1866 v. KNIGHT. of the plaintiffs' claim, under s. 192 of the Bankruptcy Act, 1861, between the defendant (the debtor) of the first part, the creditors of THOMPSON the defendant of the second part, and one Edwin Thomas Bartlett, (a trustee) of the third part; whereby after reciting that the requisite majority of the creditors had agreed to accept a composition of 10s. in the pound, to be paid by three equal instalments payable respectively at the end of two, four, and six months from the date thereof; and that the debtor should deliver to the creditors respectively his promissory notes for the amount of the instalments, to be dated on the day of the date of the deed, and to be payable at two, four, and six months date, and should secure the payment of the notes by depositing a weekly sum of 407. in a certain bank to the credit of the account of Edwin Thomas Bartlett, trustee for the creditors of the debtor, until enough had been paid to the credit of such account to satisfy the amount of the composition and all costs, &c., incurred by the trustee in carrying the deed into effect; and after further reciting that the defendant had, previously to the execution thereof, delivered to the creditors respectively the promissory notes for the amount of the instalments of their respective debts; the debtor covenanted to pay the sum of 407. weekly to the credit of the account of the trustee until enough had been so paid to satisfy the aggregate amount of the composition, upon trust to provide for the promissory notes given by the debtor to his creditors when they should become due, and to pay all the creditors their composition of 10s. in the pound. And it was amongst other things provided by the deed that “in cases where the amount of composition payable to any creditor shall not exceed 107. (i. e. where the amount of the creditor's debt shall not exceed 207.), the said Edwin Thomas Bartlett, his executors, &c., shall be at liberty, if he or they shall so think fit, to pay the same in one sum at such time or times as he or they shall think fit." The plea then averred the performance of all the statutory conditions necessary to make the deed binding on the plaintiffs in the same manner as if they had been parties thereto and had executed the same. Demurrer and joinder. H. T. Cole, in support of the demurrer, contended that the deed was unequal because the trustee had a discretionary power of paying 1866 off creditors not exceeding 207. their whole composition of 10s. in THOMPSON the pound at once, whilst all the other creditors had to wait two months for the first instalment of their composition. In Leigh v. Pendlebury (1), a proviso empowering the trustee to pay in full those creditors whose debts were under 107. was held unreasonable. V. KNIGHT. R. E. Turner, contrà. Leigh v. Pendlebury (1) is distinguishable. There, certain creditors were to be paid in full. Here, the creditors under 207. are to receive the same composition, viz. 10s. in the pound, as the rest. The only discretion of the trustee is as to the time of payment, as to which it is reasonable he should be able to use his own judgment. In Coles v. Turner (2), a discretion to trustees under a deed of assignment to determine the amount of dividends, and to pay them in such place and manner as might be thought fit, was held reasonable. Again, it does not appear that there are any creditors in existence of the privileged class, but assuming that there are some of that class, the inequality created by the clause giving this discretion to the trustee, is not so substantial as to vitiate the deed: Keyes v. Elkins. (3) H. T. Cole was not called on to reply. KELLY, C.B. I am of opinion that this deed cannot be supported as a deed of arrangement under the provisions of s. 192 of the Bankruptcy Act, 1861. There are no doubt a great number of these deeds executed daily, and daily forming the subject of discussion, and it is therefore necessary to state clearly the principle on which they are to be held valid or invalid. Now I think it absolutely essential that all the creditors should be placed on an equal footing, especially when I remember that, generally, a great number of them are in these cases bound by an instrument to which they are not parties and to which they have not assented. Under such circumstances, it is only when the provisions of the deed are just and equal that the deed ought to be held binding upon all; but here there is a provision that, where the amount of composition payable to any creditor shall not exceed 107., the trustee may pay that amount, in one sum, at such time or times as he (1) 15 C. B. (N.S.) 815; 33 L. J. (C.P.) 172. (2) Law Rep. 1 C. P. 373. (3) 34 L. J. (Q.B.) 25. may think fit. It does not appear how many creditors of this class there may be, but the insertion of the provision, which would otherwise have been idle, gives us a right to assume that there are some. But without making any assumption, here is a power given to pay a certain class of creditors a half of their respective debts, by that payment the whole fund might possibly be exhausted, so that no other creditor could be paid at all. It would be absurd to say under these circumstances that the creditors are in an equal position. Very possibly where there are a number of small debts, and where the debtor and his surety are persons of substance, no harm would happen to any of the creditors, and practically it might be very beneficial that the trustee should pay off the smaller creditors in full. Still that would depend on the amount of the assets and debts and the number of creditors who would have to be paid in full. I am therefore of opinion that this. condition is unreasonable, and that the deed is invalid. CHANNELL, B. I am also of opinion that the plea is bad. It is clear that if the deed is acted upon, and its provisions carried out, some inequality may