015-NLR-NLR-V-05-CADER-SAIBO-v.-FERNANDO.pdf
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1901.
March 27.'
CADEB SAIBO «. FERNANDO.
D. C. Colombo, 12,547.
Promissory note—Action by endotsee against maker—Endorsement in blank-*-Effect of euoh endorsement—Right of- holder in due course to sue—Bills ofExchange Act, .1882, s. 84, sub-section 4—Conversion ■ of endorsement inblank into special endorsement—Onus probandi—Amendment of pleading.
Where a promissory note was endorsed in blank, and below suchendorsement there appeared the words “ Pay the National Bank otIndia, Limited, or order,” followed by the signature “Ye A. SidambaramChetty,"—
Held, that these words did not convert the note, which had beenendorsed, in blank, into a note payable to a special endorsee, becausethere was no direction written above the endorsee’s signature (as requiredby the Bills of Exchange Act, 1882, section 34, sub-section 4) to pay thebill to,., or the order of, himself or of some other person; that, in failureof a- reconversion of the note into one payable to a special endorsee, thenote was a note payable to bearer; and that a holder in due course maysue on it, without proving how he came by it.',
The duty of proving that he is not the – lawful holder lies on the. defendant.
Pleadings are not to be amended by the parties, but by the judgeafter hearing the parties.
A
CTION by endorsee against the maker of two promissorynotes, each for Rs. 500. The first note ran as follows:—
“ Colombo, 7th March, 1898.
“ bn the 1st day of November, 1898, I, the undersigned, promise“ to pay to M. T. Ossen Saibo, Esq., or order, at the Bank of Madras,“ Colombo, the sum of Bs. 500 currency, for value received.
“ Julian,Fernando.”
This note bore endorsements as follows: —
‘‘ M. T. Ossen Saibo.”
” Per pro. M. Cader Saibo & Co., N. Ibrahim.”
” K. P. N. Arunasalem Chetty.”
"Pay the National Bank of India, Limited, or order, Ye A.Sidambaram Chetty.”
• “ Received payment for the National Bank of India,' Limited.John Laidlaw.”
Hie plaint alleged “ that the said M. T. Ossen Saibo endorsed“ and delivered the said note to the plaintiff, who endorsed the same” to K. P. .N. Arunasalem Chetty, and that the said note was duly“ presented for payment at the said Bank of Madras and was“ dishonoured,” &c.
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The other note made in favour of M. L. L. C. Marikar bore thefollowing endorsements:—
“ M. L. L. C. Marikar."
“ M. T. Ossen Saibo.”
“ Per pro. M. Cader Saibo, N. Ibrahim."
“ Ku Ye Arunasalem Chetty."
“ Pay the Equitable Loan Company of Ceylon, Limited, or order,Mu Ru Na Periya Karuppan Chetty.”
As regards this note, the plaintiff’s allegation was " that the said“ M. L. L. C. Marikar endorsed the said note, to M.”T. Ossen Saibo," who endorsed the same to Ku Ye Arunasalem Chetty, and that“ the said note was duly' presented for payment a^ the said bank" and was dishonoured,” &e.
Wherefore the plaintiff prayed for judgment for the aggregatesum of Bs. 1000, &c.
The defendant in his answer admitted- the making of the pro-missory notes, but pleaded that he signed them, without receivingany consideration, for the accommodation of the payee, M. T. OssenSaibo; that it was agreed that in case the notes were dishonouredthe defendant was not to be held liable; and that the plaintiff,having taken, the note with notice of dishonour, took it subjectto such agreement.
The learned District Judge, before framing the issues, desiredthe plaintiff to amend his plaint so as to show how he became thelawful holder of the notes, because " after his endorsement toArunasalem Chetty he ceased to be the lawful holder."
The counsel for the plaintiff refusing to amend the plaint,defendant’s counsel moved that plaintiff’s action be dismissed, andthe District Court dismissed it.
Plaintiff appealed.
Wendt (with him Van Langenberg), for appellant.—It is ad-. mitted that plaintiff is the endorsee of the notes. They are nowpayable to bearer, and plaintiff need not prove how he came bythem. He holds them, and is entitled to sue on them withoutamending his plaint in order to show how he came by them.[Bonser, C.J.—It is for the District Judge to amend pleadings,not for the parties to the suit. How was be led into this wrongdecision?]
Sampayo, for defendant, respondent.—The note is not payable tobearer, but to Ossen Saibo or order. He endorsed- it in blank anddelivered it to Cader Saibo, who endorsed it specially. [Bonser,C.J.—Is that special endorsement written over the endorser’ssignature according to sub-sectiorr 4 of section 34 of the Bills ofExchange Act?] Supposing it is not, it does not follow that any
1901.March 27.
