§ 59.

12. In order to vitiate the payment by the maker of a note · indorsed in blank, bad faith must be shewn: Ferrie v. Wardens of the House of Industry, 1 Rev. de Leg. 27 (1845).

13. The acceptance of a promissory note is not payment or novation unless there be an evident intention that it shall have that effect Beaudoin v. Dalmasse, 7 L. C. R. 47 (1857); Brown v. Mailloux, 9 ibid. 252 (1859); Noad v. Bouchard, 10 ibid. 476 (1860); Noad v. Lampson, 11 ibid. 29 (1860); Rogers v. Morris, 13 L. C. J. 20 (1869); Richard v. Boisvert, 3 R. L 7 (1871); Mercier v. Bousquet, 5 R. L. 352 (1874);—even when there is an indorser: Landry v. Beauchamp, 13 L. N. 169 (1890).

14. Proof of the payment of a promissory note in Lower Canada is governed by the law of England, and may be made by parol Carden v. Finlay, 8 L. C. J. 139 (1860).

15. Possession of a note by the maker after maturity, is a presumption of payment, but it may be rebutted by parol: Grenier v. Pothier, 3 Q. L. R. 377 (1877); Frizzell v. McKenzie, Ramsay A. C. 77 (1874).

16. Where an insolvent has secretly agreed to pay a creditor a sum in excess of the composition note, the indorser is not discharged, but the sum so paid must go in partial discharge of the note: Martin v. Poulin, 4 L. N. 20 (1880).

17. Charging a bill in the books of the bank to the account of the drawer who had got it discounted, is not payment, nor can the acceptor, when sued by the bank, set up in compensation claims he may have against the drawer: Goodall v. Exchange Bank, M. L. R. 3 Q. B. 430 (1887).

18. The receipt of a cheque which is subsequently dishonored, is not. payment, and is not a novation of the original debt Corporation of Kingsey Falls v. Quesnel, 18 R. L. 470 (1888).

19. The fact that plaintiffs did not return a note sent them by defendant, but handed it to their attorneys with the claim, is not conclusive that it was accepted even as conditional payment:

Brown v. Harris, 18 N. S. (1 R. & G.) 18 (1879); Lyman v. § 59. Chamard, 1 L. C. J. 285 (1857).

20. The acceptance of a renewal note is a conditional payment and while it is current, an action will not lie on the original note: Murray v. Gastonguay, 13 N. S. (1 R. & G.) 319 (1880).

21. One of a firm who were makers of a note died, and the business was carried by the surviving partner who was executor of the deceased. The survivor gave a renewal note and the old one was given up to him. Held, that no novation was created, and the estate of the deceased partner remained liable: re estate Ives, 19 N. S. (7 R. & G.) 108; 7 C. L. T. 146 (1887).

22. Plaintiff agreed to advance a sum of money to defendant to fit out his vessel, the latter giving his notes for the sum, and plaintiff to take as collateral security a mortgage on the vessel and an insurance policy for the amount. Plaintiff subsequently proposed to be his own insurer, and defendant paid him the premium. The vessel was lost. Held, that the notes were paid, and the subsequent agreement as to the insurance could be proved by parol McKay v. O'Neill, 12 C. L. T. (N. S.) 22 (1891).

23. When the holder of a bill improperly sold property which he held as collateral, without notice, the note was paid only to the extent of the amount received, although the debtor might have a further claim for damages; Kinnear v. Ferguson, 9 N. B. (4 Allen) 391 (1859).

24. The fact that the holder of a note had possession of land belonging to the maker from which he might have received rent, does not operate as payment if he did not actually receive it : Simonds v. Travis, 13 N. B. (2 Han.) 14 (1870).

25. Receipt of a bill or note is prima facie only conditional payment: Stephenson v. Miller, 27 N. B. 42 (1888); Owenson v. Morse, 7 T. R. 64 (1796); Dillon v. Rimmer, 1 Bing. 100 (1822); Simon v. Lloyd, 2 C. M. & R. 187 (1835); Maxwell v. Deare, 8 Moore, P. C. 364 (1853); Bottomley v. Nuttall, 5 C. B. N. S. 122 (1858); re London B. & S. S. Bank, 34 L. J. Ch. 418 (1865).

M'C.B.E.A.-22

$ 59.

26. Part payment to the holder at or after maturity operates as a discharge pro tanto, and any subsequent holder takes it sub* ject to such partial payment: Graves v. Key, 3 B. & Ad. 313 (1832).

27. Credit given to the holder of a bill by the party ultimately liable is equivalent to payment: Atkins v. Owens, 4 N. & M. 123 (1884).

28. Payment by the acceptor before maturity is equivalent to a purchase of the bill, and he may negotiate it before it becomes due Morley v. Culverwell, 7 M. & W., at p. 182 (1840); Attenborough v. Mackenzie, 25 L. J. Ex. 244 (1856).

