United Kingdom House of Lords Decisions

Appeal from a judgment of the Court of Appeal ( Collins, M.R., Cozens-Hardy and Farwell, L.JJ.) reported (1907) 1 KB 246, reversing a judgment of Walton,

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J., reported (1896) 1 K.B. 318, upon a case stated by the Commissioners of Inland Revenue. The question was whether a certain instrument, one of a series numbered consecutively, was a “promissory note” or a “marketable security.” The Commissioners held that it was the latter. Walton, J., decided that it was only a “promissory note,” but the Court of Appeal, restoring the order of the Commissioners, held that it was a “marketable security,” and liable therefore to a higher rate of duty. The instrument was described on its face as a “Four and one-half per cent. Gold Coupon Treasury Note,” was dated the 1st June 1903, and was issued by the Government of the United States of Mexico in pursuance of a Law of Congress of the 15th May 1903. The following are the more material parts of the instrument:—“United States of Mexico acknowledge themselves indebted and promise to pay to bearer on the 1st day of June 1905 one thousand dollars (1000 dollars) in gold coin of the United States of America, and also to pay interest on said principal sum in like gold coin at the rate of four and one-half per cent. per annum from the 1st day of June 1903, semi-annually on the 1st days of December and June in each year, upon surrender of the annexed coupons as they respectively mature. Both as to principal and interest this Treasury note shall be for ever exempt from any taxes or assessments which may at present exist or be hereafter imposed by the United States of Mexico. The principal and interest of this Treasury note are payable in the city of New York at the office of Speyer & Co., or, at the option of the holder, in London, England, at the office of Speyer Brothers, in sterling, at the fixed rate of 4·85 dollars to the pound sterling.” The note was also stated to be redeemable at par and accrued interest at the option of the United States of Mexico at any time before maturity on sixty days' notice to be given in certain newspapers in New York and London. The coupons attached to the note provided that “on the 1st day 19, unless the above-mentioned Treasury note shall be sooner redeemed, and on the surrender of this coupon, the United States of Mexico will pay to bearer in the city of New York, U.S.A., at the office of Speyer & Co., twenty-two dollars and fifty cents in gold coin of the United States of America, or in London, at the office of Speyer Brothers. £4, 12s. 9d. sterling, being six months' interest then due on said Treasury note.”

The Stamp Act 1891 enacts—Section 33—“(1) For the purposes of this Act the expression ‘promissory note’ includes any document or writing (except a bank note) containing a promise to pay any sum of money. (2) A note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen, is to be deemed a promissory note for that sum of money.” Section 82—“(1) Marketable securities for the purpose of the charge of duty thereon include… ( b) a marketable security by or on behalf of any foreign State or Government, or foreign or colonial municipal body, corporation, or company (hereinafter called a foreign security) bearing date or signed after the 3rd of June 1862… (2) which, though originally issued out of the United Kingdom, has been, after the 6th of August 1885, or is offered for subscription and given or delivered to a subscriber in the United Kingdom; (3) which, the interest thereon being payable in the United Kingdom, is assigned, transferred, or in any manner negotiated in the United Kingdom. …” Section 122—“…. The expression ‘marketable security’ means a security of such a description as to be capable of being sold in any stock market in the United Kingdom.”