NAGAL/INGAM J.—Sicasubramanian: v. Alagamuttu
Present: N&gallngam J. and Gunasekara J.SIVASUBRAMANIAM, Appellant, and ALAGAMUTTU,Respondent
S. C. 4:49—D. C. Jaffna, 3,818
Prescription—Deposit of sum of money—Payment of interest—When cause of actionarises—Requirement of formal demand prior to institution of action—In what
circumstances necessaryLoan of money belonging to third party—Right of
lender to sue in his oum name.
On July 25, 1940, plaintiff deposited with the defendant, who was not abanker, a sum of Bs. 928. In acknowledgment's document was-given theconstruction of which indicated that the document had to be .surrendered anda requ^Bt made before payment could be claimed. Plaintiff made demandfor the repayment of the money on July 18, 1947.
■ In an action instituted on September 15, 1947, on the footing that " plaintiffdeposited with the defendant a sum of Bs. 928 and the defendant agreed andundertook to pay the said sum with interest at € per cent, per annum wheneverdemanded ”—
Held, that the cauBe of action accrued to the plaintiff only -on July 18, 1947,and that the claim was therefore not prescribed.
Held further, that where a person lends out or deposits money belonging to athird party in his own name he is entitled to sue in hiB own name for the recoveryof the sum without joining the owner of the fund.
.^^.PPISAL from a judgment of the District Judge, Jaffna.
A. Hayley, K.C., with C. Shanmuganayagam, for .the defendantappellant.
H. W. Tambiah, for the plaintiff respondent.February 7, 1950. Nagai.inoam J.—
Cur. adv. vult.
An interesting question under the Prescription Ordinance arises foradjudication on this appeal. The defendant-appellant carries on businessas a pawnbroker. An ancillary to his main- business, he appears to bein the habit of receiving monies from depositors, undertaking to payinterest on the sums so deposited with him. The plaintiff respondentis a first cousin of the defendant and is a widow. From time to timeshe seems to have made deposits of various sums of money with thedefendant in respect of which deposits she was given separate receipts,and there is no dispute in regard to the various sums deposited saveand except in regard to the amount which is the subject of this action.On 25th July, 1940, the plaintiff admittedly paid a sum of Rs. 928 intothe hands of the defendant, who delivered the document PI inacknowledgment of the said sum. The plaintiff commenced this actionon 15th September^ 1947, that is to say, after the expiry of a periodof over six years.The action is not framed' as a suit based on the
■ contractual relationship arising between the parties on the documentbut simply on the footing that the " plaintiff deposited with thedefendant a sum of Rs. 928 and the defendant agreed an.d undertookto pay the said sum wi.th interest at 6 per cent, per annum wheneverdemanded ”.
NAGAIiINGAM J.—Sivasvbramaniam t>. Alagamultu
Apart from a defence that the money had been transferred at therequest of the plaintiff to the account of another cousin of the parties,by name Thambithurai, and that consequently no money is due to theplaintiff, the defendant has taken a plea under the Prescription Ordinance,contending that the claim is statute barred. This latter question hasbeen the main point debated on appeal. As certain arguments wereadvanced even in regard to the allegation of novation, I shall brieflytouch upon that question before I proceed to consider the point underthe Prescription Ordinance.
Notwithstanding the denial of the plaintiff it is clear to my mindthat the sum of Rs. 928 she deposited with the plaintiff was the sumwhich rightly belonged to one Maheswari, the. wife of Thambithurai.'Ihe several documents produced in the case by the defendant leave noroom for doubt but that the plaintiff had been entrusted by Thambi-thurai and his wife with certain monies for investment. The plaintiffhad lent the money out on mortgage repayable either to her or toThambithurai or to Maheswari by bond D2 of 1937. The mortgagedebt with interest was paid and settled on 20th July, 1940, by paymentmade to the plaintiff—vide receipt D3 of the same date. The amountreceived by her was a sum of Rs. 930 as shown in the document D3.Five days later, that is on 25th July, 1940, it was, that the plaintiffdeposited the sum of Rs. 928 with the defendant. The defendant saysthat the difference between Rs. 930 received by her and the sum ofRs. 928 deposited with him, namely Rs. 2, represents the fee paid fordrawing up the receipt D3. I therefore hold that the money that waspaid by the plaintiff on this occasion was money belonging to Maheswari.Rut the law is clef”- that tfhere a person lends out or deposits moneybelonging to a third party in his own name he is entitled to sue in hisown name for the recovery of the sum without joining the owner of thefund. Nathan 1 says:
“ If a person have lent money belonging to a third party the lenderwill still have this action if he has lent in his own name and the actualowner of the money will not have this action unless it has been cededto him by the. lender ”.
