and such damages were not to be brought into the account of redemption.

But as to the over size of the wagons, directed an issue at

law.

FOLEY V. FLETCHER ET AL.

(3 Hurlstone & N. 769. Court of Exchequer, 1858.)

Proviso deferring right to suit after breach. Where there is a covenant to pay money by a day certain, with a proviso that no action shall be brought till after the expiration of a month, the action is premature if brought within the month.

1 Annual payments, not annual profits. Payments of purchase money by annual payments are not annuities, annual profits or gains-under the income tax acts.

A proviso in the same deed with the covenant qualifies and controls the covenant.

The declaration stated that by indenture between Sir F. Scott of the first part, the plaintiff of the second part, the defendants of the third part, and W. Matthews and W. Hatton of the fourth part; reciting that Sir F. Scott was seized in fee of one moiety and the plaintiff of the other moiety of certain buildings, lands, and mines therein described, etc.; and reciting that the defendants were partners in the business of coal and iron masters, and in the said buildings, land and mines; and that Sir F. Scott and the plaintiff had agreed with the defendants for the sale to them of the buildings, lands, mines, colliery, engines and plant for £99,000; and that the buildings, lands, mines, etc., should be conveyed to Matthews and Hatton upon the trusts therein declared. It was witnessed, that in consideration of £6,770, before the execution of the indenture paid by the defendant to Sir F. Scott, and the plaintiff in moieties, and of £92,230, residue of the sum of £99,000, to be paid by the several installments therein mentioned, Sir F. Scott and the plaintiff did grant, release, and convey, and the defendants confirmed, to Mat

1 Brook v. Badley, L. R. 4 Eq. 106. Post RENTS.

thews and Hatton, the buildings, lands, mines, etc., to the use of Matthews and Hatton forever, upon certain trusts, etc.; and the defendants did, by the said indenture, covenant to pay to Sir F. Scott £46,115, being one equal half part, etc.; and did also covenant with the plaintiff that the defendants would pay, or cause to be paid, to the plaintiff £46,115, being the other equal moiety or half part of the said sum of £92,230, by the several installments and proportions, and at the several times, and subject to the provisos and agreements, and otherwise in the manner thereinafter expressed, viz.: the sum of £768, 11s. 8d. on every 24th day of June and 24th day of December in every year after the year of our Lord 1854, until and inclusive of the 24th day of December, 1884; the first installment to commence on the 24th of June, 1855, and subject, nevertheless, to such eventual acceleration or variation of the time or times of payment as therein mentioned. And in case either of the installments or sums of £768, 11s. 8d. should not be fully paid by the defendants upon the day appointed for payment thereof, or within one calendar month next after the same day, and should not have been previously satisfied, pursuant to any of the provisions of the indenture, then the defendants should, upon demand, or in default of demand, pay to the plaintiff interest at the rate of £4 per cent. upon the installment, or upon each such instaliment which for the time being should be in arrear and unpaid; and such interest should be computed from the 24th of June or 24th of December, as the case may be, upon which the installment should have become payable, or, as the case might require, should be computed from the then last preceding day for payment of interest upon the installments so in arrear; and that every payment therein before covenanted to be made should be so made without any deduction, except in respect of any property or income tax which ought in law to be so deducted from such interest.-Averment: that the acceleration or variation of the time of payment depended upon events which had not happened.

Breaches:-First, that the 24th of June and the 24th of December in the years of our Lord 1855, 1856 and 1857, had elapsed, but the defendants had not paid the six installments due. Secondly, that though the installments were not paid

on the appointed days respectively or within one calendar month after those days respectively, the defendants had not paid interest, etc.

Second plea. As to the installments due on the 24th of December, 1857, that by the said indenture it was provided and agreed that no installment or other principal sum for the time being payable under or pursuant to the covenants and provisions therein contained, should be recoverable or capable of being enforced, nor should any proceeding for that purpose be commenced until after the expiration of one calendar month from the day upon which the same installment or sum should have become payable, under or pursuant to the covenants and provisions therein contained; nor should any interest accrue or become payable in respect thereof until the expiration of such calendar month; and that one calendar month from the day upon which the last-mentioned installment or sum became payable under or pursuant to the covenants and provisions contained in the said indenture, had not expired before this suit.

Fourth plea. As to £236, 7s. 8d., parcel of the installments, that in making payment of the said installments respectively, the defendants deducted and retained out of the said installments respectively divers sums of money, amounting in the whole to the sum of £236, 7s. Sd., being the amount of the rate of duty which at the times when the said installments respectively became payable, was payable under the statute, (16 & 17 Vict. C. 34,) and that by such deduction and by virtue of such statute they were acquitted and discharged of the sum of £236, 7s. 8d.

