[*236

only apply to a deed which compounds with all the creditors of the party. If the deed is so framed as to exclude from its operation a particular class of the creditors, then the three-fourths of the creditors who have assented to it have not pursued their statutable authority, and the deed therefore does not bind any non-assenting creditors, whether included in the excepted class or not. And I think that where the deed professedly binds all the creditors, but is so framed as to cast on a particular class of non-assenting creditors a greater burden than that which the assenting creditors take upon themselves, it is not binding on those on whom this unequal burden is attempted to be imposed; and the effect is the same as if they had been designedly excluded from the deed. The deed .not being binding on all the creditors is binding on none.

Now comes the question, is there such a particular class of creditors here, i. c., are those creditors who have received bills or other negotiable instruments from the debtor professedly bound to an extent beyond the power of the assenting creditors to bind them? I think they are. A creditor who has received a negotiable security on account of his debt stands in a peculiar position, which was considered in Belshaw v. Bush, 11 C. B. 191 (E. C. L. R. vol. 73). His right to sue for the debt is not gone, but suspended till the bill attains maturity; if then the bill is dishonoured in his hands, or if having been passed away by him it comes back upon him, he is remitted to his old debt, and may sue upon it. If the bill is satisfied he is paid, but till then he is a creditor, though his right to sue is suspended. I cannot doubt that it was intended by the 192d section to enable the three-fourths of assenting *creditors

to bind such creditors as I have just described. No doubt there [*237 is great difficulty, in every case in which there are outstanding bills of exchange, in making a composition deed which shall effectually protect the debtor from being obliged to pay 208. in the pound upon the bills to some holder who becomes so after the execution of the deed, either in virtue of a subsequent endorsement to him without notice, or as a prior endorser to whom the bill is returned. It may be that no such deed can be made unless sect. 200 be complied with, and a simple cessio bonorum in the form in Schedule D. be made; or unless the debtor either ascertains who are the holders of his outstanding paper, and obtains their assent, or waits until all bills to which he has put his name have attained maturity.

But, however that may be, I think the provision in this deed by which this object is sought is unequally burdensome on the creditors who have received negotiable paper on account of their debts. The more common case is that such a creditor draws on the debtor who accepts his bill, or that the debtor endorses direct to the creditor the bill of some other person, but it also often happens that some person as surety for the debtor endorses to the creditor an acceptance of the debtor. Now in this last case it would be most unreasonable to say, if you sue the surety so that he can recover from the debtor you shall not only indemnify him against the bill but pay the costs of the suit. Then in the case where the bill has been endorsed away, the acceptor may have a defence,-he may say, I have not received notice of dishonour,-and keep the bill suspended while that is being decided. The holder in the meantime will sue the acceptor, and if it afterwards appears that due notice

*of dishonour was given, he would become creditor at once, and

*238] be bound to indemnify the defendant against all costs. Or again, the person who endorses the bill away might be so situated with respect to his own creditors as to make it wrong in him to do so. If a creditor who is under such circumstances had covenanted to lay himself under such a burden it might be different; but it is neither reasonable nor right that three-fourths of a body of creditors, who perhaps have not a bill of exchange among them all, should impose it on such a creditor, and I do not think that the law authorizes them to do it. As therefore the class of creditors I have described are not bound by this deed, none of the creditors are bound.

SHEE, J.-It has now been clearly decided that a deed under the 192d section of The Bankruptcy Act, 1861, is bad if it contains clauses to which it is unreasonable to call upon a creditor to assent. In the present case the clause of indemnity does not appear so unreasonable as that in Woods v. Foote, in error, 1 H. & C. 841, and Inglebach v. Nichols, 14 C. B. N. S. 85 (E. C. L. R. vol. 108), because in those cases each of the creditors was bound to indemnify the debtor's estate, not only against bills which he had himself taken but against bills which any other creditor had taken from the debtor. In this deed each individual creditor only agrees to indemnify against all claims in respect of bills taken by himself. But still it appears to me that such a clause is unreasonable. It embraces two classes of creditors; first, those to whom the defendant has given bills for their debts, which bills they have not parted with; secondly, those who having taken bills have negotiated *239] *them. With respect to the first class the clause, perhaps, is not unreasonable, for they would be in the same position as if the debtor had never given bills at all on account of their debts; they could prove against his estate and would be entitled to their dividend out of it. But with respect to the second class of creditors who have put the bills received by them into circulation the case is different. The bills being outstanding the claim upon them is suspended until the bills become due, though it revives if the bills remain unpaid at maturity. Such creditors are put under a great disadvantage by this clause; for, first, they may not be able, without serious inconvenience to themselves, or injustice to others who may have claims against them, to take up the bills; and it cannot be reasonable that other creditors of the debtor should compel them to do what they either would not or ought not to have done if they were free agents. There may also be cases where a creditor, having passed away a bill given by the debtor, is not liable on it to the holder by reason of the holder not having given him notice of dishonour; and if, payment being refused by him, the holder should proceed against the principal debtor, then under this clause the original creditor would be liable for all damages and costs. This clause is therefore unreasonable, and consequently the deed containing it void as against non-assenting creditors.

