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Decisions of the Superior Courts of New South Wales, 1788-1899

McLaren v. Lyons (1841) N.S.W. Sel. Cas. (Dowling) 391; [1841] NSWSupC 32

promissory note - bill of exchange

Supreme Court of New South Wales

Dowling C.J. and Stephen J., 13 March 1841

Source: Sydney Herald, 16 March 1841[1]

            SATURDAY. - In Banco, before the Chief Justice and Mr. Justice Stephen.

            In this case there had been an argument on a demurrer, on a previous day, and the Chief Justice now proceeded to deliver judgment as follows:-

            This is a declaration by an endorsee against the endorsers of a promissory note for £1200, dated the 24th September, 1840, payable three months after date, and drawn by one Lewis Samuel, in favour of the defendants. The special plea is, that before the endorsement of this note, a bill of exchange had been drawn by defendant upon and accepted by one John Walker for £1050, and by him dishonoured at maturity, and that the Union Bank, of which plaintiff was inspector, applied to defendants to pay them the amount of that bill, representing themselves to be the holders, and entitled to recover the amount thereof, and promised defendants if they would take up the said bill to deliver the same to them, and that defendants delivered the promissory note mentioned in the declaration to the Bank, for the express purpose of taking up the said bill, and for no other consideration whatever, and that the Bank accepted and received the same for that and for no other purpose or consideration, and did not nor would then, or at any other time re-deliver the said bill to them, concluding with a verification. Replication that after the promise by the Bank to take up the bill of exchange, and after the delivery the promissory note, and before the commencement of this suit, to wit, the 20th November, 1840, the Bank were ready and willing, and then tendered and offered, and from thence continually hitherto have been, and still are ready and willing to deliver the bill of exchange, which defendants then wholly refused to accept or receive, concluding with a verification. Demurrer to the replication, that it does not shew that the Bank was ready at all times after the endorsement and delivery of the note to the Bank, and before the tender alleged to deliver the bill of exchange according to the terms of the payment set out in the plea, and admitted by the Directors. I am of opinion that the readinesss of the Bank to deliver the bill of exchange to the defendants on the 20th November, 1840, being nearly two months after the endorsement of the promissory note to the Bank by the defendants, in consideration of the Bank taking up the bill is an immaterial issue on these pleadings. This opinion involves the reasonable construction of the agreement set forth in the defendant's plea, from the obligations of which, the plaintiff has not shown by pleading, any matter of excuse. Without criticising the looseness of the phrases used in the plea, the substance of it in this:- The Bank being holders (which we must understand to mean having an immediate manual control over, and possession of Walker's dishonoured bill, and entitled to recover the amount against defendant) they promised that they would retire and deliver it up, in consideration of receiving the promissory note in question, upon having the note delivered to them, which for the purpose of this case must be considered as a payment in cash to retire, the bill, it appears to me in the absence of any cause shown by pleading, that they were bound forthwith, or within a reasonable time after, to give up the bill of exchange, and that it is no excuse that they were ready and willing, and tendered it, nearly two months afterwards. Whether they kept it an unreasonable time is a matter for the jury to determine, if the object of the agreement was to retire the bill, and deliver it up, upon or immediately after receiving the note; this was an act requiring no special request on the part of the defendants. The consideration for giving the note having failed, I think the Bank was bound to show that they were at all times ready to deliver the note without request, or that they were ready to deliver within a reasonable time, that they tendered within that time, or to show by pleading some excuse for the breach of the agreement. The Court cannot by mere construction of law hold, that the retention of the bill for nearly two months after receiving the note, is a reasonable retention when it is shown, and admitted that on the 24th September, 1840, they were then the holders of the bill, and entitled to recover it against the defendants, and for the retirement of which bill this note was given; prima facia the holder of a bill of exchange is bound to deliver it up to the party liable upon it, as soon as the latter has discharged his liability, either by payment in cash, or by the substitution of another security, ac[LINE OMITTED]  It is true, that the plaintiff in terms negatives the allegation in the plea "that the Bank did not at any time re-deliver the bill to them," but he does not cover the important allegation that they did not then, viz. - when the note was given, deliver up the bill. That is the material part of the plea, and not whether the Bank was ready to deliver at a time long subsequent. Judgment for defendant on demurrer.

