156-NLR-NLR-V-23-THE-EASTERN-GARAGE-AND-COLOMBO-TAXI-CAB-CO-LTD-v.-SILVA.pdf
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Present: Bertram C.J. and Be Sampayo J.
1922.
THE EASTERN OARAGE AND COLOMBO TAXI-CAB CO., LTD., v. SILVA.
189—D. O. Colombo, 2,363.
Cheque—Payment by cheque of a third party—Notice of dishonour—Accommodation cheque.
When an account is paid by the cheque of a third person andthat chequC-is dishonoured, the creditor loses his right of recourseagainst his4 debtor, unless prompt notice of dishonour is given tothat debtor. If the cheque is an accommodation cheque, notice ofdishonour is dispensed with.
111HE facts appear from the judgment.
Pereira, K.C. (with him L. V. Loos), for the appellant.
Jayatoardene, K.C. (with him L. M. de Silva), for respondent.
January 13,1922. Bertram C.J.—This is an extremely unsatisfactory case. The action is broughton a bill for repairs to a motor car. It appears that the defendantleft his motor oar for extensive repairs at the garage of the plaintiffs,and that finally the bill for the repairs was paid in the first instanceby a cheque—a cheque not of the defendant himself, but drawn inhis favour by a young man, D. V. de Silva, and endorsed by the-defendant. That cheque was dishonoured. Later Rs. 1,000 waspaid on acoount of the liability by D. V. de Silva. The balancewas demanded from the defendant by the plaintiffs, and the pleawas a plea of payment. It was suggested &at the cheque hadbeen taken in discharge of the liability. For the first time, whenthe parties came into Court, a' new plea was raised, namely, thatnotice of dishonour had not been given to the defendant. It isquite plain that this point had up to that time occurred to neithertide.
The plea of failure to give notice of dishonour arises, underthe law of merchant now codified in the Bills of Exchange Act. Itis based upon the custom of merchants, and relates to a departmentof law which every merchant is supposed to know. It is not to beexpected that either the manager of a motor garage or a boutique-keeper in Ambalangoda should be acquainted with the rules of thelaw merchant in this particular, or should be aware that these rules,originally evolved with reference to bills of exchange, also apply to
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1923.
BPPOEUM
jw.
The EasternOarage andColomboTaxi-Cab
Co,, Ltd., v.Silva
cheques. As I have said, it is quite clear that neither the plaintiffcompany's manager nor the defendant thought anything about thequestion of the notice of dishonour. Nevertheless, the point wastaken in the District Court, and has to be dealt with.
In my opinion it would have been better if,'before an issue wasframed on the subject, an amendment of the pleadings had beenordered, and if an adjournment had been taken so as to enable theplaintiffs to consider this new aspect of the case. As it was, the casewent to trial. Various pleas were put forward, and one was thatD. V. de Silva was held out as the agent of the defendant. Thatplea clearly was not substantiated. Another point made was thatnotice of dishonour had, in fact, been given, because the defendantwas present with D. V. de Silva at the time when the dishonouredcheque was handed back to the latter within a day or so after itsdishonour. Plaintiffs' manager cannot speak positively to thepresence of the defendant on that occasion. If he had been able todo so, no doubt that circumstance would have been decisive. As hecannot do so, the point fails.
There was, however, a most material point which ought to havebeen considered, and that was whether the cheque tondered inpayment of the account was, as alleged by the defendant, a chequewhich he had really bought for valuable consideration from D. V. deSilva, or was only an accommodation cheque given by D. V. de Silvafor the benefit of the defendant. If the cheque was an accommoda-tion cheque, notice of dishonour would be dispensed with. Tet,strange to say, neither of the parties, nor the Court itself, everseriously considered that question. It is only when the case camebefore us in appeal that that question is discussed. Under thecircumstances, we must decide that question upon the evidenceappearing on the record.
The defendant has sworn that he gave full value for the cheque.He appears to have had no banking account. He says that D; V.de Silva was already indebted to him to a certain extent, that hegave him a cheque lor Rs. 1,000, and cash for the balance. Now,this is undoubtedly very loose evidence. But it was not challengedand sifted in the Court below as it ought to have been. The defend-ant's books were not called for. The evidence was accepted, and itappears to me that, under the circumstances, although there isevidence to the contrary by D. V. de Silva, yet, in view of the factthat the learned Judge has generally accepted the evidence of thedefendant, we, in appeal, cannot take upon ourselves, not havingheard the parties, to say he was wrong. We pmst, therefore, takeH^fchat the cheque was not an accommodation cheque, but a chequegiven forconsideration.
The result is that a legal point, of which both parties were ignorant,was taken when the case came on for trial, and the Courtmust give its decision upon that legal point. That decision can
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only be that notice of dishonour was not given, and the plaintiffsunfortunately for themselves must pay the penalty. This casewill, no doubt, serve as a lesson that, when an account is paid by thecheque of a third person, and that cheque is dishonoured^ thecreditor loses his right of recourse against his debtor, unless promptnotioe of dishonour is given to that debtor. In my opinion theappeal must be dismissed, with costs.
i>B Sampavo J.—I agree.
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Bbbsbau
O.J.
The BottomOarage'andColomboTaxi-CabCo., Lid., V.Silva