143-NLR-NLR-V-22-KATHIRESA-CHETTY-v.-DORESAMY-et-al.pdf
( m )
FfeSpU Jte ^Sampayo J. and Schneider A.J.J£ATHIRESA. CHETTY v. DORESAMY et al.■445—D C. Colombo, 1,437.
Cheque signed by proprietor and accountant of a business carried on wider' a firm name—Firm name appearing in rubber stamp On the cheque—Letters “Acct.” under accountants signature.—Is accountantpersonally liable ?—BUI of Exchange Act, e. 26. ■
The first defendant was the proprietor of a business carried onunder the name of “ Indo-Ceylon Trading Co.” The seconddefendant was the accountant. Over the signature of the firstdefendant, were in rubber stamp the words “ Indo-Ceylon TradingCo.,” and below the signature of the second defendant were theletters "Acct.” (meaning accountant). The second defendantcontended that he was not personally liable, as he signed only in hisrepresentative capacity as accountant,field, that he was#personally liable.
f 1 nJti facts appear from the judgment of the District Jadge“*■(W. Wadsworth, Esq.):—
This is an action by the payee of a cheque against the drawers, thetwo defendants. The cheque was duly presented at the Bank, but wasdishonoured. The first defendant did not appear and judgment wasentered against him. The second defendant, while -admitting that hesigned the cheque, states that he is not personally ^iahfei.as 'he signedonly as an officer of the firm whose sole proprietor waathefixst defendant.
The question raised'is a very important one. The-first defendantwas carrying on business under the name of “ The Ind,o-<peylon TradingCompany.” The second defendant was the accountant of the company.He was not a partner, and had no personal inter^Mtih the Company.The company had an account in the bank. For the purpose df operatingon the bank account, the signatures of the first defendant and of thesecond defendant were placed on the cheque as follows:—
The Indo-Cetloh Trading Co.,
N. Ponnudurai,R. Doreswamy,
, Acct.
The bank would honour the cheques onlyif they were signed as above.The cheque sued upon was signed as above, but was dishonoured whenpresented. There is no question that plaintiff paid consideration forthe cheque, although defendant says he himself did not receive theconsideration.
The question is: Is second defendant personally liable on the cheque 7At first one is inclined to the view that he is hot. He is only a paidservant of the first defendant, or rather-of the Indo-Ceylon Company.He has signed as accountant, and has shown on the face of the chequethe capacity in which he- signed. ' Can he be made personally liable 7This is probably the layman’s view. The law, however, is different,
1921,
( 492 )
1921.
KathiresaOhetty v.D&reaamy
and there appears to be good reason based on sound prinoiple. Mostlyof the leading oases on the subject were those decided before the Billsof Exchange Act of 1882,45 and 46* Viet., o. 61.
In SoUornley v. Fisher,1 a promissory note was signed by the Directorsof a benefit building society in favour of Bottomley as follows:—
“ W. R. HeathS. B. Smitti
Directors.
W. D. Fisher, Secretary.”
It was held by the Court of Exchequer that Fisher was personallyliable on the note. The fact that Fisher added the word “ Secretary ”was held not to exempt him from personal liability. Bramwell B. saidthat it was possible that Fisher did not mean to make himself personallyresponsible ; on the other hand, it was probable that he had no objectionto sign his name as an additional security, but, however that might be,he had made himself personally liable by the mode in which he hadsigned the note. Pollock C.B. said that there was nothing on the faceof ittoexempt from personal liability any of the parties who had signed it.
Byles, in commenting on the earlier decisions on the question, statesthat if persons who fill official situations as church wardens, overseers,commissioners, managers of joint stock banks, agents and secretaries tocompanies, and the like, give bills or notes on which they describethemselves in their official capacity, they are, nevertheless, personallyliable; Byles on Bills, p. 56.
This personal liability is now dependent on the provisions of section26 (1) of the Bills of Exchange Act of 1882. The section runs asfollows: “Where a person signs a bill as drawer, indorser, or acceptor,and. adds words to his signature indicating that he signs for or on behalfof a principal, or in a representative character, he is not personallyliable thereon; but the mere addition to his signature of wordsdescribing him as an agent, or as filling a representative character, doesnot exempt him from personal liability.”
This section embodies the principle of law laid down in the earliercases, which is, that the terms agent, manager, secretary, &c., attachedto the signature are regarded as mere designaUo personse. “ Is it not auniversal rule,” says Lord Ellenbotrough, “ that a man who puts hisname to a bill of exchange thereby makes himself personally liable,unless he subscribes for another or by procuration of another, which arewords of exclusion ? ” Leadbitter v. Farrow.*
It was contended that the principle applied to makers of promissorynotes, but not to drawers of cheques. A cheque is a bill of exchangedrawn 4R A bgnkeff payc&le on demand. The position of a maker of apromieeoryAOteoorreBpqnds to that of an acceptor of a bill. Section 89of the Bills qf Exchange Act enacts that subject to the^provisions in thispart and tfeeept as by this section provided, the provisions of this Actrelafib^^bills of exchange apply, with the necessary modifications topraO&fettfty notes, and ih applying those provisions themaker of a notedeemed,^ correspond with the acceptor ef a bilk Section 26aboVJp quoted doeg not" make any difference between the personalliabilities of a person who signs a bill as drawer and of one who signs asacceptor.
