The statement of a particular fund in a bill of exchange will not vitiate it if introduced merely as a direction to the drawee how to reimburse himself or show the particular account to be debited; thus a bill directing the drawee to pay J. S. £9 10s., “as my quarterly half pay was held to be a good bill (r).

If the instrument be defective as a bill or note, it still may be evidence of an agreement (8).

For the purposes of the Stamp Act, 1891, a variety of instruments Bills and may rank as bills or notes which would not fall within the Code. notes within Stamp Act Such, for instance, are debentures, coupons for interest, and engage- but not Code. ments for the payment of money which, either by reason of conditions attached thereto, or of including other engagements than for the payment of money, or from not specifying that they are payable to a named payee or to bearer, would not fall within the definitions of bills or notes under the Code (t).

Pickford, L.J., in this case (at p. 635) applied in Commercial Bank of Australia v. Rosenhair & Co., [1922] Victoria L. R. 655, where a bill had written at its head documents against acceptance," and was held unconditional.

(r) Mackleod v. Snee (1726), 2 Ld. Raym. 1481.

(8) See Smith v. Nightingale (1818), 2 Stark. 375. It will, however, require stamping as such (unless specially exempt under the Schedule to the Stamp Act, 1891), subject to a penalty of £10 (s. 15 Act of 1891) if more than fourteen days have elapsed since its execution.

(t) See Chap. IX., and s. 32, Stamp Act, 1891, post, p. 107, and as to debentures, post, p. 151, note (g).

Various

sorts of agreements.

Effect of con

CHAPTER VIII.

OF AGREEMENTS INTENDED TO CONTROL THE

OPERATION OF BILLS OR NOTES.

SUCH agreements are either WRITTEN or ORAL.

A written agreement is either on the instrument itself or on a distinct paper. Again, a written agreement on the instrument itself is either contemporaneous with the completion of the bill or note, or it is a subsequent agreement. Once more, even a contemporaneous written agreement may either be parcel of the instrument, or it may be collateral.

A memorandum on a bill or note, made before it is complete, is temporaneous sometimes considered as part of the instrument, so as to control its written on the operation, and sometimes not.

agreement

instrument.

Effect of an agreement subsequently written on the instrument.

If the memorandum make the payment contingent, it will be incorporated in the instrument (a). But where it is merely directory, as if it point out the place of payment (b), or be merely the expression of an intended courtesy, as if it intimate a wish that the money lent should not be called in by the payee's executors till three years after his death (c); or if it import that a collateral security (as the deposit of title deeds) has been given (d); or be intended only to identify and ear-mark the instrument (e): it does not affect its operation. Further, a memorandum of the time when a note falls due may correct an error in the date (f).

A memorandum made after the note is perfected and delivered is an independent agreement, requiring an agreement stamp. "If,"

(a) In Leeds v. Lancashire (1809), 2 Camp. 205, Ellenborough, C.J., regarded the instrument as an agreement only between the immediate parties; see also Hartley v. Wilkinson (1815), 4 Camp. 127. In both these cases the memo. was by indorsement. In Cholmeley v. Darley (1845), 14 M. & W. 344, a joint and several promissory note had an indorsement in this form: "The within note is given for securing floating advances from the L. Banking Company, to the within-named T. S., sen. (one of the joint and several makers of the note), with lawful interest for the same from the respective times when such advances have been or may be made, together with commission, stamps, postages, etc., and all usual charges and disbursements, not exceeding in the whole the sum of £100 within mentioned." It was held to be an agreement which could not be read in evidence without an agreement stamp. Sed quære, whether the indorsement were anything more than an explanation of the consideration. See Code, 3 (3) (b). (b) Exon v. Russell (1816), 4 M. & S. 505.

(c) Stone v. Metcalfe (1815), 4 Camp. 217.

(d) Wise v. Charlton (1836), 4 A. & E. 786; Fancourt v. Thorne (1846), 9 Q. B. 312, a note may contain a pledge of collateral security; Code, s. 83 (3). (e) Brill v. Crick (1836), 1 M. & W. 232.

