STEWART v Stewart

• Jurisdiction: Ireland
• Judgment Date: 17 April 1891
• Docket Number: (1889. No. 11,660.)
• Date: 17 April 1891
• Court: Chancery Division (Ireland)

Chancery Division.

(1889. No. 11,660.)

STEWART

and

Stewart.

Crosskill v. BowerENR 32 Beav. 86.

Graves v. Davies 17 Ir. Ch. R. 227.

M' Carthy v. Fermoy Unreported.

Provincial Bank v. O' Reilly 26 L.R. Ir. 313.

Balckburn v. WarwickENR 2 Y. & C. Ex. 92.

Ferqusson v. Fuffe 8 CI. & Fin. 121.

Williamson v. WilliamsonELR L.R. 7 Eq. 542.

Mosse v. SaltENR 32 Beav. 269.

Daniell v. SinclairELR 4 App. Cas. 181.

Lord Clancarty v. Latouche 1 Ba. & B. 420.

Barfield v. Loughborough L.B. 8 Ch. App.1.

Mosse v. SaltENR 32 Beav. 269.

Fergusson v. Fyffe 8 CI. & Fin. 121.

Provincial Bank v. Reilly 26. L.R. Ir. 313.

Graves v Davies 17 Ir. Ch. R. 227.

M'Carthy v. Lord Fermoy Unreported.

Burke's Estate 9 L. R. Ir. At pp. 39.40.

M' Carthy v. Lord Fermoy unreported.

Fergusson v. Fyffe 8 CI. & Fin.121

Crosskill v. BowerENR 32 Beav. 86.

Williamson v. WilliamsonELR L.R. 7 Eq. 542.

Barfield v. LoughboroughELR L.R. 8 Ch. App.1

Mosse v. SaltENR 32 Beav. 269.

Daniell v. Sinclair.ELR 6. App. Cas. 181.

Mosse v. SaltENR 32 Beav. 269.

Lord Clancarty v. Latouche 1 Ba. & B. 420.

Banker and customer — Express contract — Interest on overdraft due at the death of customer — Accounts charging compound interest with half-yearly rests — Security fro fixed sum — Inconsistent parol agreement — Accounts stated and settled.

Vol,. XXVII.] CHANCERY DIVISION. R. 1891. STEWART v. STEWART. (1889. No. 11,660.) .Banker and customer-Express contract-Interest on overdraft due at the death of customer-Accounts charging compound interest with half-yearly rest* -Security for fixed sum-Inconsistent parol agreement-Accounts stated and settled. March 23.26. April 17. In 1879 S. opened an account with the N. Bank, and was allowed to overÂdraw the same to the amount of £1500 having signed the following agreement:- "In the event of my account being overdrawn at any time during the continuance of my dealings with the N. Banking Company, it is understood that said account is to be subject to all charges and interest which may be charged by the bank from time to time on such accounts, and in the event of my death such interest and charges are to continue until the account be paid off." In 1880 he arranged for an additional advance of about £6500, stating he wanted to pay off a mortgage of £5000 charged on his estate, and that he would require the loan for about six months. The manager of the N. Bank explained to S. that the minimum rate of interest on this advance would be 5 per cent., and that it varied according to the bank rate, and that interest was calculated daily on the debit balance of the account, and debited to it at the end of each half-year-on the 28th February and 31st August. The mortgage on his estate for £5000 with interest payable at 4 per cent. was transferred to the bank by deed dated the 17th March, 1880, D. the mortgagee having been paid off and being a party to the conveyance. The deed was in form an absoÂlute transfer of the mortgage debt and premises to the N. Bank, and did not show the existence of any banking account between the parties, or any connexion therewith ; but it was proved that it was the intention of the parties that this transfer of the mortgage should be assigned as a collateral security for the account which was to be overdrawn, and not merely for the £5000 the principal sum mentioned in the deed. After the expiration of six months, and subsequently, from time to time, the privilege of overdrawing his account was continued to S., and the debit balance against him in the books of the bank varied at different times. Compound interest at the bank rate was regularly charged by the N. Bank, with half-yearly rests, and paid by 8. from the 30th January, 1880, till his death in 1889, accounts being regularly stated and settled between them. At the time of his death 8. had overdrawn his account to the amount of £612813s. lOd. Vol.. XXVII. 2 1) LAW REPORTS (IRELAND). [L. R. L In a suit for the administration of the estate of S. the N. Bank claimed against the executors of S., in addition to the sum due at his decease, compound interest at the bank rate with half-yearly rests. Held (1), On the construction of the agreement there was an express conÂtract that compound interest at the rate charged by the bank and paid by S. during his lifetime, should be paid by his executors on the balance due at his death. (2) That the transfer of the mortgage of £5000 was in law a distinct transaction, having no connexion with the banking account between the parties, was properly the subject of a separate account, and that the inconsistent parol agreement could not alter or contradict the legal effect of the deed. (3) That, inasmuch as accounts were regularly stated and settled by B. with full means of knowledge of his rights, and considering the fact that, if S. had insisted on these rights, and refused to pay compound interest at the bank rate on the whole debit balance, the bank might have closed the account, it would be inequitable to allow the executors of S. to open up the settled transÂactions : Held, further, that an account should be taken to ascertain the minimum sum to the debit of S. at any time after the date of the transfer of the mortgage, and that this sum, if not more than £5000, should be treated as the principal sum due on the security at the date of the last settlement, and that interest at 4 per cent should be calculated on it till payment. When a deed is given as a security for a fixed and definite sum, at a fixed rate of interest, and not for the general balance of a banking account, it is not open to the bank in the absence of express contract, contained in the deed itself or in some instrument of equal degree, to charge compound interest upon this sum or include it in the general banking account. Moue v. Salt (32 Beay. 269) explained and followed. This case was placed in the Judge's list for the determination of a claim on behalf of the Northern Banking Company for compound interest at the bank rate on a principal sum of £6128 13.9. 104 due to them at the death of Sir Augustus Stewart by his estate. In the month of April, 1879, Sir Augustus Stewart opened au account with the Ramelton Branch of the Northern Banking Company, and he entered into an arrangement with the bank that, he should be allowed to overdraw his account to the amount of £1500. At the time of this arrangement he signed the following agreement : " In the event of my account being overdrawn at any time during the continuance of my dealings with the Northern Banking Company, it is understood that said account is to be subject to all Vol,. XXVII.] CHANCERY DIVISION. 353 charges and interest which may be charged by the bank from R. time to time on such accounts, and in the event of my...