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MUTTIAH v. RAMASAMY.D. 0., Kandy, 15,115.
Promissory note—Debts of husband’s coolies working on tea estate—Promissorynote of kankani to head kahkoni—Security for coolies’ debts—Evidencenecessary to support action on promissory note—Defence of conditionaldelivery—Bills of Exchange Act, 1888, s. 81.
When a. kang&ni, employed on a tea estate in Ceylon, obtainedadvance through the bead kankani and brought to the estate a numberoi ooolles and, on the order of the superintendent, gave the headkankani a promissory note for the amount of the debt of himself and hisgang of coolies to the estate-
field, in an action brought by the head kankani against the kankani,on his promissory note, that it was a good plea that the note was givenunder a special agreement as a security only for a debt which was to beliquidated by stoppages from the wages of the defendant and his coolies,and that as the defendant was performing his part' of the contract itwas not open to the plaintiff to demand immediate payment of the balancedue on the note.
In the case of such, agreement the promissory note is deliveredconditionally, and the fact of such delivery may be proved between theimmediate parties to the note, under the Bills of Exchange Act, 1882,section 21.
Layard, C.J.—It may be that the plaintiff has a right of action torecover from the defendant the amount due in respect of some one ormore of the coolies who have failed to pay his or her debts to the estateand to cany out the terms of that agreement, but he has certainly noright to recover On the note the whole amount due, unless he establishesthat all the principal debtors have failed to carry out .the terms of theagreement in respect of which the note was made.
HE plaintiff in this case was the head kankani of Watagoda. estate. He sued .the defendant, who was a sub-kankani on
the same estate, upon a promissory note ftor Bs. 901.13 made on the26th October, 1901, by the defendant in favour of the plaintiff forthe recovery of a balance sum of Bs. 501.91.
The note ran as follows: —
1903.June 5and 10
“ Watagoda estate, 26th October, 1901.
“On demand, I, .the undersigned, Bamasamy Kankani of theabove estate, do hereby promise to pay to Mr. Muttiah, headkankani, or order, the sum of Bs. 901.13 only for value received.
“(Signed) Bamasamy Kankani.”
The plaint also contained a count for money lent to the defentdant.
The defendant admitted that he received the sum of Bs. 901.13from the plaintiff, but he contended that it merely passed throughhis hands to certain coolies whose services the defendant procuredfor Watagoda estate; that the document sued upon, through having
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the form of a promisor? note, was signed by the defendant onlyas a security for the debts of'the 'defendant’s coolies, in conformitywith an established custom obtaining in tea estates; that defendanthad a gang of forty ooolies on the said estate, of whom sixteen mendeserted service; that neither the plaintiff nor the superintendentof the estate, although requested by the defendant, took measurestp have them apprehended; that three of the coolies died; thatplaintiff, as head kankani, had removed from defendant's gang fivemore of the coolies; that the remaining sixteen of the defendant’sooolies were still on the estate working, liquidating the debt to theplaintiff from wages earned; that defendant was not liable to besued on the note until recourse was had to the principal debtors;and that so long as his coolies worked on the estate the liabilityof the defendant as kankani did not arise.
The District Judge gave judgment for plaintiff for Bs. 501.91,holding that the allegations as regards the desertion and death ofthe coolies were not proved; that the note was given for themoney admittedly received by the defendant and distributed byhim, at his own discretion in proportions unknown to any one else,among the labourers he secured by such advances; that he was theprincipal debtor; and that documents having the form of promis-sory notes should not be allowed to veil a quite different form ofcontract.
The defendant appealed. The case was argued on 5th June,1903.
Samarawikrama, for appellant.
Van Langenberg, for respondent.
