MORTGAGES, DEBENTURES AND RECEIVERS 195
company; (3) a fixed charge on some and a floating charge
on other parts of the property of the company.

In the case of debentures secured by trust deed the specific
property which is to be the security is either demised to or
charged by way of legal mortgage in favour of trustees upon
trusts for the benefit of the debenture holders, and the deed
prescribes the terms and conditions on which the security is
to be held, and, if need be, enforced, by the trustees. The
debentures themselves, by one of the conditions endorsed
thereon, declare the holders to be entitled pari passu to the
benefit of, and subject to the provisions in, the trust deed,
the terms of which are thus incorporated in the debentures.
The debentures, even though a specific charge is created by
the trust deed, often contain a general charge on the under-
taking of the company.

The advantages of a trust deed are that a legal mortgage can
be created in favour of the trustees, and that they, as repre-
senting the whole body of debenture holders, can act more
conveniently on their behalf.

The trust deed also usually contains provisions for the
calling of meetings of the debenture holders at which a
specified majority (usually three-fourths) is able by resolution
to bind the minority, and such provisions are valid [Follit v.
Eddystone Granite Quarries (1892), 3 Ch. 75). Buta majority
will not be allowed to exercise its voting power in such a
way as to defraud a minority [New York Taxicab Co. (1913),
t Ch. 1].

The powers given to the majority should, however, be
strictly defined, as the Court will refuse to allow the will of
the majority to override that of the minority except in regard
to matters definitely provided for in the trust deed, e.g. a
power to release the mortgaged premises does not include
a power to release the company; a power to modify the rights
of the debenture holders does not include a power to relin-
quish their rights; a power to compromise their rights pre-
supposes some dispute about them, or difficulty in enforcing
them, and cannot be exercised where there is no such dispute
or difficulty [Mercantile Investment Trust Co. v. International
Co. of Mexico (1891), reported in footnote to Sneath v. Valley
Gold (1893), 1 Ch. 477)). Moreover, even if the modification is
within the express provisions of the deed, the resolution effect-
ing the modification may not be upheld if it is only carried by
the vote of a debenture holder with a special interest in
s>curing the modification [British American Nickel Corporation
v. M. J. O’Brien, Ltd. (1027), * ©. 369; but see Goodfellow v
Velson Line (1912), 2

Toor

Debentures
secured by
Trust Deed