It is therefore clear that the plaintiff is nevertheless entitled to maintain thisaction because the money was paid by her to the defendant and by docu-ment PI the defendant expressly agrees to repay the sum to the plaintiff.
The learned trial Judge has disbelieved the defendant in regard tothe allegation of novation. According to the defendant, the date ofnovation was 12th May, 1942, when admittedly Thambithurai and hiswife were both in Malaya which was then under enemy occupation bythe Japanese. No communication between Thambithurai and his.wife on the one hand and the plaintiff or the defendant on the otherwas possible at that date. It is to be noted that Maheswari is a sisterof the defendant. It is not unlikely, as-has been suggested on behalfof the plaintiff, that the defendant, considering the return of Maheswarior Thpmbithurai highly improbable and in fact being even doubtfulof their being alive at that date, took upon himself to transfer the fundstanding to the credit of the plaintiff in his books to the credit of Thambi-thurai in the hope that he would be in a position to resist any claim by
1 1904 ed. Vcl. II p. 983.
KAOALiXNGAM J.—Sivaeubarmaniam v. Alagamuttv
the plaintiff if she put forward one in regard to the money which admit-tedly belonged to his sister and to which he probably would be heir.The defendant was unable to explain why, if the transfer was effectedwith the consent of the plaintiff, he did not get back the document inwhich there is an express statement that the defendant should get backthe document on paymeht. His explanation that the plaintiff wasa cousin of his is unconvincing. The defendant, who is accustomedto business methods, would not, if his statement be true, have allowedthe document PI to remain in the hands of the plaintiff at least at thedate he says he paid the money to Thambithurai, even if he had allowedthe document to remain with the plaintiff at the date, of the allegedtransfer of accounts. The belated plea put forward by him in thepleadings of payment to Thambithurai does also not inspire confidencein his case. I concur with the finding of the learned District Judgethat the defendant’s evidence is false on this point and that his furtherevidence that he subsequently paid the money to Thambithurai is alsoequally false.
I now come to the plea of prescription. It is. urged on behalf of thedefendant that if the action be regarded even as one based on a writtencontract, which in fact it is not, it is prescribed in six years by virtueof section 6 of the Prescription Ordinance (Cap. 55). But it is saidthat the action as framed is in fact one founded on an unwritten promiseand was prescribed within three years of the date of payment to thedefendant.
Mr. Hayley contends that the transaction between the parties .wasno more than one of lending and borrowing and that prescription arosefrom the date of payment as the cause of action accrued immediately• the payment was made. He relied upon the case of Foley v. Hill 1to show that the relationship between banker and customer is that ofdebtor and creditor. This case was regarded for a number of years inEnglish law as authority for the proposition that a previous demandwas unnecessary to sue a banker for the return of the balance standingto the credit of a customer’s current account ; in other words, that theStatute of Limitations barred a claim on a current account which hasremained unoperated upon for a period of over six years.
Mr. Hayley, however3 conceded that the law as held to have beenenunciated in the above case received modification in 1921 by a judgmentof the Court of Appeal in the case of Joachimson v. Swiss Bank Corpo-ration 2, where -it was held that—to the ordinary relationship of debtorand creditor between banker and customer there was superadded otherobligations, and it is only necessary to note for the purpose of this casethat a previous demand by the customer was held to be one of theobligations necessary to be performed by the customer before he couldinstitute action against the banker for the recovery of the money. ButMr. Hayley argues that as the parties here are not shown to stand inthe relation of banker and customer the special superadded obligationsfound in the case of Joachimson v. Swiss Bank Corporation (supra) arelacking and that no previous demand is therefore necessary. It istrue that the well recognised special features relating to a current account
* (1921) 3 K. B. 110.
