THENAPPA CHETTY v. VEERAPPA CHETTY and another

035-NLR-NLR-V-12-THENAPPA-CHETTY-v.-VEERAPPA-CHETTY-and-another.pdf


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1909.
May 5.
Present: The Hon. Sir Joseph T. Hutchinson, Chief Justice,and Mr. Justice Wendt.
THENAPPA CHETTY v. VEERAPPA CHETTY and another.
D. 0., Negombo, 7,144.
Promissory note—Agreement to give evidence in favour of a person—Illegality of consideration—Stake-holder—Recovery from stake-holder—Repudiation of unlawful agreement.
Where a promissory note was granted in consideration of an agree-ment entered into between the maker and the payee that the payeeshould give evidence in favour of the maker in a pending litigation,—Held, that the agreement was unlawful and immoral and that the^nte was void.
Where a promissory note made in furtherance of an unlawfulagreement is deposited with a third party as stake-holder, the makerof the note has a right, before the unlawful agreement is carriedout, to repudiate it and demand back the note from the stake-holder ; but where the unlawful agreement has been carried out,the right to get back the note ceases.
Hampden v. Walsh 1 referred to.
T
HE plaint alleged that the plaintiff made a promissory note infavour of the 2nd defendant for Rs. 1,000 and handed it to
the 1st defendant, who was to keep it till he was instructed by theplaintiff to give it over to the 2nd defendant; that the 1st defendant,without any such instructions, acting in collusion with the 2nddefendant, fraudulently handed it over to the latter; that the 2nddefendant endorsed the note to one Pidelis de Silva, who obtainedjudgment thereon^ and that the plaintiff paid and satisfied thesame. The plaintiff brought this action to recover damages againstthe defendants jointly and severally for having negotiated the notein breach of their agreement.
1 (1876) 1 Q. B. D. 189.
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The defendants admitted the making of the npte by the plaintiff,but denied all the other averments in the plaint.
' The plaintiff being examined at the trial gave the followingevidence:—
“ I purchased a share of land at Lianagemulla at a Fiscal’s sale andobtained a Fiscal’s transfer. Sam. Silva was the owner of the otherhalf. I instituted a partition suit making Sam Silva defendant.He filed statement of claim claiming the whole land by prescription.Second defendant is the headman of lianagemulla. I spoke to 2nddefendant about giving evidence in the suit. We came to an agree-ment that I was to sell my half share to him for Bis. 2,260. Heagreed to give evidence in the case—on my behalf that I was theowner—to support my title. He did not give evidence. He wassummoned. I was not present on the trial day. I was informed hedid not give evidence. The agreement was that if he gave evidencein my favour he was to have the land for Bs. 2,250, and a promis-sory note was made by him in my favour for Rs. 1,000, anotherpromissory note was made by me in his favour for Rs. 1,000 on June8, 1907.. He also paid me Rs. 250 as an advance. I gave him apromissory note for Rs. 250. Three promissory notes were thusdrawn. The three notes were left with Veerappa Chetty to be heldby him. According to agreement it was fulfilled on terms, thenotes were to be returned to the respective parties who signed them.This was to be on the headman’s giving evidence and on the deedbeing signed. It was arranged that I should tell Veerappa. He wasto keep the notes till I gave him instructions. I was informed theheadman did not give evidence. I informed Veerappa that theheadman had not given evidence, and that the notes should not behanded over. I sold my half share to Abraham Gunasekere’s wife.The note I had made was sued upon in 7,039, D. C., Negombo.Judgment went against me. The plaintiff was Pidelis, who allegedHarmanis endorsed the note to. him. I did not defend the action onadvice of my proctor. I did not receive Rs. 1,000 from Harmanison the note. I did not hand the note to Harmanis, but to VeerappaChetty. This man present is not Veerappa, but his attorney. InD: C. 7,3091 paid the claim Rs. 1,207 05. I got receipts. ProducesP 1, P 2. I claim that amount and Rs. 500 damages.”
Cross-examined :-r-
“I got the Rs. 250 on June 8. The same day as the note waswritten. Veerappa Chetty has that note. I have not been sued onit. The note, in my favour was with Veerappa Chetty. I askedhim for the note. He did not give it. I was to have been given thenote for Rs. 1,000 if he, the 2nd defendant, did not give evidence.If I had got the note I would have sued upon it. If he had givenevidence in my favour, he was entitled to have all the three notes.The condition was his giving evidence in my favour. Veerappa12-
1908.July 3.
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1909.Chetty should have given me all the three notes, as the 2nd defend-
May 6.ant had not given evidence. If he had given evidence, the note
* made by him was to be returned to him and my note to me, and thedeed of transfer would have been written in my favour. I left lorIndio- I was in India when the case was tried. I do not know thatthe defendant in the partition case admitted my title. I sold theland. I cannot give the amount. Palaniappa Chetty looked aftermy business. Pedflo wrote the notes. I owe money.”
