an offer to their creditors, 
 the terms of which are embodied in a composition 
 deed, dated 10th Kel)ruary, 18G8, wliich is expressed 
 to be made between Brown, (jJillespie & Co. and all 
 their creditors, and if need be, to ojicrate under the 
 provision-^ <)f the Insolvent Act, and the creditors of 
 Brown, Gillespie & Co. thereby *' agree to accept a 
 "composition of lis Gd in the £, payalde at G, 12, 
 "and 18 months, in discharge of nnd from all claims, 
 " demands, and whatsoever, which they have a claim 
 "against them (Brown, Gillespie & Co.) or their 
 " estate, whether due, or accruing due." 
 
 4. Brown, Gillespie & Co. prepared their statement 
 of assetw and liabilities, prior to the execution of the 
 composition deed, showing this |] 0,155 note then 
 current, as a liability against the firm for one-half of 
 that sum, but learning that Kerr, Brown & McKenzie 
 contended that they could, with the assistance of or 
 in the name of the i3ank of Montreal, rank for $10,155 
 on this note ; they consulted Messrs. Burton & Bruce, 
 who were the legal advisers of both firms, and who 
 gave their opinion by letter dated 7th February, 18G8, 
 which states tiiat the then holdersof this note could rank 
 for $10,155 on this note, if it remained their property. 
 Brown, Gillespie & Co., being informed that Kerr, 
 Brown & McKenzie had deposited collaterals with the 
 Bank of Montreal, and so induced that Bank to agree 
 to hold the note, altered their schedule shewing the 
 full $10,155 as a liability of their estate, naming 
 
 (£ 
 
 ie 
 
It ti.ev (lid MS Hiniply m ft^Hiimed compliimcc with 
 
 which l.a.l happened, uiid they never agreed with 
 Kerr Bnnvn & MeKen/.ie, to rec.jrni-/.,. titen. a« the 
 creditors (or m,\r,r,, mdesH U-gally «, ,ntitl'.d „n 
 the con rary Urown, Gillenpie & Co ntill objected to 
 thi« ranking, while Kerr, Brown & McKenzie insisted 
 o It as their strict legal right, an.l in tliis position of 
 a lairs Kerr, Brown & M..Ken.ie signed thi con.pos"- 
 tion deed only, but not the statement, and no amount 
 iH set opposite their names or that of any other credit- 
 ors as amounts for wliidi they were creditors. 
 
 G. At the meeting of Biwn, Gillespie & Co.'s 
 creditors, held on lOtli Feb'y, 1868, these facts were 
 stated, and subsequently, objection was made to the 
 raniiing of Kerr, Brown & McKenzie for tlie $10 155 
 note, and inspectors were appointed at this incetin-' 
 to examine Brown, Gillesiuo & Co.'s statement. °' 
 
 Before these inspectors made their reports, Kerr 
 Brown & McKenzie retired the ?10,155 note from the 
 Banit of Montreal Subsequently the inspectors made 
 their report, which, after stating the ofier made to 
 be a fair one refers to this $10,153 note transaction 
 m these words : — 
 
 •' Since the meeting of creditors on the I'Jth inst 
 
 .< «i n 1™ !"^.°f^?u° f ''"''**'"■ *'"' ^"""'^ ■•"luced from 
 ^l|flO,]od to half that amount, the committee are of 
 
 • opinion that the amount thus saved to the estate, 
 
 < I°"i xu °* ''° *"^'"S <" «l'«ng« in the total divi- 
 
 • (lend, that It should not render any now proposition 
 iiGCGSStiry, 
 
 6. The deed was subsequently assented to by all 
 
8 
 
 Brown, G'llt'Hpu' & Co.'h creditors without procecdiugs 
 in inHolvcncy. 
 
 7. The creditors of Brown, GilleHoio & Co. wcro 
 willing* to accept, a couhmoiiuho from tnoin at the latc 
 muiied, the objection nas to Kerr, Brown & McKcn- 
 zie obtainin^r a preference over other credi torn. 
 
