Devaynes v Noble
| Clayton's case | |
|---|---|
| Court | Court of Chancery |
| Decided | 9 March 1816 |
| Citation(s) | (1816) 35 ER 767, 781; (1816) 1 Mer 529, 572 |
| Case opinions | |
| Sir William Grant MR | |
| Keywords | |
| First in, first out, tracing | |
Devaynes v Noble (1816) 35 ER 781, best known for the claim contained in Clayton's case, created a rule, or rather common law presumption in relation to the distribution of monies from a bank account. The rule is based upon the deceptively simple notion of first-in, first-out to determine the effect of payments from an account, and will normally apply in the absence of evidence of any other intention. Payments are presumed to be appropriated to debts in the order in which the debts are incurred.
Mr Clayton had an account with a banking firm, a partnership named Devaynes, Dawes, Noble, and Co. One of the partners, William Devaynes, died. The amount then due to Clayton was £1,717. The surviving partners, thereafter paid out to Mr Clayton more than that amount while Clayton himself, on his part, made further deposits with the firm. The firm subsequently went bankrupt.
Sir William Grant MR held that the estate of the deceased partner was not liable to Clayton, as the payments made by the surviving partners to Clayton must be regarded as completely discharging the liability of the firm to Clayton at the time of the particular partner’s death.
It appears to me that this transaction stands quite detached from any other, and may be decided by itself. The exchequer bills having been sold in Mr. Devaynes's lifetime, contrary to the duty reposed in the partnership, and the money having been received by the partnership, the amount became a partnership debt, whether the individual partners were, or were not, privy to the sale. The debt accrued at the moment that the sale was made, and not at the time when the subsequent representation was given to Mr. Clayton , with respect to the re-investment of the money in other exchequer bills. How a falsehood told by the four could do away a previous breach of trust which had been committed by the five, I cannot comprehend. More than a breach of trust, I do not see how it can be reckoned. It was attempted to argue that it was a felony; but, in order to make the subsequent conversion of property, of which the possession has been delivered, amount to a criminal charge, it is necessary to shew that the animus furandi existed at the moment when the delivery was made. Taking this, therefore, to be a debt, as Mr. Clayton was altogether ignorant of its existence, he could not, by any subsequent dealings with the other partners, transfer it to their credit.
The notice, whatever operation it may have in any other question as between Mr. Clayton and the surviving partners, can have none in this case, in which lie was ignorant that any such sum of money was in their hands. He was willing to trust them with the care of his exchequer bills; but, whether he would transfer to them exclusively the liability, which all had incurred, of answering for the produce of the sale, was a matter upon which he never had an opportunity of exercising any choice. For the same reason, none of the payments that were subsequently made, could operate in extinction of this debt. Mr. Clayton could not draw upon the credit of a fund which he did not know to exist; and, whatever question may arise as to the manner in which the payments are to be imputed, to the old or to the new cash balances, they must be imputed to acknowledged cash balances, of the one or the other description, and not to the produce of securities which the one party represented, and the other believed, to be still remaining in specie.
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