Gu.nasek.ere v. Gunasekere.
1941Present : Howard C.J. and Hearne J.
340—D. C. Balapitiya, B 158.
Obligation in solidum—Joint note by plaintiff and defendants—Plaintiffan accommodating party—Note discharged by plaintiff—Action by plaintiffto recover amount of note—Roman-Dutch law.
Where the defendants, who were partners in a business, requested theplaintiff to be an accommodating party to a promissory note on whichthey raised money for the business and where the plaintiff, havingdischarged the note, sued the defendants to recover the amount dueon the note,—
Held, that the liability of the defendants was an obiligation in solidum.and that each was liable to pay the whole debt.
Held, further, that the case was governed by the Roman-Dutch law.
y a promissory note dated December 16, 1937, the defendants andthe plaintiff jointly and severally promised to pay R. M. P. L.
P. R. Palaniappa Chettiar a sum of Rs. 500 with interest at 18 per cent,per annum. On December 3, 1939, the plaintiff paid a sum of Rs. 657.50owing on the note, which was discharged. In this action he claimedthe said sum, which he maintained he paid on their behalf.
The claim was made on the footing that he signed the promissory noteat the request of the defendants as an accommodating party. Theclaim was not contested by the first defendant but the second defendantfiled answer denying that the plaintiff was an accommodating party.The learned District Judge gave judgment for the plaintiff.
A. Rajapakse (with him J. M. Jayamanne), for the second defendant,appellant.—The only point that arises is whether one of three debtorswho pays the entirety of the debt to crditor and seeks recovery fromthe co-debtors can get the full amount or only a pro-rata share from aco-debtor. The Obligation under the pro-note is governed by English' law. If this obligation is extinguished by decree or otherwise, as; forexample, by payment, there arises a new obligation which is governedby the Roman-Dutch law—Ramalingam v. James The new cause ofaction which arises may be historically connected with the old cause ofaction but is different. English law applies only to actions on pro-notes.Under the Roman-Dutch law plaintiff can claim only a pro rata sharefrom the defendants—Walter Pereira: Laws of Ceylon, 2nd ed., pp. 586-588Kotze’s Van Leeuwen, Vol. II., p. 35 ; Panis Appuhamy v. Selenchi Appu
M.T. de S. Amerasekere, K.C. (with him R. N. Ilangakoon), for plaintiff,respondent.—The cause of action is the refusal to pay a certain sum ofmoney which plaintiff has paid on behalf of defendants. The authoritiescited for appellant apply to the case of persons who are joint debtors.Plaintiff here is not a joint debtor. No doubt on the pro-note he is.The District Judge has held that he was only an accommodating party.The passage cited from Walter Pereira applies -only where parties are infact joint debtors. Here, as between the debtors themselves, plaintiff is
> (1939) 40 N. L. R. 4S6.
* (1903) 7 N. L. R. 16.
HOWARD C.J.—Gunasekere v. Gunasekere
only an accommodating party, i.e., a surety.—Burge on Suretyship, p. 364 ;Pothier; Vol. 1., Evan’s Translation, pp. 146, 147. As regards suretyship,whether English or Roman-Dutch law applies, the defendants are jointlyand severally liable.
A. Rajapakse, in reply.—The passage cited from Burge deals withsubrogation. In English law statutory provisions apply as regardssuretyship. In Ceylon Roman-Dutch law applies. As regards co-obligors see 3 Maasdorp, 1907 ed., pp. 86, 87. Each of several co-obligorsis liable only for a share.
Cur. adv. vult.
