10. Municipal Debentures under C. S. L. C. c. 25, payable § 82. to bearer: Eastern Townships' Bank v. Compton, 7 R. L. 446 (1871); Eastern Townships Bank v. Compton, 7 R. L. 436 (1871); Macfarlane v. Ste. Cesaire, M. L. R. 2 Q. B. 160 (1886).

11. "This is to certify that I, N. K., hereby agree and bind myself to pay to M., or order, $2,000, for all the space from date to close of navigation he has on the A. & B. line of steamers; $1,000 I now pay cash, and $1,000 I bind and pledge myself to pay to M., or order, on or about Nov. 15th, 1883. It is understood that this amount of $2,000 is paid for premium over and above the rate of freight to be paid for said steamers to agents and shipowners"-Held to be a negotiable note: Kennedy v. Exchange Bank, 30 L. C. J. 266 (1886).

12. An instrument in the form of a note written at the foot of a letter which set out the consideration, etc. The fact of the payee having cut off the letter before suing on the note was not a mutilation or alteration of the note: Palliser v. Lindsay, M. L. R. 6 Q. B. 311 (1890).

13. "I have received the books, which with cash overpaid, amounts to £80, which I will pay in two years": Wheatley v. Williams, 1 M. & W. 533 (1836).

14. "I promise to pay S. or order, 3 months after date, £100 as per memorandum of agreement: Jury v. Barker, E. B. & E. 459 (1858).

15. "Received from A. B. £30, payable on demand": McCubbin v. Stephen, 28 Jurist (Sc.) 618 (1856).

The following are recent decisions in Quebec regarding promissory notes:

16. A promissory note given by a debtor to his creditor for the excess of his claim over a composition accepted by the creditors generally is valid as against the maker, in the absence of a statute prohibiting it: Tees v. McArthur, 35 L. C. J. 33 (1891); Racine v. Champoux, M. L. R. 7 S. C. 478 (1890). Contra, Gervais v. Dubé, ibid 91 (1890). See also ante pp. 195, 196, Nos. 6, 9, and 10.

M'C.B.E.A.-27

§ 82.

17. Where the maker of a promissory note payable to his own order transferred it for value, but accidentally omitted to indorse it, he is liable to the transferee, and a judgment ordering him to indorse the note would be superfluous. Indorsers pour aval are also liable on it without protest, as it was indorsed and matured before the Bills of Exchange Act came into force: Coutu v. Rafferty, M. L. R. 7 S. C. 148 (1891). See ante p. 210.

18. Where defendant claimed he was an ordinary indorser of the note sued on, and not an indorser pour aval as claimed by plaintiff, the English rules of evidence apply, and under the authority of Macdonald v. Whitfield, 8 App. Cas. 733, he may prove by parol the circumstances under which the note was indorsed Northfield v. Lawrance, M. L. R. 7 S. C. 148 (1891).

Bank Notes.-Bank notes are promissory notes payable to bearer on demand. They may be issued only by chartered banks, and no note shall be for less than five dollars, or for any sum that is not a multiple of five dollars: 53 Vict. c. 31, s. 51 (Can.). They circulate as cash, are not deemed to be overdue, and are not discharged by coming into the hands of the bank, but may be re-issued. They are not subject to the statutes of limitation or prescription, at least, until after demand and dishonor.

Dominion Notes.-These notes issued under R. S. C. c. 31 are in form promissory notes payable on demand, but they do not strictly come within the definition of this section, as the Dominion of Canada, the maker, is not a "person" under the Interpretation Act. They have all the qualities of negotiable notes and bank notes, and are besides a legal tender.

Bon or I. O. U.-There were conflicting decisions in England as to whether an I. O. U. was a negotiable instrument. It is now well settled that if the instrument is a

simple I. O. U. and contains no promise to pay it, is a mere § 82. acknowledgment of debt, and is not negotiable: Gould v. Coombs, 1 C. B. 543 (1845); Fessenmayer v. Adcock, 16 M. & W. 449 (1847); Byles, p. 33. If, however, it contains a promise to pay it is a note, and the following was held to be sufficient: "11th Oct., 1831, I. O. U. £20, to be paid on the 22nd inst. W. B." Brooks v. Elkins, 2 M. & W.

74 (1836).

In

In Canada the decisions have not been uniform. Palmer v. McLennan, 22 U. C. C. P. 565 (1873), the following was held not to be a note: "Good to Mr. Palmer for $850 on demand." In Gray v. Worden, 29 U. C. Q. B. 535 (1870), "Due J. G. or bearer $482, payable in 14 days," was held to be a sufficient promise to make it a note.

