Nairn and Fonseka.
1943Present: Howard C.J. and Keuneman J.
NADAR, Appellant, and FONSEKA, Respondent.
346—D. C. Chilaw, 11,687.
Agreement to pay money—Promise implied by terms of document—Acknow-ledgment of debt—Prescription Ordinance . (Cap. 55) s. 6.
A document in which the defendant states that he has “ borrowed and
received in full from, the sum' of Rs. 275 of lawful money of Ceylon,
having promised to pay interest at the rate of .15 per cent, per annum■ until the sum is paid in full ”• contains an implied promise to pay the sumborrowed and is a contract, agreement or bargain to pay money withinthe meaning of section 6 of the Prescription Ordinance.
1 43 „V. L. B. 529.
HOWARD C.J.—Nadar and Fonseka.
PPEAL from a judgments of the District Judge of Chilaw. – Thefacts appear from the head-note and the argument.
N. Nadar ajah, K.C. (with him E. B. Wikremenayake), for the plaintiff,appellant.—Document P 1 constitutes a contract in‘ writing and theperiod of limitation is six years, under section 6 of the PrescriptionOrdinance (Cap. 55). There is a clear acknowledgment of debt and animplied promise to pay. See Urban District Council, Matale v. Sellaiyah ',Sonnadara v. Weerasinghe", Mohideen v. Bandar a Rodrigo v. JinaSena& Co. *. The English authorities are all reviewed in Spencer v. Hemmerde *.
H. V. Perera, K.C. (with him Sam P. C. Fernando), for the defendant,respondent.—The decision of the Divisional Bench in Dawbam v. Ryall'is the basis for all later judgments. A written contract cannot be impliedby way ef an inference of fact. The question is whether a contract canbe implied in law. A bare memorandum in writing is sufficient to makea written contract only where it was given in pursuance of a prior oralagreement. . In the present case there was no such prior agreement.
A promise in writing must be contained in words of promise. Thereare no words of promise in P 1, nor is P 1 referable to any other documentcontaining a promise. P 1 is nothing more than a record of a previoustransaction, and the District Judge’s analysis of it is correct.
N. Nadarajah, K.C., in reply.—There is no difference, in effect, betweena promise by inference and a prdmise implied by law—Caddick v.Skidmore ’; Walter Pereira’s Laws-of Ceylon (1913) p. 620; Chitaley &Rao’s Commentary on the Indian Civil Procedure Code, Vol. 2, p. 1736.
Cur. adv. vult.
November 3, 1943. Howard C.J.—
In this case the plaintiff appeals from the decision of the District Judgeof Chilaw dismissing his action with costs.. The only, question that arisesfor consideration is whether the document P 1 can be regarded as a writtencontract,1 agreement or bargain under which the defendant agreed to paya sum of Rs. 275 with interest at 15 per cent. This document was madeon April 1, 1936, in favour of one Soona Yana Isak Nadar, was endorsedon October 7, 1940, to the plaintiff, a younger brother of Nadar, and theaction was commenced on August 15, 1941. The learned Judge heldthat P 1 was not an agreement falling within the provisions of section 6of the Prescription Ordinance and the claim was therefore prescribed.In coming to this conclusion the learned Judge was influenced by thefact that P 1 did not contain a statement that the defendant promised topay the sum of ,Rs. 275. In the body of the document the defendantstates he has “ borrowed and received in full from Soona Yana IsakNadar the sum of Rs. 275 of lawful money of Ceylon, having promised topay interest at the rate of 15 per cent, per annum until this sum is paid infull ”. In the margin it 'is stated as follows “ Capital sum borrowed-Rupees Two hundred and Severity-five (Rs. 275)—No interest wasdeducted—Interest at -the rate of fifteen (15) per centum per annum ”.
1 (1931) 33 N. L. R. 14.
9 (1932) 1 C. L. W- 328.
» (1919) 6 C. W. R. 188.
•-» (1837) 44 E. R. 907 at 908
* (1931) 32 iV. L. R. 322.
•L. R. (1922) 2 A. G. 607. v•(1914) 17 N.L. R. 372.
HOWARD C.J.—Nadar and Fonseka.
P1 purports to be signed by the defendant in front of two witnesses. In hisjudgment the learned judge referred -to. the case of Jinasena & Co. v.Rodrigo' and sought to distinguish it from the present case by reasonof the fact that the Statute of Frauds required that the agreement muststate what the contract was and the documents D 3 and D 4 in that casecontained all the elements of the contract reduced to writing. Thelearned Judge’s attention does not seem to have been invited to the FullBench case of Dawbam v. Ryall2, in which it was held that a claim forcompensation for a deficiency of land purported to be sold by deed wasfounded on a written contract of sale and not prescribed within six years.Although the contract made no mention of compensation, it was heldthat a claim to the same was implied by law. In his judgment in thiscase Pereira J. stated that he failed to see the distinction that was soughtto be drawn by respondent’s Counsel between an express undertakingand one that is only implied by law from the terms of a contract. EnnisJ. in his judgment also stated as follows :—
“ The terms of the contract in this case were evidenced by thewritten document, and anything implied by the written document is asmuch a part of that document as if separate words had been used.”
