MacArthur v. MacDowall

MacArthur v. MacDowall

Majority: MacArthur purchased the overdue note from the assignee of the payee and thereby acquired only the rights of the insolvent estate; because the note was an accommodation instrument limited by agreement, an equity attached to it and the purchaser taking after maturity takes subject to that equity; accordingly the appellant cannot maintain the action. (Appeal dismissed.)

Citation
(1893) 23 SCR 571
Parties
Plaintiff Appellant: James MacArthur; Plaintiff Appellant (by Amendment): Commercial Bank of Manitoba; Defendant Respondent: Day Hart MacDowall
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
1 May 1893
Procedural Posture
Appeal Contract (promissory Note / Negotiable Instrument) / Appeal to the Supreme Court of Canada From Supreme Court of the North West Territories; Final Judgment
Outcome
Appeal dismissed with costs.
Legal Topics
Transfer of Promissory Note, Holder in Due Course, Equities Attaching to Negotiable Instruments, Pledge/collateral Security, Subrogation, Notice and Good Faith, Overdue Instrument
Source Language
English
Contract Bills of Exchange Equity Insolvency Commercial Law Transfer of Promissory Note Holder in Due Course Equities Attaching to Negotiable Instruments +4 more

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Parties

James MacArthur

Plaintiff Appellant

Commercial Bank of Manitoba

Plaintiff Appellant (by Amendment)

Day Hart MacDowall

Defendant Respondent

Procedural Posture

Appeal Contract (promissory Note / Negotiable Instrument) / Appeal to the Supreme Court of Canada From Supreme Court of the North West Territories; Final Judgment

Legal Issues

  1. 1 Whether an agreement between maker and payee restricting use of a promissory note constitutes an equity that binds subsequent holders who take after dishonour
  2. 2 Whether appellant acquired title from the bank (a holder for value) or from the assignee of the payee and the legal effect of taking an overdue accommodation note from an assignee
  3. 3 Whether statutory provisions of the Bills of Exchange Act 1890 govern rights of holders and transferees in this transaction

Ratio Decidendi

Majority: MacArthur purchased the overdue note from the assignee of the payee and thereby acquired only the rights of the insolvent estate; because the note was an accommodation instrument limited by agreement, an equity attached to it and the purchaser taking after maturity takes subject to that equity; accordingly the appellant cannot maintain the action. (Appeal dismissed.)

Court Disposition

Appeal dismissed with costs.

Orders

  • Appeal dismissed with costs to respondent.