thereafter, certify by writing under his hand that a sufficient proportion in his judgment in number and value of the creditors of the debtor has not executed or in writing assented to or approved of these presents, or the provisions hereof, or in case the debtor shall fail to pay the amounts hereinbefore covenanted to be paid by him, or any or any one of them, or any part thereof, to the creditors or creditor to whom the same are or is respectively due, upon the same being demanded by such creditors or creditor, then and in either of such cases these presents and every thing herein contained shall, except as to any acts or things heretofore done in pursuance hereof and without prejudice to any right of action theretofore accrued hereunder, cease and be void. The plea concluded with the usual averments of compliance with all the conditions required by the Bankruptcy Act, 1861, and that the plaintiffs were bound by the deed. Demurrer, and joinder therein. Holl, in support of the demurrer.- The 4th clause, taken in connection with the 10th and 12th, is unreasonable. The debtor is to pay the composition, not upon the event of the requisite majority in number and value of creditors assenting to the deed, but upon the trustee certifying that fact in writing. By the 10th clause the creditors are precluded from suing unless the deed is void under the 12th clause, that is, if the trustee shall certify in writing that a sufficient proportion, in his judgment, in number and value of creditors has not assented to the deed, or if the debtor shall fail to pay the composition. But he cannot make default until the trustee has certified under the 4th clause. [Bramwell, B.-A creditor might bring his action and be defeated by a plea of the deed, and after judgment against him the trustee might certify 1865. BOULNOIS v. MANN. 1865. BOULNOIS V. MANN. EXCHEQUER REPORTS. that the deed was void.] The trustee has an absolute discretion, and he may delay his certificate for years, or never certify, or die after the requisite majority in number and value of creditors had assented. The 12th clause, indeed, contains a reservation of any right of action which accrued under the deed, but none could accrue until the trustee certified under the 4th clause. [Pollock, C. B.-The statute makes the deed binding when the conditions are fulfilled, not when some one has certified that fact. Is there any provision in case the trustee should come to a wrong conclusion?] None whatever. Moreover, the plea contains no averment that the composition has been paid or tendered. Harrington, in support of the plea.-The 4th and 12th clauses are not unreasonable. [Bramwell, B.-Suppose the requisite majority in number and value of creditors assented to the deed, but the trustee, by mistake, certified that they had not.] It is not to be assumed that the trustee, who is appointed to protect the interest of the creditors, will act negligently, and, if he did, there is a remedy in equity. It is the duty of the trustee to certify within a reasonable time. His intervention is only a convenient mode of ascertaining when the composition money becomes payable. It is not unreasonable that the trustee should certify that the deed has been executed by the requisite majority in number and value of creditors before the debtor is called upon to pay the composition. [Bramwell, B.-Where is the right of action between the time when the requisite majority of creditors assent and the trustee certifies, in gremio legis or in nubibus?] It is suspended, as in the case of a promissory note payable at a future day given for a present debt. Instead of a covenant to pay the com MICHAELMAS TERM, 29 VICT. position on a certain day this is a covenant to pay it on a day to be determined by the trustee. The 12th clause must of necessity refer only to assenting creditors; for if the requisite majority do not assent, the deed can have no operation. It is no objection that assenting creditors place themselves in a worse situation than the others: Hidson v. Barclay (a). Holl replied. POLLOCK, C. B.-I am of opinion that the plaintiff is entitled to judgment. This is a demurrer to a plea, which sets out a composition deed under the Bankruptcy Act, 1861. One rule which has been laid down is that such a deed is invalid if it does not place all the creditors upon an equal footing. Perhaps in this case the creditors would be upon an equal footing, if the deed were valid; but it contains a provision that the composition money shall not be paid until the trustee named in the deed has certified that the requisite majority in number and value of creditors have assented to the deed. That is a novel condition, and wholly unwarranted by the statute. It is obvious that it may create great difficulty; for, if the certificate be not obtained, the debtor's estate cannot be administered. The Act intended that when the requisite majority in number and value of creditors assented, the deed should operate, not that when the statutory conditions were complied with something more should be done before the creditors obtained their rights under it. It appears to me that this deed is not within the Act, and therefore not binding on non-assenting creditors. BRANWELL, B.-I am of the same opinion. I think the (a) 3 H. & N. 361. 1865. BOULNOIS v. MANN. 1865. BOULNOIS V. MANN. 4th clause unreasonable in point of law, as well as inexpedient in point of policy. It is almost a violation of the rule that the authority conferred on one person cannot be delegated by him to another. According to the statute non-assenting creditors are not bound by the deed unless the requisite majority in number and value of creditors have assented to it, but when that event takes place they are bound. Then why should anything further be done for the purpose of ascertaining the fact before they can obtain their rights under the deed? If the provision had been that no creditor should be bound by the deed unless the certificate was given, that would have been more reasonable. But here is a deed by which non-assenting creditors are to be bound, although they can have no rights under it. unless the trustee certifies. Upon the ground that the deed is unreasonable in point of law, and not upon the supposition that the trustee might not perform his duty, my judgment is for the plaintiff. CHANNELL, B.-I agree that our judgment ought to be for the plaintiff; and I have come to that conclusion on the ground stated by my brother Bramwell. It is not necessary to hold that this requisition is inexpedient, or to assume that the trustee might not perform his duty; but taking it for granted that the requisition would be fairly and properly complied with, it seems to me that the deed does not disclose a legal answer to the action. Upon these pleadings I assume that the deed has been executed by the requisite majority in number and value of creditors, and therefore the question is, what is its operation as against the plaintiffs, who have neither executed it or assented to it. It is clear that if the deed is good it must be supported on the ground that it is a composition deed; and there is MICHAELMAS TERM, 29 VICT. no provision for payment of the composition except that contained in the 4th clause, so that, if that clause were struck out, it would not admit of argument that this was not a bad plea. If the 4th clause had simply provided for payment of the composition upon the execution of the deed by the requisite majority in number and value of creditors, I do not say that would not have been a good contract of composition; but the clause is fettered by the introductory words, which make the composition payable only in the event of the trustee giving his certificate. I do not think that a reasonable condition: and if it be struck out there is nothing in the deed to bar the plaintiff's action. I will only add that when the statute has said that a deed executed by three-fourths in number and value of creditors shall be valid and effectual, provided certain conditions are complied with, one of which is that an affidavit shall be filed stating that the requisite number of creditors have assented in writing to the deed, I see no reason for resorting to any other mode of ascertaining the fact. PIGOTT, B.-I am of the same opinion, and for the same reasons. Judgment for the plaintiff. 1865. BOULNOIS v. MANN. |