19th June, 1903. Layakd, C.J.—
I would set aside the decree and dismiss the plaintiff’s action.The evidence for the defendant shows that the promissory notewas given merely by way of security for the amount of debts dueby him and his coolies to the estate. This evidence is uncontra-dicted. The plaintiff to succeed in this action must prove thatthe defendant and his coolies have failed to carry out the termsof the agreement in respect of which the note was given. He hasfailed to do so. It may be that the plaintiff has a right of actionto' recover from the defendant the amount due in respect of someone or more of the coolies who have failed tp pay his or her debtsto the estate and to carry out the terms of that agreement, but hehas certainly no right to recover on the note the whole amountdue, unless he establishes that all the principal debtors have failedto carry out the terms of the agreement in respect of which thenote was made.
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This is an action to recover a balance of Bs. 501.91 on apromissory note for Bs. 901.13, dated 26th October, 1901, made bydefendant in favour of plaintiff, and payable on demand. Theaction was brought on 21st January, 1902. At the dates materialto the action the plaintiff was the head kankani of the Watagodatea estate, and the defendant was a sub-kankani under the plaintiff,and had a gang of coolies under him working on the estate. Thedefence is “ that the promissory note was signed by the defendantfor the debts of defendant's coolies or labourers by way of seourityonly, in conformity with an established custom obtaining in teaestates, for the debts of his coolies to the plaintiff, the headkankani. ” The answer goes on to say that of defendant’s gang offorty men, sixteen deserted, three died, and plaintiff removedfive from defendant’s gang, and that the remaining sixteenare still working on the estate paying off from time to timeby wages earned the said debt to plaintiff; “ that defendant isnot liable to be sued on the note until recourse be had to theprincipal debtors, and so long as his coolies work on the saidestate the liability of the defendant as kankani does not arise.Defendant also said that the debt on the note had been reducedby deductions made, from time to time from the wages of hiscoolies.
It will be observed that defendant pleads an alleged custom. Inthe Court below great reliance was placed on his behalf on the caseof Imray v. Palawasen Kankani (1 Browne, 88; 4 N. L. R. 113),but the custom there recognized by this Court had nothing to dowith promissory notes made by a sub-kankani in favour of hishead kankani. It related to notes made by a kankani in favour ofthe superintendent, or, in other words, by the person who hasthe supervision of a labour force which he has collected andbrought to the estates in favour of the person who, in the eye of thelaw, is the employer of the labourers, with power to continueemploying them or to dismiss them, power to pay their wages, orstop them wholly or in part. The debt is the debt of the cooliesto the state, i.e., to the proprietor, and with their consent deduc-tions are from time to time made by the superintendent from theirwages, • which are applied in reduction of the debt, and the customis stated by Bonser, C.J., in these words: ” It was stated in theevidence in this case, and in my opinion proved, that these pro-missory notes are given by the kankanies as security that thecoolies would pay the amount by working it off. If the coolies rur-away or die, then the employer can sue the kankani, but the custom
1803.June 6and 19.
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June 6'and 19.
is that so long aB the coolies work on that estate the liability of akankani on that promissory note does not arise. ” See the remarkson this case of Layard, C. J. and Moncreiff, J., in Whitham v. PitcheMuttu, decided in appeal on December 9. 1902, 6 N. L. R. 290. Thequestion as to when precisely the superintendent would be entitledto sue on the note, whether he could do so when a large gang ofcoolies was substantially reduced by desertions, or whether he wasprecluded from coming into Court so long as a single coolyremained earning wages which could go in reduction of the debt,did not arise in the case referred to, and was therefore not decided.In the present case the payee is not the person who employed thecoolies and paid them their wages, and therefore, in the ordinarycourse of things, he could not make deductions towards liquida-tion of the debt, and the defendant admits that the debt was due tothe plaintiff, not to the estate.