(f) Fitch v. Jones (1855), 5 E. & B. 238. And see Fanshawe v. Peet (1857), 2 H. & N. 1.

says Lord Ellenborough, "the memorandum was subsequently written, when the note had been perfected and delivered in its absolute state, it could not be considered as part of that instrument, though it chanced to be inscribed upon the same piece of paper. In that case it was an agreement by way of defeasance, and it lay upon the defendant to produce it with a proper stamp (g).

agreement written on

a distinct

A written agreement on a distinct paper, to renew, or in other Effect of respects to qualify, the liability of the maker or acceptor, is good as between the original parties (h). Thus, if the drawer agrees to indemnify the acceptor against a claim by other parties, for a paper. portion of the sum for which the bill is drawn, and the acceptor afterwards pays those other parties a sum to which the indemnity applies, the acceptor's liability as between himself and the drawer will be reduced pro tanto, and he will not be turned round to his cross-action on the indemnity (i).

But a written agreement, though contemporaneous, will not Agreement restrain the operation of the bill or note if it be collateral, e.g., if contemporaother persons besides the parties to the bill or note be parties collateral. to it (k).

neous but

note accom

When a promissory note is given to accompany a mortgage deed Promissory as further security, the mortgagee is not entitled to sever the two, and a Court of Equity would, if necessary, have issued an injunction mortgage. to restrain him from so doing (1).

No mere oral agreement can have any effect at law in controlling the instrument, if contemporaneous with the making of it; for that would be to allow oral evidence to vary a written contract (m). Yet there are cases in which evidence of an oral agreement is admissible, since the Code provides that:

S. 21. (2.) As between immediate parties, and as regards a remote party other than a holder in due course, the delivery

(b.) May be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill.

But if the bill be in the hands of a holder in due course

(g) Stone v. Metcalfe (1815), 4 Camp. at p. 218. Stamp Act, 1891, s. 4. (h) Bowerbank v. Monteiro (1813), 4 Taunt. 844; but it requires a good consideration to support it. M'Manus v. Bark (1870), L. R. 5 Exch. 65.

(i) Carr v. Stephens (1829), 9 B. & C. 758.

(k) Webb v. Spicer (1849), 13 Q. B. 894; on error in Exchequer Chamber. (1) Walker v. Jones (1865), L. R. 1 P. C. 50.

(m) Hoare v. Graham (1811), 3 Camp. 56; Free v. Hawkins (1817), 8 Taunt. 92; Woodbridge v. Spooner (1819), 3 B. & Ald. 233; Moseley v. Hanford (1830), 10 B. & C. 729; Foster v. Jolly (1835), 1 Cr. M. & R. 703; Besant v. Cross (1851), 10 C. B. 895; Henry v. Smith (1895), 39 Sol. J. 559; New London Syndicate v. Neale, [1898] 2 Q. B. 487; Orsmond v. Steyn (1900), 18 Cape S. C. 1. Where the plaintiff took issue on a plea alleging such an agreement, the evidence was received: Holt v. Miers (1839), 9 C. & P. 191.

panying a

Oral agree

ment when admissible.

a valid delivery of the bill by all parties prior to him, so as to make them liable to him, is conclusively presumed.

The effect of this provision is not to alter the rule of common law excluding parol evidence to vary a written agreement, but in conformity with the common law it allows, except as against a holder in due course, evidence to be given either that there was no delivery by the defendant with the intention of transferring property in the instrument, as where a bill was indorsed and delivered to be collected on a joint account (n), or that delivery was subject to the fulfilment of a condition suspending the operation of the instrument, and that the condition has not been fulfilled (0); in other words, that the instrument was a mere escrow.

Parol evidence has been admitted to prove an oral agreement by the defendant to take up a bill accepted by the plaintiff, such being preliminary to a written agreement by the plaintiff with the defendant in reliance on the defendant's verbal undertaking, the Court construing the written contract as not containing the whole that was intended to be binding between the parties (p). But in a later case evidence of a contemporaneous oral agreement to renew a bill was held inadmissible, as its effect would be to vary the terms of the instrument, Vaughan Williams, L.J., pointing out that the test of the admissibility of such evidence under the common law procedure was whether it would support a plea of the general issue, such as non est factum (q). It has, indeed, been held that, in an action by the indorsee against the drawer of a bill, the defendant might set up that at the time of the indorsement to the plaintiff it was verbally agreed that the plaintiff should sue the acceptor and not the defendant, the indorser (r). Further, oral evidence is

(n) Denton v. Peters (1870), L. R. 5 Q. B. 475; Lloyd v. Howard (1850), 15 Q. B. 995; Marston v. Allen (1841), 8 M. & W. 494; Adams v. Jones (1840), 12 A. & E. 455.

