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Present: Dalton J. and Jayewardene A.J.DAVITH APPU ». DE SILVA.
68—D. C. Hatton, 1,643.
Promissory note—Alteration of sum by payee—Judgment against maker—Defence raised—Action for damages by maker against payee.
Plaintiff, who was the maker of a promissory note, sued thedefendant, the payee, to recover damages on the ground, that thedefendant had altered the sum due on the note, before endorsingthe note to K. K had sued the plaintiff on the note, when thelatter raised in defence the question of his liability on the notebased upon the wrongful act of the payee. Judgment in that casewent against the plaintiff, he having failed to provide socurity asa condition of being given leave to defend.
Held, that the plaintiff could not maintain the present actionagainst the defendant.
PPEAL from a judgment of the District Judge of Hatton.
Plaintiff sued the defendant to recover & sum of Rs. 1,500
damages sustained by reason of a wrongful act of the defendantin falsely altering the sum payable on a promissory note granted tohim by the plaintiff.
It was alleged that the defendant altered the sum of Rs. 834-95to Rs. 1,834-95 and endorsed the note to one Kumarasinghe, whosued the plaintiff in D. C. Galle, 24,149. In that case' plaintiffset up the identical allegations which he was now making,viz., that he had signed the note for Rs. 834-95 and that it hadbeen fraudulently and materially altered by the payee. When theplaintiff asked for leave to defend, the District Judge grantedleave on condition of his giving security in the sum of Rs. 2,600.
Plaintiff failed to do so and decree was entered in favour ofKumarasinghe for the amount claimed.
The learned District Judge dismissed the plaintiff’s action.
N. E. Weerasooria, for appellant.
Garvin, for respondent.
July 18, 1928. Dalton J.—
Plaintiff, Davith Appu, who is the present appellant, sued thedefendant (respondent) to recover the sum of Rs. 1,500 damagesalleged to have been sustained by him at the hands of the defendantin the following circumstances. In March, 1925, he signed in favourof the defendant a promissory note for the sum of Rs. 834-95,with interest at the rate of 18 per cent. This sum, he says,represented the balance due by him to the defendant in respect of16J. N. 9487 (11/46)
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1928.* transaction that had taken place between the parties. He
alleges that defendant falsely altered the note by altering the sum
Damon j. ^834*95 to Rs. 1,834*59, and then endorsed it to one B.,
Dawith Appu Kumarasinghe. B. Kumarasinghe then sued plaintiff in D. C.be Silva Galle, No. 24,149, on the note, and judgment was entered againsthim for Rs. 2,391*24. He now seeks to recover Rs. 1,500 fromdefendant for his alleged false and wrongful act.
Before going into the facts, apart from the production of acertified copy of the record in D. C. Galle, No. 24,149, the trialJudge dismissed the action on certain legal objections taken.
It was first of all urged for the defendant-respondent that thequestion of liability on the note referred to in the plaint was finallydecided in D. C. Galle, No. 24,149, and that the defendant isentitled to plead res judicata under section 207 of the CivilProcedure Code.
On the question of res judicata the trial Judge came to theconclusion that the defendant’s plea must be upheld. On theappeal, however, Mr. Garvin for the defendant stated he was notable to sustain this conclusion as it was obvious that whateverbe urged about the cause of action, the parties to D. C. Galle,No. 24,149, were not the same parties as those in this case. Therewas nothing before the trial Judge to lead him to conclude thatthe defendant was privy to that suit or that the indorsee washis representative.
The determining factor in this case it seems to me is the answerto the question whether plaintiff set up or was entitled to set upas a defence in D. C. Galle, No. 24,149, the circumstances he nowpleads as the basis for his present action for damages. To answerthis questiou it is necessary to look at the pleadings and proceed-ings in that earlier case which were produced in the lower Court.There it seems the plaintiff Kumarasinghe sought to recoverRs. 1,834*59 as principal and Rs. 556*65 as interest on the notemade by the defendant Davith Appu in favour of Barnes de Silvaand indorsed by the latter to Kumarasinghe. Davith Apputhen set up as a defence the identical allegations he is makingin this case, namely, that he had signed a note for Rs. 834*95only and that it had been fraudulently and materially alteredby the payee. When he asked for leave to defend, the DistrictJudge pointed out that there was nothing on the note to showeither that the figure “ 1 ” or the words “ one thousand ” had beenadded. As he came to the conclusion there was no good reasonto believe that the note was given for Rs. 834*95 only, he gaveleave to defend only on condition that security be given in thesum of Rs. 2,600. Defendant (present plaintiff) neither gavesecurity nor did he appeal from this order, and decree was thereuponentered for Kumarasinghe for the amount claimed.
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It is now stated in appellant’s petition of appeal that he “ was 1988.
•not in a position for various reasons to contest the said action
against the said indorsee. What those various reasons werehe does not state, but it has been urged before us that he would De Silvain that action be unable to contest his liability to Kuinarasingheon the note as sued upon in view of the provisions of section 64of the Bills of Exchange Act. That argument, it seems to me,is based upon an incorrect interpretation of the provisions of thatsection. Appellant as defendant in that action pleaded a materialalteration in the note to which he had not agreed and for whichhe was in no way responsible. The section enacts that it isavoided in such a case except as against a party who has himselfmade, authorized, or assented to, the alteration and subsequentindorses. Clearly on his own showing neither he nor Kumara-singhe, who was not an indorser at all, come within these exceptions.
Even under the proviso to the section, had Kumarasinghe comewithin the exception, on the assumption that the alteration on thenote was not apparent (as would appear to be the case from theDistrict Judge’s reasons for refusing unconditional leave to defend)and that it was in the hands of a holder in due course, he couldonly enforce payment according to its original tenour.
It will be seen then that the appellant raised in that formeraction the question of his liability on the note based upon thewrongful act of the payee which he was entitled to raise. If hehad been successful in that action, he would have obtained all the- remedy to which, on his own showing, he was then entitled, and nodamages such as he now pleads would have resulted. .He did notpursue it for reasons best known to himself and judgment wentagainst him. He now seeks to raise exactly the same questionin another action disguised in another form. I am not satisfiedhe is entitled to do so. This action was therefore rightly dismissed.
This appeal must therefore be dismissed with costs.
Section 64 of the Bills of Exchange Act enacts that a bill whichis materially altered is avoided, except as against (1) a party,who has made, authorized, or Absented to, the alteration, and (2)subsequent indorsers.
The present plaintiff, who was defendant in D. C. Galle, '
No. 24,149, does not come under either category. He was themaker of the note, and had not made, authorized, or assentedto, the alteration.
After the alteration the note was a nullity as far as the presentplaintiff, the maker, was concerned. (Valliappa Chetty v. Silva.1)
1 (1918) 20 N. L. R. 340.
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Even in the view placed before us at the argument (which Ithink is incorrect), that the note was good in the hands of asubsequent indorser, the plaintiff in the Galle case was not anindorser at all. He was merely the indorsee.
An altered note binds subsequent indorsers because theynegotiate the bill on the footing of the alteration.
It was open to the present plaintiff to prove in the Galle casethat the note had been altered and that it was void as against him.He failed to do that and if he has suffered any damage, it was dueto his own default.
A defendant is always entitled to prove that whatever damagesthe plaintiff may have suffered were due, not to the defendant’sconduct but to the plaintiff’s own laches (Fonaeka v. Perera.1)
I agree that the appeal should be dismissed with costs.
DAVITH APPU v. DE SILVA