128-NLR-NLR-V-39-SUPPIAYA-REDDIAR-v.-MOHAMED–et-al.pdf
Suppiaya Reddiar v. Mohamed.
459
1937Present: Abrahams C.J., Poyser and Maartensz JJ.
SUPPIAYA REDDIAR v. MOHAMED et dl. .
78—C. R. Colombo, 24,794
Joint promissory note—Action against two makers—Judgment by defaultagainst one—Action barred against the other—English law.
Where in an action brought against two joint-makers of a promissorynote, judgment by default is entered against one, the action cannotthereafter be maintained against the other.
P
LAINTIFF sued two defendants on a promissory note for Rs 300,admitted to be a joint note, dated January 5, 1935, carrying
interest at 18 per cent. On the day of trial, the first defendant did notappear and judgment was entered against him. The following issue wasthen framed: “ In view of the judgment against the first defendant, canthe plaintiff maintain the action against the second defendant as it is ajoint promissory note ? ” The issue was answered against the defendantand judgment was entered for the plaintiff as prayed for with costs.
N. K. Choksy (with him R. C. Fonseka), for second defendant, appellant.—The decree is one for judgment against the defendants jointly and■severally. This'is a joint note and the decree will have accordingly to be•altered.
The action cannot be maintained against the second defendant,because judgment has already been entered in favour of the plaintiffagainst one of the joint debtors liable on this note. That is the EnglishCommon law rule which was made applicable in Ceylon by section 98 (2)of Ordinance Ttfo. 25 of 1927 which is the Ordinance relating to Bills ofExchange.
1 30 N. L. R. 256.
460
POYSER J.—Suppiaya Reddiar v. Mo homed.
The rule was adopted in these Courts in the case of Elias Appuhamy v.de Silva See also Parr v. SnellMoore v. Flanagan Hammondv. Schofieldand Kendall v. Hamilton *.
[Abrahams C.J.—In all these cases, there were two separate actions.]
Even when the objection has been taken in the same action, it has beenupheld. See McLeod v. Power *.,
This question has come up before the Ceylon Courts in Mudalihamy v.Punchi Banda which does not apply, and Babapulle v. Rajaratnamwhich applies. In the latter case, the action was held to be .barred.
A. Muttukumaru (S. J. V. Chelvanayagam with him), for plaintiff, re-spondent.—The rule has been modified in England and under certain rulesof the Supreme Court in England, an action may proceed against oneof several joint debtors in which judgment has been entered againstanother, when, as in this case, there has been default of appearance.
[Abrahams C.J.—Those rules cannot apply in this country.]
The rule can apply only if this is a question of substantive law. Sub-. stantive law will apply to a question in which. the nature of a liability orits extent is involved. It is otherwise when the manner of enforcingthat liability is in question—that would be a matter , of procedure. SeePoyser v. Minors *. In this case, the liability on the note is not denied ; itis only the manner in which the liability is sought to be enforced that isquestioned. That is a question of procedure which must be governed bythe Civil Procedure Code which is silent oh this point. Section 89 of theCode does not apply.
Even the Judges of the House'of Lords, who decided Kendall v. Hamilton(supra), were divided in their opinion as to whether the rule is a questionof substantive law or of procedure.
Even if this is a question of- substantive law, the English Commonlaw rule cannot apply in this case, because there is in this case onlyone decree. Decree is the equivalent in Ceylon of judgment in Englishlaw. So that there should have been two decrees to make the Englishrule applicable.
[Abrahams C.J.—But there was a judgment entered when the firstdefendant defaulted.]
Yes. But the judgment was valueless. No rights flowed from it. Itwas not capable of execution. Therefore only a decree against thatdefendant could have made proceedings against the. other defendantimproper.
Cur. adv. vult.
December 16, 1937. Poyser J.—
The plaintiff sued the two defendants on a joint promissory note forthe sum of Rs. 300. The defendants filed one proxy and a joint answeralleging, inter alia, that all sums die on the promissory note had beenpaid. Subsequently however the second defendant revoked his previousproxy and filed an amended answer.
On the day of the trial, the first defendant did not appear and judg-ment was forthwith entered against him. The following issue was then
1 30N.L.R. 232.8 {1875-9) 4 A. C. 504, at 522 and at 582.
(1923) 1. K. B. 1, at p. 4.(1898) 67 L. J. if. (Ch.) 551.
