( ltt )1931.
Present: Bertram C.J. and Ennis J.
KADIRASAN CHETTY v. ARNOLIS.
•53—D. C. (Inty.) Galle, 18,521.
Stamp—Promissory note payable on demand—Memorandum in marginshowing deduction of interest for one month—Must note be stampednd valorem ?Money Lending Ordinance, s. 10„
A promissory note was expressed on the face of it to be payableon demand, and stamped with a six-cent stamp. In pursuance ofsection 10 of the Money Lending Ordinance an endorsement wasmade declaring that Rs. 12 had been “ deducted or paid in advanceas interest, premium, or charges.” The deduction representeda month’s interest. The District Judge held that the note was notpayable on demand, as an action could not have been broughton the note within the month, and that consequently the note wasnot properly stamped.
Held, that the note was nayable on demand, and was properlystamped.
By declaring that certain particulars should be entered in themargin of certain notes, the Legislature did not intend in any wayto a*.. 'it the liabilities on such notes. Its object was to assistCourts of law in discharging the equitable jurisdiction conferredupon them by the Ordinance.
rpHE facts appear from the. judgment.
Keuneman, for appellant.
ElliottK.C. (with him R. C. Fonseka), for respondent.
Cur. adv. vutt
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July 21,1921*. Bbbtram C.J.—
This is an appeal from an order giving leave to appear and defendan action brought under chapter LIII. of the Civil Procedure Code.The order was based on a finding that a promissory note sued onwas not sufficiently stamped. The note was expressed to be payableon demand. As it was given as security for the loan of money,there was an endorsement in the margin, in pursuance of section 10of the Money Lending Ordinance (No. 2 of 1918), declaring that thesum of Rs. 12 had been “ deducted or paid in advance as interest,premium, or charges.” The learned Judge, acting apparently onan admission made by the plaintiff, found that this deductionrepresented a month’s interest paid in advance. He held, therefore,that no action would have lain on the note during the month inrespect of which interest was so paid ; that it was not therefore anote payable on demand, and should have been stamped ad valorem.I think that the decision of the learned Judge is erroneous.
By declaring that certain particulars should be entered in themargin of such notes, the Legislature did not intend in any way toaffect the liabilities on such notes. Its object was to assist Courtsof law in discharging the equitable jurisdiction conferred upon themby the Ordinance.
Mr. Elliott, K.C., who appears in support of the order, contendsthat an endorsement showing that interest was paid in advancein the margin of the note of itself imports a condition that the noteshould not be put in suit during the period for which interest is sopaid, and that this affects not only the payee, but also any holderof that note, inasmuch as any such holder' has express notice ofwhat appears on the face of the note.
There is a simple answer to this contention with regard to thepresent note, namely, that the endorsement in the margin merelystates that Rs. 12 had been “deducted or paid in advance asinterest, premium, or charges.” There is no specific statementthat this Rs. 12 represented a month’s interest, and no agreementtherefore could be implied therefrom. In order to raise such apoint on this note, it would be necessary to set up an oral agreement.Even if evidence of this oral agreement could be given under proviso3 to section 92 of the Evidence Ordinance, such an agreement couldnot effect a holder in due course; and as my brother Ennis hasobserved, it would be impossible to hold that a note must bear onestamp in the hands of a promisee and another in the hands of aholder in due course.
But even if the endorsement in the margin were treated as amemorandum of the payment of a month’s interest in advance, 1do not think the argument is sound. The term “ promissory notepayable on demand ” in section 3, sub-section (4), of the StampOrdinance, 1909, must be interpreted with reference to tbe sameexpression in the Bills of Exchange Act (1882). A promissory note
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payable on demand by the combined effect of section 10 and section89 of that Act means, among other things, a promissory note whichis “ expressed to be payable on demand.” The fact that, in accord-ance with the provisions of an Ordinance, it is endorsed with amemorandum which may give rise to an equity, as between themaker and the promisee or between the maker and a holder in due.course, does not affect the character of the instrument. Whetherthe effect of that equity is to restrain a suit pending the period forwhich interest was paid, or to require the return of a proportionatepart of the interest so paid, it is not necessary to decide. In eithercase, on the principles above explained, a promissory note is a notepayable on demand within the meaning of the section, and is rightlystamped accordingly.
I agree with the order proposed by my brother Ennis.
This is an appeal from an order giving leave io appear a nd defend,which was based on a finding that a promissory note sued upon inthe action was not sufficiently stamped.
The note was stamped as a promissory note payable on demand,and the learned Judge held that, inasmuch as Rs. 12 interest hadbeen, paid in advance, the note was not one payable on demand.
The noto ia expressed to l>e one payablo on demand, and thereforecomos within the definition of such a note-given in the Bills ofExchange Act and the Stamp Ordinance, No. 22 of 1909, as amendedby No. 16 of 193,9. But. in pursuance of the Money Lending Ordi-nance, No. 2 of 1918. there is a marginal note to the effect thatRs. 12 had been u deducted or paid in advance as interest, premium,or charges.” In my opinion the marginal note does not affect thisnote for the purpose of calculating the amount of stamp duty to bepaid on it. It was conceded that in the hands of a bona fide holderfor value the note would be properly stamped as a note payableon demand, i:e., according to tho express terms of the note, and Iam unable tocome to the conclusion that it should bear a differentstamp duty when in the hands of the promisee.
While setting aside the finding that the note has not been properlystamped, I would allow the order to stand on other grounds, andas the finding was one which practically barred the plaintiff’*action, I would allow him the costs of the appeal.
KADIRASAN CHETTY v. ARNOLIS