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KADIJA TJMMA et al. v. ABDUL RAHIM et al.D.C., Colombo, 12,465.
Bond—Failure of consideration—Sale of bond by Fiscal—Purchase by thirdparty with notice of failure of consideration—Action by grantor forcancellation of bond.
Judgment having gone against A, B, and .C, C agreed with A and B topay their share of the judgment debt, and obtained from them a bond inhis favour for the amount due by them. C did not pay the judgmentdebt. The Fiscal seized the bond in the possession of C and put it lipfor sale. D bough' it, though he had notice that the consideration forthe bond had failed.
Held, that'A and B were entitled to sue C and D for the cancellationand delivery up of the bond without waiting for D to sue them.
rnHIS was an action on a bond granted by the two plaintiffs to
_L the first defendant under the following circumstances.Judgment having gone against the plaintiffs and the first- defend-ant in a suit, the latter agreed with the plaintiffs to pay theirshare of the judgment debt and obtained from them the presentbond, in which they acknowledged themselves to be indebtedto him in the sum of Rs. 2,500, which was the amount due bythem under the judgment. The first defendant did not pay thejudgment debt. The judgment-creditor caused the J? iscal toseize this bond and put it up for sale. The second defendantpurchased it, though he had notice that the consideration for thebond had failed. The plaintiffs now raised the present suit in theDistrict Court of Colombo against the first and second defendantsfor the cancellation and delivery of the bond, because it hadbecome inoperative through failure of consideration:The
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defendants pleaded that the Court had no jurisdiction to try thiscase, as the parties resided beyond its limits. The District Judgeruled to the contrary, and entered judgment for plaintiffs.
The defendants appealed.
. Morgan, for first defendant, appellant.—The parties residebeyond the jurisdiction of the District Court of Colombo. On awrit issued against first defendantthis bondwas soldand bought
by second defendant. Thejudgesaystheground for action is
the failure of consideration of the bond; that the failure took placein Colombo, and therefore the Court has jurisdiction. He thendeclared it void and cancelled it. [Bonser, C.J.—The cause Ofaction is failure to pay the money in Colombo.] The action is toset aside the bond. [Bonser, C.J.—Certainly, on the ground offailure of consideration inColombo.]Nocause ofaction is
proved to have accrued.Therewasnoevidenceled. The
District Judge has decided the case on the pleadings.
Sampayo, for second defendant, appellant.—The second defend-ant is in a better position than the first defendant. To set aside .the bond, the validity of the deed must be impugned. Subsequentdevelopments are nocause ofaction toset it aside.[Bonser,
C.J.—Have you any authority for that statement—that, though adeed is bad, a man cannot come to Court to have it set asidebeoause there was no orginal defect? All reason and principleare against you.] Ihave noauthority;but why isthis bond
bad? Failure of considerationis alleged.Hut as notime was
stipulated for the payment of the money by the first defendant, itcannot be said that the first defendant has failed to carry out hisundertaking, and the action to set aside the bond is ill-conceived.
If the first defendant seeks to enforce it against the plaintiffs, theyhave the right to plead the circumstances now alleged. Theyhave not yet been injured by anybody. [Bonser, ^ C.J.—Whyshould they wait tillthe evidence whichthey have against the
bond is lost? The sooner the action is brought the better.]The second defendant is ;not trying to enforce the bond, he simplypurchased it at a Fiscal's sale. What harm has he done against theplaintiffs that they should drag him into Court? [Bonser, C.J.—
If it is liable to be cancelled in first defendant’s hands, it is justas liable in your hands.] Then, the Court had no jurisdiction toentertain this suit. The cause of action is not failure of consider-ation at Colombo, or a breach of the promise to ’ pay money inColombo, but the mere fact of there being a bond withoutconsideration. That does not give jurisdiction. The action mustflow naturally from the cause. Here the action which arises
1001. naturally from the cause is by no means an action to oanoelMar&l. the bond.
H. Jayawardana, for plaintiffs, respondents.—The action is good.The cause of action was failure to pay the money in Colombo.[Bohseb, C.J.—How is that proved?] That fact was not dis-.puted. It was conceded that the defendants had no defence onthe merits at all.
1st March, 1901. Bonser, C.J.-^
This is an appeal on a purely technical point. The action isone for the delivery up and cancellation of a bond on the groundthat the bond had become inoperative owing to failure of consi-deration. The bond was given by the two plaintiffs to the firstdefendant in the following circumstances. The plaintiffs andthe first defendant had been co-defendants in an action in theCourt of Colombo, and judgment had gone against them. Theplaintiffs thereupon arranged with the first defendant to pay theamount of the judgment with the costs, and gave him a bound fortheir share. The bond recited that they had borrowed this moneyfrom him, treating it as though it was a simple transaction of loan.But'the facts were admitted to be. as I have just stated. The firstdefendant did not pay the money in accordance with this agree-ment. Thereupon the Fiscal seized certain property of his;amongst other things he seized this bond and put it up for sale..The second defendant became the purchaser at the Fiscal’s sale forBs. 200 of this bond for Rs. 2,500. Before purchasing it he waswarned by the plaintiffs and informed of the true facts of thecase. Yet, in spite of this, he went on to purchase this bond.That being so, he cannot be in a. better position than the firstdefendant, because he had full knowledge of the facts. If thebond was invalid against the first defendant, it was also invalidagainst the second defendant.
The plaintiffs reside at Galle, and the defendants at Kalutara,which is not far from Colombo. But they are all resident outsidethe limits of the local jurisdiction of the District Court of Colombo.As I have before said, the defendants did not dispute the facts.The only defence they raised is that there was no jurisdiction inthe Colombo Court to deal with the matter, because the parties wereall resident outside its jurisdiction, and that no cause of actionarose within the jurisdiction of the Colombo Court. Now, it seemsto me that the cause of action in this ease is the failure of the firstilefendant to carry out his agreement to pay this money in Colombo,which, it is admitted, was the real consideration of the bond.
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That being bo, the cause of action arose within the jurisdiction of 1901*the Colombo District Court. Then, a further objection was t»kS5, Uarch l-that the plaintiffs were not entitled to sue to have the bond can- Botr-in, ex-celled, but that they ought to wait until they are sued on it. Itseems to me that if this bond is invalid, the sooner it is declaredto be so the better. The plaintiffs -are not, in my opinion, obligedto wait until possibly the evidence of the true nature of this trans-action may have perished. They are quite justified in comingto the Court at the earliest moment whilst they are in a positionto prove the true nature of the transaction, and asking to have thisbond cancelled.
I entirely agree with what my lord has said. I disregard thecontention of the second defendant altogether, and think thatit is not only allowable, but eminently just th&t the first defendantshould be sued in the District Court of Colombo, and thus givena last opportunity to complete his contract at the place at whichit was originally agreed it should be fulfilled.
KADIJA UMMA et al. v. ABDUL RAHIM