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2. A bank collects a cheque for a person who has no account there, and who has had no previous dealings with them. He is not a customer, and the bank is not protected.
This reproduces the proviso to sect. 12 of the Act of 1876. It was held in Mathiessen v. London and County Bank, that the proviso protected the collecting banker, whether the cheque was crossed with or without the words “not negotiable,” for the proviso was to be construed as an independent section. The present Act, in affirmance of that decision, reproduces the proviso as an independent section.
The fact that the cheque is indorsed by the customer "per pro.” may put the collecting banker on inquiry, and if the banker makes no inquiry it may be negligence within the meaning of the section.
1 Matthews v. Williams & Co. (1894), The Reports, p. 267.
3 Bissell v. Fox & Co. (1884), 51 L. T. N, S. 663 ; affirmed with variation on another point, 53 L. T. N. S. 193, C. A.
83. (1) A promissory note is an unconditional' Promissory
note defined. promise in writing made by one person to another 2 signed by the maker, engaging to pay, on demand* or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person 8 or to bearer.
ILLUSTRATIONS. 1. An I. O. U. containing a promise to pay may constitute a note.'
The following are invalid as notes:
2. “Borrowed of C. 1001. to account for on behalf of the X. Club at months' notice, if required.” (Signed) T. B.10
3. “I. O. U. 201. for value received.” (Signed) W. B.11
4. “Nine years after date I promise to pay C. 1007., provided X. shall not return to England, or his death be certified in the meantime.” (Signed) W. B.12
Document providing for payment of certain money by instalments, with interest, the whole to become due on
· Colehan v. Cooke (1742), Willes, 393, at pp. 396, 397. Cf. sect. 3 (1) and note thereto, ante, p. 8.
? See Beecham v. Smith (1858), E. B. & E. 442, and sub-sect. (2).
3 As to signature by the hands of an agent, see sect. 91 (1), post, p. 274 ; and as to the seal of a corporation in lieu of signature, see sect. 91 (2), post,
* As to what instruments are, in legal effect, payable on demand, see sect. 10, ante, p. 29.
5 Colehan v. Cooke (1742), Willes, 393, at pp. 396, 397 ; see sect. 11, and notes thereto, ante, p. 30.
6 See sect. 9, and notes thereto, ante, p. 26.
default in payment of one instalment, and containing the following proviso, “No time given to, or security taken from, or composition arrangements entered into with, either party hereto shall prejudice the rights of the holder to proceed against any other party,” held, not a promissory note.
Comparing this section with the wider terms of sect. 33 of the Stamp Act, 1891, post, p. 355, it is clear that many instruments may require to be stamped as promissory notes which have not the mercantile incidents of notes as prescribed by the Act. A promissory note issued in the United Kingdom must be on an impressed stamp: see post, p. 357. An instrument invalid as a note may, of course, be valid as an agreement.? See a promissory note compared with a bill of exchange by Lord Mansfield 3 and Parke, B.4
No form of words is essential to the validity of a note, provided the requirements of this section be fulfilled ; 5 but, on the other hand, a document might comply with the terms of the section and yet not be a promissory note. It must be such as to show the intention to make a note. For instance, a banker's deposit note running, “ Received of Mr. C. 1501. to be accounted for on demand," and signed, will not be treated as a promissory note.?
An instrument promising to do anything in addition to the payment of money is clearly not a note; 8 but it has been held in the United States that a promissory note may give the holder the option between the payment of the sum specified and the performance of some other act by the makers, though as to the latter it is not a note. As the
Form of words.
Note in alternative.
| Kirkwood v. Smith, W. N. 1896, p. 46 (16).
2 Cf. White v. North (1849), 3 Exch. 689 ; Drury v. Macaulay (1846), 16 M. & W. 146 ; Kirkwood v. Smith, W. N. 1896, 46 (16). 3 Heylyn v. Adamson (1758), 2 Burr. at p. 676.
Gibb v. Mather (1832), 2 Cr. & J. at pp. 262, 263, Ex. Ch. 5 Hooper v. Williams (1848), 2 Excb. at p. 20. See English and American Cases reviewed in Currier v. Lockwood (1873), 16 Amer. R. 40. So, too, an ambiguous instrument may be treated by holder either as a bill or a note at his option. Peto v. Reynolds (1854), 9 Exch. 410 ; affirmed, 11 Exch. 418, Ex. Ch.
6 Sibree v. Tripp (1846), 15 M. & W. at p. 29; cf. Jackson v. Slipper (1869), 19 L. T. N. S. 640.
i Hopkins v. Abbott (1875), L. R. 19 Eq. 222.