In Quebec a simple bon, "Good on demand," has been recognized as a negotiable note: Hall v. Bradbury, 1 Rev. de Leg. 180 (1845); Beaudry v. Laflamme, 6 L. C. J. 307 (1862); Cridiford v. Bulmer, M. L. R. 4 Q. B. 293 (1886); but not a mere certificate of indebtedness: Dasylva v. Dufour, 16 L. C. R. 294 (1866).

In France and in most of the United States these instruments are recognized as negotiable, and the introduction of such words as "payable," "good to," "order," "bearer," "demand," or a due date, have been accepted as sufficient evidence of a promise to pay, or that the instrument should be negotiable. See Sackett v. Spencer, 29 Barb. (N. Y.) 180 (1859); Hussey v. Winslow, 59 Me. 170 (1870); Franklin v. March, 6 N. H. 364 (1833); Kimball v. Huntington, 10 Wend. (N. Y.) 675 (1833).

It is probable that the change in the law of Canada, by by which notes payable to a person, without "order" or "bearer," are made negotiable will lead to more general recognition of these bons as negotiable instruments.

§ 82.

Indorsement by maker.

Collateral pledge in.

note.

2. An instrument in the form of a note payable to maker's order is not a note within the meaning of this section, unless and until it is indorsed by the maker. Imp. Act, s. 83 (2).

When such a note is indorsed in blank it becomes a note payable to bearer: Burns v. Harper, 6 U. C. Q. B. 509 (1849); Wallace v. Henderson, 7 U. C. Q. B. 88 (1849); Ennis v. Hastings, 9 N. B. (4 Allen) 482 (1860); Hooper v. Williams, 2 Ex. 13 (1848); Brown v. De Winton, 6 C. B. 336 (1848); Masters v. Baretto, 8 C. B. 433 (1849). If indorsed specially it becomes a note payable to the indorsee Gay v. Lander, 6 C. B. 336 (1848).

3. A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof. Imp. Act, s. 83 (3).

This sub-section is a modification of the rule in section 3, that an instrument which orders anything to be done in addition to the payment of money, is not a bill. See Wise v. Charlton, 4 A. & E. 786 (1836); Fancourt v. Thorne, 9 Q. B. 312 (1846).

When a note on its face contains a statement that it is given as collateral security, it is not a promissory note: Hall v. Merrick, 40 U. C. Q. B. 566 (1877); Sutherland v. Patterson, 4 O. R. 565 (1884).

The right to such securities would go with the note: Central Bank v. Garland, 20 O. R. 142 (1890). See Cochrane v. Boucher, 3 O. R. at p. 472 (1888). This is the law in France: Nouguier, § 715.

The creditor has a right to hold the securities even after the remedy on the note is barred by the Statute of Limitations: Wiley v. Ledyard, 10 Ont. P. R. 182 (1883).

4. A note which is, or on the face of it purports to § 82. be, both made and payable within Canada, is an Inland and inland note: any other note is a foreign note: Imp. Act, s. 83 (4).

foreign.

The Imperial Act uses the words "British Islands."

If dated abroad and payable in Canada, a note would still be an inland note if actually made or issued in Canada. On the other hand, if dated in Canada and payable there, it would be an inland note although actually issued abroad. The distinction is of consequence for the purposes of protest. An inland note need not be protested except in Quebec, notice of dishonor being sufficient to bind indorsers in the other provinces: sections 51, 88. To bind the indorsers of a foreign note protest is necessary in any part of Canada: section 88, s-s. 4.

A note dated in Halifax, N.S., and payable there is an inland note although made in France: Merchants' Bank v. Stirling, 13 N. S. (1 R. & G.) 439 (1880).

necessary.

83. A promissory note is inchoate and incom- Delivery plete until delivery thereof to the payee or bearer. Imp. Act, s. 84.

It becomes a note on delivery to the second party to it. Delivery is the transfer of possession, actual or constructive, from one person to another: section 2 (f). The nature of the delivery necessary to give effect to a note is set out in section 21.

See Chapman v. Cottrell, 3 H. & C. 857 (1865).

several

84. A promissory note may be made by two Joint and or more makers, and they may be liable thereon notes. jointly, or jointly and severally, according to its tenor. Imp. Act, s. 85 (1).