101-NLR-NLR-V-62-R.-S.-THAMBIRAJAH-Appellantand-T.-MAHESWARI-Respondent.pdf
619
Thambxrajah v. Mahestvari
1961Present :Sinnetamby, J., and L. B. de Silva, J.R.S. THAMRIRAJAH, Appellant, and T. MAHESWARI, Respondent
S.C. 394—.D. G. Colombo, 21633jS
Promissory note—Action instituted by indorsee against makei Issue raised as to fact
of indorsement—Burden of proof—JVo presumption in favour of valid or genuineindorsement—Bills of Exchange Ordinance, ss. 2, 21 (2), 30 (2), 31 (2)—Evidence Ordinance, s. 101.
In an action in which the maker and the payee of a promissory not© payableto ordor are sued by the person to whom the payee indorsed the note, if the makerraises an issue questioning whether the note was indorsed, the burdon is upon theplaintiff to prove affirmatively the fact of indorsement completed by delivery.In such a case the plaintiff must first prove that he is a “ holder ” within themeaning of that term in section 2 of the Sills of Exchange Ordinance before hocan claim the benefit of the presumption created under section 30 (2) that everyholder of a bill is prima ;acie deemed to be a holder in due course.
A PPEAL, from a judgment of the District Court, Colombo.
A. C. M. Uvais, for the Plaintiff-Appellant.
N. K. Chohsy, Q.C., with E. B. Wilcramanayahe^ Q.C., and S. Sharva-nanda, for the 1st Defendant-Respondent.
Cur. adv. vult.
520
L. B. DE SILVA, J.—TUambirajah v. Mahest ari
January 24, 1961. L. B. de Silva, J.—
The Plaintiff sued the 1st and 2nd Defendants to recover two sumsof Rs. 1,000 and Rs. 500 on the Promissory Notes marked “ A ” and “ B ”filed of Record and dated 10/3/1956. Admittedly the 1st Respondentgranted the promissory notes in favour of the 2nd defendant. ThePlaintiff alleged in his plaint that the 2nd defendant had endorsed thesaid notes to the Plaintiff for valuable consideration and that he becamethe holder of the said notes in due course.
This action was filed under Summary Procedure and the 1st defendantbrought the amount claimed to Court and obtained leave to defend theaction. The 2nd defendant did not obtain leave to defend the action.
The case went to trial between the Plaintiff and the 1st defendant onseveral issues. Amongst them, were the following issues :—
Were the Notes in question endorsed to the Plaintiff by the 2nd
defendant ?
If so, has the 2nd Defendant the legal capacity to endorse the
said notes ?
Did the Plaintiff pay the 2nd defendant valuable consideration for
the said notes ?
Is the Plaintiff a holder in due course ?
Were the Notes in question given as security for loans of Rs. 850
and Rs. 425 respectively ?
Were sums of Rs. 150 and Rs. 75 respectively deducted as interest
for 3 months at the time of the said loans %
If so, are the said Notes unenforceable in terms of section 10 of the
Money Lending Ordinance.
(S)Are the Defendants or either of them married ?
(9) If so, are they and their husbands subject to the Law of Thesa-
valamai ?
(10) If so, did the 1st defendant have the capacity to incur liability by
signing the notes sued upon or borrow money without the
concurrence or consent of her husband 1
After trial the learned District Judge answered the Issues as follows:—
Yes.
Does not arise in view of section 89 (b) of the Bills of Exchange
Ordinance.
and (4) Plaintiff did not pay to the 2nd Defendant valuable considera-
tion for the Notes and the Plaintiff is not a holder in due course.
-(10) Does not arise.
The action against the 1st defendant was dismissed with costs.
L. B. DE SILVA, J-Thambirajah v. Jldaheswari
521
The Plaintiff appealed against the Judgment and Decree in favour ofthe 1st defendant. It was urged in appeal that there was no evidenceexcept hearsay that only sums of Rs. 850 and Rs. 425 were lent on thesenotes—and that the balance was deducted by way of interest.