arise. Suppose that the deed had provided absolutely that the stipulated composition should be paid to one class of creditors in three instalments, and to another class in one, that would certainly have been an inequality. This deed does not exactly provide that, because here the trustee has a discretionary power left to him. But this circumstance does not, in my judgment, prevent the objection made from prevailing. The case of Keyes v. Elkins (1), which has been referred to, does not really affect the question. The great question there was, whether a particular clause was a release, or only a covenant not to sue, and it was objected that, assuming the clause to be a release in terms, it could not so operate in effect, because there was a reservation of the rights of a certain class of creditors. The Court, however, held that it might still so operate, and Cockburn, C.J., says (2):-" The only way the objection could prevail would be by reason of producing inequality among the creditors," thus stating the objection as it has been stated here. Then, he adds, there must be a "substantial" inequality; and in that case I can well understand 1866 THOMPSON บ. KNIGHT. 1866 that there was no substantial inequality; but here I think that THOMPSON there is, and accordingly my judgment is for the plaintiffs. บ. KNIGHT. PIGOTT, B., concurred. Judgment for the plaintiffs. Attorneys for plaintiffs: Torr, Janeway, & Tagart. Nov. 21. CHRISTIE v. THE COMMISSIONERS OF INLAND REVENUE. Stamp Act (13 & 14 Vict. c. 97) Sch. Tit. “Conveyance"-Conveyance upon sale of Property-Dissolution of Partnership-Conveyance by retiring Partner to Co-partner. A dissolution of partnership being in contemplation between two persons, one of whom was desirous of retiring from business, a deed was entered into, whereby after reciting an agreement for dissolution and that the property of the firm and the share due to the retiring partner had been ascertained, that in respect of such share a specified sum had been paid in cash, and that the remainder was to be secured by a mortgage, and by assignment of certain policies of insurance, it was witnessed that the partnership was dissolved, and that the retiring partner should forthwith release to the remaining partner all his estate in the partnership property, real or personal, and obtain the concurrence in the conveyance of all necessary parties. By an indenture of later date, reciting the previous deed, the retiring partner, “in pursuance of the agreement and in consideration of the premises,” conveyed to the remaining partner all his estate and interest in the partnership property and assets : Held, that the indenture was liable to ad valorem stamp duty, as a "conveyance upon the sale of property," within the meaning of 13 & 14 Vict. c. 97, sch. tit. "Conveyance." CASE stated pursuant to 13 & 14 Vict. c. 97, by the Commissioners of Inland Revenue, to enable Charles Peter Christie to appeal against their decision as to the stamp duty chargeable on the indenture hereafter mentioned. The indenture, dated the 21st of March, 1866, was made between John Back of the first part, Robert Hunt of the second part, Philip Longmore and Matthew Skinner Longmore of the third part, and Charles Peter Christie of the fourth part. It appeared from the recitals, that Messrs. Back and Christie had dissolved a partnership in the trade of brewers and wine merchants previously existing between them as from the 29th of September, 1865; and that by a deed, dated the 20th of March, 1866, made between them-after reciting that a stock account and balance-sheet of the partnership up to the 29th of September, 1864, had been taken and made and duly signed by the partners, shewing all the freehold, copyhold, and leasehold and other property, and also the debts and credits of the partnership, the amount of profits up to the 29th of September, 1864, and the respective shares of the partners and the loans of each of them to the firm; that, in June, 1865, John Back being desirous of retiring from the firm, the presumed amount due to him on the 29th of September following was ascertained, and appeared to be 110,0007.; that he had proposed to retire as from the last-mentioned date upon the conditions that he should be paid 10,0007. by Charles Peter Christie in cash, and have the remainder of the 110,000l. found to be due to him secured by Charles Peter Christie by a mortgage of part of the assets of the firm, and by the assignment of certain policies of insurance; that Charles Peter Christie had agreed to a dissolution of partnership on these conditions; that he had paid to John Back 10,0007. in cash, and that the terms of a mortgage of part of the assets of the firm and of the assignment of the policies had been finally arranged; and that it was intended that such mortgage should be executed by Charles Peter Christie as soon as John Back and certain other persons who were trustees of a portion of the property to be comprised in the mortgage should have conveyed the same to him— it had been witnessed, 1st, that the partnership was dissolved as from the 29th of September, 1865; 2ndly, that John Back should forthwith release to Charles Peter Christie all his estate and interest in the freehold, copyhold, and leasehold estates, stock in trade, &c., belonging to the late co-partnership; 3rdly, that the concurrence in the conveyance of the trustees of certain portions of the property should be obtained; 4thly, that Charles Peter Christie should, within seven days from the date of the deed in recital, or as soon after as might be, execute a mortgage on the terms arranged; 5thly, that Charles Peter Christie should indemnify John Back against the debts and liabilities of the firm. After further reciting that the assets of the partnership consisted, amongst other things, of certain freehold and copyhold lands and 1866 CHRISTIE V. COMMISSIONERS |