Union Investment Co. v. Wells

Union Investment Co. v. Wells

Default in payment of a periodical instalment of interest does not, by itself, render a promissory note "overdue" within the meaning of sections 56 and 70 of the Bills of Exchange Act when the principal is not yet due; a purchaser for value who takes such a current instrument in good faith is a holder in due course and is not affected by transferor's fraud or by constructive notice of unpaid interest.

Citation
(1908) 39 SCR 625
Parties
Plaintiff/appellant: Union Investment Company; Defendant/respondent: Martin W. J. Wells and Others
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
18 February 1908
Procedural Posture
Civil Appeal / Supreme Court Judgment on Appeal (per Saltum)
Outcome
Appeal allowed; judgment of trial court reversed (Idington and Maclennan JJ. dissenting).
Legal Topics
Overdue Negotiable Instruments, Holder in Due Course, Interest Instalments, Constructive Notice, Interpretation of Bills of Exchange Act, Fraud in Procurement
Source Language
English
Bills of Exchange Negotiable Instruments Commercial Law Contract Law Overdue Negotiable Instruments Holder in Due Course Interest Instalments Constructive Notice +2 more

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Parties

Union Investment Company

Plaintiff/appellant

Martin W. J. Wells and Others

Defendant/respondent

Procedural Posture

Civil Appeal / Supreme Court Judgment on Appeal (per Saltum)

Legal Issues

  1. 1 Whether default in payment of a periodical instalment of interest renders a promissory note "overdue" under sections 56 and 70 of the Bills of Exchange Act
  2. 2 Whether purchasers for value taking such a note without notice are holders in due course unaffected by prior equities including fraud of transferor
  3. 3 Whether doctrine of constructive notice applies to current negotiable instruments transferred for value

Ratio Decidendi

Default in payment of a periodical instalment of interest does not, by itself, render a promissory note "overdue" within the meaning of sections 56 and 70 of the Bills of Exchange Act when the principal is not yet due; a purchaser for value who takes such a current instrument in good faith is a holder in due course and is not affected by transferor's fraud or by constructive notice of unpaid interest.

Court Disposition

Appeal allowed; judgment of trial court reversed (Idington and Maclennan JJ. dissenting).

Orders

  • Judgment appealed from reversed.
  • Appeal allowed with costs.