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1901. subsequent holder can sue on it. [Lav?bib, J.—The point is thatMarch 27. {or ^ran't of a special endorsement in terms of section 88 of the*English Act, 1882, the notes in suit are notes payable to bearer andany holder Can sue upon them.] The note ceased to be negotiablewhen there was a speoial endorsement on it. The section in theEnglish Act applies to endorsers in general. [Bonser, C.J.—On. these notes there is only one endorser in blank, and the sectionapplies to that endorser, Other so-called special endorsements-are not really so, according to the Act.] In D. (’., Colombo,11,501, decided on the 18th August, 1898, the payee endorsed,the note in blank to -the plaintiff, and Your Lordship held thathe was entitled -to sue as holder, but as he specially endorsed itto a company, or order, the company became the owners of thedocument and were the only persons entitled to sue on it; and thatas the company had not endorsed it over to the plaintiff, he had noright to sue, Mr. Justice Withers agreed with Your Lordship andthe order of the District Judge was "reversed. [Bonser, C.J.—Nothing in that judgment seems inconsistent with what I' now"say. It all depends upon the position of the special endorse-'ment, whether it is above or below the signature, of the endorserin blank. What is your real defence?] Plaintiff has not shownhow he came by the note after he has endorsed it over. [Bonser,C.J.—He need not do that, as he says in effect that he is theholder in due course. It is for you to show that he is not thelawful holder.]
27th,March, 1901. Bonser, C.J.—
This is a very simple case. The plaintiff sues the' maker of apromissory note upon his note. Plaintiff alleges himself to bethe holder in due course of that note and produces it. His piaintwas accepted by the District Judge, but when the case came on forsettlement of issues .the District Judge called attention to certainendorsements on the back of the note and said that the plaintiffdid not state how the plaintiff became the holder of the note, andhe invited the plaintiff’s counsel to amend the plaint.
The plaintiff’s counsel properly declined to do that which hehad no power to do, and then the defendant’s counsel pressed theDistrict Judge to dismiss the action, which he accordingly did.
Now, we have over and over again said that the parties cannotamend their pleadings, but that it is for the District'Judge, whenhe has ascertained what are the issues of fact and law in disputebetween the parties, himself to amend the pleadings, if he thinksany amendment is necessary after hearing what the parties • ortheir counsel have to say.
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Now, this note .was made by one Julian Fernando, ■ who. promised. . 1901.
“ to pay M. T. Ossen Saibo, or order, the sum of Ha. 500 ” op a March 27.
certain date. The payee, Ossen Saibo, endorsed that note, in' blank, Bomsbb, C.J.
and thereupon it became . a note payable to bearer. Below that.
endorsement in blank-there are certain. other. endorsements, and
one of those endorsements is in these terms: ” Pay to the National
Bank of India, or order,” and signed by a person who would
appear to be the then holder of the note. There is also endorsed the
signature of the present plaintiffs, Gader Saibo & Co. But that' ia
not in form a special endorsement; it is merely their name
written across the back of the note. The note having gotvback
into the hands of Cader Saibo & Go., the District Judge held that
it was necessary for the plaintiff to show how he became possessed
of this note after apparently it had been in other hands, and to
trace the devolution of title.
It seems to me that in this he was wrong. When the notewas endorsed in blank by Ossen Saibo, the payee, it became anote payable to bearer and became negotiable, so that any holdercould sue upon it.
There is no doubt that a note which has been thus endorsedin blank and converted into a note payable to bearer can bereconverted into a note payable only to a special endorsee, if theprocedure laid down in section 34 of the Bills of Exchange Actof 1882, sub-section 4, is followed. That section provides that“ when a bill has been endorsed in blank any holder may convert
the blank endorsement into a special endorsement by writing“ above the endorser’s signature a direction to pay the bill te, or“ to the order of; himself or of some other- person.” Now, it isplain on the face of it that this was not done in the case of thispromissory note. There is no direction written above theendorser’s signature on the .note such as is referred to in thatsub-section.
But I understood Mr. Sampayo to argue—and he argued it moststrenuously—that the endorser’s signature referred to’ in thatsection meant the signature of anybody who liked to write his nameacross the bill, and that, if a direction was written over his oldsignature on the back. of the note by the holder' for the time beingfor payment to himself or order or' to some other person, that •converted the note back again into a note payable to order.. Itseems quite clear that that is not so. The endorser’s signature,means- the signature which converted the note into a note payableto bearer. There is no suggestion that it can be converted intosuch a note in any way other than that pointed out in this section,-and as that course has not been followed in this case it appears
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1001
March 27.Bonseb, C.J.
me that the note is still a note payable to bearer, and that aholder in due course can sue upon it, subject, of course, to allproper defences that can be raised to such action, it is open to thedefendant to allege and prove that the plaintiff is not the holder.in due course, or that he has no title, or that he had taken thatnote 'with knowledge of some infirmity which would disentitlehim to sue. But these are questions which,- if they are intendedto be raised, must be raised by proper issues and decided at thetried.
Lawrie, J., agreed.