 8. The queHtions anked are : 
 
 (I.) Could the Bank of Montreal rank on Brown, 
 GillcHpie <fe Co., in inHolvency, for the full aniouiit of 
 J10,15rM 
 
 (II,) Under the al)0ve factH, if the ^10,155 note 
 wa« ranked f(»r in full on Brown Cfilienpio & Co.'s 
 estate, could Brown, Gillespie c^.c Co.'s estate have 
 recovered from Kerr, Brown tfe McKenzie in insolv- 
 ency or othewise, any sumn paid in exc^'ss of lis Gd 
 in the £ on the half of the $10,155 note; in fact 
 what were the strict legal rights of Kerr, Brown & 
 McKenzie and Brown, GilIeHi)ie ct Co.'s estate respec- 
 tively, in regard to this note ? 
 
 9. As to the first question : 
 
 It is clearly settled, that upon tL*^ insolvency of 
 any or all the parties to a note, the bona fide holder 
 of the note can rank for the full amount on the estate 
 of each of the insolvents, until he has received his 
 full claim : there is not the shadow of doubt as to 
 this ; it has been law ever since there was a Court of 
 Bankruptcy. But this right of ranking is a rule of 
 convenience adopted for the distribution of insolvent 
 estates, it is the right of the holder of the note only, 
 and in no way affects the rights of the parties to the 
 note, as between themselves: for instance, it the 
 estate of the maker and endorser were both in insol- 
 
D 
 
 veiic) uiul the iimkcr cil tl v nolo wtTo r<Mlly only an 
 iiannnncxlution makor. ho or hin iuHolvont erttntc 
 would, on thy hill Iumul jmid, either by the mrker 
 direct or by the dividendn, {i.e. : my 11h iVom nuiker'8 
 e«tnte und lO.s iVoni the endoiMern) he entitled to 
 recover IVoin the estate of the endorner, all further 
 t'.ividends coming Ironi the en<lorHcr'« estate, asHura- 
 ing that it was not exhausted hv the pavnient of the 
 lOs dividend. 
 
 On the facts sta^-'i it was Keir, Brown & Mc- 
 Kenzie's duty, as ) ween tlieui and the Bank of 
 Montreal, to have [mid tne note in full when <luc 
 in discharge of th'Mf lial)ilitv' as endorsers, and m 
 bet\yeen Kerr, Brovn tfe McKenzie and Br wn, Gil- 
 lespie <fe Co., it was Kerr, Brown cir; McKf .'; j's dutv 
 to have paid iialfid' the note, if therefore Kerr, Brown 
 & McKenziekept theiragreenient either with the I^ink 
 or Brown Gillespie tfe Co., no dillicuUy could have 
 iirisen, but if in violation of th"ir agreement and 
 with a view to procure the Bank of Montreal to rank 
 for their benefit for 110,155 in full, Ker., Brown & 
 McKenzie in pursusnice of this plan with tlie consent 
 and agreement of the Bank of Montreal deliberately 
 abstained from paying either the wboleor half of the 
 note but lodged collaterals for it witb the nnder- 
 standing and intention on their part, and that of the 
 Bank, that the Bank of Montreal shculd in the 
 interest of Kerr, Brown Sz McKenzie, rank for the 
 full rrn.unt ji the $10, 155 note. I think it would l^e 
 fairly open to contend that the ]5ank of Montreal 
 were not the bona-lide holders of the note, and 
 that they could stand in no better position than Kerr, 
 Brown & McKenzie. and I think such .rould be the 
 decision of the courts. 
 
10 
 
 In fact, ■ Kerr, Brown & McKcnzi'j never were 
 creditors of Brown, Gillespie ct Co. for $10,15') and 
 they could not by deliberiitely breaking their own 
 contracts, as above stated, directly or indirectly rank 
 on Brown, Gillespie & Co. for tliat sum. A bona- 
 lide holder of the bill could alone do so, and what is 
 stated as to the right of ranking of the Bank of 
 Montreal would <tpply to any persons to whom the 
 note was transferred with notice. 
 
 10. As to the second (question 
 
 The ansv/er to the first (juestion shews to a great 
 extent the rights of the parties and how far they 
 could be affected by the Bank of Montreal or those 
 claiming, as indorsers of the note. 
 
