$82.

ILLUSTRATIONS.

See illustrations ante pp. 42, 47, 48, 60 61, 77 and 84. The following instruments have been held not to be valid promissory notes:

1. "Three months after date, pay to the order of T. £228, for value received." Held not to be a note, for want of a promise, and not a bill, because addressed to no drawee: Forward v. Thompson, 12 U. C. Q. B. 103 (1855).

2. An instrument in the form of a note but under the seal of the maker: Wilson v. Gates, 16 U. C. Q. B. 278 (1858).

3. An instrument in the form of a note payable to bearer, but with a condition: Campbell v. McKinnon, 18 U. C. Q. B. 612 (1859).

4. "Four months after date I promise to pay to W. H. or order $1,264, value received. This note to be held as collateral security. S. J. M.": Hall v. Merrick, 40 U. C. Q. B. 566 (1877); Sutherland v. Patterson, 4 O. R. 565 (1884).

5. A letter acknowledging receipt of money "as a loan, subject to be returned when demanded, with interest": Whishaw v. Gilmour, 6 L. C. J. 319 (1862).

6. A receipt in the following form:-" Received from Mrs. A. a loan of $800, to be returned when required": DeSola v. Ascher, 17 R. L. 315 (1889).

The following have been held to be valid notes :

7. A church subscription list held to be the several note of each subscriber for the sum opposite his name: Thomas v. Grace, 15 U. C. C. P. 462 (1865).

8. A promise to pay in cash or goods at the option of the holder: McDonnell v. Holgate, 2 Rev. de Leg. 29 (1821); Hosstatter v. Wilson, 31 Barb. (N.Y.) 307 (1862); Dinsmore v. Duncan, 57 N. Y. at p. 573 (1874).

9. An obligation before a notary to pay a certain sum of money without condition: Aurele v. Durocher, 5 R. L. 165 (1878).

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.

Indorse

ment 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 0. 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 (1883). 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).