•
To 2nd defendant:—
“ When I made the agreement I thought Sam. Silva wouldcontest the case. I did not know in what way. I know the land.
I knew the land before I purchased. I was the mortgagee. The 2nddefendant said he would give evidence and do all he could forthe case if I were to sell the land to him cheap. He said he wouldgive evidence in my favour. On June 8 the promissory notewas written- He had said before that he would give evidence.He came to me first. I did not know him before. He made theproposal. He offered to give evidence on my behalf. He said hewanted to have the land cheap. He said he knew the facts a^dlived in the village, and there might be disputes. The agreem*.was that the 2nd defendant was to give evidence in my favour, a -'don these conditions I was to transfer to him the land cheap, i-)stakes we each deposited with Veerappa Chetty a promissory notefor Rs. 1,000. Second defendant failed to fulfil his part of theagreement. Yet he obtained the note made by me, and Isued on it.”
The District Judge (R. W. Byrde, Esq.) delivered judgment ? .follows (July 3, 1908):—
“ I find, as a matter of fact, that the promissory note was hand- A.by the plaintiff to the 1st defendant, and the 1st defendant waskeep it in his custody till the plaintiff gave him instructions to ban 1it to the 2nd defendant.
‘ ‘ 2. The note was not handed to the 2nd defr^dant direct bythe plaintiff.
“ 3. There is no evidence to show why the 1st aefendant handedthe note to the 2nd defendant.
“ 4. The 2nd defendant did not pay consideration for the note.
“ 5. There is no proof that the plaintiff has suffered any damage,
“ 6, 7. The action cannot be maintained, against either of the ■defendants.
“ The facts are those given by the plaintiff—a Chetty. E.purchased a certain land. A partition suit was instituted, in whichhe was the defendant. The 2nd defendant, the Police Headman ofLianagemulla, came to him and 'made him a proposal. He offeredto give evidence in the case in favour of the Chetty, on condition that
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the Chetty should transfer the land to him at a low rate. Neitherparty trusted the other, and so each signed a promissory notefor Us. 1,000, which was deposited with the 1st defendant asstake-holder. ■
“It subsequently transpired that the headman’s evidence was notrequired, and was therefore not given. He was no doubt quiteready to give evidence. He apparently on the strength of thisclaimed the note. The 1st defendant no doubt gave him the note.He endorsed it to his brother-in-law Pidelis, who sued the Chettyupon it. The Chetty suffered the case to go against him. . I findthat the consideration for the note was the 2nd defendant's givingevidence in favour of the Chetty. The giving of evidence in a caseis no consideration at law. It was the duty of the 2nd defendant onreceipt of a subpoena to appear and give evidence. He was boundso to appear and give evidence. The consideration was illegal.The headman was to give evidence in favour of the Chetty. Theheadman was prostituting his headmanship for gain. He wastrafficking in perjury. He was also guilty of champerty for hisoffer of assistance in the suit. He was to get the land for Rs. 2,260,whereas it was worth Rs. 2,750.
“ It is the duty of the plaintiff to prove his case, but he cannot atlaw prove an illegal contract. He cannot set up a case on which hemust necessarily disclose an illegal purpose as the groundwork ofhis claim. The maxim ‘ In pari delicto potior est conditio defend-entis ’ applies. The plaintiff has no case to put before the Court..His action is based on an illegal contract, of which the Court cannotaccept evidence in favour of the plaintiff. It was open to him to. have contested the action on the promissory note.
‘1A negotiable instrument made and given as security for an illegaltransaction is as between the immediate parties void. The trans-action was illegal, the subsequent holder would consequently havelost the benefit of the rule that consideration is presumed till thecontrary is shown, he would have been put to the proof that he gaveconsideration, and that he was unaware of the illegality. Seeingthat he was the headman s brother-in-law this would have beenrather difficult. The plaintiff has no case. His action is dismissedwith costs.”
The plaintiff appealed .
F. M. de Saram (with him A. St. V. Jayewardene), for the plaintiff,appellant.
Walter Pereira, K.C., S.-G. (with him Prins and Wadsworth), forthe 1st defendant, respondent.
H. A. Jayewardene (with him A. Drieberg and R. L. Pereira), forthe 2nd defendant, respondent. .
1909.
May 5.
Cur. adv. vuti.