            Mr. Justice Stephen concurred with the Chief Justice.

            This judgment applied to two other assets in which the same plaintiff's name appeared on the list.

Source: Dowling, Select Cases, Vol. 6, State Records of New South Wales, 2/3464, p. 187

[p.187]

[1841]

[Jno Cunningham

Maclaren

   v

AG. & Saul Lyons]

                                                                     In Banco

                                                       Saturday 13th March 1841

                                                           Dowling CJ. Judgment

            Declaration by indorsee against the indorsers of promissory note for 1200£ date 24th Sept 1840 payable three months after date and drawn by one Lewis Samuelin favour of the Defts. Special plea - That before the indorsement of the note, a Bill of Exchange had been drawn by Defts upon & accepted by one John Walker for 1050£ and by him dishonored at maturity, & that the Union Bank, of which Plf was Inspector, applied to Defts to pay them the amount of that Bill "representing themselves to be the holders and entitled to recover the amount thereof, and then promised Defts, if they would take up the said Bill to deliver the same to them, - and that Defts delivered the promissory note mentioned for the express purpose of taking up the said Bill & for no other reason whatever, & that the Bank accepted & received the same for that an for no other purpose or reason and did not nor [p.188] wouldthen, or at any other time redeliver the said Bill to them, concluding with a verification: - Replication, that after the promise by the Bank to take up the Bill of Exchange, and after the delivery of the promissory note C before the commencement of this suit, to writ on 20th December 1840 the Bank were ready & willing & then tendered & offered C from them continually hitherto has been & still are ready & willing to deliver the Bill of Exchange, which Defts then wholly refused to accept or receive, concluding with a verification. Demurrer, to the replication that it does not shew that the Bank was ready at all times after the indorsement & delivery of the note to the Bank, C before the tender alleged, to deliver the Bill of Exchange according to the terms of the agreement set out in the plea, and admitted by the decton [sic]. Joinder in demurrer.


 

[p.189]                        I am of opinion that the readiness of the Bank to deliver the Bill of Exchange to the defts on the 20th Nov. 1840 - being nearly two months after the promissory note to the Bank by the Deft, in consideration of the Bank taking up the Bill is an immaterial issue on these pleadings. This opinion involves the reasonable construction of the agreement set forth in the Defts plea, from the obligations of which the Plf has not shewn by pleading, any matter of excuse. Without criticizing [sic] the looseness of the phrazes used in the plea, the substance of it is this:  The Bank beingholders (which we must understand to mean - having an immediate manual control over & possession) of Walker dispossessed Bill & entitled to recover the amountagainst Defts they promised that they would retire & deliver it up, in consideration of receiving the promissory in question. Upon having the note delivered to them, which for the purpose of this case must be considered as a payment in cash to retire the Bill, it appears to me, (in the absence of any excuse shewn [p.190] by the pleading), that they were bound forthwith, or within reasonable time to give up the Bill of Exchange, and that it is no excuse that they were ready & willing & tendered it, nearly two months afterwards. Whether they kept it an unreasonable time is matter for a Jury to determine. If the affect of the agreement was to retire the Bill & deliver it up upon or immediately after receiving the note, this was an act requiring no special request on the part of the Defts. The consideration for giving the note having failed, I think the Bank was bound to shew that they were at all time ready to deliver the note, or that they were ready to deliver within a reasonable time that they tendered within that time, without request, or to shew by pleading some excuse for the breach of the agreement. The Court cannot by mere construction of law hold, that the retention of the Bill for nearly two months after receiving the note, is a reasonable retention when it is shewn, and admitted that on the 24th Sept 1840 they were then the holders of the Bill and entitled to recover [p.191] upon it against the Defts, & for the retirement of which Bill this note was given. Prima Facie the holder of a bill of Exchange is bound deliver it up to the party liable upon it, as soon as the latter has discharged his liability either by payment in cash, or by the substitution of another security accepted by the holder of the Bill as payment. It is true that the Plf in terms negatives the allegation in the plea, that the Bank did not "at any other time redeliver the Bill to them", but he does not cover the important allegation, that they did not then, viz- when the note was given, deliver up the Bill. That is the material part of the plea, & not whether the Bank was ready to deliver at a time subsequent.

            Stephen J. concur.

            Judgment for Deft on demurrer.

