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*Mr. Druce. - Ex parte Morgan was the case of a trustdeed to which the principle of a valuation of securities may have a proper application, but it can have none to the case of composition deeds, and in the present cases the composition of three pence in the pound is offered to creditors secured and unsecured alike. In Ex parte Spyer, (a) where a power to pay creditors under 107. in full was held to be incapable of being exercised, an opinion was intimated that had there been a trust or an absolute direction for that purpose, the case would have been different. That seems to point to the validity of such a deed only as provides for a distribution in accordance with the bankrupt law. The decision in Ex parte Godden was intended to obviate the startling results which would have followed from a contrary decision. And if it be true that the assent of all the creditors is necessary, there must be a majority of each class in order to bind the creditors of that class. In the present case, notwithstanding that the onus is upon the respondents of making out these facts, they have offered no further proof than their respective affidavits which are copied servilely from the common form, instead of being extended, together with the language of the statute, to the circumstances of the particular case to show that the requisite majority of joint creditors has executed, or in writing assented to, or approved of, either of the deeds. The language of the affidavits is insufficient to raise even prima facie proof to that fact.

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So, again, the certificates of registration of these decds being, according to the decisions in Ex parte Page (b) and Ex parte *184 Spyer, nothing more than primâ facie evidence of the fulfilment of the statutory requisitions, it might be argued, although I do not press the point, that there is nothing to show that the assents of Messrs. Overend, Gurney, & Co. to the deeds were given otherwise than conditionally. Those creditors actually appear in the schedule to each deed as creditors for the same debt, 20,0007., and in the case of the respondent Laxton's deed even the appellants are scheduled in the account delivered to the chief registrar for their debt. For all these reasons the present appeal ought to be allowed.

Mr. Bacon and Mr. Sargood, for the respondents, were stopped by the Court.

(a) 1 De G., J. & S. 318.

(b) 1 De G., J. & S. 283.

THE LORD CHANCELLOR.-Two traders, Messrs. Smith & Laxton, were wine-merchants in partnership together, a partnership which lasted till November, 1862. Upon the evidence it is not clear when that partnership was dissolved, but it was on some day after the bill of exchange was given to the appellants, the petitioning creditors. From and after the date of the dissolution, of course, the joint property, if there was any, of these partners might have been divided and distributed between them, and there might have been a total annihilation of the joint property of the partnership.

The argument on behalf of the appellants has proceeded on the great inconvenience which would ensue if the provisions of the statute were to be held to apply to all creditors, joint and separate, without distinction; and it is argued that the word "creditors" ought to be taken as indicating the several classes of credit

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ors, and that the words of the statute ought to be taken *185 distributively as to the majority in number and value of each

class, the object being to show, that unless there is a majority of each class assenting, the provisions of the statute have not been sufficiently complied with, and the result being represented to be, that by a skilful union on the part of the separate creditors, the joint estate might be rendered distributable amongst the separate creditors.

But, on the other hand, if there be no joint estate, the assets will be distributed pari passu amongst all the creditors, joint and separate. In that case the joint creditors are not distinguished from the separate creditors, and have the right of proving against each estate.

I am obliged, in the present case, to assume that there is no joint estate. It lies at the very root of this objection that there should be a joint estate. Had there been any, its existence would, no doubt, have been proved.

On the assumption, therefore, that there is no joint estate, the joint and separate creditors are not distinguishable in any respect, and primâ facie evidence is adduced showing the existence, in the present case, of the assents of the requisite statutory majorities in number and value of the creditors to these deeds.

So far, therefore, as the objections pressed upon me go, these deeds are not wanting in validity.

It was competent, indeed, to the appellants to show that the

*186 majorities actually obtained were, in fact, insufficient, * because the evidence adduced before the registrar was prima

facie only; but this they have not done.

The learned commissioner has, in my judgment, arrived at a correct conclusion. The appeal must be dismissed, and with costs.

November 12.

On this day the Lord Chancellor desired that the case should be reargued with reference to the frame of the deeds, and as to their being as favourable to absent creditors as to those creditors who were named, and especially with reference to the question whether creditors who were not named in, and did not execute or in writing assent to or approve of them, could sue upon the covenants contained in them, or might be obliged to prove the amounts due to them respectively before admission as creditors under the deeds.

November 18.

The case accordingly now came on to be reargued upon these points.