But, although the custom established in Imray v. Palawasertdoes not help defendant, he is entitled to prove, if he can, the cus-tom he pleads, or, failing that, to prove that there was a specialagreement between him and plaintiff, which controlled theplaintiff’s right to sue him on the note. The only witness calledat the trial was the defendant himself, and his evidence falls veryfar short of what is necessary to establish a custom which the Courtcould recognize. Has he then proved such a special agreement?I may say here that I do not appreciate the District Judge’sobjections to the admission of extrinsic evidence of such anagreement. If the agreement between you and me is that I shouldgive you a promissory note to secure my servant’s debt, or to beheld by you . as a floating security for my own indebtedness, whichmay vary from time to time, our agreement may either be inwriting or may be by word of mouth. In the former case, doubt-less, it would have to be stamped with an ad valorem stamp inaddition to any stamp required by the promissory note when made,but in the latter case it cannot be, and is not required by the law tobe stamped. In the case of such an agreement the promissory noteis delivered conditionally, and this may be proved between imme-diate parties. See The Bills of Exchange Act, 1882, section 21. (2) (o)and illustrations 4 and 8. Certainly, if the payee indorsed the noteto a holder in due course, the latter could immediately recoveron the note from the maker in spite of the agreement betweenmaker and payee. The parties must be taken to have reckonedwith the possibility of such negotiation. If they intended toexclude that possibility, nothing was easier than to make thepromissory note payable to the payee only, and so to prevent itsnegotiation.
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Turning to the evidence, defendant deposes that in 1897 he tooka gang of eight or nine coolies to the estate where they were takeninto service, the defendant becoming a sub-kankani under MuttuGarpen Kankani. From time to lime the defendant added to thegang, obtaining advances from Muttu Carpen for that purpose. Hegave Muttu Carpen a promissory note for what the gang owedhim. Muttu Carpen died, and was succeeded by plaintiff as headkankani ahout October, 1901, and defendant, on the orders of thesuperintendent, gave plaintiff the note in question for the amountof the debt of himself and his gang to the estate. In January,1902, plaintiff took over eleven of defendant’s coolies, by which Iunderstand defendant to mean that plaintiff placed them undersome other sub-kankani and reduced his claim against plaintiff onthe note by the amount of the debt due by the eleven men. Thiswas apparently done after action brought, as it is not mentionedin plaintiff’s account particulars. The defendant admitted thathe had received the Bs. 901.13, the amount of the note, in cashinto his own hands and had disbursed it as advances to the coolieswhom he brought to the estate. He kept an account with eachone, and whenever wages were withheld by the superintendenthe was informed of it, and in turn told each oooly of the amountcredited to him against his debt. At the date of aotion, defendantand the remainder of his coolies (either sixteen men or ten men,it is not clear which) were working on the estate and were willingto continue working, but after action, namely, on 27th February,the superintendent gave defendant himself notice to quit, and heleft on 27th March.
That the note was not given for a fixed and certain debt, but wasa sort of floating security, is proved by plaintiff’s account parti-culars, in which defendant is debited with three sums of Be. 1.50,Bs. 10 (cash), and Bs. 27 (cash); and defendant’s story that thenote was to be worked off in wages is borne out by plaintiff'sgiving Him credit on October 28 for the wages of three mennamed, Bs. 9.80; for contract pay, Bs. 6.10; and on 11th Januaryfor “October and November pay taken in for advance,” Bs. 155.50(this seemingly represents the wages of coolies); and “ contractpay for October and November taken in for advance, Bs. 21.70. ”These deductions show that the superintendent was cognizantof the arrangement between plaintiff and defendant and gaveplaintiff the sums he deducted from the coolies’ wages, anddefendant says that the note itself was given to the plaintiff at theinstance of – the superintendent. Defendant’s evidence is entirelyuncontradicted. Under these circumstances, I think the defendanthas shown that the note was given as a security only for a debt
June 6'and 19.
1903.June 6and 19.
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which was to be liquidated by stoppages from the defendant’shis coolies' wages, and as at the date of the action the defend-ant was abiding by. and performing his part of the contract it wasnot open to plaintiff to demand immediate payment of the balancedue on the note. I therefore think the decree appealed againstShould be reversed and the action dismissed with costs.
MUTTIAH v. RAMASAMY