 Kerr, Brown & McKenzie were bound by the 
 composition deed to accept the composition thereby 
 fixed, on whatever was the true legal amount of the 
 demand which they could make on Brown, Gillespie 
 & Co., and they could not evade this by refusing to 
 take up the $10,155 note. 
 
 They never were the creditors of Brov/n, Gillespie 
 & Co. for $10,155 on the note in question, what took 
 place as to changing the figures in the statement did 
 not make them creditors for $10,155, and indeed if 
 Brown, Gillespie & Co. had been acting in collusion 
 with Kerr, Brown & McKenzie and endeavouring to 
 make them creditors for $10,155 they could not have 
 done so. Any creditor could, without difficulty, cut 
 down Kerr, Brown & Mckenzie's claim to its true 
 figure. 
 
 The statement should luue shown the Bank of 
 Montreal creditors for $10,155, and Kerr, Brown & 
 
11 
 
 1» 
 
 
 McKenzie liable lor half of this sum, and so left the 
 balrnce as first stated. As between the two firms, 
 Kerr, Erown cfe McKeirzie were bound to pay off half 
 of this $10,155 note, and if they failed to keep this 
 engagement and Brown, Gillespie & Co. had to pay 
 any part of what Kerr, Brown <Sz> McKenzie should 
 have paid or anything beyond the composition agreed 
 on. Brown, Gillespie & Co., or their assignee, could 
 have maintained a suit against Kerr, Br* wn & 
 McKenzie to recover the amount ^o paid, and this 
 without paying the §10,155 in full. The action 
 would be founded on the agreement between the two 
 firms, each to pay half the note, and not on the Bill 
 itself. Indeed we are strongly inclined to think that 
 immediately on Kerr, Brown & McKenzie making 
 default in payment of the $10,155, Brown, Gillespie 
 & Co. could have sued them and recovered the half 
 of this amount on the principal that the agreement of 
 Kerr, Brown & McKenzie was to pay off a liability 
 and not merely to ii demnify Brown, Gillespie & 
 Co. Brown, Gillespie & Co would have been bound 
 to apply the amount so recovered in payment of the 
 110,155 note. 
 
 From what is stated in answer to the first question 
 it is apparent that Kerr, Brown & McKenzie's plan 
 of securing their debt in full, by having the Bank of 
 Montreal rank for the $10,155, would necessarily fail. 
 If Kerr, Brown & McKenzie were merely passive, and 
 letthinj]^s take their ordinarv course, for in that event 
 the Bank of Montreal would either have sued Kerr, 
 Brown & McKenzie or made them pay in full the 
 balance after receiving Brown, Gillespie & Co's. divi- 
 dend (assuming that the Bank would wait 18 months 
 for this purpose), and the moment the Bank of Mon- 
 treal were paid off by Kerr, Brown & McKenzie, then 
 
12 
 
 all difficulticH, caused by tli(» note being outHtandiiip; in 
 the bands of* a creditor, vani«li, and Kerr, Brown & Mc- 
 Kenzie would simply bo creditors of Brown, Gilles- 
 pie & Co. for half the amount of the note on which 
 . they had agreed to accept a composition. 
 
 The note therefore could never, in ordinary course 
 of events, be outstanding in the hands of a creditor 
 for any length of time, unless the creditor and Kerr, 
 Brown & McKenzie colluded for the purpose of aiding 
 Kerr, Brown k McKenzie to violate their agreement 
 by receiving a dividend on §10,155, when only half 
 of this sum was due ; and if there was this collusion, 
 then we think the ranking Avould be reduced to the 
 real sum for which Kerr, Brown <fc McKenzie were 
 creditors of Brown, Gillespie & Co., otherwise it would 
 be allowing Kerr, Brown & McKenzie to take advan- 
 tage of their own wrong in not keeping their engage- 
 ment, and thereby receiving more than othe^' creditors ; 
 but the law will not permit this to happen. 
 
