060-NLR-NLR-V-54-JOHN-RODGER-Appellant-and-L.C.-DE-SILVA-Respondent.pdf
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ROSE C.J.—Rodger v. L. G. de Silva
1952Present: Rose C.J. and Gunasekara J.
JOHN RODGER, Appellant, and L. C. DE SIDVA, RespondentS. C. 494—D. C. Colombo, 8,374
Promissory Note—“ Account stated ”—Meaning oj term—Money Lending Ordinance{Gap. 67), s. 10.
A promissory note given in respect of pure and. simple loan transactionsand not in consequence of an account stated between the parties is governedby section 10 of the Money Lending Ordinance. If it does not set forth thecapital sum actually borrowed it is unenforceable.
^^JPPEALi from a judgment of the District Court, Colombo.
N. E. Weerasooria, Q.C., with E. R. S. R. Coomaraswamy, for the
plaintiff appellant.
H. V. Perera, Q.C., with N. M. de, Silva, for the defendant respondent.
Cur. adv. vult.
October 28, 1952. Rose C.J.—
The plaintiff-appellant sued the defendant-respondent on a pro-missory note which was in the following terms :—
“Colombo. 1.4.46.
Capital sum borrowed.Rs. 13,062'50
Rs. 13,062 50.On demand 1 the undersigned L. C. de
Silva of Pinnaduwa, Amhalangoda,1 (1927) 28 N. L. R. 502.
ROSE C.J.—Rodger v. L. O. de Silva
247
Interest premium or chargesdeducted or paid in advance.Rs. Nil.
Rate of interest per centumper annum.
Rs. nine.
Intd. L. C. de S.
promise to pay J. Rodger, of 26/3,Rosmead Place, Colombo, or order,the sum of rupees thirteen thousandand sixty-two and cents fifty only.Currency for value received, withinterest thereon at the rate of nineper centum per annum from the datehereof.
Sgd. L. C. de Silva.
Witnesses.
Sgd. B. M. Peiris. ”
The learned District Judge held that the note was unenforceable inview of its non-compliance with section 10 of the Money LendingOrdinance, Chapter 67.
It appears that the appellant had from time to time advanced moniesto the respondent for the purpose of his (respondent’s) business. Someof these monies were advanced by the appellant himself and some by anindependent Company at the instance of the appellant. It is commonground that the figure Rs. 13,062 50 is made up as follows : An advanceof Rs. 3,000 from the appellant personally to the respondent ; anotheradvance of Rs. 5,000 from the appellant personally to the respondent ;the balance Rs. 5,062■ 50 being commission payable on the other sumsadvanced by the appellant or the independent Company to the respondent.It is thus apparent that on the face of it the note does not comply withsection 10 of the Money Lending Ordinance, in that the capital sumactually borrowed is inaccurately stated. The appellant contends,however, that the Money Lending Ordinance does not apply to thetransaction in question in that an account had been stated between theparties and a new obligation created by the note.
On the question as to the nature of the transactions between the parties,the learned District Judge has stated (at page 185 of the record) that
whatever language the plaintiff may have used to describe these pay-ments by him to the defendant—in point of fact in P7 he refers to themas a loan—there is no doubt that they must be regarded as and were inpoint of fact nothing more or less than pure and simple loans ’ ’. Moreover,(at pages 174H75) the learned District Judge says, “ The first contractfor Rs. 29,000 was one entered into between the plaintiff and the defen-dant personally, and moneys had to be advanced by the plaintiff outof his personal funds. In respect of the subsequent contracts, the defen-dant was advanced money by the plaintiff out of funds belonging to theGampaha Stores Ltd., but the arrangement was that the commissionshould be paid to the plaintiff, for it was through his services that themoney was obtained from the Company. In point of fact, although theCompany money was used, the course of dealing between the parties waspersonal. ”
I see no reason to disagree with this assessment of the position by thelearned District Judge. With regard to the allegation that there wasan account stated, it is to be noted that there were no cross-transactionsbetween the parties and no transaction of any kind which could be said
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ROSE C.J.—Rodger v. L. G. de Silva
to be “foreign” to the “pure and simple” loan transactions. InSiqueira v. Noronha—1934 A. C. 332—Lord Atkin in discussing thenature of an account stated refers to what Blackburn J. calls a“ real account stated ”, which is the only kind of account stated whichextinguishes- the old debt and creates a new and which could avail theappellant in this case. At page 337 Lord Atkin says :
“ Their Lordships think that what has been forgotten is that thereare two forms of account stated. An account stated may only takethe form of a mere acknowledgment of a debt, and in those circum-stances, though it is quite true it amounts to a promise and the exis-tence of a debt may be inferred, that can be rebutted, and it may verywell turn out that there is no real debt at all, and in those circum-stances there would be no consideration and no binding promise. Buton the other band, there is another form of account stated whichis a very usual form as between merchants in business in which theaccount stated is an account which contains entries on both sides, andin which the parties who have stated the account between them haveagreed that the items on one side should be set against the itemsupon the other side and the balance only should be paid ; the itemson the smaller side are set off and deemed to be paid by the items onthe larger side, and there is a promise for good consideration to paythe balance arising from the fact that the items have been so set offand paid in the wray described. Probably the best authority for thatdefinition on an account stated is that which was selected by ViscountCave in the case of Camillo Tank Steamship Co., Ltd. v. AlexandriaEngineering Works1, which was in the year 1921, although the accountin that case was not an account of the nature described, because it wasmerely a repairer’s account with the items probably only on one side.Viscount Cave, in dealing with the various descriptions in law of anaccount stated said : ‘ ‘ There is a second kind of account stated wherethe account contains items both of credit and debit, and the figureson both sides are adjusted between the parties and a balance struck.This is called by Blackburn J. in Laycock v. Pickles2, a ‘real accountstated ’, and be describes it as follows : ‘ There is a real accountstated, called in old law an insimul computassent, that is to say, whenseveral items of claim are brought into account on either side, and,being set against one another, a balance is struck, and the considerationfor the payment of the balance is the discharge of the items on eachside. It is then the same as if each item was paid and a discharge givenfor each, and in consideration of that discharge the balance was agreedto be due. ”
I consider, therefore, that in the present case there was, to use a collo-quialism, no more than a looking-into the accounts between the partiesand not an account stated in the technical sense of that term.
Alternatively, it was urged on behalf of the appellant, who did notcontend that the proviso to section 10 was applicable, that there was nointention to evade the provisions of the Ordinance on his part and that thepoint taken by the respondent is highly technical and without merit.
1 (1921) 38 Times L. R. 134, 143.2 (1863) 4 B. db S. 497.
Banda v. Alitamby
249
Moreover, that there was no evidence of “ moral "turpitude ” on behalfof the appellant : and that, in any event, any doubt should be resolvedin favour of the validity of the note.
All these submissions may be true—I express no opinion one way orthe other—but it seems to me that they cannot avail the appellant for thereason that if, as I consider to be the case, the transactions in questionwere pure and simple loan transactions and there was no account statedbetween the parties, Section 10 is applicable to this case and there hasbeen.a clear non-compliance with it.
For these reasons the appeal must be dismissed with costs.
Gusasekasa. J.—I agree.
Appeal dismissed.