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The debentures issued by The General South American Co., 2 Ch. Div. 337 (supra, p. 405), contained clauses nearly the same as the above and the two following.

4. From and after such default, or such suspension of payment, or the passing of such resolution by the directors of the company, or the making of such order, or the passing of any such resolution of the company as above mentioned, whichever shall first happen, the liberty and authority to the company hereinbefore given shall forthwith cease and determine, and the charge by this debenture created shall and may be immediately enforceable.

5. Nothing herein contained shall be taken to authorise the creation of any mortgage or charge of or upon the said property or any part thereof having priority over the said charge.

6. The bearer [supra, p. 428].

7. The receipt [supra, p. 428].
Given, &c. [supra, p. 428].

For coupon, see supra, p. 424.

The above is a form of mortgage debenture, which, with more or less modification, is commonly issued. As to the effect of the charge, see

supra, p. 403, et seq.

It is not necessary where, as above, a debenture charges both present and future property expressly to provide that the charge shall attach to the proceeds of any sale made under Condition 3. See Wickham v. The New Brunswick and Canada Ry. Co, L. R. 1 P. C. 64.

Some persons prefer to enumerate some of the items of the property charged, e.g. All the collieries, mining rights, buildings, plant, machinery, book-debts, credits, and monies of the company, and all other its real and personal property, both present and future.

If desired, the charge may be extended to the uncalled capital for the time being of the company, provided that there is power to charge it. See supra, p. 416, and infra, Form VIII.

Sometimes mortgage debentures contain power to redeem at any time on giving three months' notice, see supra, p. 430, or a power to redeem "at any time after the expiration of years, from the date hereof." A debenture in the above form, not being intended to operate as a promissory note, should be stamped as a debenture. See supra, p. 422. If, in accordance with the plan referred to, supra, p. 407, the debentures are to be secured, in part, by a trust or covering deed, the above form will be altered, by introducing the words "not comprised in the indenture hereinafter mentioned," after the words "present and future ; " and by introducing an additional condition as follows:

8. This debenture, and the other debentures of the same series, are entitled, pari passu, to the benefit of an indenture, dated, &c., and made, &c., whereby certain [letters patent] and other property of the company were vested in trustees for securing the payment of the principal monies and interest payable by virtue of such debentures.

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[For heading, &c., see supra, p. 424.]

Issue of. in mortgage debentures, ranking pari passi. The Company, Limited, in consideration of the sum of 50%. paid to it by — of— will [supra, p. 431, mutatis mutandis].

And the said company will also pay to the bearer of every interest coupon [supra, p. 425 (d)].

And for the consideration aforesaid the said company doth hereby charge with such payments the undertaking of the said company, and all the property to which it is now or shall at any time hereafter become entitled, and also its uncalled capital for the time being, and all the estate, right, title and interest of the company in to and upon the said premises.

This debenture is issued upon and subject to the conditions indorsed hereon.

IN WITNESS, &c. [supra, p. 431].

For coupon, supra, p. 424.

The conditions upon which this debenture is issued :

1. This debenture is one of a series of 2,000 debentures for 507. each, numbered or to be numbered 1 to 2000 inclusive, and all in like form; which debentures have been or are about to be issued by the within-named company.

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whole of the said debentures shall have been redeemed or paid

off.

3. The particular debentures [supra, p. 432].

4. Such drawings [supra, p. 432].

5. Public notice [supra, p. 432].

6. Forthwith after each drawing notice [supra, p. 432].

7. The numbers [supra, p. 432].

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year or two after date], upon giving not less than thirty days. notice by advertisement as aforesaid, appoint a day for the redemption of this debenture, and upon the day so appointed this debenture shall be entitled to be redeemed].

The above is sometimes inserted.

8. As from [supra, p. 432].
9. Annexed [supra, p. 430].
10. The bearer [supra, p. 428].
11. The receipt [supra, p. 428].

12. The monies intended to be hereby secured will be paid at the Bank, Limited, Street, London, or at the

registered office of the company.

13. The said 2000 debentures will constitute a first charge upon the property of the company and its uncalled capital for the time being, and shall (save as hereinbefore provided,) rank pari passu without any preference or priority one over another.

14. Notwithstanding the charge created by this debenture, the said company shall be at liberty, for the purpose of continuing and carrying on its business, to use, employ, sell, lease, exchange, or otherwise deal with, all or any part of the property and premises for the time being subject to such charge, without any liability for so doing to the bearer of this debenture until default shall be made in payment of any principal monies or interest hereby secured for the period of two calendar months after the same respectively shall have become due, according to the tenor of this debenture and these conditions, or until the company shall commit a breach of any of such conditions, or until the company shall by reason, &c. [supra, p. 435].

