missory notes for the payment of this sum of $39,015, payable in six, twelve, eighteen, and twenty-four months from the said date. That the bank further took an hypothec for the payment of this sum of $39,015, and by this means diminished the property of Shortis so as to render him insolvent, and that, therefore, Shortis could not validly grant any preference over his other creditors. Wherefore he concludes for the dismissal of

the action.

By a second plea defendant sets up the same matter and alleges that the transactions of the 30th March, 1880, operated a novation of the debt, and further, that the note was returned to Shortis, whose endorsement was effaced, as appears by the note.

By a third plea defendant pleads payment. The two questions substantially before us are:-first, whether knowledge that the parties to a note occupy between themselves a different relation than that expressed on the face of the note, is sufficient to alter the relations of these parties towards a third party having such knowledge?

Second. Whether the transaction of the 30th March, 1880, created a novation of the debt?

With regard to the former of these questions it appears to be well-settled law in England, that knowledge coming to a third party after he has accepted the note is nothing, and that to modify the contract as expressed on the face of the note, between the parties and the payee, it is necessary there should be an express agreement. The principle is this, the contract expressed by the instrument binds, and carries with it all its incidents, unless it be set aside by something else. So if A. and B. bind themselves to C. as principal and surety, it is of no importance whether C. was aware of an equity existing between A. and B. or not. In this case no special agreement is alleged, but simply that the Bank knew, on the 30th March, 1880, how matters stood between Shortis and defendant. In the case of Clarke et al. & Wilson, an action on a joint and several promissory note, where the plea was that defendant made the note for the accommodation of one T. Scott, and that he had no value, and that of all this the plaintiffs

had knowledge, Lord Abinger said: “The plea should have set out some contract that was binding on the plaintiff. All that he states is, that he waited six months before he commenced his action." (3 M. & W. 210.) In the case of Manley & Boycott, Lord Campbell, C.J., lays down emphatically the doctrine that there must be a special agreement and that mere knowledge is neither here nor there. (2 E. & B., p. 54.)

And in the case of Strong & The Northamptonshire Banking Company, 17 C. B. 201, a rule was refused defendant on the suggestion that defendant was only an accommodation promissor of a note, and that the party who got value for the note, got delay from the plaintiff knowing the circumstances. C. J. Jervis said: "You clearly cannot, at law, vary the contract which appears upon the face of the note;" and then, "I speak with reference to the action upon the written contract."

It may perhaps be said that the equity rule allows more latitude. In the case of Hollier & Eyre (9 C. & K. 1) Lord Cottenham said, that it was clear that between themselves certain grantors bore the relation of principal and surety, but that they were all principals as regards the grantees by the deed, that the question whether one of the grantors between himself and the grantees was a principal or only a surety for the payments of the annuity by another must be ascertained by the terms of the instruments themselves, and that no extraneous evidence was admissible for the purpose of establishing this, "and upon that," he said, “I think there is no room for doubt." He then went on to explain that in equity there might be relief given if knowledge were established and with it a course of dealing which raised an equity in favour of the party.

I am not prepared to say how far the rules of equity, as understood in England, go, or to what institutions of our law they correspond; but we may fairly presume, I think, that law alone with us covers the whole legal field which law and equity together embrace in England. At all events, it is not difficult for us fully to deal with the case indicated as an exception by Lord Cottenham. We take it to mean that the acts of the parties to an instrument may be of so formal and decided

a character that they establish a new contract. This is perfectly in accordance with our law, and we call it novation. Or, there may be evidence of a contract from the beginning modifying the contract on the face of the note; of which I shall give an instance later. Or, it may be, that the dealings of some of the parties are so injurious to the interests of another as to give him an equitable right to get rid of his obligation, although I cannot at this moment suggest an example as likely to arise in dealing with bills of exchange and promissory notes.

ignorant of, and non-consenting to, the transaction between Shortis and the Bank, he could have compelled Shortis to pay, and Shortis' dealing with the Bank would have been no answer to defendant in Shortis' mouth. His obligation to defendant, if the story be true, is to relieve him of the note, and no operation short of that would answer Scott's action.

If the story be not true, Scott has, of course, no reason to complain of the bargain. It should be remembered that the effect, on the obligation of the surety, of discharging the principal does not rest on any equitable con

cipal goes, and the accessory disappears simultaneously, or, as the code puts it (1929 C. C.) Suretyship is the act by which a person engages to fulfil the obligation of another, in case of its non-fulfilment by the

Let us suppose for an instant that this is good evidence, which probably it was not, as its object was to contradict the written instrument, and it only establishes knowledge without any implied expression of consent to alter the conditions of the parties to the note towards the bank. The next step of the evidence on which defendant relies, is that the contract itself implies an intention to vary the original deed. On the contrary, the transaction of the 30th March, 1880, was precisely such a dealing as the Bank had a right to have with the endorser without in any way disturbing its relations with the drawer. That is to say, the Bank treated the parties as they represented themselves, so there is no presumption from that of the intention to make a new contract. Now, have Shortis and the Bank, by anything they have done, damnified the defendant? It seems to us they have not. The injury suggested by appellant is that Scott's recourse against Shortis was stopped by the transaction of the 30th March. This is not tenable. It must be admitted that Scott's legal position compelled him to look after his note without notice. Now suppose he was