I say nothing as to the other objections.

Judgment for the plaintiff.(a)

(a) See the next case.

*KEYES v. ELKINS. [Nov. 18.]

[*240

Bankruptcy Act, 1861, 24 & 25 Vict. c. 134, s. 192.—Composition deed.—Release.— Reservation of rights against sureties. Pleading.

Declaration by drawee against acceptor of a bill of exchange. Plea. A composition deed made between the defendant of the first part, a trustee of the second part, and the executing or assenting creditors on behalf of themselves and all the creditors of the defendant of the third part, by which the defendant covenanted with the trustee to appropriate half of his future net income from his profession of attorney until 58. in the pound should be realized and paid to his creditors (the amount of such income to be ascertained and paid at certain times therein mentioned). And the creditors covenanted with the defendant to accept the deed in satisfaction of their debts, claims, and demands against the defendant, and released the defendant and his future estate from their debts, claims, and demands: provided that the release should not prejudice or prevent any of the creditors from claiming or realizing any security held by them, or from suing any person other than the debtor liable to payment thereof for the recovery thereof, less the amount received by them under the deed, nor prejudice the rights or remedies of any such creditors except as against the debtor. Held,

1. That the deed was a valid deed within sect. 192 of The Bankruptcy Act, 1861, 24 & 25 Vict. c. 134, inasmuch as the covenant by the defendant was not unreasonable.

2. That notwithstanding the proviso reserving remedies against sureties the deed was pleadable in bar.

DECLARATION on a bill of exchange drawn by the plaintiff and accepted by the defendant.

66

Plea. That after the accruing of the causes of action and contracting the debts in the declaration mentioned, and after action brought, a composition deed within the true intent and meaning of The Bankruptcy Act, 1861, was executed by the defendant, then being a debtor within the Act, and was a deed made and entered into between the defendant so being such debtor and his creditors relating to his debts and liabilities, and his release therefrom, which deed was set out as follows: This indenture, made the 18th March, 1864, between Edward Elkins, of, &c. (hereinafter called the debtor), of the first part; James Lane, of, &c. (hereinafter called the trustee), of the second part; and the several persons whose names are sub[*241 scribed and seals affixed in the schedule hereunder written, or who shall before or after the execution hereof by the said debtor in writing assent to or approve of this deed or instrument (being respectively in their own right, either individually or in copartnership with others, or being agents or attorneys of creditors, of the said debtor), on behalf of themselves and all and every other the creditors of the said debtor (hereinafter called the creditors), of the third part: Whereas the said debtor is and standeth indebted to the parties hereto of the third part, and all those who are or are intended to be bound by these presents, in divers sums of money respectively; and whereas the said debtor being unable immediately to pay his said creditors the amount of their several debts or claims against him in full, hath lately proposed to them, and it hath been mutually agreed between the said parties hereto of the second and third parts respectively, that the said debtor should pay all and every the creditors of him the said debtor, whether executing, assenting to or approving of this deed or not, and that they the said creditors should accept from him the sum or composition of 58. in the pound on the full amount and in full discharge of all and every the debts of the said debtor due and owing by him at the time of the execution of these presents, in manner and at the times hereinafter mentioned, that the