 Brown, Gillespie & Co., or their assignee, and Kerr, 
 Brown & McKenzie, had a right at any time to pay 
 or •!.ake up the note from the Bank of Montreal, or 
 whoever they transferred it to, and this right could 
 be enforced by suit. 
 
 So long as the proper majority of creditors in num- 
 ber and value agreed to accept a composition from 
 Brown, Gillespie & Co., it w^iuld be quite immaterial 
 whether Kerr, Brown (Sl McKenzie signed the com- 
 position deed or not, it would -be equally binding on 
 thorn whether the}' executed it or not. 
 
 I have not entered into the question as to how far 
 it was likely the Bank of Montreal would assist one 
 creditor over others, if a statement o^ the faets were 
 
 »4* 
 
 

 :d 
 
 laid before the Bank ; because thid is merely a ques- 
 tion of whether Kerr, Brown & McKenzie or Brown, 
 Gillespie & Co., and their creditors, had the most in- 
 fluence with the Bank, and is of no consequence as 
 affecting the legal rights of the parties. 
 
 I am of opinion that no member of the firm of 
 Kerr, Brown & McKenzie could, as holder of the note, 
 stand in a better position than the firm itself, other- 
 wise there would be a violation of the principle that 
 a release by or to one of several joint contractors enures 
 to the benefit of the rest. 
 
 Yours truly, 
 
 EDWARD MARTIN. 
 
 Mr. Martin at the request of Brown, Gillespie 
 & Co., forwarded Mr. Blake s and his own opinion to 
 the Hon. J. J. C. Abbott, of Montreal, the framer of 
 the Insolvency Act, and the following is his reply : 
 
 Ottawa, 28th April, 1870. 
 EDWARD MARTIN, ESQ., 
 Hamilton, 
 
 Dear Sir : 
 
 I have to apologize for not sooner replying to 
 the questions submitted to me in your favor of*4th 
 instant, but an extreme press of business has pre- 
 vented me from doing so. I think it hardly neces- 
 sary to reply in xtenso to the questions contained 
 in the case submitted to me, as I concur in nearly all 
 that you have said on the subject. The only point 
 
 the Bank of Montreal, to rank for the full amount of 
 
1! 
 
 the note. I find diflicultv in conchulinir that it i.s 
 deprived oftlie right of ranking for the full amount 
 ^y the fact ol Iiavnig received securities from Kerr 
 Brown & McKenzie, in consideration of doing so— even 
 though made fully aware of the motives of that firm 
 lor making such an arranoement. I should consider the 
 I3ank only exercising its legal right in ranking, and 
 should think that its reasons for exercising that rio-ht 
 could not he inquired into. With us the firnf of 
 Brown, Gillespie & Co. would have the right of pav- 
 ing the Bank in full the one half of the debt, asbeincr 
 due by Kerr, Brown & Mackenzie, and 8s. 6d. in the 
 t on the balance, as being the amount which that 
 hrm agreed by the composition deed to lose, and then 
 to claim from the Bank upon payment of the compos- 
 ition on their own half of the note, the securities 
 deposited by Kerr, Brown & McKenzie, subject to 
 the obligation to account to that iirm for any surplus 
 after recouping themselves for half the debt, and 8s 
 6d in the £ on the other hdf. Or they could with us 
 allow the Bank to rank for the whole \amount of the 
 note and claim on Kerr, Brown & Mackenzie for the 
 dividend appropriated to their half, and if that firm is 
 solvent, this course would appear to be the most 
 simple. 
 
 But as 1 understand the note to have been retired 
 by^ the firm of Kerr, Brown & Mackenzie, or one of 
 Its members, the difficulty seems to me to disappear. 
 I do not think that the mere fact that a third party 
 paying and procuring a subrogation from the Bank of 
 Its rights upon the note had a knowledge of the cir- 
 cumstances would prevent his exercising the same 
 remedies that the Bank could. But if such third 
 party were himself bound to indem.iiifv Brown, Gil= 
 lespie & Co. the case would be quite different. If as 
 