The plaintiff demurred to these pleas and the defendants joined in demurrer.

ATHERTON (with whom was GRAY), in support of the de

murrers.

First, the second plea is bad because the covenant is absolute to pay the installment on the 24th of December. The proviso in the indenture that no installment shall be recoverable or capable of being enforced and that no proceeding for that purpose shall be commenced till after the expiration of a

month, amounts merely to a covenant not to sue for a month, and can not therefore be pleaded in bar of the action: Ford v. Beech, 11 Q. B. 852 (E. C. L. R. Vol. 63). The defendants must contend that the proviso is a qualification of the covenant making the installments due and payable not in June and December but in July and January. Now looking at the whole deed the installments are due on the days named for payment. If the plaintiff were to die between the 24th of June and the 24th of July in any year the debt would go to her executors. In case of the defendant's bankruptcy the debt might be treated as actually due before the expiration of the month.

Secondly, the fourth plea is bad.-The argument for the defendants must amount to this: First, that where the purchase money of an estate is payable by installments, the installments are subject to income tax; a charge which the gross sum would have escaped. Secondly, that the income tax must be paid in the first instance by the purchaser. Now the 16 and 17 Vict., c. 34, Sect. 5, enacts that the duties thereby granted shall be assessed, raised, levied and collected under the provisions of the 5 & 6 Vict., c. 35, which is revived for that purpose. The 40th section of the latter act enacts, that every person who shall be liable to the payment of any "annuity or other annual payment, either as a charge on any property, or as a personal debt or obligation by virtue of any contract, whether the same shall be received or payable halfyearly or at any shorter or more distant periods, shall be entitled, etc., on making such payment, to deduct and retain thereout the amount of the rate of duty which, at the time. when such payment becomes due, shall be payable under this act, etc., and the person liable to such payment shall be acquitted and discharged of so much money as such deduction shall amount to, as if the amount thereof had actually been paid unto the person to whom such payment shall have • been due and payable; and the person to whom such payment as aforesaid is to be made shall allow such deduction upon the receipt of the residue of such money," etc.

In order to show a right to deduct, the defendants must first show that they are chargeable in respect of these installments. [WATSON, B.-The 40th section is a regulating and not a charging section; it imposes no new duty.] The defend

ants must show that, under schedule D in sec. 2 of the 16 and 17 Vict., c. 34, the installments are liable to income tax. They must allege that the installments are "annuities or other annual profits or gains." But they are not so. The 102d section of the 5 & 6 Vict., c. 35, is the provision under which, if at all, this duty would be levied on the defendants. That is, in terms, a charging section; it empowers the parties paying any annuities or annual payments "out of profits or gains chargeable by virtue of that act, "out of any annual payment liable to deduction, or from which a deduction hath been made," to deduct out of such annual payments 7d. in the pound. Schedule D in sect. 2, of the 16 and 17 Vict., c. 34, contains a clause, in addition to those in schedule D, sect. 1, of the earlier act, as follows:-And for and in respect of all interest of money, annuities and other annual profits and gains not charged by virtue of any of the other schedules contained in this act." This clause is in effect substituted for sect. 102 of the 5 & 6 Vict., c. 35, and it relates solely to such annual payment as are annual profits or gains. [CHANNALL, B. -Taylor v. Evans, H. & N. 101, was argued as if the question depended wholly on sect. 102.] If the question depends that section the defendants can not deduct the income tax, because the payment is not made out of profits or gains. Whether they work the mines or not they must pay the installments. [BRAMWELL, B.-Suppose a person covenants to pay an annuity; can he deduct income tax?] The annuity is liable to income tax, but whether the person paying or person receiving it must be assessed would appear from sect. 102, to depend upon whether it is made payable out of profits and gains, or not.

upon

PHIPSON, for the defendants.-As to the first point. It is not disputed that a covenant not to sue for a limited time for a debt actually due and payable can not be pleaded in bar: Aloff v. Scrimshaw, 2 Salk. 573; Thimbleby v. Barron, 3 M. & W. 210. In the present instance, however, the proviso is incorporated in the covenant, and qualifies it. Therefore the effect is, not that the creditor agrees not to sue, but that the debt is made not enforceable till the expiration of a month. The case is similar to that of Trott v. Smith, 10 M. & W.