The husband of the 1st defendant gave evidence in this case. Com-menting on his evidence, the learned District Judge stated in his judgment“ Thereupon, he questioned bis wife who appears to have told him thatRbft actually borrowed sums of Rs. 850 and Rs. 425 on the two notes andthe balance was deducted by way of interest for 3 months. He there-upon spoke to the 2nd defendant and reprimanded her and asked herwhether it was proper for her to be a usurious money-lender and deductthese sums by way of interest. The 2nd defendant did not either con-tradict or deny what Mr. Thiagalingam told her ”.
The 1st defendant did not give evidence in this case and clearly thestatement of the 1st defendant to her husband is hearsay and inadmissiblein evidence. The fact that the 2nd defendant neither admitted nordenied the accusation by the husband of the 1st defendant that 2nddefendant was a usurious money lender who deducted interest in advance,when he reprimanded the 2nd defendant (a woman) over the telephone,can scarcely be said to be evidence to justify a finding that only the sumsof Rs. 850 and Rs. 425 were lent on these Notes and the balance sums ofRs. 150 and Rs. 75 were deducted as interest in advance, which wouldtaint these notes with illegality under the provisions of section 10 of theMoney Lending Ordinance (Chapter 67, Legislative Enactments of Ceylon).
Under Section 30 (2) of the Bills of Exchange Ordinance (Cap 68»Legislative Enactments of Ceylon), every holder of a Bill is prima faciedeemed to be a holder in due course but if the issue or subsequentnegotiation of the Bill is proved to be affected with fraud, duress, orforce and fear or illegality, the burden of proof is shifted, unless anduntil the holder proves that subsequent to the alleged fraud or illegality,value has in good faith been given for the bill.
The learned District Judge has held in this case that the issue of thesepromissory notes was affected with illegality and the burden of provingthat value has in good faith been given for these bills thereafter, was onthe plaintiff which he has failed to discharge.
The learned District Judge had erred in this case in holding that theissue of the promissory Notes has been affected with illegality as there is
9
no admissible evidence to warrant such a finding. He has therefore erredin holding that the burden of proving that value has been given in goodfaith for these promissory notes, has shifted to the plaintiff.
However in this case, the learned District Judge has erred in answeringthe 1st Issue in the affirmative. Admittedly in this case, no evidencewhatever was led to prove that the 2nd defendant had endorsed thesetwo promissory notes to the Plaintiff. Neither the Plaintiff nor the 1stdefendant gave evidence in this case, in spite of the fact that a specificIssue was raised on this point.
622
L. B. DE SliiVA, <T.—I'hambirctjah v. Afaheswan
For the purposes of proceeding under Summary Procedure (Chapter 53of the Civil Procedure Code), the plaintiff filed an Affidavit in -which hestated that the 2nd defendant endorsed these Promissory Notes to him.That Affidavit was not led in evidence at this trial and the 1st defendanthad no opportunity to cross-examine the plaintiff on that affidavit.This Court is unable to accept this averment in the Affidavit filed withthe plaint, as evidence at this trial, for the purpose of proving that the2nd defendant had endorsed the promissory notes to the Plaintiff. Norcan the fact that the 2nd defendant took no steps to defend this action,be taken as evidence or proof of this fact as against the 1st defendant.
The husband of the 1st defendant, in the course of his evidence pro-duced the letter of Demand (1D5) sent by the plaintiff’s lawyer and thereply (IDG) sent by him to the Plaintiff’s lawyer. The Letter of Demandaverred that the 2nd defendant (Mrs. Ariyakutti) had endorsed thesepromissory Notes to the Plaintiff. In the reply (1D6), the husband of the1st defendant alleged that the claim was unenforceable for a number ofreasons. It is not possible to hold that there is any admission by or onbehalf of the 1st defendant, either express or implied, that the 2nddefendant had endorsed these promissory Notes to the plaintiff.