15 
 
 it it is 
 iniount 
 : Kerr, 
 -—even 
 it firm 
 iei the 
 g, and 
 t right 
 inn of 
 f pay- 
 ^ being 
 in the 
 that 
 d then 
 )mpos- 
 arities 
 ect to 
 arpliLs 
 md 8s 
 ith us 
 of the 
 T the 
 irm is 
 most 
 
 3tired 
 ne of 
 )pear. 
 party 
 .nk of 
 J cir- 
 same 
 third 
 Gil= 
 If as 
 
 .seems to be admitted, Kerr, Hrown cS: Mackenzie are 
 themselves l)ound to piiy one half of the note, they are 
 equally ]>ound jointly and sevcrallv to protect the 
 insolvents from bel -.• ranked upon 'for that half, and 
 as they have accepted the comi)osition, the fact that 
 they are obliged to pry a part of the other half, does 
 not seem to me to affect the (luestion. The insertion 
 of Kerr, Brown & Mackenzie; a.; creditors for the full 
 amount of the note, is an unfortunate circumstance, 
 but in my opinion docs not perclude the ins'olvents 
 iroin proving the facts, iind placing Kerr, Brown & 
 Mackenzie in their correct legal position. 
 
 I might therefore sum up mv views of the matter 
 thus : I think if the Bank had retained the note it 
 might have ranked for the full amount of it, but 
 might have been compelled to give to Brown, Gil- 
 lespie & Co. the bcneiit of the securities it held to the 
 extent which Brown, Gillesj^ie & Co. might pay, above 
 the m-oper liability of that firm, under its agreement 
 with Kerr, Brown & Mackenzie, and under the com- 
 position deed. But as the note has been retired by 
 Kerr, Brown & Mackenzie, or by one of the members 
 of that firm, Brown Gillespie & Co. can only be ranked 
 upon for one half of its amount, and I say so because 
 1 do not consider that the firm of Kerr, Brown & 
 Mackenzie or any of the members of it can claim to 
 hold any rights from the Bank of Montreal against 
 Brown, Gillespie & Co. from which the former firm is 
 bound to protect the latter. If Kerr, Brown & Mac- 
 kenzie had not signed the composition deed, but the 
 requisite propoi tion of creditors had done so, and the 
 estate had passed through insolvency, they would 
 have been as fully bound by it as if they had signed it. 
 
 Very truly yours, 
 
 J J. C. ABBOTT. 
 
Hamilton, i;]th Sept., 1870 
 MKSSKS. BROWS, (IlLLESPI K & CO, 
 
 Hamilton. 
 
 ourth query he appears t., have folt son.e doubt b t 
 
 Whilst 1 atiree witli Mv i^i.^i, • i • 
 the fact, state^a fo;tlti„f tt^toTSt^d 
 to him omits a very material fact. The ouestio, .^ 
 or7Tl '° T^" "ot whetlier the Bank ^Vfir^r 
 or the firm of Kerr, Brown & McKenzie or an in^ ' 
 viduul member of that firm, had the rkht under the 
 
 =oX^:lttfS^^^^^^ 
 
 etettSXt'la-t^i^^^^^ 
 benefit of the gain whieh oceunSSe eiueS''' 
 G.&Co.by such reduction; whether, in fi^t thev 
 
 Blake n;,. ^^"'.r^'^}-"'} ^^•''^ not submitted to Mr 
 iilake, nor does lus opinion touch upon it. 
 
 K '^n Tm T"""'' *? ""^ *" '^« Pl^« e"0"gh. Messrs 
 K., B. & McK. were bound by their agreemenf w h 
 
 ,T„"li ;i ^\ *° P'^y °n« half of the note— thev 
 paid the whole. For the excess which ttv S 
 
17 
 
 heyond what they wen; hoiiiul to yniy they were 
 creditors of B., G."'& Co., but they were creditors for 
 no more. Their right to prove lus creditors on the 
 estate of B., G. & Co. was limited to that amount.— 
 To hohl otherwise would ])e to give them a preference 
 oyer the other creditors. I can see no principle, 
 either legal or equitable, upon which K., B. & McK. 
 can claim a dividend on more than the actual debt 
 which B., G. & Co. owed them, namely, one half of 
 the note. 
 
