not income, because they never came into the hands of the
appellant; that his true income, upon which he ought to be
taxed, was his salary less the amount deducted from it under
the scheme. In my opinion that argument is not well founded.
I do not think that, to use the old language of pleading, it
would be correct to say that, as to the amounts deducted from
the appellants' salaries, the corporation never were indebted to
them. I think that, if sued for these amounts, the corpora-
tion would have to admit indebtedness, and to justify the
deductions on the ground that the amounts deducted were
appropriated and paid by the authority of the appellants in
accordance with the contracts entered into between them and
the corporation. I do not think it necessary to go at length
into all the arguments which have been put forward in this
case, but I should like to call attention to the argument which
arises upon s. 54 of the Income Tax Act, 1853. It is plain
that the case with which we are now dealing is not covered by
the words of that section. If, as contended, it is covered by
the words of the first rule which I have discussed, it would
follow that the whole of s. 54, except that part of it which
deals with certain voluntary payments made by way of
premiums on insurances, was absolutely unnecessary. In my
judgment that is not so, and I do not think that the Legisla-
ture made a mistake when they thought it necessary to insert
that section. I think I ought to say that, if my view of the
construction of the first rule is correct, it seems to me to
follow that the view taken in Beaumont v. Bowers (1) was
wrong. I cannot, speaking for myself, see that any substantial
distinction between that case and the present can be based on
the suggestion that the deduction there was one directly pre-
scribed by the Poor Law Officers' Superannuation Act, 1896, or
that the deduction in that case was a compulsory deduction in
any sense which is not equally applicable to the present case.
It is not however necessary to decide the question whether
that decision was correct one way or the other. It is enough
to say that in the present case the sums in question do not fall
within the words of the first rule defining the deductions
(1) [1900] 2 Q. B. 204.

C. A.

1903

HUDSON

v.

GRIBBLE.

BELL

v.

GRIBBLE.

Vaughan Williams L.J.

C. A.

1903

HUDSON

V.

GRIBBLE.

BELL

v.

GRIBBLE.

which may be made, on the two grounds which I have mentioned, namely, that they are not sums "payable or chargeable on the same by virtue of any Act of Parliament," and that they are not sums "really and bonâ fide paid and borne by the party to be charged." For these reasons I think the appeal in the first case must be dismissed, and that in the second allowed.

STIRLING L.J. I am of the same opinion. I do not think that the deductions claimed are in respect of sums which have been "really and bonâ fide paid and borne by the party to be charged" within the meaning of the first rule of Sched. E of the Income Tax Act, 1842. These sums have been deducted by the Manchester Corporation from the salaries of the appellants in pursuance of a scheme framed by the corporation under the Manchester Corporation Act, 1891; and it is contended that they therefore come within! the words of the rule as being sums payable or chargeable on those salaries by virtue of an Act of Parliament, and which have been really and bonâ fide paid and borne by the parties to be charged. But the Act of Parliament under which the scheme was framed, and which authorized these deductions, itself provides that the sums so deducted shall be retained by the corporation and shall in their hands bear interest; and by s. 7 it is enacted that the terms of the scheme must provide that, on a person in the service of the corporation retiring from that service, he shall be entitled, subject to certain qualifications in the case of misconduct, to have his own contributions returned to him with interest, or, if he dies in the service of the corporation, his representatives shall, subject to the like qualifications, be similarly entitled. It is obvious that, though the amounts so deducted are not immediately paid to the person employed, they remain his property to a great extent. In these circumstances I do not think that they can be said to have been "really and bonâ fide paid and borne" by him. I also agree with my brother Vaughan Williams that in truth these are not sums payable or chargeable by virtue of an Act of Parliament. They are really payable because the person concerned

has thought fit voluntarily to enter into the service of the Manchester Corporation.

MATHEW L.J. I am of the same opinion. An argument was presented to us by Mr. Asquith, which was founded on the word "income." He argued that, the tax imposed by the Income Tax Act, 1842, being a tax on income, it could only apply to income which actually reached the hands of the taxpayer within the year; and therefore income tax was not payable on the sums deducted under the scheme in the present case. He carried that argument so far as to insist that, where, by a term of a contract of service entered into voluntarily, and not in pursuance of any Act of Parliament, it was provided that the employer might defer payment of a portion of the salary from time to time payable to a person in his employ, for purposes similar to those of the scheme in the present case, the portion, of which payment was so deferred, would not be income taxable under the Income Tax Act, 1842. The consequences of that contention would be very remarkable. Suppose that a marriage settlement contained a covenant by the husband to set aside a certain proportion of his income every year, and invest the same on certain trusts for the benefit of his family; it would follow, if the argument put forward is correct, that the sums so set aside would not be taxable. Such a conclusion would, I think, be impossible.

