Arnold White, C.J.
1. The learned Commissioner dealt with this case on the footing that Barru Narasimha Row to whom the half-notes were sent was the agent of Mr. Ramaniah Pantulu who had the money in question in deposit with Messrs. Arbuth not and Company and who claims to be paid the amount in fall. The actual terms of the letter of August 8th, 1906, are not before us bat, it was not seriously contended on behalf of the appellant that the money was to be received by Mr. Narasimha Row in any other capacity than that of Mr. Ramaniah Pantalu's agent, and on his behalf, the case may, therefore, be considered as if the half notes had been sent by Messrs. Arbuthnot and Company direct to the customer.
2. The learned Commissioner in dealing with the case held (1) that on the authority of Smith v. Munde 29 L.J.Q. B. 172 that the property in the half notes had not passed and (2) that no question of appropriation or trust arose.
3. As regards the question whether the sending of the half notes operated as payment of the debt due by Messrs. Arbuthnot and Company to the customer, I think it is clear that the case is concluded by Smith v. Munde 29 L.J.Q.B. 172. I agree with the learned Commissioner that the facts that in Smith v. Munde 29 L.J.Q.B. 172 the party who sent the notes was not the debtor, and that his payment was a voluntary payment, made no difference.
4. The question whether there had been any trust created or appropriation made was not discussed by the learned Commissioner but he states in his judgment that no question of appropriation or trust arose.
5. In the course of the argument I was disposed to think that there had been an appropriation of a specific amount to the payment of this particular debt. On further consideration I have come to the conclusion that this is not so. There was no direction by the customer to appropriate. The only reason for sending the half notes, so far as appears from the evidence, was that it suited the convenience of the bank and of the customer that the money should be transmitted in the form of two sets of half notes.
6. Mr. Narasimha Row who acknowledged the receipt of the' half notes on behalf of the customer, and asked that the other halves should be sent had no occasion to consider any question of appropriation. What he wanted was payment, and what he assented to was payment in the form adopted by the bank.
7. I do not think the principle of the decision in Farley v. Turner 26 L.J. Ch. 710 where there was express direction to appropriate a specific sum to a specific purpose has any application to the facts of this case.
8. Then, can it be said that there was an appropriation of the notes themselves in the sense that the property in the notes passed to the customer. The Bank in sending the half notes no doubt ear-marked and set aside specific notes to satisfy this particular debt. In a sense they appropriated the notes to the payment of the debt and by sending the half notes they communicated this appropriation to the customer but this appropriation did not, in my opinion, operate so as to pass the property in the notes to the customer. The setting aside of the notes and sending the half notes indicated an intention to pass the property, but not an intention to pass the property ed instanti by the sending of the half notes. As in Wilson v. Balfour 2 Camp. 579 it seems to me that there was no 'virtual transfer.'
9. I think the learned Commissioner was right and I would dismiss the appeal.
10. From Smith v. Munde 29 L.J.Q.B. 172 it seems to me we get this only : the property in a promissory note payable to bearer passes by delivery, and the delivery of half the note is not a delivery as will pass the property. But it was the intention of the debtor in sending the half notes to set apart for the creditor specific notes and to pay by means of them and if this intention was communicated to the creditor then it seems to me we have a specific appropriation upon which the creditor can rely against the Official Assignee. I do not think there is any doubt about this, but I may refer to the case of Wilson v. Balfour 2 Camp. 579 to which the learned Chief Justice has referred and Ranken v. Alfaro 5 Ch. D. 786 as authorities from which the proposition can be deduced. No question of fraudulent preference is raised in this case and the only difficulty is to decide upon the intention as evidenced by the circumstances and the acts of the parties. No doubt Messrs. Arbuthnot and Company intended primarily to pay the debt but they must have also intended to pay it by means of those particular currency notes and that' the creditor should be satisfied from the receipt of the half notes that his claims would be paid by the transmission of the other halves. They had undertaken to pay him on the 16th October and they commenced to meet their undertaking on that date by giving him the half notes. It must have been present to their minds and intended by them that he should accept the receipt of the first halves as sufficient security for the payment of his claim, till the other halves could reach him. It seems to me that that being so, they made representations amounting to a pledge' that they would remit the second halves of the particular notes of which the creditor held the first halves.
11. And that will give the creditor a right in equity to call for delivery of the notes or of course payment in lieu thereof. Messrs. Arbuthnot and Company, could not, in my view of their acts, have recalled the half notes sent to the plaintiff unless by redeeming them by payment of the debt or by substituting for them some other security equally satisfactory to the creditor.
12. I would allow the appeal.
13. The result is that the appeal is dismissed with costs.