128-NLR-NLR-V-16-SENDIRIGAPITIYA-v.-DEMALAMANE.pdf
( 478 )
1018.
Present: De Sampayo A.J.
SENDIRIGAPITIYA DEMALAMANE.
428—C. R. Kurunegala, 21,376.
Promissory note—Option to pay money or transfer lands—Collateralsecurity—Promise to pay—“ Borrow.”
The following document was held not to be a promissory note :—
W, in a pecuniary need, have borrowed and received thesum of Rs. 150 from K, and promised to pay interest at 12£ cents
for Rs. 10 per mensemon demand unto the said creditor
on the said sum.
That further, in default of payment as such, it is herebysincerely promised …… to sell and transfer all the shares of
lands belonging to me unto the said creditor only for the
estimated value.
Signed on two stamps (10 cents).
T
HIS was an action to recover a sum of Rs. 150 and intereston the document set out in the headnote. The learned
Commissioner of Requests (G. W. Woodhouse, Esq.) held that thedocument was invalid as a promissory note and dismissed plaintiffsaction. He appealed. •
( 479 )
Balasingham, for the plaintiff, appellant.—After the plaintiff hadobtained judgment against the executor, de son tort of the deceasedmaker of the document sued upon, another person who claims to bean heir of the deceased moved that the decree entered be vacated.The order of the Judge vacating the decree and setting the casefor trial on the merits is wrong. [V. Grenier.—There is no appealagainst that order. This is a case for the recovery of money, andonly points set out in the appeal petition could be considered inappeal.] Objection was taken to the vacating of the decree at theproper time, but the Commissioner over-ruled the objection.
The Commissioner was wrong in holding that the document suedupon was not a promissory note. There is an ° unconditional pro-mise to pay a sum certain in money.*’ [De Sampayo A.J.—Thereis no promise to pay the principal. The document appears to beonly a receipt.] The word ” borrow ** clearly shows that the moneyhas to be repaid. The document is in Sinhalese, and we shouldfind out the intention of the parties. If the document was merelyintended to be a receipt, the words used would have been “ havereceived Rs. 150,” and not ” borrowed and received Rs. 150.”
The first part of the document satisfies all the requirements ofthe definition of a promissory note.
The addition of the second portion does not vitiate the note.Sub-section (3) of section 83 of the Bills of Exchange Act enactsthat ** a note is not invalid by reason only that it contains also apledge of collateral security with authority to sell or dispose there-of.” The second portion is nothing more than a collateral security.It has been held that a promissory note is not the less a note be-cause it contains a recital that the maker has deposited title deedswith the payee as a collateral security, or a pledge of collateralsecurity with power to sell. See Byles on Bills 13 (17th edition)citing Wise v. Charlton,1 Fancourt v. Thome.2 [De Sampayo A.J.—The words used in the document are not words used for creating amortgage.] It is a paraphrase of the word ” mortgage.” Insteadof saying “ I mortgage,” the maker says ” I give you the right tosell my lands in case I make default.” [De Sampayo A.J.—Thewords indicate an alternative obligation—to pay money or to sellland.] That may be said in a sense of every mortgage. Themortgagor says, in effect, “ I promise to pay the sum borrowed, orin default I authorize you to sell my lands.”
The second portion of the document must be treated as a surplus-age, as the document has not been notarially executed. It does notaffect the validity of the first portion.
1918*
Sendirtga*pitiya o.Demalamene
V. Grenier, for the substituted defendant, resjwndent, not called• upon. i
i (2886) 4 A. & E. 786.
Cur adv. vult.a (1846) 9 Q. B. 312.
4W3.
( 480 )
November 28, 1018. De Sampayo A.J.—
8endiriga- The question on this appeal is whether the document on whichrSnflSfltnfltip action is brought is a promissory note. It acknowledges thatthe party to it borrowed aaum of Bs. 150, on which interest is agreedto be paid at 12£ cents per Bs. 10 per mensem on demand to thecreditor, his heirs, executors, administrators, and assigns, and itthen proceeds to provide that in default of payment the partyshould transfer to the creditor all the shares of land belonging toand possessed by him, for the estimated value. The documentcontains no express promise to pay the principal sum of Bs. 150.But it is argued that there is a necessary implication to that effectin the use of the word " borrow.’* I cannot hold that this wordnecessarily implies a promise to pay, or that the language of thedocument satisfies the requirements of the law relating to promissory' notes in that respect. Even if there were an implied promise, topay, it is hot an absolute promise to pay money. It seems to me. that the promise at all events is in the alternative, and that theparty has the option to pay money or to transfer the lands at avaluation. Mr. Balasingham for the plaintiff referred me to the.cases in which it has been held that an instrument'which is other-wise good as a promissory note is not vitiated by reason of itscontaining a collateral security. In my opinion these cases arein no way applicable to the present case, where the agreement totransfer lands is not collateral but goes to the substance of thewhole transaction and indicates the main object of the instrument.Then it was contended that, as the agreement to transfer land wasinoperative under our Ordinance No. 7 of 1840, it should be treatedas mere surplusage. That cannot be done. The agreement may beinvalid, but it must be looked at in construing the instrument as awhole. It is true that no particular form of words is essential tothe validity of a promissory note, but the form must be such as toshow the intention to make a note. It is far from clear that thedocument was intended, even by the parties, to be a promissorynote, and I think that the alternative agreement- which gives to thedebtor an election vitiates the entire instrument as a promissorynote (Follet v. Moore *). See also Chalmers* Bills of Exchange (7thedition) 10, where the author refers to the old case of ex parteImeson2 in which an order to pay “ in cash or Bank of Englandnote*’ was held invalid'. This kind of negotiable instrumentappears to be allowable in the United States, but we must follow theEnglish law on the subject.
In my opinion the Commissioner rightly decided against the. plaintiff, and I dismiss the appeal with costs.
Affirmed.
i (18*9) 4 Exch. 41$.
* (1814) Rose m.