066-NLR-NLR-V-16-PALANIAPPA-CHETTY-v.DE-MEL.pdf
( 242 .)
1918.
Present; Pereira J. and Ennis J.
PALANIAPPA CHETTY t>. DE MEL.
36—D. C. Colombo, 34,937
Contracts “ relating to ” promissory notes are governed by the English law,and not by the Roman-Dutch law—Letter from A to B asking himto pay C Rs. 1,000 and guaranteeing to pay the sum if not paid byG—Benefit of excussion.
The test for the determination, of the question whether a contract“ relates ” to a promissory note, and is therefore governed by the’English law in terms of section 2 of Ordinance No. 5 of 1852, is inthe question whether the rights and liabilities of the party to thecontract sought to be made liable thereunder are in any wayaffected by the terms of the note to which it is alleged to relate, orwhether such rights and liabilities can be affected by the possiblelegal situations incidental to the effect and operation of the note.And so where A wrote to B as follows : “ Please give C Rs. 1,000at a reasonable interest on a promissory note for one month. I canrecommend him highly. If he did not pay, I guarantee thepayment.*’
Held, that the contract so established was a contract “ relatingto ” the promissory note taken on the strength of A’s letter, andthat the English law applied to it, and A became liable to be suedas surety before the excussion of the principal debtor.
T
HE facts are set out in the judgment of the Additional DistrictJudge:—
The only question in this action is whether the defendant by docu-ment P 1 rendered himself liable as a principal debtor, or whether heduly rendered himself liable as surety.
The document is as follows : “ Please give bearer, Mr. Thomas de
Almeida of Rupees One thousand on a pro-note for one month.
I can recommend him highly. If he did not pay, I guarantee thepayment.
Jacob be Mel.”
It is addressed to the plaintiff, who lent Almeida Rs. 1,000 on apromissory note dated June 14, 1912, payable at the Bank of Madrason July 10, 1912.
The note was dishonoured for non-payment on July 13, and theamount is still admittedly due to plaintiff.
The defendant contends that the document P 1 only rendered him-liable as a surety, and that he cannot be proceeded against until theprincipal has been excussed.
I am of opinion that the defendant only rendered himself liable assurety, and that the issue framed must be answered in the negative.
IMS.
( 243 )
Plaintiffs counsel contended that the action should not be dismissed,even though the issue was answered in defendant’s favour, but thatthe action should be allowed to stand over till plaintiff had proceededagainst Almeida.
am not prepared to accede to this contention.
It would be unreasonable to have the action hanging over plaintiffindefinitely, and it may be that there might not be any necessity forplaintiff to sue the defendant. It is atso possible that the defendantmay have other defences to set up after Almeida has been sued.
therefore dismiss plaintiffs action with costs.
PolaniappoChetty e.De Af«l
A St. V. Jayewardene, for plaintiff, appellant.—The Englishlaw governs the rights of parties, and not the Boman-Dutchlaw. Section 2 of Ordinance No. 5 of 1852 introduces theEnglish law on all matters relating to promissory notes. This is acontract relating to a promissory note. Under the English law asurety may be sued before the principal debtor. The defendantcannot, therefore, plead the benefit of excussion.
Hayley (with him Canekeratne), for defendant, respondent.—The Boman-Dutch law applies to this case. Section 2 of Ordi-nance No. 5 of 1852 applies only to actions “ arising on or upon abill of exchange.” Here the action does not arise on the pro-missory note. It arises on the guaranty. It makes no differencethat the guaranty was given to cover a loan on a promissory note.The defendant is liable to no one except the plaintiff—the payeeof the note. If the note is circulated, the defendant would not beliable to any holder of the note. That shows that the defendant’sobligation arises from the guaranty and not from the note.Counsel cited Lipton v. Buchanan,1 Raman Chetty v. Silva.2
Cur. adv. vult.