said debtor should make such provision for the payment of the said sum or composition of 58. in the pound, and enter into such covenants, provisions and agreements as are hereinafter contained, and that the said creditors should execute the release hereinafter provided. Now THIS *INDENTURE WITNESSETH that, in pursuance of the said agree*242] ment and in consideration of the premises, he the said debtor doth hereby for himself, his heirs, executors and administrators, covenant, promise and agree with the said trustee on behalf of himself and the said creditors respectively, and their respective executors, administrators, partners and partner, that he the said debtor shall and will set apart and appropriate one equal half part or moiety of his future net income or profits to be derived and received by him from his professional fees and emoluments as an attorney and solicitor (and vouch the truth thereof in such a manner as shall be required by the said trustee), until the said sum or composition of 58. in the pound shall be realized and paid in manner hereinafter provided, to and amongst all his several creditors, whether executing, assenting to or approving of these presents or not, upon the full amount and in full discharge and satisfaction of the amounts or debts due and owing by him to them, or any of them, on the day of the date hereof, and that he the said debtor will duly and truly proceed to and ascertain the amount of such net income or profits actually received (and not receivable), and declare the same to the said trustee in writing at the end of eighteen calendar months next after the date of the certificate of registration of these presents, and thenceforth in like manner ascertain and declare the receipts of the subsequent net income or profits at the end of every succeeding twelve calendar months; and further, that he the said debtor shall and will from time to time within one calendar month after such ascertainment and declaration thereof, respectively, pay over such equal half part or moiety of the said net income or profits as aforesaid to the said trustee upon the trusts hereinafter declared of and concerning the *same, that is to say, *243] upon trust that he the said trustee, his executors, administrators and assigns, shall with all convenient speed out of the moneys which shall be received by him by virtue hereof, in the first place pay all costs, charges and expenses which shall or may have been necessarily incurred or otherwise incidentally occasioned in and about the preparation, completion and registration of these presents, such costs to be taxed on the principle as near as may be as that applied to a bankruptcy; and, in the next place, shall and do from time to time pay, distribute and divide the whole of the residue of such moneys then remaining in his hands to and amongst all the creditors of the said debtor, whether executing, assenting to or approving of this present deed or not, their respective executors and administrators, partners, partner or successors, rateably and in proportion to the several amounts of their respective debts or claims, until the whole of the said sum or composition of 58. in the pound shall be fully paid thereon according to the true intent and meaning of these presents. AND THIS INDENTURE FURTHER WITNESSETH that, in further pursuance of the said agreement and in consideration of the premises and of the said covenant of the said debtor, they the said creditors do hereby severally for themselves, and their respective heirs, executors, administrators, partners, partner and successors, covenant and agree with the said debtor, his executors and administra

tors, to accept and take, and they do hereby accept and take, these presents in full discharge and satisfaction of their respective debts, claims and demands against or upon him the said debtor, his estate and effects. And they the said creditors, in further pursuance of the said agreement and *for the considerations aforesaid, do, and each and every of them doth, by these presents, for themselves and [*244 their respective heirs, executors, administrators, partners, partner and successors, freely, clearly and absolutely remise, release, exonerate, discharge and for ever quit claim unto the said debtor, his heirs, executors and administrators, and his and their future lands, tenements, goods and chattels, estate and effects, all and singular their and each and every of their said respective debts, claims and demands now due and owing to them respectively, and all and all manner of action and actions, suit and suits, cause and causes of action, and suit, bills, bonds, writings obligatory, debts, sums of money, promissory and other notes, IO Us, dues, duties, accounts, reckonings, costs, charges, expenses, agreements, judgments, decrees, decretal or other orders, warrants of attorney, defeasances, extents, executions, quarrels, controversies, trespasses, damages, claims and demands, whether admitted or not, whatsoever, both at law and in equity, or otherwise howsoever, which they the said creditors and their respective heirs, executors and administrators, partners, partner and successors, now have, ever had or shall, or may or otherwise could or might hereafter have, claim, challenge, or demand of from and against him the said debtor, his heirs, executors or administrators, or his or their lands and tenements, goods and chattels, estate and effects, or any of them, for or by reason or on account of the debts, claims or demands of them, or any of them, respectively now due and owing or claimed to be due and owing from the said debtor, and all interest and arrears of interest for or in respect of the same several debts and premises, or any of them, or for *or by reason or on [*245 account of any other matter, cause or thing whatsoever relating thereto antecedent to and including the day of the date hereof; and these presents shall and may accordingly operate as a defeasance pleadable in bar to or may be otherwise set up as a defence to any action or actions, suit or suits, or other proceedings at law or in equity heretofore or hereafter brought, instituted or taken by or on behalf of the said creditors, or any of them, their or any of their heirs, executors or administrators, partners, partner or successors, for or in respect of such debts, claims and demands, or any of them. Provided always, and it is hereby agreed and declared by and between the said parties hereto, that the execution, assenting to or approval of these presents, and the acceptance of the said sum or composition of 58. in the pound at the times, by the means and in manner herein before mentioned, and the release hereinbefore contained shall not in anywise prejudice, affect, or extend, or be construed to extend, to prevent any of the said creditors from claiming or realizing any security now held by them, or any of them, or from suing any person or persons, other than the said debtor, liable to payment thereof for the recovery thereof less the amount received by them, or any of them, under and by virtue of these presents, nor in any way prejudice or affect the rights or remedies of any such creditors, except as against the said debtor, to which but for agreeing to or signing these presents they might severally have recourse for the