082-NLR-NLR-V-06-SOKALINGAM-CHETTY-v.-DE-HOEDT.pdf
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1902.
September 10and IS.
SOKALINGAM CHETTY v. DE HOEDT.C. R., Colombo, 19,153.
Promissorynote—Materialalteration—Unauthorizedinsertion of rate of
interest—Bills of Exchange Act, 1882, ss. 20 and 62—Rights of holder indue course.
In an action broughtby theendorsee of apromissory noteagainst
the maker for the principal and interest alleged to be due thereon, thedefendant pleaded that he did not stipulate for interest, and that thefiguresappearing on the face ofthe promissorynote as regardsinterest
were inserted without his authority.
Heldthat, though theunauthorized insertionof the rate ofinterest
was amaterial alterationof thenote, yet, assuch alteration was not
apparent to the holder in due course, he had the right, in terms ofsection 64 of the Bills of Exchange Act, 1882, to enforce payment ofthe principal only, according to the original tenor of the note.
T
HE plaintiff in this action sought to recover from the defend-ant a sum of Bs. 120, being principal, and Bs. 120 interest,
alleged to be due to him upon a promissory note made by thedefendant in favour of one Susey Victoria, and by him endorsedto the plaintiff. The defendant denied that there was any agree-ment on his part with the payee of the said promissory note topay interest at the rates of 45 per centum per annum, and that theinsertion of the figures 45 on the, note was made without hisauthority.
The Commissioner, after hearing evidence, entered up judgment,for the plaintiff for Bs. 120, with legal interest from the date ofaction till payment in full. He believed the defence set up wasstraightforward and bore the impress of truth.'
The plaintiff appealed.
The case was argued on the 10th September, 1902.
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Walter Pereira, for appellant.—The defence may bear the impress 1902.
-of truth, but it cannot affect the appellant, who is a holder in due19
course, and who is not proved to have been fixed with the knowledge ’
of the alleged agreement between the maker and payee. On theoefendant’s own showing the note was a printed one and theamount of interest was left blank. If the payee filled the blankup, an innocent endorsee must not suffer, but rather the maker,whose carelessness enabled the payee to get value from the-endorsee. If defendants story is true, he will have his remedyagainst the payee. Bills of Exchange Act of 1882; section 20.
Our. adv. vult.
15th September, 1902. Monchbiff, A.C.J.—
On the 5th December, 1898, the defendant made a note in .favour of one Susey Victoria for a sum of Bs. 120 and, as allegedby the plaintiff, with interest thereon at 45 per cent, per annum.The plaintiff says that Susey Viotoria endorsed the note to him inconsideration of the payment of Bs. 220. The plaintiff then suedthe defendant, the maker of the'note, who was astonished to findthat the rate of interest had been inserted in the note at 45 percent. The note was made upon a printed form, and the rate ofinterest was inserted in the concluding words of the form. Thedefendants says that he did not fill in the interest at 45 per cent, orat any other figure; and the Judge believed him, and I believe him.
The plaintiff say that it is quite immaterial whether the payeeinserted the interest or not, because by virtue of section 20 of theBills of Exchange Act he was entitled to fill in the blank which thedefendant had left. By that provision the holder of the note hasprimd facie authority to insert such an amount as the stamp willcover, and when the note is “ wanting in any material particular ”to fill up the omission in any way he thinks fit.
Now, I have some doubts as to this insertion being in respectof a material particular, beoause, as a matter of fact, the amountof stamp duty is not affected by the interest; that is to say,the stamp which would cover a note for a certain amount issufficient, although that amount when increased by the amountof interest is greater than the value covered by the stamp.However, the fact which we have to deal with here is that, afterthe note was made and given, the rate of interest was insertedby the payee. By section 64 of the Bills of Exchange Act it isprovided that a note is avoided if it is materially altered, exceptas against persons who had a hand in the alteration, or were privyto it, or subsequent endorsers. It appears to have been held thatthere is a material alteration if a specified rate of interest at 8 percent, is altered to 2£ per cent., or if a bill payable “ with lawful
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1902. interest ” is altered by substituting the words “ interest at 6 perSeptember 10 cent.”and 15*
—— Lord Justice Brett says* that any alteration seemB to be material°*Arr which would alter the business effect of the note is used for anybusiness purpose. There is, however, the proviso of section 64 tothe effect that, where the material alteration is not apparent, theholder in due course may avail himself of the note as if it had notbeen altered, and may enforce payment of it according to itsoriginal tenour.
In this case it does not appear that the plaintiff had anything todo with the alteration, and the alteration is not apparent on theface of the note. The plaintiff is therefore entitled to recoverthe amount of the note according to its original tenour. That thedefendant has admitted all along, and it is on that basis that theCommissioner' has given the plaintiff judgment. I agree with theCommissioner’s judgment. The plaintiff’s appeal is dismissedwith costs.
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