Craig v. Samuel, (1895) 24 SCR 278

Supreme Court of Canada

Craig v. Samuel, (1895) 24 S.C.R. 278

Date: 1895-01-15

J.T. Craig (Defendant) Appellant;

and

M. & L. Samuel, Benjamin & Co., (Plaintiffs) Respondents.

1894: October 18, 19; 1895: January 15.

Present: Sir Henry Strong C.J. and Taschereau, Gwynne, Sedgewick and King JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Promissory note—Consideration—Transfer of patent right—Bills of Exchange Act 53 V. c. 33 s. 30 s.s. 4 (D).

C. & F. were partners in the manufacture of certain articles under a patent owned by F. A creditor of F. for a debt due prior to the partnership induced C. to purchase a half interest in the patent for $700 and join with F. in a promissory note for $1,000 in favour of said creditor who also, as an inducement to F. to sell the half interest, gave the latter $200 for his personal use. In an action against C. on this note:

Held, reversing the decision of the Court of Appeal, Taschereau J. dissenting, that the note was given by C. in purchase of the interest in the patent and not having the words “given for a patent right” printed across its face it was void under the Bills of Exchange Act, 53 Vic. c. 33 s. 30 ss. 4 (D.).

APPEAL from a decision of the Court of Appeal for Ontario^[1] reversing the judgment of the Divisional Court^[2] in favour of the defendant.

The action in this case was on promissory notes of the defendant and his partner Fairgrieve and the defence that there was no consideration to the defendant for said notes unless it was the sale to him of a half interest in a patent owned by Fairgrieve as to which the notes were void as not complying with the provisions of the Bills of Exchange Act, 53 Vic. ch. 33 s. 30 ss. 4 (D). The way in which the notes came to be

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given is stated as follows in the judgment of the Divisional Court.

“The defendant Fairgrieve had been in business on his own account prior to Craig becoming his partner on the 1st November, 1890, when he (Craig) put $1,600 into the business which was thereafter carried on under the firm name of “Fairgrieve & Craig.”

“At the time of the formation of the partnership Fairgrieve was indebted to the plaintiffs on his personal account to the amount of at least $1,000, for which the plaintiffs desired to obtain the notes of the firm of Faigrieve & Craig, and in order that Fairgrieve might be authorized to give the firm’s notes it was suggested by Mr. Benjamin, one of the plaintiffs, that Craig should purchase a half interest in a patent of which Fairgrieve was the owner. The terms are set out in an agreement under seal between Fairgrieve and Craig dated the 18th of March, 1891, as follows: Whereas on or about the 3rd day of March, 1891, (the day on which the notes were given) the said Fairgrieve agreed to sell and the said Craig agreed to buy a half interest in the said Canadian patent no. 34093 in consideration of $700, payable as follows, $200 to be paid to Fairgrieve out of Craig’s share of income from the business, and $500 by the firm becoming responsible to the extent of $1,000 for the personal indebtedness of Fairgrieve to Messrs. Samuel, Benjamin & Co., for which amount the promissory notes of the said firm were in pursuance of the said agreement given to the said Samuel, Benjamin & Co.”

By the “Bills of Exchange Act,” sec. 30, subsec. 4:

“Every bill or note the consideration of which consists in whole or in part of the purchase money of a patent right or of a partial interest limited geographically, or otherwise, in a patent right, shall have written or printed prominently and legibly across the

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face thereof, before the same is issued, the words: ‘given for a patent right’, and without such words thereon such instrument shall be void except in the hands of a holder in due course, without notice of such consideration.”

The words required by the section were not printed or written across the notes sued upon.

The trial judge held that the transaction was not within the provision of the “Bills of Exchange Act,” and that there was good consideration for the notes independently of the patent. His decision was reversed by the Divisional Court but restored by the Court of Appeal, from whose judgment the defendant appealed to this court.

Moss Q.C. and Thompson, for the appellant.

Watson Q.C. and Parkes, for the respondents.

THE CHIEF JUSTICE.—I concur in the judgment of Mr. Justice Gwynne.

TASCHEREAU J.—I would dismiss this appeal. Mr. Justice Osler’s reasoning in the Court of Appeal seems to me unanswerable.

GWYNNE J.—It is a fallacy, I think, to say that the loan of $200 to Fairgrieve for which he gave his note formed any part of the consideration of the notes signed by Craig and now sued upon. The loan of the $200 by Benjamin to Fairgrieve may have been and no doubt was made to induce Fairgrieve to accept Craig’s terms for the patent right which he, at Benjamin’s suggestion and to forward his private purpose, had induced Craig to consent to buy and to make an offer for to Fairgrieve; but the consideration for Craig being a party to and signing the notes sued on was the transfer of an interest in the patent by Fairgrieve to him

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and that only, and it was by Benjamin’s contrivance and to forward his own purpose of trying to make the firm of Fairgrieve and Craig become answerable for the old discharged debt of Fairgrieve alone, that the notes were made payable to the respondents.

Now however different may have been the condition of things to meet which the legislature passed the section of the “Bills of Exchange Act” under consideration, it is impossible to say that the present case does not come within its letter, and I must say that I think it comes within the mischief intended to be guarded against, for otherwise the act might be readily evaded by the person who sells patent rights making all notes given therefor payable to one cognizant of the consideration for which they are given. The plaintiffs gave no consideration whatever to Fairgrieve and Craig or to Craig, or to Fairgrieve, which can support their claim to recover against Craig upon the notes sued upon, and that is the sole question on this appeal. The appeal must therefore be allowed with costs.

SEDGEWICK and KING JJ. concurred.

Appeal allowed with costs.

Solicitors for the appellant: Wickham & Thompson.

Solicitors for the respondents: James Parkes & Co.