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CHAPTER
VIII.

Various sorts of agreements.

Effect of con

CHAPTER VIII.

OF AGREEMENTS INTENDED TO CONTROL THE
OPERATION OF BILLS OR NOTES.

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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 temporaneous complete, is sometimes considered as part of the instrument, so as to control its operation, and sometimes not.

agreement written on the instrument.

If the memorandum make the payment contingent, we have seen that it will be incorporated in the instrument (a).

(a) Leeds v. Lancashire, 2 Camp. 205; Hartley v. Wilkinson, 4 M. & S. 25; 5 Camp. 127. Though by way of indorsement ; Leeds v. Lancashire, supra. A joint and several promissory note had an indorsement in this form : "The within note is given for securing floating advances from

the Lincoln and Lindsay Banking Company, to the withinnamed Thomas Smith, 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,

VIII.

But where it is merely directory, as if it point out the place CHAPTER 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. But 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," 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).

A written agreement on a distinct paper, to renew, or in other respects to qualify, the liability of the maker or acceptor, is good as between the original parties (). Thus, if the drawer agrees to indemnify the acceptor against a claim by other parties, for a 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).

stamps, postages, &c., and all usual charges and disbursements, not exceeding in the whole the sum of 100l. 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. Cholmley v. Darley, 14 M. & W. 344. See the Chapter on CONSIDERATION, and Code, 3 (b).

(b) Exon v. Russell, 4 M. & S. 505.

(c) Stone v. Metcalfe, 4 Camp. 217; 1 Stark. 53.

(d) Wise v. Charlton, 4 A. & E.

B.B.E.

786; 6 Nev. & M. 364; 2 Har. &
W. 49; Fancourt v. Thorne, 9
Q. B. 312.

(e) Brill v. Crick, 1 M. & W.
232.

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

(g) Stone v. Metcalfe, 4 Camp.
217; 1 Stark. 53; 54 & 55 Vict.
c. 39, s. 4.

(h) Bowerbank v. Monteiro, 4
Taunt. 844; 14 R. R. 679; but it
requires a good consideration to
support it. M Manus v. Bark,
5 L. R., Ex. 65; 39 L. J. 65.
(i) Carr v. Stephens, 9 B. & C.
758; 4 M. & R. 591.

8

Effect of an

agreement subsequently written on the

instrument.

Effect of agreement distinct paper.

written on a

CHAPTER
VIII.

Agreement contemporaneous but collateral.

Promissory

note accom

panying a mortgage.

Effect of an oral agree

ment.

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

When a promissory note is given to accompany a mortgage deed as further security, the mortgagee is not entitled to sever the two, and a court of equity would, if necessary, issue an injunction 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). "Every bill or note," says Parke, J., "imports two things, value received, and an engagement to pay the amount on certain specified terms. Evidence is admissible to deny the receipt of value, but not to vary the engagement" (n).

(k) Webb v. Spicer, 19 L. J., Q. B. 34: 13 Q. B. 894; on error in Exchequer Chamber.

(1) Walker v. Jones, L. R., 1 Pr. C. 50, ante, p. 13.

(m) Hoare v. Graham, 3 Camp. 57; 13 R. R. 752; Free v. Hawkins, 8 Taunt. 92; 1 Moore, 28; Woodbridge v. Spooner, 3 B. & Al. 233; 1 Chit. 661; 22 R. R. 365, 367; Moseley v. Hanford, 10 B. & C. 729; Foster v. Jolly, 1 C., M. & R. 703; 5 Tyr. 255; Richards v. Thomas, 1 C., M. & R. 772 Holt v. Miers, 9 C. & P. 191; Besant v. Cross, 10 C. B. 895; Stott v. Fairlamb, 53 L. J., Q. B. 47.

(n) Abbott v. Hendricks, 1 M.
& G. 795; Moseley v. Hanford,
10 B. & C. 729. The cases,"
says Maule, J., "show that
although a consideration is stated
in the note, you may show that
it was given for a different con-
sideration or without any con-
sideration at all."
Abbott v.
Hendricks, 1 M. & G. 791: 2
Scott, N. R. 183; but see Ridout
v. Bristow, 1 C. & J. 231; 1 Tyr.
84; 35 R. R. 710; and Edwards
v. Jones, 2 M. & W. 414; 5 Dowl.
585; 7 C. & P. 633.

