Mortgage Insurance Corporation v Commissioners of Inland Revenue

JurisdictionEngland & Wales
Date1887
Year1887
CourtQueen's Bench Division
[DIVISIONAL COURT] MORTGAGE INSURANCE CORPORATION, LIMITED, APPELLANTS; COMMISSIONERS OF INLAND REVENUE, RESPONDENTS. 1887 Dec. 14, 15. POLLOCK, B. and HAWKINS, J.

Revenue - Stamp Duty - Promissory Note - Agreement - Stamp Act, 1870 (33 & 34 Vict. c. 97), s. 49.

By an instrument headed “Policy of Insurance,” after reciting that E. was desirous of being insured with the appellant corporation, and that there had been paid to the corporation 9l. 17s. 4d., being the agreed premium for such assurance, it was witnessed that the corporation did thereby guarantee to the assured payment of the sum of 100l. on May 18, 1976; provided that if the assured should be desirous at any time of surrendering the policy, the corporation would allow to him the surrender value thereof as on the 18th day of May last preceding the date of his notice to surrender, such value to be fixed according to the tables of the corporation for the time being in force with reference to surrenders:—

Held, that, for the purposes of the Stamp Act, 1870, this instrument required to be stamped as an agreement, and not as a promissory note.

CASE stated by the Commissioners of Inland Revenue under the Stamp Act, 1870 (33 & 34 Vict. c. 97), s. 19.

On June 7, 1887, the appellants' solicitors presented, under the provisions of s. 18 of the Stamp Act, 1870, an unstamped instrument to the commissioners for their opinion as to the liability thereof to stamp duty. The instrument (omitting immaterial parts) was as follows:—

“Amount insured 100l.

“This policy of insurance witnesseth that whereas W. Elkin, Esq. (who with his executors, administrators, and assigns are hereinafter called the assured), is desirous of being insured by the corporation as hereinafter appearing, and there has been paid to the corporation the sum of 9l. 17s. 4d., being the agreed premium for such assurance, now these presents witness that the corporation do hereby guarantee to the assured payment of the sum of 100l. on the 18th day of May, 1976, Provided that if the assured shall be desirous at any time of surrendering this policy the corporation will allow to the assured the surrender value thereof as on the 18th day of May last preceding the date of his notice to surrender, such value to be fixed according to the tables of the corporation for the time being in force with reference to surrenders.

“In witness, &c.”

The commissioners, being of opinion that the instrument was chargeable with stamp duty as a promissory note for 100l., assessed the duty thereon at one shilling, and the instrument was stamped in conformity with that assessment.

The appellants, being dissatisfied with such assessment, required the commissioners to state and sign this case.

Sir H. James, Q.C. (Moulton, Q.C., and Reginald Brown, with him), for the appellants. The question is whether this document should be treated as a promissory note or an agreement, for the purposes of the stamp duties. It is something more than a mere promissory note, which is required to be stamped with a one shilling stamp: It is an agreement, only requiring a sixpenny stamp. The definition of a promissory note in s. 49 of the Stamp Act, 1870F1, cannot be construed literally. It is not true to say that every instrument which contains a promise to pay money is a promissory note for the purposes of the Act. Where the instrument contains obligations to be performed by both parties and a promise to pay a sum of money by one of them, it is an agreement and not a promissory note. No business man would call this instrument a promissory note in the common acceptation of the term. No doubt it contains an agreement to pay, upon receipt of a certain sum, 100l., at a fixed date, but the appellants further undertake not merely to pay 100l. in 1976, but to allow the promisee to call upon them to pay the surrender value at any period. That surrender value is to be paid according to the tables of the company for the time being in force. It is a shifting sum, not ascertained even on an actuarial estimate. It may vary from time to time with alterations made by the company in their tables. The company undertake to keep those tables in order that the assured may at any time calculate the surrender value, but supposing that for any reason they ceased to keep the proper tables, the assured could sue them, not merely on their promise to pay, but on their agreement, in order to make them keep and produce tables so that he might ascertain the surrender value; and in that case the document would be put in as an agreement.

In the British India Steam Navigation Co. v. Commissioners of Inland RevenueF2, the question was whether the instrument before the Court ought to be stamped, under the Act of 1870, as a promissory note, or as a debenture. The tests applied by the Court in deciding that it should be stamped as a debenture were, whether, though in one sense a promissory note, it contained matters other than those usually contained in promissory notes; and whether it would strike any commercial man as something very different from a promissory note. In Yeo v. DaweF3, the question was whether the instrument ought to be stamped as a promissory note or as an agreement, and the Court of Appeal held that it should be stamped as an agreement. The judgments of Brett, M.R., and Baggallay, L.J., proceeded on the ground that the instrument was not given or taken by the parties as a promissory note, and was not in fact a promissory note in the business sense of that term. In each of those cases the...

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