073-NLR-NLR-V-08-MANTHIRA-NADAN-v.-KULANTHIVEL.pdf
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1005,
November 15.
MANTHIRA NAD AN v. KULANTHTVEL.
D. C., Colombo, 21,685.
Accountstated—Crossaccounts—Strikingbalance—Acknowledgment . in
writing—Prescription Ordinance (No. 22 of 1871), sections 8, ■ 18,
15..o
Where the plaintiff and the defendant had cross accounts and ona particular day the state of accounts between them was examinedby them both in each other's presence, and a balance struck, whichthe defendant admitted to be correct— .
Held, that there was a " valid account stated " between theparties within the meaning of the Prescription Ordinance, notwith-standing the absence of any written acknowledgment on .the part'of the defendant.
Ashby v. James (11 M. and W. 542) followed.f’J’lHE facts and arguments appear in the judgment.
, Bawa and E. W. Perera, for appellant.
Van Langenberg, A.S.-G., and F. M. de Saram, for respondent.
15th November, 1905. Wood Renton, J.—
In the present case the plaintiff-respondent, as administrator of oneMuttu Nadar, sued the defendant-appellant for a sum of Rs. 366.65,being the balance of an alleged account stated between themfor goods sold and delivered between the 30th June, 1895, and the30th October,. 1902. Two issues were framed raising respectivelythe questions of the sale and delivery of the goods and the stating ofthe accounts as the plaintiff alleged. We were informed by counselfor the defendant that the point as to whether the plaintiff’s claimwas barred by prescription (see “ The Prescription Ordinance, 1871,”sections 15, 8, 13) was argued in the court below. No reference,however, to the question of prescription appears in the record, andthe learned District Judge .decided the case in the plaintiff’s favoursimply on the ground that the evidence clearly established the fact ofan account having been stated between the parties. In regard to thatissue the material facts were these. The plaintiff alleged that therehad been a course of transactions between his intestate and thedefendant; that on the 30th October, 1902, the state of accounts bet-ween them was examined by them both in each other’s presence; thatthe balance of Rs. 366.65 sued for in the action was struck; that thedefendant acknowledged it to be correct; and that there weretransactions of later date and similar character between them. Theseallegations were denied by the defendant, but the learned DistrictJudge believed the plaintiff’s story, and we accept his finding on thatpoint as correct. We have satisfied ourselves by referring to the
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books that the transactions between the parties were in the nature of 1905.mutual or cross accounts. Mr. Bawa, for the defendant-, argued that fftwemfrer 15even accepting the plaintiff's version of the facts as the true one, his Woooclaim was barred by prescription, inasmuch as the account stated Renton»J*had been settled orally, and it has been held by the Supremo Courtof this Colony that such a parol accounting is insufficient .to take acase out of section 13 of “ The Prescription Ordinance, 1871," whichrecognizes only written acknowledgments of indebtedness as arrestingthe operation of that enactment {Kappoor Saibo v. Mudalihami Baas(1903), 6 N. L. jR. 216). Mr. Bawa further relied on the English caseof Cottam v. Partridge (1842) 4 M. and G. 271, in which it was heldthat an open account between two tradesmen for goods sold by eachto the-other, without any agreement that the goods delivered on theone side should be considered as payment for those delivered on theother, did not constitute such an accounting as would bring the casewithin the exception of the English Statute of Limitations (21 Jac. I.
C. 16, S. 3) in regard to merchants’ accounts. In the same case itwas held that since Lord Tenterden’s Act (9 Geo. IV. c. 64, s. 1) theexistence of items within six years in an open account will notoperate to take the previous account out of the Statute of Limita-tions. The same principle was laid down by the Supreme Courtin the recent case of Usuf Saile v. Punchi Menike (1904 1 Balasin*gharrv, 36. But in none of the cases—whether English or Colonial—that I have cited had there been any mutual dealings between theparties or had a balance been struck by consent on cross accountsbetween them. The effect of such a state of matters was, however,considered in England in the case of Ashby v. James (1842),
11M. & W. 542. In that case there had been mutual accounts between -the parties. .A short time before the action the plaintiff and defendant- met for the purpose of adjusting the accounts between them.. Onthe plaintiff’s demand being read, the defendant said it was correct,but claimed a set-off. His set-off was also investigated, and finallya balance was struck in favour of the plaintiff for a certain sum. Itwas contended on behalf of the defendant that his mere parol ac-knowledgment of the debt, by virtue of the express provision ofLord Tenterden's Act, that acknowledgments in order to be effec-tive must be in writing, was insufficient to take the case out of thestatute. The Court of Exchequer, however, overruled this conten-tion and gave judgment for the plaintiff. It is obvious that the facts ,of this case bear the strongest analogy to those with which we havenow to deal, and that the decision, if applicable in this Colony, willgovern the present appeal. In both the Ceylon cases above-men-tioned (Kappoor Saibo v, Mudalihami Baas and Usoof Saile v. Punchi28-
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1905.
November 15.
WoodRenton, J.
Menike) it was assumed (see 6 N. L. E, 219 and 1 Balaaingham, p. 38),that mutual accounts would stand in a different position fromaccounts which were all on one side, and'Sir Charles Layard, C.J.,expressly refers to Ashby v. James as embodying a “ quite intelli-gible ” principle where it applies.
We have , now, however, apparently for the first time, to considerwhether Ashby v. James ought to be followed*in this Colony. I amof opinion that this question should be answered in the affirmative.I cannot see that the ratio decidendi in that case in any way dependson the English doctrine of consideration. Both Lord Abinger, C.B.,and Baron Alderson treat the striking by mutual consent of a balanceon cross accounts, as an appropriation by the parties of items on theone side to the satisfaction pro tanto of the account on the other side.It is true that Baron Rolfe speaks, in the terminology of English law,of a “ new consideration ” arising out of the transaction for a promiseto pay the balance. It appears to me that this is only another wayof stating, as was stated by Mr. Justice Moncreiff in Kappoor Saibov. Mudalihami Baas (6 N. .L. R.t 218), that if a claim for goods soldand delivered is based on a valid account stated “ the plaintiff is notsuing for goods sold and delivered, nor in a sense possibly upon anyacknowledgment of liability for, or promise to pay for goods soldor delivered, nor upon a continuing contract. He is suing upona new contract, upon a new cause of action which is independent ofhis liability to pay for goods sold and delivered.”
Mr. Bawa pressed us finally with a decision of Mr. Justice Mon-creiff in a case (Horsfall.v. Martin (1900), 4 N. L. R. 70) which camebefore him on appeal from the Court of Requests. It was there heldthat though money due for goods sold and delivered on three months'credit may be money due upon an unwritten promise, yet the actionbrought for the recovery of it falls under section 9 of “ The Pre-scription Ordinance, 1871,” and as such is prescribed within one yearafter the'debt became due. I do not think that this decision-canfind any application here. If, as I hold, following the principles laiddown in Ashby v. James, the striking by consent of a balance on mutualaccounts creates a valid account stated ” within the meaning of thePrescription Ordinance, then, as Mr. Justice Moncreiff has himselfpointed out in the passage quoted above, a claim for goods sold anddelivered based on that account is no longer an action for goodssold and delivered. It is an action on an account stated, as to whichthe Legislature has fixed the prescriptive period at three years. Thedecision of the learned District Judge must, in my opinion, be affirmed.
Grenier, J.—I entirely agree.