thereon, if such is the nature of the contract between the parties (u). Chap. XXVII. § 2 (ii). Bearer may sue in his own name. where debentures are secured by a trust deed, is A debenture to bearer will entitle the holder for the time being, as equitable assignee of the contract, to the full benefit thereof, so as to enable him to sue thereon in his own name (x). Where a trust deed to secure certain debentures to bearer Remedy, issued by a company contained a covenant with the trustees to pay to them the interest, and to provide by a sinking fund for the gradual discharge of the debentures, and each debenture through the contained a covenant with the trustees to pay 1007. to the trustees. bearer thereof, and interest to the bearer of the coupons annexed thereto, it was held that neither the bearer of a debenture, as to principal, nor the bearer of a coupon, as to interest, was a creditor of the company, either at law or in equity, so as to be entitled to present a winding-up petition, but that his only right of action was through the trustees (y). debentures contract with Where, however, debentures were secured by a trust deed con- Distinction taining a similar covenant with the trustees, but each debenture where the contained a general undertaking to pay the principal and create direct interest subject to indorsed conditions, one of which was that holders. the bearer of the debenture and bearer of each of the coupons should be entitled to the principal and interest respectively; it was held that there was a direct debt from the company, so that the holder of a debenture might present a petition to wind up the company (≈). Debentures are sometimes issued left with a blank for the Debentures in blank. name of the holder, so as to render them transferable by delivery by way of assignment or deposit as security with a view of enabling the holder for the time being to insert the name of himself or a nominee, and to register the person whose name is filled in as owner of the debenture. Where a company issued debentures purporting to charge property as security for a loan, and delivered them to the lenders with blanks left for the obligee, it was held that the holders had in equity a good charge as against the company, (u) Crouch v. Crédit Foncier of England, L. R. 8 Q. B. 385; Re Natal Investment Co., L. R. 3 Ch. 355. (x) Re Blakely Ordnance Co., L. R. 3 Ch. 154. (y) Re Uruguay Central Rail. Co., 11 Ch. D. 372. See Re Empress Engineer- (z) Re Olathe Silver Mining Co., 27 Chap. XXVII. § 2 (ii). Terminable debentures. notwithstanding that the debentures were void at law (a); and where some of a series of debentures were issued in blank and deposited with a bank as security for a loan, it was held that the debentures were void, but that the lender had an equitable security for the loan, and was entitled to rank pari passu with the other valid debenture holders (b). So an option to call at any time for a specific amount of mortgage debentures of a given issue in satisfaction of a debt is a good equitable security, while the issue remains unexhausted, and may be exercised after judgment in a debenture holder's action (c). Debentures may be either terminable or perpetual. Terand perpetual minable debentures may be made payable at a stated time or by drawings at stated periods. A provision in a debenture accelerating the time for payment if default should be made in payment of interest is not a penalty against which equity can relieve. Independently of any such provision, the holder of a debenture which has not matured may, on the winding up of the company, at once enforce his security for the full amount of his principal, interest, and costs (d). Interest on debentures. The intention that a debenture shall be perpetual, that is to say, payable only on default in payment of interest or on the winding up of the company, must be clearly expressed. If merely no date is fixed for payment of the principal, the debenture holder will be entitled to enforce his security upon nonpayment by the company after six months' notice at any time (e). Quare, whether a limited company can issue irredeemable debenture stock (f). Interest continues to run on a debenture after it falls due, although not expressly provided for (g); but it is a question of discretion. The rule against payment of dividends on shares before any profits are realized does not apply so as to render improper the payment of interest on debentures (h). (a) Re Strand Music Hall Co., 1 De G. J. & S. 147. (b) Re Queensland Land and Coal Co., (1894) 3 Ch. 181. (c) Pegge v. Neath Tramways Co., (1898) 1 Ch. 183. (d) Hodson v. Tea Co., 14 Ch. D. 859; Wallace v. Universal Automatic Machines Co., (1894) 2 Ch. 547, C. A. (e) Hopkins v. Worcester, &c. Canal Proprietary, L. R. 6 Eq. 437. See (f) Jarrah Timber, &c. Corp. v. Samuel, (1903) 2 Ch. 1, C. A. (g) Price v. G. Western Ry., 16 M. & W. 244; Morgan v. Jones, 8 Exch. 620; Gordillo v. Weguelin, 5 Ch. D. 303. (h) Bloxam v. Metropolitan Rail Co., L. R. 3 Ch. 337. The right to recover interest on debenture stock issued under Part III. of the Companies Act, 1863, is not barred for twenty years (i). Chap. XXVII. § 2 (ii). There seems no practical objection to annexing coupons for Coupons. the interest of debentures (k). And these coupons being mere tokens, require no stamp (7). debenture iii.-Debenture Stock.