1 (1S43) 2 H. L. C. 27
NAGAXiINGAM J.—Sivatubramaniam v. Alagamuttu
in a bank, such as that the customer should claim payment by applyingon special forms provided by the bank or that payment should be madeonly at the bank’s premises or that payment should be made withinbanking hours have no application to the transaction I am now consi-dering, and the respondent himself concedes that there is no analogybetween a current account and the transaction between the plaintiffand the defendant in this case.
Mr. Thambiah, however, argues that the transaction under investi-gation is similar to a deposit account with a banker. In regard todeposit accounts it has never been doubted in English Law that a previousdemand is necessary to found an action. One particular feature that isalways stressed in regard to this class of accounts is that the depositreceipt must be surrendered to the banker before payment can beclaimed—see In re Dillon 1 per Cotton L.J. But I do not see why theprinciples of English Law should be transported into the transactionbetween these parties. The defendant is admittedly no banker in thesense in which the term is understoodinlaw.Section 3 ofthe Civil
Law Ordinance Cap. 66 lets in the LawofEngland only in regard to the
law of partnerships, joint stock companies, corporations, banks andbanking, principal and agent, carriers by land, and life and fire insurance ;so that I can see no justification for applying the principles of EnglishLaw to the decision of this case.
It seems to me that the Homan Dutch Law should govern the rightsof the present parties. Under the Roman Dutch Law, unlike underthe English Law, it is for the creditortoseekout the debtorto claim
payment. Even in the case of a simpleI6an, “where no timehas been
fixed for repayment, .it is not immediately claimable but after the lapseof a reasonable time ” 2; so that it would be seen that under our commonlaw a demand is essential before it could be said that’ a cause of actionaccrues to a creditor to sue the debtor. But, as was rightly remarkedby Bankes L.J. in the case of Joachimaon v. Swiaa Bank Corporation(supra) “ In every case, therefore, where this question arises, the testmust be whether the parties have or have not agreed that an actual,demand shall be a condition precedent to the existence of a presentenforceable debt, ” and it is therefore necessary to see whether there areany special terms of agreement between the parties throwing light onthe question for determination in this case, irrespective of thequestion whether the English or the Roman Dutch Law applies.
The defendant did not grant a promissory note when the money waspaid to him, but he issued the document PI. Document PI is a printedform in Tamil. Correctly translated, it run^ as follows:—-
“ On this 10 day of the month of Adi in the year Vikrama to thecredit of Alagamuttu widow of Kandiah of Urumpirai debit of thebusiness (shop) of V. Sivasubramaniam of Van East Rs. 928. I shallreceive back this document after paying this sum of Rs. 928 withinterest at 6 per cent, at any time that she makes demand for it.
Sgd. V. Sivasubramaniam. ”
‘This is not a negotiable Instrument to which the Law Merchant can apply,under which it is settled law -that no previous' demand is necessary to
* Nathan Vol. II. p. 984.
i 44 Ch. D.atp. 81.
W. C. Fernando o. L. de Silva
commence an action. But this document is one the construction, ofwhich indicates that it had to be surrendered and a request made beforepayment could be claimed. Without surrendering tlje document,payment cannot be insisted upon—needless to say that other considera-tions would apply to a lost document. The surrender, by itself, with-out anything further being said, may also operate as a sufficient demand,ft thereforb seems to me that a surrender of the document and a demandare both conditions precedent to the institution of the action. Theplaintiff affirmed, and it was not denied by the defendant, that for thefirst time the plaintifE made demand for the repayment of the amounton 18th July, 1947, that is to say, within two months of the date of theplaint.
In this view of the matter, it must follow that the cause of actionaccrued to the plaintiff only on 18th July, 1947, and that the claim istherefore not prescribed. I would therefore affirm the judgment ofthe learned District Judge and dismiss the appeal with costs.
Gunasekara J.—I agree.
SIVASUBRAMANIAM, Appellant, and ALAGAMUTTU, Respondent