» (1920) 1 K. B. 919.’ 15 N. L. B. 350.
(1391) 1 Q. B. 453.* 4 N. L. R. 348.
Tr Q. A. D. 329.
POYSER J.—Suppiaya Reddiar v. Mohamed.461
framed : —“ In view of the judgment against the first defendant,, can theplaintiff maintain the action against the second defendant as it is a jointpromissory note ?
The second defendant did not desire any other issue to be framed andthe plaintiff admitted that the note sued on is a joint note.
The Commissioner of Requests, to whom the same cases were cited aswere brought to our notice, was of the opinion that the principles of lawlaid down in those cases did not apply to the present case and that toapply them would seem to be absurd and would amount to an injustice.
Judgment was consequently entered for the plaintiff against the seconddefendant as well as the first defendant.
The second defendant appealed and the appeal came before Moseley J.who referred it to a Bench of three Judges as he was disinclined to agreewith the judgment of Lascelles C.J. in Mudalihasmy v. Punchi Banda1, acase which supported the Commissioner’s judgment.
In deciding the question that arises on this appeal, we must be guidedby English decisions. There is statutory provision to this effect, viz.,section 98 (2) of the Bills of Exchange Ordinance, 1927, which is asfollows : —
“ The rules of the Common Law of England including the LawMerchant, save in as far as they are inconsistent with the expressprovisions of this Ordinance, or any other Ordinance for the time beingin force shall apply to bills of exchange, promissory notes, andcheques ”.
The earliest authority to which we were referred was the case of King v.Hoare where the point seems to have first been, decided. In this caseParker B. held that a judgment (without satisfaction) recovered againstone tj two joint debtors is a bar to an action against the other.
The principle laid down in this case was adopted by the House of Lordsin the case of Kendall v. Hamilton'. In that case judgment had beenobtained against two of three joint debtors and it was sought subsequentlyto recover from the third. It was held the action was not maintainableas the contract had passed into a judgment and the following dictum ofParker B. in King v. Hoare (supra) was followed : —
The judgment of a Court of record changes the nature of that causeof action and prevents its being the subject of another suit and the .cause of action being single cannot afterwards be divided into two ”.
It is only necessary to cite one other English case, viz., Parr v. Snell. ‘In that case one action was brought against three joint contractors andfinal judgment was signed against two of the defendants. It was heldfollowing the rule in King v. Hoare (supra) and Kendall v. Hamilton (supra)that the plaintiff was precluded from proceeding with the action againstthe third.
The following passage occurs in the judgment of Scrutton L.J. at >.page 9 : —
“We are dealing with a settled system of law and are not entitled tomould or disregard it, because, as I think in this case, the rule is a
1 IS N. L. R. 350.3 4 Law Rep. Appeal Cases 504.
3 13 M. and W. 494.* (1923) 1. K. B. 1.
462
POYSER J.—Suppiaya Reddiar v. Mohamed.
technical one which does not in any way affect the merits of the parti-cular case. The technical rule of law which we have to apply is this:that where there are joint contractors if judgment is. signed against onethe other is discharged”.
In the case of Mudalikamy v. Punchi Banda {supra), the facts were verysimilar to this case and Lascelles C.J. considered the question was one ofprocedure and English rules of procedure were not in force in Ceylon.He consequently held that a judgment by default against one of severaljoint makers of a note does not prejudice the plaintiff’s right to proceedwith the action against the other defendants.
This judgment is, as Moseley J. points out, not in accord with theEnglish authorities and such authorities do not appear to have beencited.
This appears to be the only local decision in support of the argument onbehalf of the respondent but other local decisions, viz., Manual Istaky v.Sinnathamby and Appuhamy v. de Silva*, support the appellant.
In the former case Middleton J. held that a judgment, although unsatis-fied obtained against a -joint contractor, is a bar to an action against theother joint contractors, and in the latter case Fisher C.J., after referenceto the English authorities, held that where judgment was obtained ofconsent against one defendant on a joint debt, he could not sue the seconddefendant on the same cause of action.
From a consideration of these authorities it is clear that it is a settledrule of English law—not procedure—that a judgment against one of twojoint debtors is a bar to an action against the other joint debtor unlessthere is some statute or rule of Court which takes the case out of this rule.
