BY M. B. PELL, ESQ. 229 



no possible doubt, I conceive, that the surplus should be 

 appropriated to make good this loss. To the justice and legality 

 of such an appropriation, no objection could possibly be made. 

 But according to the assumed principle, such an appropriation 

 would be grossly unjust, being an application of the private 

 property of certain members, to make good a partnership loss. 

 If there had been no surplus, then all the members must have 

 borne the loss, in a certain proportion. The fact that there 

 happens to be in the hands of the society a fund, the private pro- 

 perty of the members, cannot alter the proportion in which the 

 loss should be borne, and to apply this fund to cover the loss 

 would be clearly unjust, unless the proportion were the same, 

 which could only happen by the merest accident. According to 

 the principle, the fallacy of which I am endeavouring to prove, 

 the only proper course would be, to apportion the loss, and to 

 apportion the surplus separately, and so to balance the accounts. 

 This would lead us to the absurd conclusion, that some of the 

 members would have to bear a certain loss, or abate somewhat of 

 their claims according to the original contract, although the 

 society on the whole was in a perfectly solvent state, whilst to 

 apply the surplus to cover the loss, would be at once to affirm 

 that the surplus fund is, and that it is not the common property 

 of the society common property to pay losses, but not common 

 property to be distributed as profit. 



Again it might be found upon investigation, that by reason of 

 high rates of interest, a certain profit had accrued, but that in 

 consequence of a high rate of mortality, a loss had been incurred. 

 To follow the obvious and necessary course of applying the profit 

 to cover the loss would involve similar contradictions. 



The word equitable has been much used by writers upon this 

 subject, and it seems always to have been assumed that equity 

 consists in returning to every member so much as he may have 

 paid in excess of what has in fact proved to be sufficient ; or, in 

 other words, to reform the original contract by the light of new ex- 

 perience. I think that I have sufficiently shown that this principle 

 of equity, if carried out to its full extent, and I cannot see that 

 there is any particular point at which we can stop short in its 

 application, is inconsistent with the existence of any contract of 