(0) Jeffries v. Austen (1725), 1 Stra. 674; Bell v. Ingestre (1848), 12 Q. B. 317; Commercial Bank of Windsor v. Morrison (1902), 33 Canada S. C. 98; Merton v. Harris (1912), 33 Natal L. R. 474; Goeldner v. Marshall (1913), 15 West Australian L. R. 50; Standard Bank of Canada v. Wettlaufer (1915), 33 Ontario L. R. 441.

(p) Lindley v. Lacey (1864), 34 L. J. C. P. 7; Bank of South Australia v. Williams (1893), 19 Victoria L. R. 514.

(q) New London Credit Syndicate v. Neale, [1898] 2 Q. B. 487, following Young v. Austen (1869), L. R. 4 C. P. 553. See also Hitchings & Co. V. Northern Leather Co. of America, [1914] 3 K. B. 907; Vineberg v. Jones (1912), 22 Quebec B. R. 128; Wilton v. Manitoba Oil Co. (1915), 25 Manitoba 628.

(r) Pike v. Street (1828), 1 M. & M. 226. This case has been explained on the ground that the evidence really negatived the consideration and so was admissible, per Parke, B., Foster v. Jolly (1835), 1 Cr. M. & R. at p. 708. In the later case of Abrey v. Crux (1869), L. R. 5 C. P. 37, in practically identical circumstances such evidence was not admitted (dubitante, however, Willes, J.), but the decision in Pike v. Street was but briefly noticed. The case has never in fact been overruled; see Henry v. Smith (1895), 39 Sol. Jo. 559, and Yorkshire Canadian Trust Co. v. Scott, [1919] 2 Western Weekly R. (Can.) 87, where Pike v. Street followed; contra Stiglingh v. Theron, [1907] Transvaal S. 998, where the decision in Abrey v. Crux apparently preferred.

admissible to contradict the consideration or value of a bill or note, but not to vary the terms of the instrument (8).

An agreement to renew, without more, is an agreement to renew Agreement to once only (t). But the party liable is not bound to apply during renew. the currency of the bill; he may do so within a reasonable time

after the bill falls due (u).

A defendant has a right at the trial to call on the plaintiff to Agreement on read any indorsements that may be on the bill (x).

Though it be generally necessary that the agreement affecting the operation of the bill or note should be in writing, it has been held that it is not necessary in pleading to aver that it is in writing (y).

(s) See per Alderson, B., Foster v. Jolly, supra, at p. 708. See also Abbott v. Hendricks (1840), 1 M. & G. 791. But if the nature of the consideration be written on the note it cannot be contradicted by oral evidence: Ridout v. Bristow (1830), 1 C. & J. 231.

(t) Innes v Munro (1847), 1 Exch. 473; followed Pennoyer Co. v. Williams Machinery Co. (1915), 34 Ontario L. R. 493. As to covenant not to sue, see post, pp. 233, 235.

(u) Maillard v. Page (1870), L. R. 5 Exch. 312. It has been held that three weeks after maturity is too late White v. Sabiston (1896), 12 Quebec C. S. 345. A substituted bill is in general held under the same rights and title as the one it replaces Lee v. Zagury (1817), 8 Taunt. 114.

:

(x) Richards v. Frankum (1840), 9 C. & P. 221. As to agreements by clerks in fraud of their employers, see Bosanquet v. Forster (1841), ib., Bosanquet v. Corser (1841), ib., p. 664.

p. 659;

(y) Kearns v. Durell (1848), 18 L. J. C. P. 28. See Gillett v. Whitmarsh (1846), 8 Q. B. at p. 969; Young v. Austen (1869), L. R. 4 C. P. 553, where, at p. 557, Bovill, C.J., approves of the above statement. Such an averment should now, it seems, be always made; cf. Bullen and Leake, 7th ed., p. 59, note (m).

bill must be read.

Pleading.