GARVIN S.PJ.—Kanniah v. Manicam.
Present: Garvin S.PJ. and Akbar J.
KANNIAH v. MANICAM120—D. C. Kandy, 42,815.
Promissory note—Rate of interest left blank—Insertion of rate withoutauthority—Material alteration—Ordinance No. 25 of 1927, s. 20 (2).
The insertion of a rate of interest in a promissory note -withoutauthority is a material alteration of the note.a PPEAL from a judgment of the District Judge of Kandy.
jf. v, Perera (with him E. F. N. Gratiaen), for the defendant, appellant.
Rajapakse (with him J. R. Jayawardene), for the plaintiff, respondent.
February 21, 1934. Garvin S.P.J.—
This was an action by the payee against the maker of a promissory note.He sought to recover a sum of Rs. 300, being the principal stun due on thenote, and a sum of Rs. 193.50, being the interest which he said waspayable in terms of the note. The defendant filed an answer in which hetook various defences, among them one being that there had been afailure of consideration. The case proceeded to trial upon the singleissue: “ Was there a failure of consideration on the promissory note * A ’
. dated January 15, 1929, for Rs. 300”. Now this promissory note is inthe ordinary form. The maker promises to pay to the payee or orderthe sum of Rs. 300 with interest at 18 per cent, per annum. When givingevidence at the trial the plaintiff who began admitted in cross-examinationthat when the promissory note was given to him no rate of interest hadbeen filled in. He added “ I put in the interest rate in note * A ’ on theday I gave it to the Proctor to bring this action. When note ‘A’ was
GARVIN S.P.J.—Kanniah v. Manicam.
signed there was no interest rate inserted. No rate was agreed uponthen In view of this evidence the defence proposed two further issues,(2) In view of this evidence has the note 1A ’ been materially altered,and (3) if so, is this action maintainable. The case was then adjournedand the plaintiff was given permission to file a replication. In thereplication the plaintiff further pleaded as follows:—“Pleading to theissue of law raised by defendant at the trial, plaintiff says that the fact ofdefendant giving a note to plaintiff for Rs. 300 agreeing to pay interestand leaving the interest column blank constitutes an implied authorityto plaintiff to insert any reasonable interest recoverable in law Thecase was then once again set down for trial. No further evidence wasadduced, the plaintiff’s Counsel expressly stating: “ I leave it to Courton the evidence led as regards issue (1) of fact On the two issues of lawwhich were framed on the first day of trial Counsel proceeded to addressthe learned District Judge without further evidence.
The facts, therefore, which are material to the question of law whichhas been raised by Counsel for the appellant are these. There is here apromissory note which was complete in all respects save one. The rateof interest was left blank. The plaintiff before bringing this actioninserted in the blank space the figure 18, so that, as the promissory notenow stands, it is a note to pay a specified sum with interest at 18 per cent.The evidence is clear and it all proceeds from the plaintiff that the notewas in this respect blank when it was handed to him and that no rate ofinterest was greed upon. It has been urged that in these circumstancesthe plaintiff’s action must be dismissed upon the ground that this notehas been materially altered.
No attempt has been made to prove any express or other authority tofill in and complete the note in the manner in which it has been completed.In the absence of such an authority one is driven to the conclusion thata rate of interest inserted without authority is a material alterationwhich vitiates the note. For this proposition there is ample authorityto be found in our reports. There is first the case of Raman Chetty v.Ramanathan1 where Grenier J. went the length of holding that there wasa material alteration of a note where the figures 30 were inserted in thespace left blank so that the note read as one in which the principal sumwas payable with interest at 30 per cent. This conclusion was reachednotwithstanding' that, though there was no authority given by the makerto the payee to fill the note in the manner in which it was filled in, therewas evidence of an agreement to pay interest at that rate. In the case ofAbdul Majeed v. Yasaya Nadan* which was also a judgment of Grenier J.we have authority for the proposition that an agreement to pay interestdoes not amount to an agreement to alter a promissory note by insertingthe rate of interest so promised in a space left blank and that such aninsertion is a material alteration which vitiates the note. In the case ofSwaminadan v. Kannan Middleton J. has held that in the specialcircumstances of that case where notwithstanding that a space was leftblank and no rate of interest was inserted there was evidence of anagreement to pay interest at the rate subsequently inserted in that space
11 Bah. Rep. 182.3 4 Leader Law Reports 1.
3 14 N. L. R. 108.
Kailasan Pillai v. PaUmiappa Chettiar.
an authority to fill in that rate might be presumed. The two judgmentsof Grenier J. above cited are referred to, but it can hardly be gatheredthat Middleton J. dissented from the law as stated by Grenier J. in allrespects. The utmost I think that can fairly be gathered from perusalof this judgment is that it was the opinion of Middleton J. that in anappropriate case an authority to fill in the rate of interest may be gatheredfrom the surrounding facts and circumstances.
It seems to me however that this matter is concluded by the privisionsof section 20. The authority which by the provisions of that section isdeemed to arise in the circumstances specified therein is only prima facie.Sub-section (2) states specially that “in order that any such instrumentwhen completed may be enforceable against any person who became aparty thereto prior to its completion, it must be filled up within a reason-able time, and strictly in accordance with the authority givenThroughout this case there is not even a suggestion that there was anauthority to fill in 18 per cent, as the rate of interest agreed upon. Indeed,we are definitely told that no rate of interest was agreed upon. As to thesuggestion in the replication, no evidence has been adduced in support ofit nor has any authority been cited for the proposition that where in apromissory note the space provided for the insertion of the rate of interestis left blank that is an ample authority to the payee to insert “anyreasonable interest recoverable in lawThe appeal is allowed, the judgment of the Court below is set aside andthe plaintiff's action dismissed with costs both here and below.
Akbar J.—I agree.
KANNIAH v. MANICAM