In Pike v. Street, 1 Dans. &
Lloyd, 159; 1 M. & M. 226, it

was held a good defence to an action against the drawer that, at the time when the plaintiff discounted the bill, he verbally agreed, in the event of its being dishonoured, not to proceed against the drawer, who had indorsed the bill to him. In Abrey v. Crux, the contrary was held by the Court of C. P., dubitante that most eminent judge, the late Mr. Justice Willes, L. R., 5 C. P. 37; 39 L. J. 9.

An indorsement was perhaps excepted from the rule in the text on account of its twofold operation, as an express assignment to the indorsee of the right against the acceptor, and as implying a conditional promise by the indorser to pay on his default. This conditional promise might be varied by parol so as to increase the indorser's liability. Phipson v. Kelner, 4 Camp. 285; Burgh v. Legge, 5 M. & W. 418; Brett v. Levett, 13 East, 214. It might, therefore, by analogy well be varied so as to diminish it. Byles on Bills, 6th Amer. edition 157. But see Martin v. Cole, 14 Otto, 30; Kealing v. Van Sickle, 39 Amer. R. 101; Stuck v. Buck, ib. 113.

By sect. 16 a drawer or indorser

An instrument under seal may be delivered as an escrow, that is to say, with a condition that it shall not operate as a deed, except in a certain event. An instrument under seal, which is to operate as an escrow, must be delivered, not to the obligee, but to a stranger, and regularly the condition should be expressed by apt words used at the time of the delivery (0).

In analogy with a deed, it has been held that a written and signed simple contract may be delivered with an express parol condition precedent, that it is not to take effect except in a certain event. And the instrument may be so delivered, not only to a stranger, but by one party to the other (p). And evidence of the parol condition is admissible not only when it is relied on as a condition, but also when an action is brought upon it as an agrement (q).

When such a doctrine is extended to a bill of exchange or promissory note, it is obvious that it must not be applied to the injury of a holder for value without notice.

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An agreement to renew, without more, is an agreement Agreement to to renew once only (r). But the party liable is not bound renew.

to apply during the currency of the bill; he may do so

within a reasonable time after the bill falls due (s).

may limit his liability to all parties, or increase it, by express stipulation on the bill or note, and will be held like an acceptor or maker to his written contract.

Still, as between immediate parties, or remote, other than a holder in due course, the delivery required to complete any contract on a bill or note, 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 or note. Code, s. 21. In Henry v. Smith, 39 Solicitors' Jo., 559, Grantham, J., points out that Pike v. Street, though much criticized, has never been formally overruled, and the effect of the most recent case, New London Syndicate v. Neal, [1898] 2 Q. B. 487; seems to be to confine parol agreements between immediate parties to what Rigby, L.J., styles cases of the escrow class.

(0) Sheppard's Touchstone, 58; see Murray v. Earl of Stair, 2 B. & C. 82; 26 R. R. 282, where the

Court of King's Bench expressed
an opinion that it was not in-
dispensable that express words
should be used at the time, but
that the condition might be
gathered from circumstances.

(p) Code, s. 21 (2) b. Daris
v. Jones, 17 C. B. 625; Pym v.
Campbell, 6 E. & B. 370; Wallis
v. Littell, C. B., M. T. 1861; 31
L. J., C. P. 101; Lara v. Hacon,
E. T., C. P. 1863: Rogers v.
Hadley, 32 L. J., Ex. 241. In
this last case parol evidence was
held admissible to show that a
contract signed and delivered was
never intended to be the real
contract between the parties.

(q) Hindley v. Lacey, 34 L. J., C. P. 7.

(r) Innes v. Munro, 1 Exch. 473. See, as to an agreement to renew being used as a defence to an action, Flight v. Gray, 3 C. B., N. S. 320; Webb v. Spicer, 13 Q. B. 886, 894; Salmon v. Webb, 3 H. L. Cas. 510. The point did not arise in Innes v. Munro.

(8) Maillard v. Page, L. R., 5

CHAPTER
VIII.

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

bill must be read. Pleading.

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

Ex. 312. A substituted bill is
in general held under the same
rights and title as the one it
replaces. Lee v. Zagury, 8 Taunt.
114; 19 R. R. 476.

(t) Richards v. Frankum, 9 C.
& P. 221. As to agreements by
clerks in fraud of their employers,

see Bosanquet v. Foster, 9 C. & P. 659; Bosanquet v. Corser, 9 C. & P. 664.

(u) Kearns v. Durell, 18 L. J., C. P. 28; 6 C. B. 596. See Gilbert v. Whitmarsh, 8 Q. B. 969; Austin v. Young, L. R., 4 C. P. 553.

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