 In the view I take of the case it seems unnecessary 
 
 to consider what the rights of the parties would have 
 
 been, if the Bank, or the firm of K., B. & xMcK., or a 
 
 member of it had insisted on proving for the whole 
 
 amount of the note leaving it in the hands of the 
 
 Bank. ^ The inclination of my opinion is with Mr. 
 
 Abbott's view rather than with Mr. Martin's ; but 
 
 unless you desire it, I need not enter into thisqu Jstion! 
 
 Mr. Abbott is clear that all difficulty was obviated by 
 
 the retirement of the note, and in that respect both 
 
 Mr. Martin's opinion and mine concur. 
 
 Yours, truly, 
 
 W. CEAIGTE. 
 
 J coneur in the abocc oplaiiju. 
 
 s. B. fi?eema:n-. 
 
 Hamilton, 22nd Sept., 1870. 
 MESSES. BEOWN, GILLESPIE & CO., 
 Gentlemen : 
 
 I have already expressed my opinion respectin<v 
 the claim of Kerr, Brown c& McKinzie under the 
 
 whole state of facts niontinnorl in Mr TvTo^.+,*^',. 
 
 opinion. 1 thought it unnecessary to enter into any 
 
18 
 
 coiiHidcration ot* tlic rijiliU of tliu pjirticM a« c.\istin«; 
 previous to tlic retironien of the note by K. B. <l* 
 McK., because I thouj^ht that ta(!t removed all 
 dilHculty as to the present rights of the parties. You 
 desire, however, to know what I think the rights 
 and lial)ilitieH of the respective parties were before 
 iLe note was retired. F conceive they were as 
 follows : 
 
 1. At that time the Bank of Montreal held the note 
 and had signified their intention of acceding to your 
 composition deed, and Messrs. K., B. <(• Mc.K. had 
 signed it. The Bank had the right to claim pay- 
 ment in full of the note from either your firm or K., 
 B. (l* McK., and had the right to rank on your 
 estat»3 for the whole amount of the note ; and I think 
 the Bank was not deprived of this right by the fact 
 of receiving collateral securities from K., B. (OMcK., 
 or fro^n a member of that iirm. 
 
 You, or your assignee had the right to pay to the 
 Bank the amount of the note, and then to claim the 
 collateral securities, and to hold them as a security 
 for the piiyment to your estate by K., B. (t McK. of 
 whatever sum they were legally bound to pay. 
 
 2. As regards the position of K., B. (b McK., if 
 you or your assignee had retired the note, they woidd 
 have immediately become liable to your estate for 
 one half of the note, being the proportion of it which 
 they were bound by the original agreement to pay ; 
 and they would also have become liable to your 
 estate for 8s. 6d. in the £ on the other half; and if 
 the Bank had continued to hold the note, and had 
 received the composition of lis. 6d. in the £ on the 
 whole amount of it, then I think K., B. tt* McK. 
 would have been liable to account to your estate for 
 
 •ii 
 
19 
 
 •ii 
 
 one half of of the composition received by tho Bank. 
 I will bric'tly mention my reaHone. for thin opini(m. 
 
 As between your firm and that of K., B. (t* McK, 
 each was bound upon the maturity of the note to pay 
 one half of it. And whatever amount beyond above 
 one half either iirm, continuin^^ solvent mi^ht have 
 paid, would have been recoverable as a debt from the 
 other. 
 
 On boconiinji,' insolvent, your estate became liable, 
 as between yourselves, K., B. d'* M<*K. and your other 
 creditors to pay a rateabhi dividen ! apon one half of 
 the note, being the amount which you accually owed. 
 The Bank no doubt was entitled to rank for and receive 
 a dividend on the whole amcmnt of the note, but 
 whatever sum they might receive over and a])ove the 
 rateable dividend on half the note would in effect be 
 a payment made by your estate on what as between 
 your firm and K., B. d* McK. was a liability of the 
 latter firm, which they ought to have paid, and could 
 therefore be recovered from them for the benefit of 
 your creditors. 
 