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1909. May 5, 1909. Hutchinson C. J.—
May 5. This is an appeal by the plaintiff against a decree dismissing hisaction. His plaint states that on June 8,1907, he signed a promis-sory note with the name oi the 2nd defendant Don Harmanis aspayee, and handed it to the 1st defendant Veerappa Chetty as hisagent; and that the Chetty was to keep it until the plaintiff gave himinstructions to issue it, whereupon it was to be handed to Harmanis;that Veerappa without any instructions from him, and acting incollusion with Harmanis with intent to defraud the plaintiff, handedthe note to Harmanis; that Harmanis with intent to defraud theplaintiff endorsed the note to K. P. Silva, who sued the plaintiff on itand recovered judgment, and that the plaintiff paid to him the amountof the decree in that action, Rs. 1,207 '05; and that he in conse-quence of the said fraudulent conduct of the defendants had suffereddamage to the extent of Rs. 1,707 ‘35, which sum he now claims.
The ist defendant Veerappa in his answer simply denied all theallegations of the plaint; and he also set up some legal objections,which were not referred to before us, and which seems to be trivial.The 2nd defendant Harmanis in his answer denied that the notewas har.ded to Veerappa, or was handed by Veerappa to him, andalleged that it was handed to him by the plaintiff himself; deniedany fraud or collusion with Veerappa, and admitted that he endorsedthe note to K. P. Silva. He also, as Veerappa had done, set up thelegal objection that there was a misjoinder of causes of action,because the cause of action against him was distinct from thatagainst Veerappa.
The issues settled included the following :—Was the note handedby the ■daintiff to Veerappa, and was he to keep it till the plaintiffinstructed him to hand it to Harmanis; or was it handed to Harmanisby the plaintiff ? And if the former, did Veerappa hand it toHarmans in collusion with him and with intent to defraud theplaintiff ? And did Harmanis pay consideration for the note ?
So far there had been no hint of the real defence, or of the realnature of the transaction between the parties, as it was afterwardsdisclose* by the evidence. The evidence showed, as the DistrictJudge rightly found, that the plaintiff had bought a half Share in apiece of land, and brought a partition action against the owner ofthe other half, who claimed the whole of it; and he then madea bargain with Harmanis, who was a Police Headman, that ifHarmanis would give evidence in his favour to support his title,he would sell his share of the land to Harmanis for Rs. 2,250. Inpursuanc of that bargain each party signed a note for Rs. 1,000in favour of the other.; and the notes were deposited with Veerappaas stake-holder. When the partition action came on for trialHarmanis was cited as a witness, but the case was settled withouthis being called upon to give evidence, and one-half of the land wasallotted to the plaintiff, and he afterwards sold it to another person
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for Rs. 2,750. Veerappa did not give evidence in the present case,and we do not know the circumstances under which, or the datewhen, he gave up the plaintiff’s note to Harmanis, or the date whenthe plaintiff sold the land ; but Harmanis says that he assigned thenote to Silva in August, 1907, which was the month in which thepartition action was tried. The probability is that the defendantsthought that the plaintiff had broken his bargain, and that Harmaniswas entitled to the note.
The District Judge held that the consideration for the note wasillegal; that the headman was prostituting his headmanship for gainand was trafficking in perjury ; that the plaintiff had to rely on anagreement which was illegal; and he accordingly dismissed the action.
The plaintiff cannot succeed against either of the defendants,except by proving that they iarted with his note in breach of hisagreement with them. The Judge was right in holding the agree-ment to be immoral and illegal. The headman agreed to give evidencein favour of the plaintiff’s case; if he was merely to give trueevidence of what he knew, there was no need to bribe him; butone cannot doubt that both parties understood that he was not toconfine himself to telling the truth, but was, if necessary, to give suchevidence as would enable^the plaintiff to win his case. I hope thatthe District Judge would report to the proper authority Harmanis’conduct in making such a bargain and in giving false evidence ; forif the finding of the District Court is right, Harmanis’ evidence as tothe circumstances under which he obtained the note was false. Butthe plaintiff cannot succeed in this action against Harmanis.
As regards Veerappa, perhaps on the authority of Hampden v.Walsh1 and similar cases the plaintiff would have had a right, beforethe unlawful agreement was carried out, to repent and repudiate itand demand his note back from the stake-holder. But he doesnot allege in his plaint that he demanded the note back beforeVeerappa had parted with it, and there was no issue as to that. Hedoes say in the course of his evidence that he informed Veerappathat Harmanis had not given evidence, and that the notes shouldnot be handed over, and also that he asked Veerappa for the othernote (the one given by Harmanis); but it is not clear when all thintook place, and it seems that the plaintiff did not repudiate theagreement, but claimed that in pursuance of it he was entitled to thetwo notes. I think that his claim against Veerappa also must fail,because it is founded on an alleged breach by Veerappa of an un-lawful agreement, and that the appeal should be dismissed with costs..
Wendt J.—
I take the same view as that expressed by the Chief Justice, andthink that the appeal should be dismissed with costs.
Appeal dismissed.
1909.May 5.
Hutchinson
C.J.
.1 (1876) 1 Q. B. D. 189.