1956Present : Gunasekara, J., and Sinnetamby, J.
S. PATER-NOTT ct al., Appellants, and MONIMPEXHUNGARIAN FOREIGN TRADING CO., Respondent
8. C. 542—D. C. Colombo, 17,976fS
Hill of exchange—Restrictive indorsement—Right of drawer to sue on bill thereafter
Hills of Exchange Ordinance, ss. 21 (3), 31 (1), 3-5 (2)..
'When a bill of exchange restriclively indorsed for collection is dishonoured on.presentation for payment on maturity, the drawer to whom it is returned bearing-;an indorsement in blank by the indorsee is not entitled to sue upon it. '
^^-PPEAD from a judgment of the District Court, Colombo.
S. Sharvananda, for tho defendant.s-appellants.
It. Dia-s, for the plaintiff-respondent-.
Cur. adv. vuU.
July 30, 1956. Sixxetajiby, J.—
At the conclusion of the arguments in this case we allowed the appeat-wit-h costs in bot-h Courts and stated wo shall give our reasons later. Inow proceed to record my roasons for tho decision.
Tho second and third defendants were sued in this case on aBill of Exchange drawn 011 them by the plaintiff company and madepayable to tho National Bank of Hungary*. Tho Bill which was made-payable thirty days after sight was accepted by tho defendants but wasdishonoured when presented for payment on maturity by GrindlaysBank to whom tho Bill had been endorsed. Both the Maker and thePayee are foreign companies and the Acceptor and Indorsee resident inCeylon.*
Tho Bill itself shows, and there is no contest on this point, that tho-Payee, viz., Tho National Bank of Hungary, restriclively endorsed it forcollection to Grindlays Bank. The endorsement reads :.
“ For us to Grindlays Bank, Colombo. ”
and is signed by tho National Bank of Hungary. The Plaintiff in his-plaint accounted for his possession of the Bill, by stating that it was-
returned to him. Tlio Bill bears an endorsement in' blank by GrindlaysBank. Having regard to these indorsements and to the prosumptionin regard to delivery croatod by Section 21 (3) of tho Bills of ExchangeOrdinance the only reasonable inference is that Grindlays Bank indorsedthe Bill in blank and delivered it to the plaintiff company.
The question that immediately arises for consideration is whother theindorsement and delivery by Grindlays Bank to the plaintiff companyconfers on the latter a 113' titlo on the Bill to onablo them to suo upon it.Obviously it does not. The National Bank of Hungary by its indorse-ment authorised Grindlays Bank only to receive payment on their behalf.It is a restrictive indorsement and Section 35 (2) declares that such anindorsement gives tho indorsee no power to transfer his rights.
Issues G, 7 and S framed at the Trial dealt w ith this aspect of th c matterand arc as follows :—
Issue. G.—Bid the plaintiffs by Bill of Exchange marked A requestthe defendants at 30 days after sight to pay to tho order of theNational Bank of Hungary, Board of Exchange, a sum of12 2s. Oil.
Issue 7.—Was tho said Bill of Exchango endorsed and delivered by theNational Bank of Hungary to Grindlays Bank limited, Colombo,for collection.
Issue S.—If issues 6 and 7 arc answered in tho affirmative, has thoplaintiff any Jegal right or title to maintain an action on thesaid bill of exchange.
Tho learned District Judge answered issue G in the negative. Why hodid so it is not possiblo to undorstaud. The submissions on behalf ofboth plaintiff and defendant and tho termsof tho Bill itself required thisissue to he answered in the affirmative. Issue 7 he answered in thoaffirmative but proceeded to answer issue S also in the affirmative.Presumably tho learned Judge answered this issuo in this v ay becauseof tho view I10 took and expressed in regard to tho common law rights of aPrincipal, who has employed an Agent, to suo in his own name. Ob-viously tho learned Judgo has misdirected himself on this question.Wc are hero not concerned with common law* rights but with tho specialrights and obligations created by the Bills of Exchange Ordinance inregard to parties who .are signatories to a Bill of Exchange. The actionis upon the Bill and no alternative cause of action based on any' othercontract is either pleaded or covered by the issues.
Learned Counsel for the appellants contended that the true Ownerof the Bill was the maker and that tho National Bank of Hungary' andGrindlays Bank were merely his Agents for collection. He relied on thoaverments in para 2 of tho plaint which defendants havo admitted in thoanswer. The relevant portion of pnra 2 of tlio plaint, however, is unin-telligible and meaningless. It avers that plaintiff as tho maker indorsedand delivered tho Bill for collection to the National Bank of Hungary'.
,In point of fact no such indorsement appears on the Bill and in law it isnot necessary' that tho maker of a Bill should endorse it in order to giro
effectual delivery. Despite the admission in the answer the issues framedon behalf of the defendants show that they contested these avermentsin the plaint. –
No issue was framed at the Trial on behalf of the plaintiff which inany way suggested that the National Bank of Hungary was also a moreAgont for colloctioA : on tho other hand the effect of issues 6,-7 and Sis to suggest that tho said banker was a holder for value and that onlyGrindlaya Bank was an Agont for Collection. Even on the basis that it ispossible for “ immediate ” parties to a Bill to load ovidonco which hastho effect of varying or' contradicting the terms of tho doeumont itselfin order to establish the true nature of tho relationship between them,the burden of establishing any such relationship is on tho plaintiff com-pany. In this case, apart from certain admissions, no evidence of anykind was led and in tlio absence of such evidence the presumptioncreated by Section 31 (1) of the Ordinance would operate. In consequencetho National Bank of Hungary1' must be deomc-d to have becomo a partyto tho Bill for value and not as a mero Agont for collection.
Issues 6 and 7 should in my view have been answered in the affirmativeand issue S in the negative. I would accordingly set aside the judgmentof tho learned .District Judge and dismiss plaintiff's action with costsbot h hero and in tho Court below.
Gunasekaba, J.—I agi-eo.
H.S. PATERNOTT et al., Appellants, and MONIMPEX HUNGARIAN FOREIGN TRADING CO.
1956Present : Gunasekara, J., and Sinnetamby, J.