8 Sect. 3 (2) ante, p. 8; and Follett v. Moore (1849), 4 Exch. 410, at p. 416 : cf. Cook v. Satterlee (1826), 6 Cowen, 108, New York.
9 Cf. Dinsmore v. Duncan (1874), 57 New York R. 573 ; New York Draft Code, & 1716.
holder can demand money, and no option is given to the
§ 83. maker, it is said there is no uncertainty in the instrument. Thus, in New York an instrument running, “I promise to pay C. or order 100 dollars or in goods on demand," was held to be a valid note. This question does not appear to have been raised here.
In England a promissory note for less than 201. payable Note to to bearer on demand must, by 7 Geo. 4, c. 6, § 10, be made bearer
under 2012 payable where issued, but may also be payable elsewhere.
A promissory note for less than 51. payable to bearer on Note to demand is, it seems, void in England. The legislation on
under 51. the subject is confused, but this seems to be the effect of it. The 48 Geo. 3, c. 88 (now repealed), made negotiable notes under twenty shillings void. The 17 Geo. 3, c. 30, required negotiable notes for more than twenty shillings and less than 51. (or on which less than 51. was unpaid), to specify the
payee and to conform to other regulations. This Act was suspended by 26 & 27 Vict. c. 105, as to any note “not being a note payable to bearer on demand.” The suspension was continued annually till 1882, when the Act was repealed by the Bills of Exchange Act. The 7 Geo. 4, c. 6, $$ 3, 5, and 7, appear to prohibit the making or issue in England of any promissory note payable to bearer on demand for less than 5l. The 9 Geo. 4, c. 65, prohibits the issue or negotiation in England of any note for less than 51. payable to bearer on demand which is made or issued, or purports to be made or issued, “ in Scotland or Ireland, or elsewhere out of England.”
A bank note may be defined as a promissory note issued Bank notes] by a banker payable to bearer on demand. "But a bank note differs from an ordinary note in various important respects. Among others it may be re-issued after payment. See further distinctions pointed out by Bramwell, B. As to the restrictions on the issue in England of bank notes by bankers other than the Bank of England, see ante, p. 64. Bank of England notes form part of the ordinary currency of the kingdom, and therefore stand on a peculiar footing3
| Hostater v. Wilson (1862), 31 Barb. 307.
Lichfield Union v. Greene (1857), 26 L. J. Ex. at p. 142.
See per Ld. Mansfield, in Miller v. Race (1758), · Burr. 452; and per Jessel, M. R., in Suffell v. Bank of England (1882), 9 Q. B. D. at p. 563, C. A.
The statutory privileges of the Bank of England are expressly saved by sect. 97 (3), post, p. 283.
As to the nature of a bank post bill, see Forbes v. Marshall.
An I. O. U. is not a negotiable instrument, and requires no stamp.
The production by the plaintiff of an I. O. U. signed by the defendant, though not addressed to anyone by name, in evidence of an account stated between the parties, but not of money lent. As to Scotland, see Bell's Principles, 9th ed. 8 310.
The French law as to notes (billets à ordre) is contained in Arts. 187, 188 of the Code de Commerce.
Although the code is silent on the point, it seems that notes payable to bearer (billets au porteur) are to some degree recognized : Nouguier, ss 1565 — 1578. German Exchange Law, Arts. 96—100, and Netherlands Code, Arts. 208, 209, deal with notes. The foreign codes, like this Act, apply to notes, mutatis mutandis, the provisions relating to bills of exchange.
Note payable to maker's order.
(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.
ILLUSTRATIONS. 1. B. makes a note payable to his own order, and indorses it in blank. This is a valid note payable to bearer.3
2. B. makes a note payable to his own order, and indorses it to C. This is a valid note payable to C. or order. 4
3. B., C. and D. made a joint and several note payable to C. and D. or order. This is a valid note. C. and D. may sue B. on his several liability.
| Forbes v. Marshall (1835), 24 L. J. Ex. 305; cf. Willis v. Bank of England (1835), 4 A. & E. 21.
* Taylor on Evidence, § 124 ; Fesenmayer v. Adcock (1817), 16 M. & W. 449. As to contradicting such evidence, see Lemere v. Eliott (1861), 30 L. J. Ex. 350.
3 Hooper v. Williams (1848), 2 Exch. 13; Masters v. Baretto (1849), 8 C. B. 433.
4 Gay v. Lander (1848), 17 L. J. C. P. 286. 6 Beecham v. Smith (1858), E. B. & E. 442.