            The like judgment in 2 other cases upon the same note. 

Dowling C.J., Burton and Stephen JJ, 19 October 1841

Source: Sydney Herald, 20 October 1841[2]

JOHN M[C]LAREN V. A. AND S. LYONS.

            This was an action in which the plaintiff, as Inspector of the Union Bank ofAustralia, sought to recover from the defendants, as indorsers of a promissory note, made by one Lewis Samuel in favour of the defendants, for £1200, payable three months after date, and indorsed by the defendants to the Bank.

            The defence was, that before the indorsement and delivery of the note to the Bank, a certain bill of exchange had been drawn by the defendants upon one Walker, to the sum of £1050. accepted by and dishonoured by him; that afterwards the Bank applied to the defendants to take it up, and promised to redeliver the bills if they would do so; that the defendants delivered the note to the Bank for the express purpose of taking up Walker's acceptance.

            This defence the plaintiffs denied.

            The cause was tried on the 9th of August last before his honour Mr. Justice Stephen and a Special Jury, when a verdict was found for the plaintiff - damages, £1264.

            Messrs. WINDEYER and BROADHURST now moved that a new trial be granted, on the grounds that the verdict was - 1st, against law; 2nd, against evidence; and 3rd, against the misdirection of the learned Judge who tried the case.

            Messrs. FOSTER and DARVALL showed cause; and

            Mr. WINDEYER being about to reply,

            The CHIEF JUSTICE said, the learned Judge who tried the cause has notified to us that he was surprised at the verdict, and that it was not satisfactory to his mind. On the part of the plaintiffs it has been urged that the defence set up was matter of special contract which had not been proved. But it appears to me that the defendant has relied merely upon the legal effect of the transaction itself. We think that if a party agrees to take another's security in lieu of payment of a security he holds, the other party is entitled to have the original security given up to him. The question is, did the defendant give the note declared on upon condition that he was to have the accepted bill? By law he was entitled to have it upon giving the note, if the plaintiffs took the note as payment, so as completely to discharge the defendant's liability upon the bill. Did the defendant waive that right by agreeing to take one of the non-accepted bills as the consideration for his promissory note? There is no evidence at all of that fact. If all the parties, Simpson, Lyons, and Sea, were speaking in their different conversations of the accepted bill and no other, it appears to me that the plea was made out. It is plain that Sea and Lyons were. Sea himself believed, at the time he came with the protest, that he had the accepted bill in his hands. Is it not manifest that Sea himself was speaking of the accepted bill, and not of any other of the set? It appears to me, therefore, upon the evidence, that the jury have come to a wrong conclusion. The legal effect of the contract was proved, because as soon as the plaintiffs agreed to take the defendant's note, the defendant was entitled to have the accepted bill. Therefore, the true question was, whether the defendant gave his note on condition of his having the accepted bill. There was no evidence of his having waived his rights.

            Mr. Justice BURTON - I have also no doubt upon the subject; at the time the plaintiff demanded payment of the bill they were not in a situation to demand it, because they were not in possession of the accepted bill. But they did demand payment, and what took place between them and the defendant I think amounted to payment. The note was given as payment and not as security. Is not the defendant then in the same situation as if he had paid money, and entitled to the same rights as if he had paid money? Then was there any evidence of a contract on his part, to waive what the law entitled him to? If, on the contrary, Sea said that he would bring up the bill, and there was no evidence that he was to have the second or third part, which might not be the accepted part. Rodd's evidence shews that Sea intended to fetch the accepted bill. The only inference on the other side is, from his having seen the protest with the non accepted bill annexed, and it is therefore urged that with his [eyes] open, he waived his right to the accepted part. As to that point, much has been assumed which was not in evidence. It has been urged that the defendant must have known that no ship had arrived by which any other bill of the set could have arrived. That appears to me to be coming to a conclusion not warranted by the evidence. It not unfrequently happens that two parts of a bill arrive by the same ship.

            Mr. Justice STEPHEN repeated that he was surprised at the verdict.

            Mr. Want, Attorney for the Plaintiff; Mr. Rodd, Attorney for Defendant.

Notes

[1]             See also Australian, 15 June 1841 (adjourned).

[2]             See also Sydney Gazette, 21 October 1841.

 

Published by the Division of Law, Macquarie University