In the case of Lances v. Marcus 3 (decided after the Act) followingDutton v. Marsh* it Was held that where two directors of a limitedcompany drew a cheque dto behalf of the company, adding to their
1 (1862) iH.dbO. 21U8 i1909)L- R- 47&
3 (1816) 5 M. & S. 349.4 (1871) L. It. Q. B. 361.
( 493 )
respective signatures the word “ director,” they were yet personallyliable, the fact that the cheque was stamped near the top with the nameof the company not being sufficient to show that the defendant in factsigned in a representative character within the meaning of section 26of the Aot.
Applying these principles of law, it is clear that the second defendantmade himself personally liable on the cheque sued upon. He had notadded any words to his signature indicating that he signed for or onbehalf of a principal or in a representative capacity to exempt himselffrom personal liability. The mere addition of the word “ Acot.”(meaning accountant) does not in law free him from personal liability.The fact that the oheque was stamped with the name of the companyis not sufficient in law to show that second defendant signed it in arepresentative character within the meaning of section 26 of the Act.It is possible that the words “ The Indo-Ceylon Co.” stamped on thecheque above the signatures showed the account on which the chequewas drawn. On the other hand, the fact that second defendant signedthe cheque along with the first defendant, the sole proprietor of thecompany, indicates that he did not sign it merely as an agent or represen-tative of the first defendant whose signature appeared thereon, butthat he had no objection to sign his name as an additional security.
I find second defendant is personally liable on the cheque sued upon.Enter judgment in favour of plaintiff as prayed, with costs, againstsecond defendant also.
Garvin, for second defendant, appellant.
E. W. Jayawardene (with him Keuneman), for respondent.
September 9, 1921. De Sampayo J.—
The plaintiff as payee of a cheque drawn by the two defendantssued in this action for the recovery of the amount. The firstdefendant has not filed answer, and judgment has gone against himby default. But the second defendant contested the oase on theground that he was not personally liable on the cheque. It appearsthat the first defendant was the proprietor of a business carried onin Ceylon under the name of “ Ihdo-Ceylon Trading Company.”The cheque is signed by the first defendant; and above his signatureare the words “ Indo-Ceylon Trading' Company ” impiesaectwith h>rubber stamp. The second defendant has rdrfo signed affer the firstdefendant with the letters “Acct.” underneath his signature Theseletters, no doubt, are an abbreviation of the word “ accounts^’contention of the second defendant in the Pistriet Court am|j||i&isCourt is that he, on the face of the cheque, signed the cheque tti hisrepresentative capacity as “ accountant,” and & not pereoi&llyliable on the cheque. On this point we have tie consider the effectof section 26 of the Bills of Exchange Aot whiok enacts as follows :
“ Where a person signs a bill as drawer, indorser, or acceptor, and'adds words to his signature, indicating that he signs for or on behalfof the principal, or in a representative character, he is not personallyliable thereon; but the mere addition to his signature of wordsdescribing him as an agent, or as filling a representative character,
1621.
KathiresaOhetty v.Doreaamy
( 4=04 )
1921.
£>b SampayoJ.
KathiresaOhetty t>.Doreaamy
does not exempt him from personal liability/* The question in thiscase is whether, in view of the form in which the signature of theseoond defendant appears, he could be said to have indicated thathe was signing for and on behalf of the Indo-Ceylon Trading Com-pany, or whether he did not merely give a description of the positionhe held in the company. It appears to be clear that although hedescribed himself as accountant, he did not thereby sufficientlyindicate that he was signing for and on behalf of the company.Mr. Garvin, for the second defendant-appellant, strenuously con-tended that the fact that the name of the company was stampedabove both the signatures sufficiently indicated that the seconddefendant signed in his representative capacity as accountant forand on behalf of the company. This point was dealt with by thelearned District Judge, and he came to the conclusion that thestamping of the name of the company did not make any difference.Two cases were cited by him, and they appear to be good authorityfor his decision, viz., Landes v. Marcus1 and Dutton v. Marsh?In the first of these cases two directors of a limited company drew acheque, adding to their respective signatures the word “ Director.”In that case, as in this case, the cheque was stamped with the name’ of the company, and yet it was held that they were personally liableon the cheque. I think the decision of the District Judge is right,and I would dismiss this appeal, with costsl
Schneider A. J.—I agree.
Appeal dismissed.