CH. XX. s. 1. Contracts to Lend Money. Money in bank. Money deposited with a banker by his customer, in the ordinary way, is money lent to the banker, to be repaid when called for by cheque (1). Where money is advanced by a parent to a child, it appears that Advancement the presumption is, that such advance was by way of gift, and not by way of loan (m). to child. Money lent on illegal contract. Evidence in support of. So, money lent for the express purpose of accomplishing an illegal object cannot be recovered by the lender. Therefore, money lent for the purpose of gaming or playing at an illegal game cannot be recovered (n). But money lent, to enable the borrower to pay a bet which he has already lost, may be recovered by the lender (o). Where money is lent without any stipulation as to the time of repayment, a present debt is created which is in general repayable at once without any demand; but where the promise was to pay a sum on request," the request is part of the contract, and must be proved, and no action arises until request be made (p). 66 A bill of exchange or promissory note in the ordinary form, seems to be evidence of money lent, as between the payee and drawer of the former, or the payee and the maker of the latter (q). But an instrument payable on a contingency, in the following terms:-"Nine years after date I promise to pay to the sum of with interest, provided D. M. shall not return to England, or his death be duly certified in the meantime; "-was held not to raise any presumption that the sum had been lent (r). So it appears that an I. O. U. in which the holder-plaintiff's name is not mentioned, is not evidence of money lent by the holder to the party signing it (s). Nor is the mere fact of the plaintiff producing at the trial a cheque on his bankers, drawn by him in favour of the defendant, and proving that he handed such cheque to the defendant, any evidence of money lent by the former to the latter (t). (1) Pott v. Clegg (1847), 16 M. & W. 321. Proof of a deposit with a banker, and payment of interest by him, is evidence of money lent; Sutton v. Toomer (1827), 7 B. & C. 416. (m) Per Bayley, J., Hick v. Keats (1825), 4 B. & C. 69. (n) M'Kinnell v. Robinson (1838), 3 M. & W. 434: Foot v. Baker (1843), 5 M. & G. 335. (0) Ex parte Pyke (1878), 8 Ch. D. 754, C. A.; and see post, Ch. XXI., s. 5 (b). (p) See Bullen & Leake's Pleading, notes to Money Lent. (q) Per Bayley, J., Morgan v. Jones (1830), 1 C. & J. 162. (r) Morgan v. Jones (1830), 1 C. & J. 162. (s) Fesenmayer v., Adcock (1847), 16 M. & W. 449; but see Douglas v. Holme (1840), 12 A. & E. 641. (t) Per Patteson, J., Pearce v. Davis (1834), 1 Moo. & Rob. 365; Bleasby v. Crossley (1826), 3 Bing. 430. (b) Loans on Security. [See Coote on Mortgages, 5th ed., A.D. 1884; Fisher on Mortgages, 4th ed., A.D. 1884; Reed's Bills of Sale Acts, 7th ed., A.D. 1889; Chitty's Statutes, 5th ed. tit. "Bill of Sale." CH. XX. s. 1. Contracts to Lend Money. Where money is lent upon security, the security may be either Pledge. transferred in possession to the lender to hold until the money is repaid; this kind of transaction, which is called "pawning or "pledging," we have already treated under the head of Bailments, ante, Ch. XIV. sect. 4; or the borrower may retain the possession Mortgage. of the security and transfer the property in it to the lender, to the intent that if the money be repaid, the lender shall re-transfer the property to the borrower, and if it be not repaid, the borrower shall give up the possession, as well as the property, to the lender. This kind of transaction is termed a mortgage, and so is the Bill of sale. instrument by which it is effected, but where the security consists of goods the instrument is usually termed a bill of sale, and must be in conformity with the requirements of the Bills of Sale Acts, 1878 and 1882, 41 & 42 Vict. c. 31, and 45 & 46 Vict. c. 43 (u). A legal mortgage of land, which must be by deed, ordinarily Legal mort transfers the property in the land to the lender, or mortgagee, the gage of land. borrower or mortgagor covenanting to pay the money lent at a stated day, usually six months from the date of the mortgage, with interest in the meantime until the repayment of the principal. The interim management of the property, and the powers of the mortgagee to enforce payment of principal or interest, are regulated by ss. 15-30 of the Conveyancing Act, 1881, if the mortgage was executed after that Act and the mortgage deed does not expressly avoid the operation of it; otherwise they must be sought for in the mortgage deed. land. An equitable mortgage is a contract operating as a security, but Equitable which