The question, therefore, that arises for consideration is whether anundertaking to pay the sum borrowed, namely, Rs. ^75, may be impliedfrom the terms of P 1. Ennis J. seems to think that such implicationmay arise as a matter of law or as a question of fact. The words “ untilthis sum is paid in full ” that appear in P 1 in my opinion imply a promiseto pay. I am also, of opinion that P 1 is an acknowledgment of theborrowing of a sum of Rs. 275 and from that acknowledgment therearises an implied promise to pay as a matter of law. In this connectionI would refer to the following passage that appears on page 620 ofPereira’s Laws of Ceylon :—
“ From this contract which is unilateral arises an action to thelender or his heirs against the borrower or his heirs to return a like sumof money or quantity of the thing lent, and of the same quality, and;this after the expiration of the time limited by the contract, or if notime has been fixed, then after a reasonable time to be determinedby the Judge.” (V.d.L. 1.15.2.)
The judgment of Lord Sumner in the House of Lords case of Spencer v.Hemmerde * contains a review of the authorities on the doctrine ofacknowledgment. In the judgments of Their Lordships the law, aslaid down in Tanner v. Smart ‘ was accepted. In this connection I wouldrefer to the following passage from Viscount Cave’s judgment on page513 : —
“ Since the case of Tanner v. Smart the law as there la,id downhas been uniformly accepted, and it must be held to be settled law (1)that a written promise to pay a debt given within six years beforeaction is sufficient to take the case out of the operation of the statute ofJames I. ; (2) that such a promise is implied in a simple acknowledgmentof the debt; but (3) that where an acknowledgment is coupled with
> 32 .V. L. R. 322.3 L. R. (1922) 2 A. G. 507.
1 (1914) 17 N. L. R. 372.■* 6 B. <Sb G. 603.
HOWARD C.J.—Nadar and Fonseka.
other expressions, such as a promise to pay at a future time or on acondition or an absolute refusal to pay, it is for the Court to saywhether those other expressions are sufficient to qualify or negativethe implied promise to pay. The decisions upon the Act are verynumerous ; but in every one of them the law has been assumed to beas above stated and the decision has turned upon the meaning of theparticular words used in the case. It is therefore unnecessary to referto the authorities in detail; but some statements of the principle by-distinguished Judges may,' I think, be usefully quoted.”
It is useful also to refer to three other cases which Were cited with approvalby their Lordships. In Smith v. Thome’ Parke B. said : —
“ There has been no question, since Tanner v. Smart that anacknowledgment of a debt must, in order to take it out of the operationof the Statute of Limitations, be sufficient to support the promise laidin the declaration, namely, to pay on request. By statute 9 Geo. 4,c. 14, that acknowledgment must now be in writing ; but it must stillsupport a promise to pay on request, either by shewing, on the face ofit. an unconditional promise to pay, or by the collateral fact of theperformance of the condition, or the occurrence of the event, by whichthe promise is qualified. No doubt a mere acknowledgment of theexistence of the debj (as, for instance, an I. O. U.), if unaccompaniedby any expressions which control its effect, is sufficient to support anunconditional promise to .pay.”,
In Chasemore v. Turner " Amphlett B. formulated the rule as follows : —
The principle I take to be this,: First of all, if there be an absoluteunconditional acknowledgment of the debt, that is sufficient. If thatstands alone, and nothing is said about payment, the acknowledgment .of the debt would imply a promise in law to pay the debt. But if thereis not only an acknowledgment of the debt, but a promise to pay thedebt in words, we then have to look whether the promise to pay is anunqualified unconditional promise, or whether it is a conditionalpromise ; and if it is a conditional promise to pay, and the conditionis not performed, then the mere acknowledgment of the debt will nottake the case out of. the statute.”
In Green v. Humphreys'1 Bowen L.J. said : —
“ I regret that we have had to add one more to. the cloud of caseswhich are collected around this particular point. The law has beenclear for fifty years, and all the cases that have been reported sincethat time are merely illustrations of the way in which the Court appliesthe principle. It is clearly settled that to take a case out of the statutethere must be an acknowledgment or a promise to pay, and that wherethere is a clear acknowledgment that the debt is due from the persongiving that acknowledgment a promise to pay will be. inferred. Thatwa," laid down by Lord Tenterden in Tanner v. Smart and theproposition, as Chief Baron Kelly said in Quincey v. Sharpe * has neverbeen disputed, and it has been restated over and over again in all the
■ IS Q. B. 143.
‘ L. B. 10 Q. B. 500. 506.
J 26 Ch. D. 479.
4 US76) 1 Ex. D. 72.
Abdul Coder and Meera Saibo.
Courts. Now, first of all, the acknowledgment must be clear in orderto raise the implication of a promise to pay. An acknowledgmentwhich is not clear will not raise that inference. Secondly, supposingthere is an acknowledgment of a debt which would if it stood by itself beclear enough, still, if words are found combined with it which prevent thepossibility of the implication of the promise to pay arising, then theacknowledgment is not clear within the meaning of the definition;because not merely is there found in the words something that expressesless than a promise to pay (which, as Lord Bramwell pointed out inLee v. Wilmot'. will not necessarily put an end to the implication ofthe promise to pay), but because the words express the lesser in such away as to exclude the greater.”
In this case there is clearly an acknowledgment of the debt It is anadmission that there is a debt owing. This, in my opinion, is a fair con-struction of P 1, read by the light of the surrounding circumstances. Thisacknowledgment, therefore, raises the implication of a promise to pay.The only other point that remains for consideration is whether it is anunconditional promise to pay forthwith. Or is it a promise to pay onlyin the event of failure to make payments of interest ? There is no doubta promise to pay interest if the principal is not paid. But this expresspromise does not exclude the implied promise to pay the principal. Thepromise to pay the principal is therefore unconditional.
In my opinion the appeal succeeds. Judgment must be entered forthe plaintiff as claimed together with costs in this Court and the DistrictCourt.
Keuneman J.—I agree.
NADAR, Appellant , and FONSEKA, Respondent