The case of The Liquidators of Overend, Gurney & Co. and The Liquidators of the Oriental Financial Corporation (L. R. 7 H. of L. 348), is an instance of bills of exchange being received on special conditions in writing, which altered the contract as it appeared on the instruments. This case then falls within one of the categories I have drawn from Lord Cottenham's judgment in Hollier & Eyre, and in no way applies to the present case. As we think Shortis was not the principal on this contract, it is not necessary for us to enter upon the question as to what constitutes a discharge of the principal.

The second plea need hardly be alluded to. We have already shown that there is no novation express or implied established. Giving notes for a previous debt implies no novation. Noad & Lampson, 10 L. C. R. 29. In other words the intention to operate novation must be evident. (1171 C. C.)

A small point has been put forward as to an erasure of the endorsation. The circumstances are satisfactorily explained, and any presumption that might have existed disappeared. (1181 C. C.) We do not think the renewal of the endorsation has anything to do with the matter, except in so far as it serves to fortify Mr. Wotherspoon's evidence as to the circumstance of effacing the endorsation. It seems to us that the second en

dorsation was made by Shortis, and this disposes entirely of his pretension that he was to get back these notes.

We therefore think the judgment of the Court below was right, and this appeal must be dismissed with costs.

Judgment confirmed.

COURT OF QUEEN'S BENCH.
MONTREAL, Sept. 23, 1884.

Before DORION, C.J., MONK, RAMSAY, TESSIER and BABY, JJ.

C. M. ACER, Petitioner, and THE EXCHANGE BANK OF CANADA, Respondent; also C. M. ACER et al. Petitioners, and THE ExCHANGE BANK OF CANADA, Respondent. Bank in liquidation—45 Vic. (Can.) cap. 23— Contributory.

It is not necessary that ordinary debtors (not

shareholders) of a bank in liquidation be settled on a list of contributories before actions are instituted against them by the liquidators.

In these two cases the respondent, plaintiff in the Court below, sued the petitioners, defendants in the Court below, who were alleged to be debtors of the Bank.

The declarations alleged the insolvency of the Exchange Bank and its liquidation under the Statute of Canada, 45 Vict. cap. 23, the indebtedness of the petitioners, with conclusions accordingly. The petitioners pleaded dilatory exceptions on the ground that if true as alleged in the declaration, they were "contributories" under the Statute, and before any suit could be taken against them they must be settled on the list of contributories to the Bank as provided in the Act. Admissions were filed that the petitioners were not settled on any list of contributories.

After argument Mr. Justice Loranger dismissed the exceptions. Hence the present petitions for leave to appeal from these judg

ments.

It was urged that according to the tenor of the Statute all the proceedings for or on behalf of the Bank were entirely under the supervision of the Court.

Sec. 5 was quoted, defining a contributory to be a 66 person liable to contribute to the "assets of a company under this Act."

Secs. 32, 35, 37, 41 and 71 were cited to show that the use of the word contributory referred to any debtor of the Bank and did not simply mean a shareholder.

Secs. 47, 51, 52 and 54 were also cited to show the extended meaning of the word, and that these referred to contributories who were more than shareholders or who might be indebted for amounts exclusive of calls.

Finally, sec. 76 was quoted to show that if a shareholder only was a contributory, then ordinary debtors might purchase claims against the bank and use them as an offset.

The COURT unanimously decided that a contributory was a stockholder, and that an ordinary debtor did not come within the meaning of the term.

Petitions for leave to appeal rejected.
Hall for Petitioner.
Greenshields for Respondent.

COURT OF REVIEW.

MONTREAL, Sept. 24, 1884. Before TORRANCE, PAPINEAU, GILL, JJ. Ross et vir v. SWEENEY et al. Executor-Removal from office-Inscription in Review.

Where a testamentary executor has been removed from office by a final judgment of the Supreme Court, he will not, subsequent to such judgment, be permitted to inscribe in Review, from a judgment dismissing an action brought by him in his quality of

executor.

The female plaintiff sued in her quality of testamentary executrix, and her action was dismissed on the 4th August, 1884. She immediately inscribed in Review, namely, on the 13th August, against the judgment. She was already defendant in an action taken by Dame Jessie Ross et vir to deprive her of this office. This suit was successful in the Superior Court on the 10th December, 1881, by judgment which was confirmed by the Court of Queen's Bench on the 21st December, 1883, and by the Supreme Court on the 23rd June, 1884.

W. H. Kerr, Q.C., for defendant, now moved that the inscription be struck, on the ground that the female plaintiff had been deprived of her office of testamentary executrix by the