for want of transfer of the legal estate can only be enforced mortgage of by the equitable jurisdiction of the Court, which carries it into effect either by giving the creditor immediately the appropriate remedies, or by compelling the debtor to execute a security in accordance with the contract (x). It may be made in various ways, of which the most common are an imperfect transfer of the subjectmatter of the security, and delivery of documents of title with intent to create a security thereon. It is essential to the validity of a mortgage of goods that the Bill of sale. instrument effecting it, called a "bill of sale," should be in accord (u) The Bills of Sale Acts, 1878, 1882, do not apply where possession is delivered by the lender; see Manchester, Sheffield, de., Rail. Co. v. North Central Wagon Co. (1888), 13 App. Cas. 554. (x) Fisher, p. 49, citing Ashton v. Corrigan (1871), L. R., 13 Eq. 76. Lend Money. Bills of sale cont. CH. XX. s. 1. ance with the form in the schedule to the Bills of Sale Act, Contracts to 1882 (y), should truly set forth the consideration for which it is given (2), including any deduction for "commission or expenses, or payment of a future debt (a), should be attested by a credible witness, and should be registered in the central office of the Supreme Court (b) within seven days after execution. Moreover, a bill to secure less than 301. or unregistered is absolutely void (c). Registration must be renewed once every five years (d). Future goods. Thomus v. Kelly. Seizure of goods. Difficulties of Act. Thomas v. Kelly. Future or after-acquired chattels cannot be included in a bill of sale (e), but future book debts can (ƒ). The Bill of Sale usually provides for the seizure of the goods thereby mortgaged for certain causes, and for the protection of borrowers the 7th section of 1882 limits these causes to (1) nonpayment of money secured, (2) bankruptcy of the grantor or his suffering the goods to be distrained, (3) fraudulent removal of the goods, (4) non-production of receipts for rent, rates and taxes, (5) levying of execution against the goods of the grantor; and further allows the grantor a period of five days from seizure within which he may apply to the High Court or a judge, who, “if satisfied that by payment of money or otherwise the cause of seizure no longer exists," may restrain the grantee from removing or selling the goods. The Bills of Sale Acts are in many particulars, as was observed in the House of Lords in Thomas v. Kelly (e), difficult if not impossible to construe, and the judicial decisions upon their construction are very numerous. SECT. 2.-The Contract for Interest. The general rule is that the law does not imply a contract by a debtor to pay interest on the debt, although it be of a fixed amount, and has been frequently demanded (g). Prima facie, therefore, in the absence of express stipulation, interest is not claimable on a demand for goods sold, although the (y) I.e., substantially in accordance; see Ex parte Stanford (1886), 17 Q. B. D. 259, C. A.; Thomas v. Kelly (1888), 13 App. Cas. 506; Simmons v. Woodward, [1892] A. C. 100. (z) See Hughes v. Little (1886), 18 Q. B. D. 32, C. A. (a) Firth, Ex parte, Cowburn, In re (1882), 19 Ch. D. 419, C. A. (b) As to local registration, see s. 11 of the Act of 1882, and R. S. C., Ord. LX B.; and Ord. LXI., rr. 25–27. (c) See Bills of Sale Acts, 1878 and 1882, 41 & 42 Vict. c. 31, and 45 & 46 Vict. c. 43. (d) Act of 1878, s. 11. (e) Thomas v. Kelly (1888), 13 App. Cas. 506. (f) Tailby v. Official Receiver (1888), 13 App. Cas. 523. (g) De Bernales v. Fuller (1810), 2 Camp. 426; Page v. Newman (1829), 9 B. & C. 378. The Contract for Interest. price was to have been paid on a certain day (h); or on a balance CH. XX. s. 2. struck on an account for goods sold (i); or for money lent to (j), or paid for, the defendant (k); or had and received by him, though fraudulently, for the plaintiff's use (1); or on a guarantee (m); or in an action on a foreign judgment (n); or on a solicitor's bill (0) ; or on money deposited with a banker (p). And where a security for money borrowed makes it payable at a certain day, with a certain rate of interest up to that day, there is no implied contract that interest at the same rate is to be payable afterwards (q). But where a bill of exchange, cheque or promissory note is dis- Interest on dishonoured honoured, the holder may recover from any party liable thereon, bill of exand the drawer, who has been compelled to pay it, may recover change, &c. from the acceptor, and an indorser, who has been compelled to pay it, may recover from the acceptor or from the drawer, or from a prior indorser, amongst