135-NLR-NLR-V-43-NADARAJAH-v.-JONKLAAS-et-al.pdf
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MOSELEY J.—Nadarajah v. Jonklaas.
1942Present: Moseley S.P.J. and de Kretser J.
NADARAJAH v. JONKLAAS et al.
235—D. C. Kandy, 686
Cheque—Crossed and marked non-negotiable—Agreement not to presentcheque for payment—Right of holder for value.
Where a crossed cheque which is marked “ not negotiable ” is given onthe understanding that it would not be presented for payment,—
Held, that a holder for value is not entitled to sue upon it.
PPEAL from a judgment of the District Judge of Kandy.
M.T. de S. Amerasekere, K.C. (with him H. W. Jayewardene), forthe plaintiff, appellant.
H. V. Perera, K.C. (with him F. C. W. Van Geyzel), for the defendants,respondents.
Cur. adv. vult.
August 27, 1942. Moseley J.—
The plaintiff brought this action alleging that he was the “ legalholder ” of a cheque drawn by the first defendant for the sum of Rs. 1,030in favour of Messrs. M. Cader Saibo & Co. The cheque is dated 27th May,1940, and appears to be drawn on an account in the name of“ Herondale ” Estate, of which second defendant is the owner.Cader Saibo & Co. appear from time to time to, have supplied goodsto the estate. They seem also to have acted in the capacity offorwarding agents for the estate. The firm’s financial position was,apparently, at and about the time of giving cf the cheque, unstable, anda practice had arisen whereby, to assist the firm, the first defendantwould draw a cheque in their favour, receiving at the same time thefirm’s cheque for a like amount. The cheque, the subject-matter ofthis action, was given in such circumstances. These cheques, accordingto the evidence of the first defendant, were given by him on the distinctunderstanding that the cheques would not be negotiated or presentedfor payment. This is borne out- by the evidence of one of the firm’sclerks who, referring to this particular- cheque, said' that the firm undertookto return it to the first defendant without sending it to the bank. Iemphasize this point because, while it is not clear in what manner pre-cisely Cader Saibo & Co. were to benefit by such a fetter on their dealingswith the estate cheque, there can be no doubt but that such an arrangementdid, in fact, exist. What actually happened was this. Cader Saibo &Co. took the estate cheque to the plaintiff and obtained from him theface value. The plaintiff was asked not to present the cheque for onemonth, and this request was repeated, and granted, month by month,upon Cader Saibo & Co. paying Rs. 30 by way of interest. Finally, thecheque was presented at the bank for payment on September 28, 1940,and was dishonoured since the first defendant, despairing of having itreturned to him according to custom, had stopped payment. The
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550MOSELEY J.—Nadarajah v. Jonklaas.
plaintiff thereupon brought this action and the parties went to trial upona number of issues, of which, in view of the conclusion at which I havearrived, it is only necessary to set out the following: —
Was the said cheque crossed “ not negotiable ” by the maker ?
If so, is the plaintiff entitled to the rights and privileges of a holder
in due course ?
The learned District Judge answered these two issues, respectively inthe affirmative and negative, and dismissed the plaintiff’s action.
Counsel for the plaintiff-appellant argued the appeal in the first placeupon the ground that the cheque was “ admittedly ” an accommodationbill, and he relied upon section 28 (2) of the Bills of Exchange Ordinance(Cap. 68), which renders an accommodation party liable to a holder forvalue. I have serious doubts as to whether or not the cheque in questioncan be properly described as an accommodation bill. If it were, thedrawer of the cheque would prima facie be liable as a surety, that is to say,in the absence of any agreement such as that which has been provedto exist in this case. The term “ accommodation bill ” seems to meto connote liability on the part of the accommodation party. The factthat it was specifically agreed that the cheque should not be negotiatedor presented for payment, seems to take the first defendant out of thecategory. Whether or not the cheque is an accommodation bill seemsto me, however, to be immaterial in view of section 81 of Cap. 68, whichdeals with crossed cheques bearing the words “not negotiable”.
Counsel for the appellant contended that, since the latter section was,in liis submission, in conflict with section 28 (2), the last named section,which deals particularly with accommodation parties, should prevailover a general section, as he characterized section' 81. That argumentwould appear to be fallacious since Part II. of Cap. 08, which part containssection 28, deals generally with bills of exchange, which term of courseincludes a cheque, whereas Part III, within which section 81 falls, dealswith cheques only. In the present case, the cheque is crossed and bearsthe words “ not negotiable ” and the evidence is that these words wereimposed by the first defendant. The case, therefore, in my opinion,must be decided upon an interpretation of section 81, which is as follows: —“ 81. Where a person takes a crossed cheque which bears on itthe words ‘ not negotiable ’, he shall not have and shall not be capableof giving a better title to the cheque than that which the person fromwhom he took it had.”
Counsel for the appellant sought to restrict the meaning of the word“ title ” to the mere act of possession. This seems to me to be altogethertoo narrow a meaning. * In fact, in the case of The Great Western RailwayCompany v. The London and1 County Banking Company, Limited'which was cited, although not quite on this point, by Counsel for theappellant, at page 418 Halsbury L.C., said : —
“ The supposed distinction between the title to the cheque itselfand the title to the money obtained or represented by it seems to meto be absolutely illusory.”
> (1901) A.C. 414.
551
KEUNEMAN J.—Silva v. Jayawardena.
Apply those words to the present case and what follows ? There was adistinct agreement, to which I have already referred more than once,that the cheque should not be negotiated or presented for payment.Clearly Messrs. Cader Saibo could not have sued on it. Equally clearly,in view of the terms of section 81, the plaintiff cannot sue upon it.
In my view the learned District Judge answered issues 2 and 3 correctlyand the plaintiff’s action was properly dismissed.
I would dismiss the appeal with costs.de Kretser J.—I agree.
Appeal dismissed.