March 6, 1913. Pereira J.—
In this case the plaintiff seeks to render the defendant liable topay him the amount sued for on the footing of document P 1. Thatdocument was granted by the defendant to the plaintiff, and is asfollows: “ Please give bearer, Mr. Thomas de Almeida of Wen-napuwa, Bs. 1,000 at reasonable interest on a promissory notefor one month. I can recommend him highly. If he did notpay, I guarantee the payment.” In compliance with the requestcontained in the document the plaintiff lent Almeida Bs. 1,000 onhis promissory note P % Almeida failed to pay the plaintiff theamount of the note on its due date, and hence the plaintiff sues thedefendant for the recovery of that amount on the footing of his -guarantee contained in document P 1. The question is whether theliability of the defendant on P 1 is governed by the English law orthe Boman-Dutch. Under the Boman-Dutch law the defendant1 (1914) 8 N. L. R. 49.* (1919) 16 N. L. R. 286.
would be entitled to the beneficium divisionis sen excussionis, thatis to say, he would be entitled to compel the plaintiff, before exactingpayment from him, to excuss the principal debtor (Almeida), that is,sue him and take out execution against 'his property; but under theEnglish law a surety may be sued before the excussion of the princi-pal debtor. Equity affords relief in certain circumstances, but suchoircumstances have presumably no place in the present case. Now,section 2 of Ordinance No. 5 of 1852 provides that the law to beadministered in this Colony in respect of all contracts and questionsarising upon or relating to bills of exchange, promissory notes, andcheques, and in respect of all matters connected with any suchinstruments, shall b.e the same in respect of the said matters aswould be administered in England in the like case at the corre-sponding period if the contract had been entered into, or if the actin respect of which any such question shall have arisen had beendone in England. These words are clearly intended to have a verywide operation, and the question in the present case is whether thecontract on document P 1 can be said to be a “ Contract relating toa promissory note.” If it is, the English law would apply. Now,a contract having a mere physical connection, so to say, with apromissory note would hardly fall under the class of contractscontemplated by the Ordinance, as, for instance, a contract pro-viding for the safe custody somewhere of a promissory note. Thetest in a case like the present appears to me to be in the question• whether the defendant’s rights and liabilities are in any way affectedby the terms of the promissory note granted by Almeida, or whethersuch rights and liabilities can be affected by the possible legalsituations incidental to the effect and operation of the promissoryn6te. It is clear that the due date of payment of the money, and'hence of the accrual of the defendant’s responsibility, is to be soughtfor in the light of the law relating to promissory notes, and if thenote in question in this case be indorsed, the defendant’s liabilitywould arise on the failure of Almeida to pay the indorsee, and on theplaintiff being obliged to pay the indorsee as a result of such default.And so on, in a variety of ways, the defendant’s liabilities mayconceivably be affected by matters incidental to the note.
I therefore think that the defendant’s contract P 1 may legiti-mately be said to be a contract “ relating to ” the promissory notein question. I would set aside the judgment appealed from andenter judgment for the plaintiff as claimed with costs.
Ennis J.—
It is conceded in this case that if English law applies the appeal'must be allowed. Ordinance No.. 5 of 1852, Bection 2, says:” The law to be hereafter administered in this Colony in respectof all contracts and. questions arising within the same upon orrelating to promissory notes , and in respect of
( 245 )
all matters concerning any such instruments, shall be the samein respect of the said matters as would be administered in•England”
• The action in this case was on the following document: " Pleasegive bearer, Mr. Thomas de Almeida of Wennapuwa, Es. 1,000 atreasonable interest on a promissory note for one month. I canrecommend him highly. If he did not pay, I guarantee thepayment.” The plaintiff advanced Es. 1,000 to Mr. Thomas deAlmeida on a promissory note on the guarantee of the defendant inthis document, and the promissory note was dishonoured fornon-payment. This document appears to me to be a contractrelating to a promissory note. It is operative on the money beingadvanced on a promissory note, and liability under it is contingenton non-payment of the promissory note at maturity. .
In my opinion it is a matter falling within the scope of section 2 ofthe Ordinance No. 5 of 1852, and English law applies. I wouldallow the appeal with costs, and give judgment for the plaintiff forthe amount claimed with costs.
1913.
Emus J.
Palaniappa•Ghetty v.DeM*l
Appeal allowed,