15. From and after such default, or the commission of such breach, or such suspension, &c. [supra, p. 436].

16. Nothing in these conditions contained shall be taken to authorise the creation of any mortgage or charge of or upon the said property or any part thereof having priority over the said charge.

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The Company, Limited, in consideration of 1007. paid to it by A. B., of, hereby covenants with the said A. B., his executors, administrators, and assigns, to pay to the said. A. B., his executors, administrators, or assigns, on the day of, 18, at the registered office or bankers of the company, the sum of 1007., and to pay interest thereon, in the meantime, at the rate of per cent. per annum, by halfyearly payments, to be made at the registered office or bankers of the company, on the of, in each year, the first of such half-yearly payments to be made on the day of, 18

day of

and the

-day

IN WITNESS whereof the said company hath caused its common seal to be hereunto affixed.

The common seal of the company was

hereunto affixed in the presence of

John Doe,

Directors

Richard Roe,

Seal
of the
company.

Forms.

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The above debenture is intended to operate as a covenant. It can Covenant. seldom be deemed desirable to issue debentures so framed. For the

purpose of raising money, a debenture "to bearer" is generally used. See supra, p. 385, et seq.

And a vendor or other person agreeing to accept payment in debentures, generally stipulates that they shall be "to bearer," or, at any rate, made expressly assignable, free from equities. See supra, p. 37.

A debenture in the above form is only assignable, subject to equities Assignable subsisting between the company and A. B. Athenæum Life Assurance only subject Soc. v. Pooley, 1 Giff. 102; 3 De G. & J. 294; In re Natal Investment to equities. Co., 3 Ch. 35.

An absolute assignment in writing, notice of which is given to the company, will enable the assignee to sue the company in his own name. Supreme Court of Judicature Act, 1873, Section 25, Subsection 6. See, also, supra, p. 400.

After notice of assignment, the company cannot set off against the assignee a debt which has accrued due to it from the assignor since the

Forms.

As to inquiry before taking assignment.

notice, though resulting from a contract entered into previously. Watson v. Mid.-Wales Ry. Co., L. R. 2 C. P. 593.

If, before taking the assignment, the intending assignee informs the company of his intention, and, in reply to inquiries, is told by the company that the debenture is valid and the money due, the company cannot, subsequently, set up equities against the assignee. See Brunton's Claim, 19 Eq. 310; Pichard v. Sears, and other cases cited, supra, p. 394.

Even though no inquiry be made, if the company accept notice of the assignment, it may be held to have precluded itself from setting up equities. Brunton's Claim, 19 Eq. 302. So, too, if it register the assignee, and issues to him a certificate of proprietorship. Northern Assam Tea Co., L. R. 4 Ex. 387.

Higgs v.

Parties.

Recitals.

FORM X.

TRUST DEED for SECURING MORTGAGE DEBENTURES ISSUED by a COLLIERY COMPANY. THE DEBENTURES to be REDEEMED by HALF-YEARLY DRAWINGS. SPECIAL PRO

VISIONS.

The following precedent can be readily adapted to secure the payment of debentures not redeemable by drawings. In such case the seventh recital will be that "the directors have determined to raise the sum of

7. by the issue of debentures to that amount, bearing interest at the rate of per cent. per annum, and to secure the principal and interest for the time being payable on such debentures, and on any debentures which may be issued to replace such of the said debentures as may hereafter fall due (all which debentures, as well original as substituted, are hereinafter referred to as the said debentures) in manner hereinafter appearing." The form of the debenture may be given in a schedule, or not at the discretion of the draftsman. It is very common to give it.

The provisions of the following precedent are more elaborate than in many cases is requisite, but the draftsman can readily expunge the clauses not required in any particular case.

THIS INDENTURE made the

of

between The

Company, Limited, (hereinafter called the company,) of the one part and A., of

part.

and B., of

of the other

WHEREAS the company is seised of the freehold hereditaments the short particulars of which are specified in the first schedule. hereunder written, for an estate of inheritance in fee simple in possession, free from incumbrances; and is possessed of the several leasehold hereditaments, the short particulars of which are specified in the third column of the second schedule hereunder written, for the several terms of years specified in the second column of the same schedule, and granted by the several in

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