November 26, .1941. Howard C.J.—
This is an appeal by the second defendant from a judgment of theAdditional District Judge of Galle giving judgment for the plaintiffas claimed with costs. The action arose out of a promissory note datedDecember 16, 1937, whereby the two defendants and the respondentjointly and severally promised to pay to Messrs. R. M. P. L. P. R.Palaniappa Chettiar a sum of Rs. 500 and interest thereon at 18per centum per annum. On November 3, 1939, the respondent paid anamount of Rs. 657.50 owing on the note which was discharged. In thisaction he claimed from the defendants the said sum of Rs. 657.50 whichhe maintained he had paid on their behalf. The claim of the respondent,which was not contested by the first defendant, was based on thecontention that he signed the promissory note for Rs. 500 at the requestof the defendants as an accommodating party without receiving anyconsideration. Moreover he alleged that the Chettiar was not preparedto lend the money unless he also signed the note as a debtor. The secondappellant filed answer denying that the respondent was merely anaccommodating party and signed the note without receiving consideration.On this point, which was a question of fact, the finding of the learnedDistrict Judge was in favour of the respondent. This finding has notbeen contested by Counsel for the appellant in this Court. The latter,however, maintains that the respondent could only recover from eachdefendant one half of the amount he had paid in discharge of thepromissory note.,
The first point that arises for consideration is whether the position asbetween the respondent and the defendants was governed by English orby Roman-Dutch law. Mr. Rajapakse contends that Roman-Dutch lawapplies, a contention not seriously challenged by Mr. Amerasekere. Inmy opinion the principle laid down by Soertsz J. in Ramalingam v. James 1is applicable. The promissory note while it existed was governed byEnglish law. When it was discharged by payment, it was swallowed upby such payment and lost its identity. Any debt due to the respondentby reason of his payment of the amount due on the promissory note isa new debt and is governed by the common or Roman-Dutch law.
Both Counsel have referred us to the law as stated in Walter Pereira’sLaws of Ceylon. At page 586 the following passage occurs : —
“ In general, when any one enters into an obligation for one and thesame thing to different persons, or, on the contrary, when different
1 40 N. L. if- 486.
HOWARD CJ.—Gunasekere v. Gunasekere.
persons are jointly bound to another, each is only liable or entitledpro rata as debtor or creditor of the thing. However^ an obligationmay be entered into by which each party may be bound or entitledin solidum, when this is the object of the several parties, providedhowever that payment made to or by one of the parties frees all theothers. This is entitled an obligation in solidum; and according to thegeneral rule, has no place, but which expressly stipulated except insome few cases, as when the partners of any firm enter into anycontract on account of their trade, or when several persons are chargedwith one and the same .guardianship, or when several persons haveconspired together, and are equally principals in the commission of somecrime, and are thus equally liable in damages, or have contractedtogether a debt in solidum, and are each liable for the whole withrespect to the creditor, though among themselves the debt is divisible.”
Again on page 588 it is stated as follows: —
“ Solidity must be stipulated in all contracts of whatever kind.As already observed, strictly speaking, it ought to be expressed. If itis not, when several persons have contracted an obligation in favour ofanother, each is presumed to have contracted as to his own part ”.
A similar view of the law is also expressed in Maasdorp’s Institutes ofCape Law, Vol. III., p. 86, where the following passage occurs : —
“ Whereas there are several co-obligors or co-obligees, the generalrule of our law is that, unless otherwise expressly agreed upon, theliability of the co-obligors is joint merely, and not joint and several,whilst the rights of the co-obligees are held in common. In otherwords, each of several co-obligors (except in the case of co-partners)is only liable for his share of the contract, and not for the wholecontract in solidum.”
A similar statement of the law is also to be found in Evan’s translationof Pothier on Obligations, Vol. I., p. 147, where it is stated as follows : —
“ Solidity may be stipulated in all contracts of whatever kind.But regularly, it ought to be expressed ; if it is not, when severalpersons have contracted an obligation in favour of another, each ispresumed to have contracted has to his own part. And this is confirmedby Justinian in the Novel 99. The reason is that the interpretationof obligations is made in cases of doubt in favour of debtors, as hasbeen shown elsewhere. According to this principle, where an estatebelonged to four proprietors, and three of them sold it in solido, andpromised to procure a ratification by the fourth proprietor, it wasadjudged that the fourth, by ratifying the sale, was hot to be concideredas having sold in solido with the others: for although the three hadpromised that he should accede to the contract of sale, it was notexpressed that he should accede in solido.