29. A bill is accepted by three joint acceptors, not partners. It is paid at maturity by one of them. It is discharged, and he cannot negotiate it, although he accepted it for the accommodation of the other two: Harmer v. Steele, 4 Ex. at p. 13 (1849). See as to promissory notes: Bartrum v. Caddy, 9 A. & E. 275 (1838); Beaumont v. Greathead, 2 C. B. 494 (1846).

30. The indorsee of a bill obtained it by fraud. He presented it at maturity to the acceptor, who paid it in good faith. The bill is discharged: Robarts v. Tucker, 16 Q. B. at p. 576 (1851).

31. Payment by a banker is complete when the money is placed on the counter: Chambers v. Miller, 32 L. J. C. P. 30 (1862).

32. Bond or deed to operate as a merger must be co-extensive with the bill and between the same parties: Boaler v. Mayor, 19 C. B. N. S. 76 (1865).

33. The payee of a note payable on demand takes a mortgage as collateral security. He transfers the mortgage, getting the amount of the note. Afterwards he indorses the note to a holder in due course. The note is not paid: Glasscock v. Balls, 24 Q. B. D. 13 (1889).

34. Where a person of the same name as the payee or indorsee of a bill payable to order, presents it at maturity to the acceptor, who pays it, he remains liable to the real owner: Graves v. American Bank, 17 N. Y. 205 (1858).

Compensation or Set-off. Compensation in Quebec § 59. differs from set-off in the other provinces in this, that when two persons are mutually debtor and creditor, compensation takes place by the sole operation of the law. The moment two debts, equally liquidated and demandable, exist simultaneously, they are mutually extinguished in so far as they correspond: C. C. Arts. 1187, 1188. The result is that in Quebec, a bill transferred after maturity would be subject to any money claim which the acceptor might have against any prior holder at or after maturity. In the other provinces a claim arising out of some matter not connected with the bill and which a party liable on it might set up against the holder, could not be set up against a person to whom such holder might transfer it bona fide, even after maturity. In the old phraseology it is not an equity attaching to the bill, or in the language of the Act, a defect of title. The repeal of Art. 2287 of the code, which went farther than the law of England in this respect and the enactment of section 8 of the amending Act of 1891, may tend to assimilate the law in Quebec to that of England in this matter.

ILLUSTRATIONS.

1. An attorney holding for collection the note of a local judge arranged to apply on the note fees payable to the maker. Certain fees were indorsed on the note and enough more were earned to pay it, but the attorney refused to credit or apply them. He afterwards absconded. It was held that the note was only discharged in part: Ketchum v. Powell, 3 U. C. O. S. 157 (1833).

2. Set-off by indorsees against the holder is no defence on a note given for the accommodation of the indorser. The indorsee of an overdue bill or note is liable to such equities only as attach to the bill or note itself, and to nothing collateral due from the indorser to the maker, or indorsee to payee :

§ 59. Wood v. Ross, 8 U. C. C. P. 299 (1858); Smith v. Nicholson, 19 U. C. Q. B. 27 (1859).

3. A note transferred after maturity is subject in Quebec to a money claim against any holder at or after maturity : Gibsone v. Lee, 1 Rev. de Leg. 847 (1814); Hayes v. David, 3 L. C. R. 112 (1852); Duguay v. Senecal, 1 L. C. L. J. 26 (1865); Amazon Ins. Co. v. Quebec & G. P. S. S. Co., 2 Q. L. R. 810 (1876).

4. The indorser may set up in compensation any money due or paid to the maker by the holder since its maturity: Quebec Bank v. Molson, 1 L. C. R. 116 (1851).

5. An account for goods sold and delivered may be set up in compensation of a promissory note: Angers v. Ermatinger, 2 L. C. L. J. 158 (1866); Quintal v. Aubin, M. L. R. 1 S. C. 397 (1883).

6. Compensation not allowed against a bill or note because claim not equally claire et liquide: Ryan v. Hunt, 10 L. C. R. 474 (1860); Parsons v. Graham, 15 L. C. J. 41 (1870); Perrault v. Herdman, 3 R. L. 440 (1871).

7. Claims arising after the insolvency of a company, or a judicial abandonment, cannot be set up in compensation against the liquidator or curator: Exchange Bank v. City & District Savings Bank, 14 R. L. 8 (1885); Exchange Bank v. Canadian Bank of Commerce, M. L. R. 2 Q. B. 476 (1886); Riddell v. Gould, ibid. 5 S. C. 170 (1889).

8. The maker of a note may set up in compensation against the holder the amount of a note of a third party which he gave him as collateral, and which the latter has disposed of: Lepage v. Hamel, 19 R. L. 439 (1889).

9. The indorsee of an overdue promissory note is liable, in an action against the maker, to all equities arising out of the note transaction itself, but not to a set-off in respect of a debt due from the indorser to the maker, arising out of collateral matters: Burrough v. Moss, 10 B. & C. 558 (1830).