-Where companies have the power to Power to raise money by mortgage or bond they may do so by debenture borrow on stock (m); and to the extent of the stock so issued the borrow- stock generally. ing powers are to be extinguished (n). Such stock is a charge on the undertaking, and is transferable and transmissible (o). No rate of interest is now prescribed (p). The issue of debenture stock by way of security is not ultra vires of a company governed by the Companies Clauses Act, 1863, s. 22 (q), and may be made by a company governed by the Companies Acts (r). Debenture stock principally differs from a debenture in that, Nature of subject to any restriction imposed by the stock conditions, any d fraction of the stock may be transferred (s). Debenture stock is usually secured by a trust deed which specifically mortgages the property of the company and creates a floating charge. The deed is stamped with ad valorem duty unless under the Finance Act, 1899, the duty has been paid upon the statement which has to be delivered to the Inland Revenue Commissioners in the case of any company issuing a loan, and the stock certificates do not require stamping (†). Debenture stock gives the holder no right to the possession of the property of the company (u). Quare, whether a limited company can issue irredeemable debenture stock (x). (Re Cornwall Minerals Ry., (1897) 2 Ch. 74. () Dav. Conv. (4th ed.) vol. ii. pt. 2, p. 683; and Bowen v. Brecon Rail. Co., L. R. 3 Eq. 541. (1) Enthoven v. Hoyle, 13 C. B. 373. Coupons on debentures payable abroad are liable to income tax. See Alexan dria Water Co. v. Musgrave, 11 Q. B. D. 174, C. A. (m) Comp. Cl. Act, 1863 (26 & 27 Vict. c. 118), s. 22; and 32 & 33 Vict. c. 48, s. 3. (n) 26 & 27 Vict. c. 118, s. 22. (0) Ibid. s. 23. (p) 32 & 33 Vict. c. 48, s. 1, repealing part of 26 & 27 Vict. c. 118, s. 22. (9) Whitehaven Joint Stock Bank v. Reed, 54 L. T. 360. (r) Robinson V. Montgomeryshire (s) Hamilton, Comp. Law, 278. (u) Attree v. Hawe, 9 Ch. D. 337, (x) Jarrah Timber, &c. Co. v. Samuel, (1903) 2 Ch. 1, C. A. debenture stock. Chap. XXVII. § 2 (iii). way com debenture stock. Similar powers as to debenture stock are given to railway companies (y), and this even though the special Act does not expressly incorporate Part III. of the Companies Clauses Act, Power of rail- 1863 (z). In order to check the issue of debentures beyond the panies to issue powers of the railway company, a declaration must be indorsed upon each mortgage bond or certificate of debenture stock specifying the powers under which the securities are issued (a), but with a proviso that nothing in the Act is to affect the liability of the company to third persons (b). Debenture stock of a railway company does not give to the holders any charge which they did not possess before the Act over the proceeds of sale of surplus lands (c). Bonds of companies. Lloyds' bonds. Agreement to issue debentures. iv.-Bonds.-A bond, unless by its terms specifically made so, is no charge on the property of a company (d); but bonds charging "all the estate, property, and effects" of the company, expressed to be made under a power in the articles of association authorizing the borrowing of money on the property of the company by debentures, were held to create a valid charge on the property (e). It is not clear whether the charge would have been upheld if the bonds had not expressly referred to the power (ƒ). Lloyds' bonds are instruments under seal, amounting to an account stated, and containing a promise to pay, but not creating any charge on the property of a company. If given for money lent, they are invalid (g). But if given for money due to a contractor, or the like, and generally, they will be enforced, so far as the company has had the benefit of the money (h). v.-Contracts to issue and take Debentures, &c.—A definite contract by a company to issue debentures or debenture stock (y) 30 & 31 Vict. c. 127, ss. 24, 25. (a) 29 & 30 Vict. c. 108, s. 14. (c) Re Hull, &c. Rail. and Dock Co., (d) Russell v. E. Anglian Rail. Co., 3 Mac. & G. 104, 125; Imperial Mercantile, &c. Assoc. v. Newry, &c. Rail. Co., Ir. R. 2 Eq. 524; Norton v. Florence, &c. Co., 7 Ch. D. 332. (e) Re Florence Land, &c. Co., 10 Ch. D. 530, C. A. at p. 536. (f) Re Florence Land, &c. Co., sup. (g) Chambers v. Manchester, &c. Co., B. & S. 588; Fountaine v. Carmarthen Rail. Co., L. R. 5 Eq. 316. (h) White v. Carmarthen, &c. Ry., 1 H. & M. 786; Re Cork and Youghal Rail. Co., L. R. 4 Ch. 748; Dickson v. Swansea Vale, &c. Rail. Co., L. R. 4 Q. B. 44: Blackburn, &c. Soc. v. Cunliffe, 22 Ch. D. 61, C. A.; affirmed 9 App. Ca. 857. charged on property of the company gives to the persons entitled to the benefit of the contract as good a claim and as effectual a security in equity as if the debentures or debenture stock had been actually issued pursuant to the agreement (i); and an execution creditor is only entitled to goods seized subject to a charge in favour of the intended debenture holders (k). Chap. XXVII. § 2 (v). Specific performance of an agreement to give a charge on Specific specified property may be enforced against a company, as against performance. an individual, if the money has been actually advanced, but not otherwise (). And an option to call for a specific amount of debentures of a given issue in satisfaction of a debt is a good equitable security, so long as the issue remains unexhausted (m). Conversely, specific performance will not be enforced against a person who has agreed to take debentures as security for an advance to be made by instalments, so as to compel him to pay up his instalments pursuant to the agreement; the remedy of the company in such a case is by damages (n). The measure of the damages is the loss sustained by the breach of contract, not by the amount agreed to be advanced (0). instalments of loan. A subscriber is in no way bound to continue the payment of Payment of his instalments after a company goes into liquidation (p), or if he has notice that the company is insolvent (g), or apparently that the particular object for which the money is intended to be advanced has become impracticable (r). SECTION III. WHAT SUBJECT-MATTER MAY BE INCLUDED IN SECURITIES GIVEN BY COMPANIES. i.-Undertaking, Tolls, Surplus Lands, &c. of Railway and Distinction Public Companies.-With regard to the subject-matter which between com (0) South African Territories v. Wal- (p) Re Ellerby, 20 W. R. 855. (r) See Wilson v. Church, 13 Ch. D. panies for |