 In fact tlie whole question, 1 think, turns upon the 
 principle that, as hetveen the two firms, you were only 
 liable for lialf the note, and an}- payment after your 
 insolvency, in excess ol the rateable dividends on that 
 amount, could be objected to by your creditors as pre- 
 ferential ; and if the riglits of third parties (such as 
 the Bank) were such that they could compel payments 
 of dividends to a greater ?xtent, then the excess should 
 be recoverable from the persons whose failure to per- 
 form their obligation placed your estate in such a 
 position. 
 
 The only eftect of the composition deed in this view 
 w^as to render the amount of the dividends certain. 
 
20 
 
 liKleiKMicU'iitlv of that (Ircd I think any creditor 
 wouhl liavo had a rij^ht to ohject to any portion of 
 tho cMtatc ^oinjjj to cliKcharpjo a lia})ility 'of K., B. & 
 MoK., and to havccaUi'd upon that firm tomak<» good 
 to the OHiatc the Iohh occasioned by their default. 
 
 Ah between that firm and your estate, I do not 
 think that yonr estate conhl })e called upon to pay 
 nun-e than lis (Id in the € on luilf the note without 
 beconiin<r entitled to recover from them any (»xcesH 
 paid beyond tl.t amoimt. 
 
 Yours truly, 
 
 W. CRAIGIE. 
 
 P. S. — It may make my meaning plainer to add 
 that 1 consider that upon the suspension of your iirm, 
 your creditors had the right to insist on K., B. & 
 iVIcK. paying ( ne half of the note, and that this was 
 a right which could be enforced, and that the latter 
 firm could not. by deliberately refusing or delaying to 
 fulfil this obligation, be permitted to oJ)tain an advan- 
 tage over your other creditors 
 
 W. CHAIGIE. 
 
 f ronrffi' in the ahovr opinion. 
 
 •/> 
 
 S. B. FREEMAN. 
 
 Hamilton, Ont., 2rjth Oct., 1870. 
 
 MESSRS. BROWN, GILLESPIE k CO., 
 
 Hamilton, 
 
 Gentlemen : 
 
 T have read a number of opinions, in reference 
 the 110,155 note, the subject of controversy between 
 Messrs. Kerr, Brown & McKenzie and yourselvec, 
 
'^> 
 
 21 
 
 given by Mt^nn. Burton ife bruc«?, Mr, Blake, Mr. 
 Abbott, Mr. Martin, Mr. Oiiigio ami Mr. Frwman. 
 
 AHHUining tho ihetrf to be an Htatcd by Mr. Martin, 
 I have little need to say more than that I fully con- 
 eur in the opinionn ol* Mr. Ablx)tt and Mr. Craigie. 
 and in that of Mr. Martin as (jualitied by them. 
 
 It Ls conceded throughout, 1 believe, that although 
 the holder ut" the note might have enforced payment 
 in full from cither of the HrmH, parties to it, yet oh 
 Ijetvveen themnelveH, these firms were each liable only 
 for half the note. Each was therefore a surety, as 
 regards one half, and a principal a.s regards the other 
 holf. At the time of the suspension of B., G. & Co., 
 they or their creditors wore entitled to reciuire Keir, 
 Browji & McKenzie to pay one half, wh'^^h would 
 have compelled the holder to rank upon the estate of 
 B., G. & Co. for the other half, the ai> unt of the true 
 debt owing by them. But it would be plainly in- 
 equitable to permit Kerr, Brown & McKenzie, by any 
 arrangement with the Bank, to receive dividends 
 upon their own debt out of the estate of B., G. & Co., 
 to indemnify themselves against their- suretyship for 
 the portion of the note properly payable by p., G. & 
 Co., at the expense of the other eroditois, or in other 
 words, to get paid in full while the others get only a 
 dividend. 
 
 By insisting upon this right of B., G. & Co., tliere 
 is no compulsion on Kerr, Brown & McKenz'*'^ to 
 make them creditors against tlieir will. That was a 
 liability they (K., B. & McK.) incurred long prior to 
 the suspension, by becoming parties to the note, i nd 
 placing it in che power of the Bank to enforce pay- 
 ment in full from them, and there is no in'ustice in