039-NLR-NLR-V-26-SANITAMBY-v.-NOGAN.pdf
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Present; Bertram C.J. and Garvin J.
SANITAMBY v. XOGAX.451—D. C. Batticaloa, 5,450.
Money LendingOrdinancef 1917—Note given for value of paddy
supplied—Court cannot inquire into the question of adequacy ofconsideration and grant relief under the Ordinance.
A gave B a promissory note for Rs. 400 in consideration ofpaddy supplied to the value of Rs. 210.
Held that the Money Lending Ordinaucc did not- apply to thetransaction, and that the Court could not inquire into the questionof adequacy of consideration and grant relief under the Ordinance,and that plaintiff was entitled to judgment for the full amount ofthe note.
N. K. Choksy, for plaintiff, appellant.—The mere fact that theplaintiff knew the circumstances under which the note was grantedby the defendant to the maker cannot disentitle him, as endorsee,from recovering the full face-value of the note. The evidenceshows that the payee refused to give the defendant the paddy hewanted unless he signed a note for more than its value, and thedefendant agreed to it. The defendant’s evidence shows that hewanted the paddy urgently, and it must have been worth his whileto promise to pay more than its value. Muttu Ramen Chetty v.Piper 1 was a casQ where the payee himself was held entitled torecover the full face-value of the note under similar circumstances.
James Joseph, for defendant, respondent.—Plaintiff is an endorseewith full notice of the true consideration, and he cannot, therefore,recover more than the actual amount due. The District Judge hasdisbelieved the plaintiff’s evidence that he paid the payee the fullamount of the note.
The note was merely given as security for the return of the paddy.The evidence is that subsequent to the institution of the action, theplaintiff himself was willing to accept from the defendant thequantity of paddy he had received from the payee, and interest.He cannot therefore recover the full amount of the note.
June 28, 1924. Bertram C.J.—
This is an action brought upon a promissory note. The amountstated to be due on the face of the note is Bs. 400, with interest at~ 9 per cent, per annum. The plaintiff is the endorsee of the note,and he comes forward and says that he paid value for the endorse-ment ; that Bs. 300 was already due to him by the payee, and thathe had advanced a further Bs. 100 for the note. The learnedJudge, however, disbelieved that story, and I think with very good
1 (1906) 2 Bed. 174
1QM*
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1924.
Bbrtrah
ttJ.
SanUamby
t>.
Nogan
ground. The plaintiff, so he finds, was aware of the actual natureof the transaction under which this bote was granted, and he is-not entitled, therefore, to be in a better position than the originalpayee. This we may assume to be the case. We will look at thetransaction, therefore, as though it were between the defendant andthe original payee, and the defendant- gives what he states to be thereal story of the transaction. That story is that he was indebtedto the payee on a mortgage bond; that he obtained a further advanceof six amunams of paddy from the mortgagee, and that, in con-sideration of this further advance and the cancellation of the mort-gage bond at the request and on the insistence of the mortgagee, whowas making a further advance, he gave a promissory note for theamount of Rs. 400; that the further advance of this paddy wouldhot have been made, unless he has granted a note for this amount,and that it was the intention of the parties that, unless the amountof seed paddy due was paid in due course, the whole value of thenote should be insisted upon.
Now, unfortunately in the Court below, the legal position was notproperly realized. The issues were: What was the consideration onthe note; and was the plaintiff aware off this consideration?The learned Judge found that the consideration was only fourteen,amunams of paddy, and that the plaintiff was aware of this fact,and gave judgment for the value of fourteen amunams of paddy,which came to Rs. 210, with interest.
In this Court Mr. Choksy has drawn attention to the true legal-position, and has insisted that his client is entitled to the full valueof the note. It seems to me that he is clearly so entitled. If*persons, in pursuance of transactions between them, choose tobecome parties to a promissory note which states a certain sum tobe due from one to the other, they must in ordinary circumstancesbe bound by that promissory note. The person who makes thatpromise must pay, unless he can show us equitable grounds for relief.It is a-very common practice in this Colony for a person to whommoney is due to take a promissory note for a sum in excess of theamount really due, and, until the Money Lender’s Ordinance of 1918was passed, in the event of default, the full amount stated in thenote could be recovered. This was settled by the case of MuttuJtamen Chetty v. Piper (supra).'
If this was a money lending transaction, the defendant in theCourt below, and I think even in this Court, when a new legal pointwas taken, might' have claimed relief under that Ordinance. ButI cannot at present see that this is a money lending transaction.It was a transaction arising out of advances of seed paddy. Nospecific provision was made with regard to interest on the paddyadvanced. The terms on which seed paddy is advanced aregenerally very onerous, and 1 cannot help thinking that the personwho advanced the paddy insisted on a note for Rs. 400 in order to
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'secure himself the necessary interest. I cannot at present seethat there is anything in the Money Lending Ordinance to putadvances of seed paddy on the same footing as advances for cash.I am not at present convinced that sub-section (4) of section 2 ofthat Ordinance, which declares that the section shall apply to anytransaction which, whatever its form may be, is-substantially one• of money lending, does in all cases put advances of seed paddy onthe same footing as advances of money, though this may have beenthe intention of the promoters. It seems to me that, on the facts ofthe present case, the defendant must be bound by the amount statedin the note, and I feel compelled, therefore, to hold that the appealmust be allowed with costs, both in this Court and in the Courtbelow.
Gabvin J.—
I agree. The District Judge has clearly indicated his preference' for the evidence of the defendant. The case must, therefore, bedecided on the facts as disclosed in the evidence of the defendant.What are those facts ? The defendant stood in need of fourteen: amunams of seed paddy. He wanted eight amunams of paddy todischarge an old obligation which would have the effect of releasinghis land from the burden of a mortgage. The remaining six amunamsof seed paddy were presumably required for the purpose of sowinghis land against the next harvest*
Now the defendent was not. in a position to pay cash for theseed paddy he required. The plaintiff's brother, Kasupathy, towhom the defendant applied for tlxis paddy, agreed to give him thepaddy, but upon his own terms. The consideration he demandedwas Bs. 400, for which he undertook to accept a promissory note.The defendant accepted these terms and granted the promissorynote on which this action is foun4ed.
Evidence has been led to show that the market value of fourteen■ amunams seed paddy was Bs. 210 and not Bs. 400. Whatever themarket value to a person able to purchase the paddy for cashin the market may have been, there is ample evidence that the defend-ant found it worth his while to agree to the price of Bs. 400 demandedby Kasupathy, and gave his promissory note for the amount.
There is consideration for the promissory note, and the plaintiffis entitled to recover the full amount of-the note.
Even were it open to us to investigate the question of theadequacy of consideration, I should not myself be prepared to say,Shaving regard to the circumstances disclosed in the defendant's«own evidence, that this is an unconscionable transaction.
But as it is not a money lending transaction to which the.provisions of the Money Lender's Ordinance may be applied, such.a course is not open to us.
1924;
Bebtbam
OJ.
SatiiUnnby
v.
Nopan.
Appeal allowed.