In England such rules of Court have been framed (see 1937 AnnualPractice, p. 190), but there is no Ordinance or rule of Procedure in forcein Ceylon which in any way modifies this rile.
In view of the above the appeal must be allowed. I come to this con-clusion with the greatest regret as there is no doubt that the rule,, whichin my opinion, we must follow in this case, results in injustice.
Lord Penzance in Kendall v. Hamilton (supra), in giving a dissentingjudgment, apprehended that the rule might result in injustice. Thefollowing is a passage from his judgment : —
“ What justice then, is there in saying that when three persons are,
all and each, individually liable to pay a debt, an action and judgment
(still unsatisfied) against two of them should extinguish the liability of
the' third ”.
In the present case the plaintiff loses his remedy against the seconddefendant on account of this technical rule.
The Commissioner was undoubtedly right in holding that its applicationto this case would amount to an injustice, but the rule in question Ss asettled rule of law, and must be given full effect to.
The appeal is allowed with costs both here and below and the judgment
against the second defendant set aside.
> 13 N. Z. R. 284.
* 30 If. L. R. 232.
463
AJBRAHAMS CJ.—Suppiaya Reddiar v. MohamedAbrahams C.J.—
I have had the advantage of reading the judgment of my brotherPoyser. I agree with it, and I share his regret that in allowing this appealwe are inflicting a hardship upon a creditor and enabling the escape fromhis liability of a debtor who raised no point other than a technical onewhich we have been called upon to decide.
English law is applicable to this question and I have no doubt that therule in Kendall v. Hamilton1 applies in full force, and despite .a strongdissenting judgment by Lord Penzance in that case the rule becamesettled law, as a number of subsequent cases in which it'was followedclearly indicates. As Lord Hatherley said in Kendall v. Hamilton,“ each of the co-contractors has a right to be sued and to have the mattersettled at once, instead of its being settled piecemeal ”, and Scrutton L.J.stated in Moore v. Flanagan *, “ another technical way of putting it is tosay that the contract is merged in the judgment and therefore the causeof action on the contract is gone. A more substantial way of putting thematter is that each joint contractor has a right to have his co-contractorsjoined as parties so as to have them all before the Court ”. It is notnecessary in my opinion to aggravate the mortification of the respondentby going into the reason for the rule and explaining, why it is expedientthat the individual litigant should suffer for the maintenance of a principleof law.
The respondent struggled for judgment by urging that no authoritywhich was cited before us was quite like this case, inasmuch as they allappeared to deal with two different sets of proceedings, whereas in thisparticular case the plaintiff launched one action against two joint debtorsand therefore he ought not to be frustrated in obtaining judgment againsta second defendant because he was fortunate enough, 'or rather, as it hasturned out, unfortunate enough, to obtain judgment in default againstthe first defendant. I very much regret that that cannot help him ; itis a difference in form but not in fact. Each co-contractor has a right tohave the whole matter settled in st single proceedings and it cannot besaid that the proceedings are single when there are two different judg-ments. The suit began as one but became in fact two proceedings, thedividing line being the judgment' against the first defendant. As VaughanWilliam J. said in Hammond v. Schofield the co-contractor has a rightto insist on tlhe rule that there shall not be more than one judgment onone entire contract. It is true that the proceedings in the case againstthe second defendant were restricted merely to the technical point as towhether judgment against the first defendant precluded- plaintiff fromfurther action. But he might have raised other defences and then the factthat there were actually two proceedings would have become muchclearer.
The stringent operation in England of the rule in Kendall v. Hamilton(supra) can be avoided in such cases as this by resorting to the provisions ofOrder 14, Rule 1. It is certainly desirable in the interests of -justice thatsome such legisl ation should be enacted here. When section 98 (2) of 1
14A.C.S04.* (1920) 1 K. B. 919.
» (JS91) 1 Q. B. D. 463, at p. 457.
464 ABRAHAMS C.J.—Vellupillai v. The Chairman, Urban District Council.
the Bills of Exchange Ordinance, 1927, was enacted and the rule of theCommon law of England directed thereby to apply to Bills of Exchange,the full implications of this provision could not have been reasonablyforeseen.
Maartensz J.—
I cannot usefully add to the reason given in the judgments of my lordChief Justice and my brother Poyser for allowing the appeal with costs inboth Courts. I too regret that the authorities cited on behalf of theappellants which we are bound to follow preclude us from arriving at anyother result.
Appeal allowed.