084-NLR-NLR-V-29-MATHERENAYAKAM-v.-CHELLIAH-et-al.pdf
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Present : Garvin and Lyall Grant JJ.MATHERENAYAKAM v. CHELLIAH et al.
327—D. C. Colombo, 19,151.
Promissory note—Agreement to pay money on behalf of others—Withinone year—Bills of Exchange Act, 1882.
Where the plaintiff sued the defendants upon a writing expressedin the following terms: —
“ We the undersigned agree to pay M. the sum of Ra. 5,000within one year from this date on account of K. V. M.and K. V. SM the late proprietors of the Fensylvania Oil Com*pany. This sum is due from them to us after our paying tothe said M/’—
Held, that the document is not a promissory note as definied bythe Bills of Exchange Act of 1882.
A
PPEAL from an order of the District Judge of Colombo. Thefacts appear from the judgment.
H. V. Perera, for plaintiff, appellant.
Hayley, K.C, (with Tisseverasinghe), for defendant, respondent.February 6, 1928, Garvin J.—
The plaintiff sued upon a certain writing whereby the defendantsundertook to pay him a sum of Rs. 5,000. Answer was filed andthe plaintiff then filed a replication. Upon these pleadings severalissues were framed. The parties agreed that the first two issues,which were in the nature of issues of law, should be tried first. Theseissues are as follows: (1) Is the document sued on a promissorynote? and (2) Is the document duly stamped? The submissionon behalf of the defendants was that the writing was a promissorynote within the definition attached to that term in the StampOrdinance, and in asmuch as it was not stamped at the timeof execution no action could be proceeded on upon it. A“ promissory note ” is defined in Ordinance No. 22 of 1909 as “ apromissory note as defined by the Bill of Exchange Act,18821, and any other document entitling or purporting to entitleany person, whether named therein or not, to payment by anyother person of, or to draw upon any other person for, any sumof money/’ With the latter part of this definition we are notconcerned. The question for determination, therefore, is whetherthe document is a “ promissory note ’* within the meaning of thedefinition of this term in the Bills of Exchange Act, 1882. Thelearned District Judge held that it was.
1 45 <fc 46 Vic. c. 61
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It is submitted on behalf of the appellant that the document isneither in form nor in substance a promissory note. The writingin question is in the following terms: “ We the undersigned agree topay T. Muttusamypillai Matherenayakam of 40, Brassfounder street,Colombo, the sum of Bupees Five thousand (Bs. 5,000) within oneyear from this date on account of K. V. Marcandan and K. V. Subra-maniam, the late proprietors of the Pensylvania Oil Company. Thissum is due from them to us after our paying to the said Mathere-nayakam." The first point raised is the absence of the word“ promise " and then attention is drawn to the form of the documentas a whole. There can be no question that the document is not drawnin the ordinary form in which promissory notes are drawn. Thereis the absence of the word promise ’’ and there is not the usualundertaking to pay to payee or order. These matters of detail areof course not decisive in themselves. But it seems to me that thedocument as a whole was intended to be a memorandum or agree-ment whereby the signatories undertook to pay a debt of Bs. 5,000on account of Marcandan and Subramaniam upon the understandingthat upon such payment they were to have the right to recoverthat sum from the persons named. The document clearly gave the•signatories the right to make this payment at any time they chosewithin a period of one year, and, having regard to what I havealready observed, it is quite conceivable that it may have provedto be a right of considerable value to them. I have no hesitationin saying that the parties did not intend this to be a promissorynote with the negotiability which attaches to these notes, butmerely as evidence of the agreement between them. It is urged,nevertheless, that a document in this form comes within the defini-tion attached to the term promissory note in the Bills of ExchangeAct. It is said that we have here the sum stated in money andthat the obligation to pay the money only arose on the last date ofthe period of one year from October 24, 1924, which was the dateon which the writing was made and it was therefore a promiseto pay at a fixed future time. As authority for the propositionthat wTithin one year means on the last date of the period of one yearfrom the date of the note the case of In re Horner 1 (also reported in{7896) So L. J. Chan. 699) was cited. The words which the Courtwas called upon to interpret in the case were those which appearedin an agreement by which the obligation was undertaken to 'nakea certain payment within six months of a specified date. But thepurpose for which it was necessary tq interpret the language was toascertain from what date, if at all, interest became payable undercertain provisions of 3 & 4 Will. IV. c. 49. It was held that theobligation to pay arose on the last day of the period of six months,and interest became payable from that date. But I cannot agree
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Gabvxn J.
Mather*
nayokam'v*
1 {1896) 2 Chan. 188.
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.ittB that the requirement of section 83 in the Bills of Exchange Act,j that the sum certain in money shall be payable “at a fixed or' ascertainable future time,” is satisfied when it is expressed to l>eMpthere- payable at a fixed future time or at any time before that date.
The provisions of that Act relating to payment and the right todischarge upon payment indicate that in the interpretation of thissection one must have regard, not merely to the liability, but to therights of the maker of the document under consideration. It iscontended that the effect of the words “ within a year M gave thesignatories an absolute right to a discharge of the note and of nilobligations arising thereunder upon payment to the payee at anytime within the year. This, I think, is what the document meansand what the parties intended thereby. But the maker of apromissory note is under liability to pay the note according to itstenor, t.e., at the time ..appointed, and in making a payment to thepayee before that date he acquires no right to a complete dischargeof his- liability to a holder in due course into, whose hands the notemay have passed.
The payment of a promissory note to the payee by the makermay be effective payment as between them. It cannot affect therights which endorsees obtain and acquire on the representation onthe note that it would be paid at a particular date
This is a strong indication that the parties did not think thedocument should take effect as a negotiable instrument.
In my opinion the document is not a promissory note with themeaning of the Bills of Exchange Act or the Stamp Ordinance,and the plea that the action is not maintainable thereon becauseit is not stamped as such is unsustainable.
The judgment is set aside, and the case sent back for the determi-nation of the remaining issues. The appellant is entitled to thecosts of this appeal and to the taxed costs in the Court below.
Lyall Grant J.—
I agree. I think the terms of this document preclude the ideathat it is a negotiable instrument.
Appeal allowed.