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CRANWORTH, L.C. Ex parte SOMERVILLE, Nov. 15, 22. in re TRESIDDER.

Composition Deed-Leave to issue Execution-24 & 25 Vict. c. 134. ss. 192, 198.

Although a deed of composition may be bad as not being such a deed as is contemplated by the 192nd section of the Bank ruptcy Act, 1861, yet, after the registration of such a deed it is still proper for a creditor desiring to issue execution against the debtor to apply to the Court under the 198th section for leave to do so.

A debtor executed a deed of assignment of all his property and effects to a trustee for the benefit of all his creditors, but no creditor executed it, and the deed was not stamped. Subsequently, at a meeting of creditors, a resolution was passed, in pursuance of which a second deed was prepared and executed, to which the trustee of the first deed was a party. By this deed, all the debtor's estate and effects were assigned to trustees, and amongst other trusts was a trust out of the produce thereof to pay the costs of the former deed and of the present deed, and then to satisfy the debts of the creditors ratably, subject to certain provisions for verifying the amount thereof; and there was also a proviso that no former dividend should be disturbed; and it was further provided that if there was anything therein not authorized by the NEW SERIES, 35.--BANKR.

provisions of the Bankruptcy Act, 1861, such unauthorized thing should be obligatory on those persons only who should have assented in writing to the deed :-Held, first, that the first deed, not having been executed by any of the creditors, was to be considered in the nature of an escrow, and the event in which it was to take effect not having occurred, it did not invalidate the second deed. Secondly, that, though the second deed might contain provisions which, if made binding upon non-assenting creditors, would vitiate it as being unreasonable, the clause which made those provisions binding only upon assenting creditors deprived them of their unreasonableness, and the deed, being executed bona fide, must be sustained.

This was an appeal, by a debtor, against an order of Mr. Commissioner Goulburn, giving leave to a creditor, under the 198th section of the Bankruptcy Act, 1861, to issue execution against him, notwithstanding the execution and registration of a trust deed for the benefit of creditors under the 192nd section.

The facts were as follows: On the 5th of May, 1865, Mr. S. B. Somerville commenced an action against the debtor, Mr. H. J. Tresidder, upon a bill of exchange, and on the 18th of the same month judgment was duly signed for the amount of the

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debt and costs, 381. 88. 1d. On the 10th of May Tresidder executed a deed of assignment of all his property and effects to an accountant named Butler, who was not a creditor, to be applied and administered to and for the benefit of all and every his creditors. This deed was expressed to be on behalf of and by and with the consent of the undersigned creditors; but no creditor did execute it, and the deed was not stamped.

Tresidder then called a meeting of his creditors for the 12th of May. This meeting was attended by thirty-nine creditors, and it was there stated that an assignment had been made to Butler, to keep the property together, but it was intended to assign it to the two largest creditors; and resolutions were passed that the case should be kept out of Bankruptcy, and the property assigned to two creditors.

In pursuance of this resolution, a deed of assignment was prepared and executed on the 16th of May, between Tresidder of the first part, Butler of the second part, James Spicer and J. E. Adlard, trustees for the creditors, of the third part, and the several other persons whose names, or the names of whose firms, were written in the schedule thereunder written, and whose seals, or the seals of individual members, or a member or agent of whose firms, were affixed, being respectively creditors, or claiming to be creditors, of the said debtor, and all other persons creditors of the said debtor, upon or against whom the deed should become valid, effectual and binding by reason of the provisions of the Bankruptcy Act, 1861, as to trust deeds for the benefit of creditors, or otherwise howsoever, of the fourth part; and, after reciting the assignment to Butler of the 10th of May, and the meeting of creditors and the passing of the resolution on the 12th, it was witnessed that Butler, by the direction of the creditors, and with the privity of the debtor, did grant, assign, &c., and Tresidder did confirm unto Spicer and Adlard, their heirs, &c., all the estate and effects whatsoever of the said debtor, upon trust from time to time to sell and dispose of, and realize or collect and receive the said premises, and out of the monies to be received to pay all costs and expenses of investigating, on the part of the creditors, the affairs

of the debtor, and of proposing, preparing and executing the deed of the 10th of May and the present deed, and of the trusts thereby declared; and, in the next place, so far as the same might extend, to pay, retain and satisfy, ratably and without preference, and distributing the estate and administering the assets in like manner as in Bankruptcy (except in any case where the contrary should lawfully be thereby provided for), to and amongst all the creditors of the said debtor, including the said trustees, as far as they might be creditors, the several debts and sums due to such creditors respectively, accounting such creditors creditors in respect of such amount only as upon account fairly stated, after allowing, according to the provisions of the Bankrupt Law, the value, if any, of mortgage securities, &c., should appear to be the balance due to them respectively from the debtor, "subject to the provisions hereinafter contained for verifying the amount thereof," and to pay the ultimate surplus to the debtor as in Bankruptcy. And the deed contained the following clauses:

"Provided always, that no former dividend shall be disturbed, and no liability in consequence of payment of such dividend shall be incurred by the trustees by reason or on account of any debt or debts due to creditors as aforesaid, and whereof the trustees shall not have had notice before such dividend shall have begun to be paid."

"And, further, that it shall be lawful for, but not obligatory on, the said trustees, at the expense of the estate, to require the amount of any debt of any of the creditors to be verified by solemn declaration; and in the event of any of such creditors, if in Great Britain or Ireland, failing so to verify such debts for two calendar months after such requisition, such creditor or creditors shall lose all benefit, dividends and advantage to be derived from these presents, and thereupon such last-mentioned dividends shall fall into the general estate for the benefit of the creditors not making similar default.

"And it is also hereby further declared and agreed that the said trustees shall have and may from time to time and at all times at their absolute discretion use and exercise, so far as they may think fit for the interest of the creditors, all such rights,