“ Nevertheless, there are certain cases in which solidity betweenseveral debtors of- the same thing takes place, although it is notexpressly stipulated.”
“ The first case is when partners in commerce contract some obligationin' respect of their joint concern.”
HOWARD C.J.— Gunasekere v. Gunasekere.
The law as formulated by the authorities to which I have referred wasconsidered by Layard C.J. in Panis Appuhamy v. Selenchi Appu', inwhich it was held that where two or more persons have joined instipulating for the payment of a certain sum of money, each is ordinarilyliable to pay a quota of that money. It is only when the intention of theparties is clearly expressed that each person shall severally pay thewhole that each person becomes bound in solidum. When two lesseescovenant to pay a certain sum of money as rent, and there are no wordsin the lease clearly showing that each lessee bound himself in solidumit was held that each lessee is not severally liable for the payment of thewhole rent. From the concluding words of his judgment in Ramalingamv. James ~ it is clear that Soertsz J. took the same view of the lawas expressed by Layard C.J. in Panis Appuhamy v. Selenchi Appu (supra).
The question for consideration is, therefore, whether there is anythingin the contractual relationship between the respondent on tfie one handand the defendants on the other hand to take this case out of the ordinaryrule creating a joint obligation, and by reason of such relationshipcreating an obligation in solidum. The respondent became liable on thepromissory note without receiving consideration and was, so far as thedefendants are concerned, in the position of a surety. The position ofsureties with regard to recourse against the principal debtor after theyhave paid is formulated in Pothier, Vol. I., p. 277, as follows : —
“ After the surety has paid, if he has procured'a subrogation to therights and actions of the creditor,. he may exercise them against thedebtor, as the creditor himself might have done : if he has neglectedto acquire this subrogation, he has still in his own right an actionagainst the p'rintipal debtor, to reimburse him what he has paid.”
And again on p. 282 it is stated as follows:—
“The surety, who demands from one of the principal debtors, forwhom he has become surety, the whole of the debt, which he hasdischarged, ought to cede to this debtor, not only his action in hisown right against the other debtors, but also the actions of the creditorto whom he may have procured a subrogation; if the surety in payingthe creditor has neglected to acquire this subrogation, and has therebyincapacitated himself from assigning it to the principal debtor fromwhom he demands the whole of the debt, this debtor may, on offeringto reimburse him for his own part, obtain a liberation from the demandof the surety for the parts of the other principal debtors.”
In this case the respondent in paying the Chettiar did not acquiresubrogation of the latter’s rights. In these circumstances he is only in aposition to enforce his own rights against the defendants. There remainsfor consideration the question of the respondent’s own rights. Thenature of the obligation must'be ascertained by reference to the circum-stances in which he became a party to the bond. According to the evidencethe defendants were jointly engaged in a bus business and the money wasraised for the benefit of that business. In these circumstances I am ofopinion that the implied-obligation to repay the respondent the sum ofmoney he had paid the Chettiar in discharge of the promissory note was on
1 7 .v. L. R. 16.
* 40 N. L. R. 486.
Saravanamuttu v. ae Silva.
account of the defendant’s trade. Moreover, apart from the fact thatthe defendants approached the respondent and requested him to becomea party to the bond as partners in a business, he undertook at theirrequest and without consideration the liability of each of them to paythe whole debt. In these circumstances a joint and several liability mustbe implied. Hence for the reasons I have given the defendants wereliable for the whole obligation in solidum and on this ground the respon-dent is entitled to succeed in this action.
For the reasons I have given, I have come to thfe conclusion that thejudgment of the learned District Judge is right and the appeal must bedismissed with costs.
Hearne J.—I agree.
Appeal dismissed.