other things, interest thereon from the time of presentment for payment, if the instrument be payable on demand, and from the maturity of the instrument in any other case; but the interest may, if justice require it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper (r). Interest is likewise payable on an account stated for money Account lent (s). interest. stated for money lent. There cannot be a title to compound interest, without a contract Compound expressed, or implied from the mode of dealing with former accounts, or custom (t). And it has been held in the House of Lords that, in general, a contract or promise for compound interest is not available in England, except, perhaps, in the case of mercantile accounts current, for mutual transactions (u). Nor is a customer bound or affected by the practice of his bankers, to charge interest upon interest, by making rests in their accounts at stated intervals, unless it be proved that he was aware that such was their custom (x). (h) Gordon v. Swan (1810), 12 East, 419; 11 R. R. 758, n. (i) Chalie v. Duke of York (1806), 6 Esp. 45. (j) Calton v. Bragg (1812), 15 East, 223; 13 R. R. 451. (k) Carr v. Edwards (1822), 3 Stark. 132. (l) Fruhling v. Shroeder (1835), 2 Bing. N. C. 77. (m) Hare v. Rickards (1831), 7 Bing. 254. (n) Hilhouse v. Davis (1813), 1 M. & S. 169. (0) Walker v. Bayley (1800), 2 B. & P. 219, Ex. Ch. (p) Per Lord Denman, Edwards v. Vere (1833), 5 B. & Ad. 282. (q) Per Lords Chelmsford and Selborne, Cook v. Fowler (1874), L. R., 7 H. L. 27, 35, 37. (r) Bills of Exchange Act, 1882, 45 & 46 Vict. c. 61, s. 57. (s) Blaney v. Hendricks (1771), 2 W. (t) Fergusson v. Fyffe (1841), 8 C. & (x) Moore v. Voughton (1816), 1 Stark. 487. C.C. N N CH. XX. s. 2. By agreement, or course of dealing. Usage of trade. Interest may of course be claimed in all cases where there is a The Contract contract for the payment thereof; and such a contract may be infor Interest. ferred from the course of dealing between them; e.g., if it has been frequently charged and paid without objection, in former and similar accounts (y). So if it appear to be the invariable custom or usage in any particular trade or business, to charge interest, this may amount to evidence of a contract, to allow it between parties When interest having transactions therein (z). So where there is a contract to pay a sum of money, with interest, on a certain day, the jury may give interest, as damages, for the detention of the debt beyond that day (a). recoverable as damages at common law. When reco 3 & 4 Will. 4, c. 42, ss. 28, 29. And by 3 & 4 Will. 4, c. 42, s. 28, it is enacted, "that upon verable under- all debts, or sums certain, payable at a certain time or otherwise, the jury, on the trial of any issue, or on any inquisition of damages, may, if they shall think fit, allow interest to the creditor, at a rate not exceeding the current rate of interest, from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or, if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor, that interest will be claimed from the date of such demand until the term of payment: provided that interest shall be payable in all cases in which it is now payable by law." Policy of insurance. And by s. 29 the jury are empowered, inter alia, to give damages in the nature of interest, over and above the money recoverable, in all actions on policies of insurance made after the Act. And as to these enactments it is to be observed: First, that they do not extend to any action on contract, which is brought for the recovery of unliquidated damages; nor, as it appears, to any case in which the claim is not for a sum certain, as contra-distinguished from one, the amount of which is merely capable of being ascertained (b); Secondly, that it is discretionary in the jury to allow interest even in the cases specified; Thirdly, that the jury have no power to award interest, unless there be proof of a written instrument, whereby the debt or sum certain is made payable at a (y) Calton v. Bragg (1812), 15 East, 223; 13 R. R. 451; Eaton v. Bell (1821), 5 B. & Al. 34. (z) See Ikin v. Bradley (1818), 2 Moore, 206, Ex. Ch. (a) Atkinson v. Jones (1835), 2 A. & E. 439; Price v. Great Western Rail. Co. (1847), 16 M. & W. 244; Morgan v. Jones (1853), 8 Exch. 620. (b) Hill v. South Staffordshire Rail. Co. (1874), L. R., 18 Eq. 154. In an action for money had and received, brought against a railway company to recover over-charges made by them on the carriage of goods, interest may be given under the statute, as upon a sum certain, if there have been a previous demand thereof. Edwards v. Great Western Rail. Co. (1851), 21 L. J., C. P. 72, 89. |