The Counsel for the plaintiff-appellant did not urge at the hearing ofthis Appeal, that there was any evidence to prove that the 2nd defendanthad endorsed the promissory Notes to the plaintiff. He, however,submitted that the burden of proof lay on the 1st defendant to prove thatthe promissory Notes were not endorsed by the 2nd defendant to theplaintiff and that the presumption created under section 30 (2) of theBills of Exchange Ordinance that every holder of a bill is prima faciedeemed to be a holder in due course prevailed in the absence of suchevidence on behalf of the 1st defendant.
The learned Counsel for the Plaintiff-Appellant has mis-apprehendedthe provisions of this section. Plaintiff must first prove that he is aholder of the promissory Notes before he can claim the presumptioncreated under this section in favour of a holder. Section 2 of theOrdinance states, “ A holder means the payee or indorsee of a Bill or Notewho is in possession of it, or the bearer thereof”. The same sectionstates, “ A bearer means the person in possession of a bilL or note which ispayable to bearer ”.
The Promissory Notes in question are made payable to the 2nddefendant or Order. They are not payable to bearer. So the plaintiffmust establish that he is an indorsee of these Notes—to become theirholder.
The same section states, “Indorsement means an indorsement completedby delivery ”. Section 31 (2) of the Ordinance provides, “ A bill payable toorder is negotiated by the indorsement of the holder completed bydelivery ”.
Under section 21 (2), of the Ordinance, a valid delivery by all partiesis conclusively presumed in favour of a holder in due course.
Li. B. BE SILVA, J.—Thambirajah v. Mahestegri
623
There is no presumption created by the Bills of Exchange Ordinance,the Evidence Ordinance or any other enactment, brought to our notice, infavour of a valid or genuine endorsement.
Dealing with the protection given to banks under section 19 of theStamp Act, 1853, Paget on “ The Law of Banking ”, 5th Edition, statesat page 102, “ The words can therefore apply only to a state of facts inwhich, but for this section, it would be incumbent on the banker, asdrawee, to justify his conduct by proving an indorsement to be genuine….. To entitle him to debit the customer, it would be incumbenton him to show that he has paid with the customer’s authority, in accor-dance with his mandate. If the customer said “ Pay A or Order ” andthe banker has paid somebody purporting to hold under A’s indorsement,it would be incumbent on the banker to prove to his customer that the personfulfilled the character of A’s order, in other words, to prove the genuineness ofA's indorsement ”.
Our Law affecting the burden of proof is set out in section 101 and thefollowing sections of the Evidence Ordinance. Section 101 states,“ Whoever desires any Court to give judgment as to any legal right orliability dependent on the existence of facts which he asserts, must provethat these facts exist ”.
In Davoodbhoy v. Farook and others1 His Lordship the Hon. the ChiefJustice Basnayake stated “ the plaintiffs cannot maintain this actionunless they prove that Jaleel is dead, for if he is not dead, on their ownshowing they have no right to be declared entitled to the land or to beplaced in possession of it. The burden of proof in a case such as thiswould be governed by section 101 and not sections 107 and 108 for, thelegal right of the plaintiffs is dependent on the fact of Jaleel’s death whichthe plaintiffs ask the Court to presume without proving by affirmativeevidence ”.
. In this case, the plaintiff comes to Court on the footing that the 2nddefendant has endorsed the Notes to him. His right to sue on the Notesdepends on that fact. If that fact is not admitted by any of the defen-dants, the plaintiff must prove that fact as against him and specially sowhen that fact is raised as an Issue by the defence at the trial, if he is tosucceed in his action.
In support of his contention, the Counsel for the Appellant stronglyrelied on the decision in Meera Siabo v. Sangarapillai 2.
In that case the learned District Judge held that the burden was onthe plaintiff to prove that he was a holder in due course and that the notehad been duly endorsed to him. He held that the endorsement in theplaintiff’s favour was at least doubtful as the defendant had produced aformidable body of evidence in support of his allegation that the Note hadbeen endorsed to Sinna Marikkar and discharged by the delivery ofcoconuts to him. He dismissed plaintiff’s action.
