PROMISSORY NOTES

Taranaki Daily News, 23 August 1930, Page 4

PROMISSORY NOTES

ONE OF THE PITFALLS. FARMER JIAS TO PAY TWICE, The danger of signing promissory notes without giving full consideration to the results of the negotiability is strikingly instanced in a case quoted by the Mercantile Gazette. A farmer in the North Island purchased a secondhand car in April, 1928, from a limited company, and after paying a cash instalment signed six promissory notes, in favour of the vendor, of £22 each, at three, six, nine, 12, 15 and 18 months from date. Four of these notes were subsequently discounted. Later on the purchaser called at the vendor’s office an I intimated his wish to pay whatever balance was owing on his car, and informed the manager that four of the promissory notes were not yet due, and wanted to know what discount he would be allowed for repayment. The manager' called in the salesman who had sold the car, and after making some calculations they said that £74 would be wanted to give him a clear discharge of his liability; this he agreed to and he receiped a formal receipt for the total money he had paid, showing that he was exonerated from any further liability to the company. He asked for the promissory notes made by him

and was told by the cashier; “You 'have got a receipt for the money, the notes are worth nothing now and will be returned to you?’ The -buyer went away quite satisfied, and remained so until he received a letter from a finance corporation with which the vendor had discounted two of the notes, requesting payment of £44. ine purchaser made inquiries and discovered that as the finance corporation was a bona fide holder of the two notes, its claim upon him could not be defeated by the fact that he had paid the money to the vendor company, and this advice was later on proved to be sound, as the magistrate before whom the case was tried gave judgment in favour of the plaintiffs for the amount claimed and costs.

It appeared in evidence that the vendors, when they received the £74, were prevented from picking up . the two notes in the bands of the plaintiffs by the intervention of the receiver for the debenture holders who had security over the property of the company. By a coincidence, he took possession just about the time that the £74 had been paid in, and refused to permit that money or any portion of it to be used in taking up the notes which were outstanding, and in consequence of this the vendor had to pay twice over to the extent of £44, which was hard on him, and I though he could look to the company to | reimburse him, his claim was of little I value, as after payment of the debenture holders there was an insufficiency of assets’ and he made a total loss, of the sidnfey he' was compelled io pay the finance' corporation.”