Mr. Druce, for the appellants. Neither of these deeds can be held to be within the protection of the 192d and following sections of the Bankruptcy Act, 1861. It is a rule of law well settled by decision that no one who is not a party to a deed expressed to be made between parties can sue upon it. Gilby v. Copley, (a) Metcalfe v. Rycroft, (b) Berkeley v. Hardy. (c) This rule is *187 recognized and remedied—but only in one particular, for the present purpose immaterial by the legislative enactment contained in the 8 & 9 Vict. c. 106, § 5. No creditor, therefore, of these debtors who is not actually a party to these deeds of the second part-that is to say, no creditor whom as a nonassenting creditor it is sought to bind by these deeds merely by the terms of the Act of Parliament can sue upon them.

Even assuming that there would be on no other ground any objection to an unnamed creditor suing on the deed, the very want of the name leaves a patent ambiguity, to remove which parol evidence is inadmissible.

And supposing that both these objections could be removed, the (c) 5 B. &. C. 355.

(a) 3 Lev. 138.

(b) 6 M. & S. 75.

burden of adducing such evidence and the want of an estoppel, in the case of unnamed creditors, against their status as creditors being altogether denied, which might render in their case long litigation necessary to establish their claim, places them at such a disadvantage and creates such inequality as would alone be enough to invalidate the deeds.

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Even assuming the Court to be against me upon these points, the deeds are bad, inasmuch as their benefits are not accorded with an even hand to the creditors who are parties to them of the second part, and to the creditors who do not assent to them. The former receive their composition dividend at once and release the debtors. The latter are remitted to the shadowy benefit of an insolvent's covenant to pay a composition dividend at the same rate at a future day. A mere covenant to pay a composition cannot, I submit, in any case be a composition with creditors of the nature contemplated by the Act. Of that opinion seems to have been the Court of Exchequer in Walter v. Adcock, (a) and although * 188 it may now be too late to argue that a cession of all a compounding debtor's property is requisite, still there must be actual payment or some substantial security in order to validate a proposed composition arrangement as one within the range of the 192d section of the Act. If less will suffice, a fraudulent debtor with assets sufficient to produce ten shillings in the pound might enter into an arrangement in the manner pursued in the deeds now before the Court for payment of a composition dividend of twelve shillings and six pence in the pound. His favoured creditors who are admitted to execute the deed might receive their full composition dividend at that rate upon execution; the result being that for the payment of non-executing creditors, whose remedy would be under a covenant for payment of the twelve shillings and six pence in the pound at a future day, the remaining assets would not suffice.

Moreover, as these deeds are framed, the debtors will obtain no release from such of their respective creditors as will be only by virtue of the Act bound by them. The execution of the respective deeds by the majority of creditors required by the statute, although it may by virtue of the Act bind a non-assenting minority, will not, as appears from the principle deducible from Ex parte Morgan, (b) make them actually executing parties of the respective deeds of the second part, who alone by their terms are releasing parties. The (a) 7 H. & N. 541. (b) 1 De G., J. & S. 260.

recitals show that it is because the persons made parties to the respective deeds of the second part have agreed to the respective arrangements that they are so made parties. Into this category

the appellants, who are not among such parties, have not *189 agreed to the arrangement, and will execute no* release,

cannot by construction of the Act be said to be brought, even had not the point been rendered clear by the distribution of the creditors, into different classes in the deeds themselves. Again, it is clear that under the Bankruptcy Act, § 192, no deed was intended to be in itself a final bar to proceedings on the part of non-assenting creditors until the due fulfilment by the debtor of all obligations imposed upon him by the deed. This appears from the reservation of process given by the 198th section against a debtor who seeks to depart out of England.

If there had been a trustee appointed by the deed and the aggregate amount of the composition dividend had been placed in his hands for the benefit of all the debtor's creditors, that might have had the effect of placing all his creditors in a similar position, and have met the suggestion thrown out by the Lord Chief Baron and Mr. Baron MARTIN in Walter v. Adcock, that some property must be dealt with in the arrangement.

Mr. Bacon and Mr. Sargood, for the respondents. The objection founded on the common-law authorities cited on the other side, that the arrangement being worked out through the medium of indentures, the creditors should have been but are not actually named as parties to the deed, is an objection analogous to and equally futile with a demurrer or plea to a declaration on the ground of the plaintiff not having proved his own identity. It is sufficiently answered by the fact of the practical impossibility of inserting the names of all those creditors who do not execute in a separate schedule.

[THE LORD CHANCELLOR. Does not the word composition in the ideas which it suggests involve knowledge on the part of 190 the debtor of all his creditors, and of the amount of his

debts?]

Not of his creditors, for he may not know in whose hands bills of exchange or promissory notes may be. It may be impossible to