025-NLR-NLR-V-17-MARIKAR-v.-CAROLIS-et-aL.pdf
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Present : Pereira J. and Ennis J.
MABIKAR t>. CABOLIS ei ah216—D. C. Gfatte, 11,419
Promissory note—Action by an endorsee—Defense that note was givenas security—M Overdue."
In an action on a promissory note granted 'by the first defendantto the second, and endorsed and delivered by the second defendantto the plaintiff, it is open to the first defendant to prove that thenote was granted by him as security for the supply of goods byhim to a firm, of which the second defendant was broker, and towhich the second defendant was thus liable for the default of thefirst defendant as a customer introduced to it by him, and that thenote was discharged by the due supply of goods as undertaken.
A promissory note payable on demand is not necessarily to bedeemed to be an overdue note. Unlike a bill of exchange, apromissory note payable on demand i6 not to be deemed to be*overdue for the purpose of affecting the holder with defects oftitle of which he had no notice, by reason that it appears that- areasonable time for presenting it for payment has elapsed since itsissue.
^ThE facts appear from the judgment.
A. St. V. Jayewardene, for plaintiff, appellant.
A. Jayewardene and De Zoysa, for first defendant, respondent.Guneratne, for second defendant, respondent.
Cur: adv. wit.
July 29, 1913. Pereira J.—
In this case the first question to be decided is whether thepromissory. note sued Upon has been duly paid and discharged.The second defendant was the broker of the firm of Clark, Spence '& Co., and it is clear from the evidence of Mr. Leefe, the manager ofthat firm, that the promissory note was given by the first defend^ant as security for the supply by the first defendant to the firm ofcoir yam in liquidation of advances made to him by the firm. Itappears that the second defendant7 as the broker of the firm ofClark, Spence & Co,, was liable to the firm for advances made tocustomers introduced by him. If they made default, the seconddefendant was liable to make good to the firm the loss, and hencepromissory notes were, as stated by Mr.. Leefe, usually taken infavour of the second defendant, so that he might recover on them
t«8.
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1918.
(Pbbbira J.
Marikar v.Garoli*
if he was obliged to make good loss as stated above. The promissorynote in question was in effeet security for the supply of a certainquantity of ooir yarn by the first defendant to Clark, Spence & Co.The moment he supplied the required quantity of coir yam thenote was discharged. The appellant’s counsel argued that it wasnot open to the first defendant to prove such an understanding, itbeing, as he contended, obnoxious to the provision of section 92 ofthe Evidence Ordinance. 1 do not think so. There can be nogreater objection to proof of such an understanding than there couldhave been to proof of suspension of liability on a note which thisCourt held would take place in certain circumstances in the case ofColes v. Caruppen, reported in the New Law Reports, vol. XVt.'fp. 198. In the present case, of course, as sworn to by Mr. Leefe,the first defendant did supply the coir yarn in liquidation of theamount advanced to him.
The next question is, how far the defence available to the firstdefendant as against the second is available to him as against theplaintiff ? On the authority of the case> of Tenna v. Balaya 1 theDistrict Judge has treated the present promissory note as anoverdue note, and possibly the first defendant's counsel in theCourt below placed reliance on the decision in that case in conductingthe defence. If that decision is to be deemed as implying that apromissory note payable on demand is always to be regarded as anoverdue note so far as the matter -of negotiation is concerned, 1 amnot, as at present advised, inclined to endorse it. But I am notsure that the learned Judge who decided that case intended to goso far. Anyway, in the solution of the question whether a giveninstrument is overdue, the considerations that apply to bills ofexchange payable on demand are different from those that apply topromissory notes payable on demand. Section 36, sub-section (3),•of the Bills of Exchange Act, 1882 (45 & 46 Viet., ch. 61), enacts :
" ‘ A bill payable on demand is deemed to be overdue when
it appears on the face of it to have been in circulation for anunreasonable length of time. What is an unreasonable length oftime for the purpose is a question of fact. " But in section 86,cub-section (2), it i6 provided as follows : “ Where a note payableon demand is negotiated, it is not deemed to be overdue for thepurpose of affecting the holder with defects of title of which he hadno notice, by reason that it appears that a reasonable time forpresenting it for payment has elapsed since its issue. ” So that thepromissory note m question in this case cannot be deemed to be,and treated as, an overdue note. That being so, it is necessary thatthe tenth issue framed should be definitely determined. In viewof the decision in the ease of Tenna v. Balaya cited above, neitherJudge nor counsel would appear to have treated that issue as ofprimary importance in this ease. That issue is tantamount to the
MiW) 11 N.L. R. 27.
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question whether the plaintiff is a “ holder in due course1’ of thepromissory note in question ; and a “ holder in due course, 11 I needhardly observe, is defined in section 29 of the Act. I would setaside the judgment appealed from, and remit the case to the DistrictCourt for the decision of the tepth issue as explained above andjudgment accordingly. All costs should, I think, abide the event.
Ennis J.—Agreed.
Sent back.
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1912.
Pkrkika J-
Marikar v-Cardie