With regard to the meaning of the words in the first rule of Sched. E which have been relied upon, it is contended for the Crown that they were inserted merely to provide for the deduction of duties or other sums payable or chargeable by virtue of an Act of Parliament, which were in the nature of other taxes. On reference to the statute book, it appears that there were in certain cases taxes on salaries which would answer the description of "duties payable or chargeable by virtue of an Act of Parliament." Although it appears that experience can supply no examples of such taxes in operation at the present day, the use of the word "duties" is strong to indicate that the sums intended to be dealt with were sums

C. A. 1903

HUDSON

v.

GRIBBLE.

BELL

V.

GRIBBLE.

C. A.

1903

HUDSON

v.

GRIBBLE.
BELL

v.

GRIBBLE.

Mathew L.J.

imposed upon an individual by Act of Parliament without his consent. It is true that the sums here in question were deducted in accordance with a scheme framed under an Act of Parliament; but the analogy between them and sums deducted by employers out of the wages of persons in their employment, in pursuance of a scheme of the same kind established by them on their own account, is as close as can be. A person can refuse to enter into an employment of which it is a term that he shall agree to such deductions. If he does enter into such an employment, his position is that of a person who has voluntarily agreed to the deductions. The person, who has entered into the employment of the corporation before the establishment of the scheme, is not bound to submit to these deductions, and, if he exercises his option to be admitted to the benefit of the scheme, he cannot be said to have been charged with them by virtue of an Act of Parliament. In the case of a person who enters upon the service of the corporation after the establishment of the scheme, it is equally clear in my opinion that, inasmuch as he is not obliged to enter into their service, he voluntarily submits to the deductions. Again, by the terms of the Act of Parliament and the scheme, the person from whose salary or wages deductions have been made in pursuance of the scheme is to get back any contributions which he has made upon retiring from the service. The scheme really provides for deferred payment in respect of the sums deducted. That being so, I do not think it can be said that those sums are really and bonâ fide paid and borne by the persons from whose salary or wages they are deducted. For these reasons I agree that the appeal in one case must be dismissed, and in the other allowed.

Judgment accordingly.

Solicitors for appellants: Austin & Austin, for Thomas Hudson, Manchester, and R. Bell, Manchester.

Solicitor for the Crown: Solicitor of Inland Revenue.

E. L.

[IN THE COURT OF APPEAL.]

KIRKWOOD v. CARROLL AND ANOTHER.

Bill of Exchange-Promissory Note-Joint and Several-Proviso as to giving Time to either Party-Bills of Exchange Act, 1882 (45 & 46 Vict. c. 61), 8. 83.

The plaintiff sued as holder of a document described as a joint and several promissory note, which provided for the payment of certain money by instalments, the whole to become due on default in payment of any one instalment. It contained the following clause: "No time given to, or security taken from, or composition or arrangement entered into with, either party hereto shall prejudice the rights of the holder to proceed against any other party' y":

Held, that the document was a valid promissory note within the meaning of s. 83, sub-s. 1, of the Bills of Exchange Act, 1882.

Kirkwood v. Smith, [1896] 1 Q. B. 582, overruled.

Yates v. Evans, (1892) 61 L. J. (Q.B.) 446, approved.

APPEAL from a decision of Wright J. upon a special case raising a question of law for the opinion of the Court.

The action was brought to recover 125l. from the defendants as makers of a joint and several promissory note for that amount, and the case stated that on January 24, 1901, the defendants signed and handed to the plaintiff an instrument in writing purporting to be a promissory note in favour of the plaintiff, which was in the following terms:

"1257.

"We jointly and severally promise to pay Mr. John Kirkwood (carrying on business in the name or style of the Provincial Union Bank) or order the sum of 1251. for value received by instalments in manner following, that is to say, the sum of 51. on Thursday, the 31st day of January inst., and the sum of 51. on the Thursday in every succeeding week until the whole of the said 1257. shall be fully paid, and in case default is made in payment of any one of the said instalments the whole amount remaining unpaid shall become due and payable forthwith. No time given to, or security taken from,

C. A.

1903

Feb. 16.