DEATH OF TRUSTEE. Where there are several trustees and one of them dies, it would appear that it is not safe to honour cheques upon the trust account when signed by the surviving trustee or trustees, with out first ascertaining that the terms of the instrument creating the trust permit such payment.
Section 22 of the Trustee Act, 1S93, provides (I) Where a power or trust is given to or vested in two or more trustees jointly, then, unless the contrary is expressed in the instrument, if any, creating the power or trust, the same may be exercised or performed by the survivor or survivors of them for the time being." Where a trustee is dead, then the person or persons nominated for the purpose of appointing new trustees by the instrument, if any, creating the trust, or if there is no such person, then the surviving trustees or trustee, or the personal representatives of the last surviving trustee, may, by writing, appoint another person or other persons to be a trustee or trustees in the place of the trustee dead (Section 10, Trustee et, DEBENTURE.(Latin clebeo, to owe.) Where a company requires to borrow, it frequently does so by an issue of debentures, that is by documents under the seal of the company acknowledging the debt. .\ de benture is usually secured by a mortgage or charge, and represents a separate debt of a definite round sum bearing a fixed rate of interest. In the case of debenture stock, the certificates are for different amounts, representing parts of a large loan or debt. Debentures are the instruments evidencing a loan to the company.
Although debentures generally give secur ity over the property of a company, they may be merely an acknowledgment of a debt, and give the holders no advantage over other creditors. l It is therefore important, when debentures are offered as security, to ascer tain if, and in what manner, they are secured. It is also necessary to see that the company has power, by its memorandum and articles of association, to issue debentures, and that any such power has not been exceeded ; in other words, that the amount issued is within its borrowing powers. It should also be noted whether the debentures are trans ferable only "subject to equities" that is, are subject to any debt due by the trans feror to the company—or whether the debentures are payable without regard to any such debt, that is, " without regard to any equities " between the company and the transferor.
Debentures and debenture stock are usually secured by a trust deed, sometimes called a covering deed," by which the property of the company is vested in trustees upon trust for the debenture holders or debenture stockholders. When the de bentures and debenture stock arc secured by a " fixed " charge, the holders are free from the danger of anyone securing a prior charge, and the trustee, are given powers to enable them to deal with the mortgaged property in order, when necessary, to raise money to repay the debt to the holders. lf, however, the charge is a " floating " one and not '' fixed," the company can create prior charges, or sell the property or deal with it as they desire at any time before the charge becomes fixed. A debenture I renting a floating charge often, however, contains a condition of this nature :- -" The debentures of the said series are all to rank part passit as a first charge on the property hereby charged, without any preference or priority one over another, and such charge is to be a floating security, but so that the company is not to be at liberty to create any mortgage or charge on its undertaking pan' pass:, with or in priority to the said debentures." If a banker obtains a charge, and has notice of such a condition, his charge will be postponed to the charge created by the debentures.
It is usual for a debenture to be secured by a " fixed " charge upon the land of the company and by a " floating " charge upon its stock, book debts and uncalled capital. By that means the company can continue its business and use up and vary the assets included under the floating charge. If the company defaults in payment of the prin cipal and interest secured by the debentures, or goes into liquidation, the floating charge becomes fixed, and attaches the assets as at that date. Although debentures may be secured by a trust deed, a banker should ascertain the nature of the property, as the property may prove to be of little value.