1 (1959) 5S C.Lr.JV. 57 at page. 59.
2 (1916) 2 C.W.B. 217.
524
L. 13. DE SILVA, J.—Thambira& th v. Mahestpari
Wood Renton, C.J. held in that case, “ The plaintiff, produced the Moteon which he sued. He was, prim a facie, a holder in due course unless thedefendant succeeded, which the District Judge holds that he had notdone, in affecting him with notice of the discharge of the Mote by thedelivery of coconuts, at the time that it passed into his possession orshowed affirmatively that it had not been endorsed in his favour ”.
He cited Chalmers on Bills of Exchange pp. 90 and 94—6th edition, insupport of this proposition.
The case was sent back for further hearing as the trial was not satis-factory.
De Sampayo, J. agreed with that decision.
In that case the fact that the defendant’s agent had endorsed the Motewith his authority was admitted. The defence was that it was notendorsed to the Plaintiff but to a 3rd party Sinna Marikkar and thedebt duo to him on the Note was discharged by the supply of coconuts.
The defence in that case was that the Mote was duly endorsed byDefendant’s agent but it was delivered to Sinna Marikkar and not to theplaintiff. So that it was only the question of delivery to the plaintiff,which was necessary to a valid negotiation under section 31 (3) of theBills of Exchange Ordinance in addition to the endorsement in the caseof Bill payable to order, that was in issue.
It is to be noted that under section 21 (2) of the Bills of ExchangeOrdinance, a valid delivery of the bill by all parties is conclusively pre-sumed if the bill is in the hands of a holder in due course. The case ofMeera Sciibo v. Sangarapillai 1 does not support the contention of theplaintiff that the burden of proof is on the 1st defendant to prove thatthe 2nd defendant did not endorse the Motes to the plaintiff.
As the plaintiff has failed to prove the 1st Issue in this case, which goesto the root of plaintiff’s case, his appeal must be dismissed.
An interesting and important question of Law as to the capacity of amarried woman whose husband is living and who is subject to the Thesava-lamai, to incur liability as a party to a bill of exchange has been raisedin this case. Section 22 (2) of the Bills of Exchange Ordinance dealswith this point. Such capacity is governed by the Roman Dutch Lawas applicable in Ceylon, subject to the provisions of any ordinance affectingthat Law.
By section 5 of the Married Women’s Property Ordinance, (Chapter 46,Legislative Enactments of Ceylon) a married woman is capable of enteringinto or rendering herself liable in respect of her separate property, on anycontract as if she were a feme sole. The disabilities which were applicableto married women under the Roman Dutch Law and under the statutesapplicable to them prior to the enactment of the Married Women’sProperty Ordinance of 1924, Avere wiped out by this Ordinance.
But under Section 3 (2) of this Ordinance, Kandyans, Muslims orTamils of the Northern Province who are or may become subject to theThesavalamai are not affected by this Ordinance.
i {1910) 2 C. W. K. 217.
WJfiERASOORIYA, J.—Kirimxidianse o. Davi
525
It was argued that so far as married women who are governed by theThesavalamai are concerned (and presumably this would apply toKandyans and Muslim married women if this contention is correct),their capacity to incur liability as a party to a Bill, will be governed by theHoman Dutch Daw applicable to married women subject to any otherstatutory amendments.
The question raised is of far-reaching importance and wide applicability.The learned District Judge has not given a finding in this case as to whetherthe 1st Defendant is governed by the Law of Thesavalamai. In view ofthis circumstance and the fact that our decision on the 1st Issue inthis case goes to the root of this appeal and disposes of it, we do notconsider it necessary to express any view on this issue.
For the reasons stated above, this appeal is dismissed with costs.Sintstktamby, J.—I agree.
Appeal dismissed.