trustee is no longer that of mere principal and agent (d). a dissentient creditor; A creditor who has not assented to a composition does not bind made by his debtor, is of course not bound by the provisions of the deed, and may sue for and recover his debt as if no such deed had been executed. Moreover, a conveyance or assignment of a debtor's and constiproperty to a trustee or trustees, for the benefit of bankruptcy. his creditors generally, is an act of bankruptcy (e). tutes an act of creditors should It is therefore necessary, for the complete pro- Hence all the tection of a debtor, who has executed a composition be parties to deed, that all his creditors should assent to its such a deed. provisions; otherwise he will remain liable to be sued by dissentient creditors, and he may be adjudicated bankrupt upon the petition of any such creditor (ƒ). Nevertheless, where a debtor and his principal creditors are anxious to wind up the estate without recourse to the Court, a composition deed is sometimes resorted to, and the risk that the (d) Mackinnon v. Stewart, 1 Sim. N. S. 88; Montefiore v. Brown, 7 H. & C. 241, 266. (e) Bankruptcy Act, 1869 (32 & 33 Vict., c. 71), s. 6, subs. 1. (f) The Bankruptcy Acts of 1849 and 1861 contained provisions rendering composition deeds, if assented to by a statutory majority of the creditors, and executed with certain formalities and duly registered, binding upon all the creditors. It was held, how ever, that such a deed could Composition arrangement may be rendered abortive by the action of a dissentient creditor is either obviated by means of an agreement that any such creditor shall be paid in full, or is disregarded. The Bankruptcy Act, 1869, provides (g) that the creditors of a debtor, unable to pay his debts, may, without any proceedings in bankruptcy, by an extraordinary resolution, resolve that a composition shall be accepted in satisfaction of the debts due to them by the debtor. And the extraordinary resolution may provide, that the terms of the composition be embodied in a deed between such parties, and containing such covenants for the payment of the composition, and for protecting and releasing the debtor, and such other covenants, and such provisions for securing the composition, either by assignment of property, or by inspection of the debtor's business or otherwise, as the nature of the case may require, and the resolution may specify in particular or founded remains applicable to as the resolution, and which can only be executed after the resolution has been registered, it is considered that a discussion of these cases is no longer suitable to a work which deals only with conveyancing. They will be found cited and referred to in the Digest to the Law Reports, sub vv. Creditors' Deed. (g) S. 126. (h) Bankruptcy Rules, 1870, r. 281. resolution must be registered in bankruptcy, and Provision is also made for a change from bankruptcy to composition, the trustce being enabled (k), with the sanction of a special resolution of the creditors, passed at a meeting, of which notice has been given specifying the object of such meeting, to accept any composition offered by the bankrupt, or assent to any general scheme of settlement of the affairs of the bankrupt upon such terms as may be thought expedient, and with or without a condition that the order of adjudication is to be annulled, subject, nevertheless, to the approval of (i) Bankruptcy Act, 1869, s. 126, subs. 6; Wilson v. Breslauer, 2 C. P. D. 314, and cases there referred to. It is the duty of the registrar to examine the resolution, and he may hear any creditor who may have given notice of his desire to be heard thereon, and may register or refuse to register the resolution at his discretion, but subject to the right of the debtor and of any creditor who may have been heard, to appeal from the decision. (Bankruptcy Rules, 1870, r. 295, and see, amongst (k) By s. 28. As to the form of composition deeds. the Court, to be testified by the judge of the Court signing the instrument containing the terms of such composition or scheme, or embodying such terms in an order of Court; and the Court, if it approves the composition or scheme, is to annul the adjudication upon the application of any person interested. The provisions of the composition or general scheme may be enforced by the Court, and the approval of the Court is conclusive and binding on all creditors (1.) The form of a composition deed is dependent upon and varies with the circumstances of each case, and the object the parties have in view. A conveyance and assignment of a debtor's estate and effects does not differ materially from an ordinary conveyance and assignment in trust for sale, except that (unless the deed be made in bankruptcy) the creditors are parties, and the trusts of the monies to arise from the sale are declared to be for their benefit. These trusts are generally either for distribution of the whole proceeds rateably among the creditors, in accordance with the practice in bankruptcy, or for payment to the creditors of a stated composition upon their debts. The deed (7) The following recent 2 Ch. D. 424 (rights of cre- postponed); Ex parte Turquand, 3 Ch. D. 445 (position of a surety); Crew v. Terry, 2 C. P. D. 403 (right of unsatisfied execution creditor); and also Ex parte Newland, 4 Ch. D. 515 (enforcing composition). generally concludes with a release to the debtor by his creditors. A composition deed in the more strict acceptation of the term is a deed whereby the debtor either alone, or in conjunction with a surety, covenants (m) to pay a stated composition to his creditors, either by one payment or by instalments, and either accompanied by bills of exchange or promissory notes, and either with or without the intervention of a trustee. This is followed by a declaration by the creditors that they will accept the composition in full of their demands, and that, upon payment of the composition, the deed may be pleaded in bar to an action by a creditor. A letter of licence is an agreement between the Letter of licence. debtor and his creditors that the latter shall for a specified time suspend their claims, and allow the debtor to carry on his business at his own discretion. It is, however, usually accompanied by a provision, that the business shall be carried on under the inspection and control of persons nominated by the creditors, who are called inspectors, and it then becomes, and is termed a deed of inspectorship. A deed of this kind usually contains Deed of a licence by the creditors to the debtor to carry on his business for a specified time, under the inspection and control of the inspectors, to whom a power is generally given to extend the period. The (m) See Dewhirst v. Jones, 3 H. & C. 60; but see also the judgments of the Lord Chan cellor in Ex parte Cockburn, inspectorship. |