Palaniappa Chetty V. De Mel

1913 Present: Pereira J. and Ennis J.

PALANIAPPA CHETTY v. 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 him to pay C Rs. 1,000 and guaranteeing to pay the sum if not paid by C-Benefit of excursion.

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 in the question Whether the rights and liabilities of the party to the contract sought to be made liable thereunder are in any way affected by the terms of the note to which it is alleged to relate, or whether such rights and liabilities can be affected by the possible legal situations incidental to the effect and operation of the note. And so where A wrote to B as follows : " Please give C Rs. 1,000 at a reasonable interest on a promissory note for one month. I can recommend him highly. If he did not pay, I guarantee the payment."

Held, that the contract so established was a contract " relating to " the promissory note taken on the strength of A's letter, and that the English law applied to it, and A became liable to be sued as surety before the excussion of the principal debtor.

THE facts are set out in the judgment of the Additional District Judge:-

The only question in this action is whether the defendant by document P 1 rendered himself liable as a principal debtor, or whether he duly 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 the payment.

JACOB DE MEL."

It is addressed to the plaintiff, who lent Almeida Rs. 1,000 on a promissory note dated June 14, 1912, payable at the Bank of Madras on July 10, 1912.

The note was dishonoured for non-payment on July 13, and the amount 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 the principal has been excussed.

I am of opinion that the defendant only rendered himself liable as surety, and that the issue framed must be answered in the negative.

Plaintiffs counsel contended that the action should not be dismissed, even though the issue was answered in defendant's favour, but that the action should be allowed to stand over till plaintiff bad proceeded  against Almeida.

I am not prepared to accede to this contention.

It would be unreasonable to have the action hanging over plaintiff indefinitely, and it may be that there might not be any necessity for plaintiff to sue the defendant. It is also possible that the defendant may have other defences to set up after Almeida has been sued.

I therefore dismiss plaintiff's action with costs.

A St. V. Jayewardene, for plaintiff, appellant.-The English law governs the rights of parties, and not the Roman-Dutch law. Section 2 of Ordinance No. 5 of 1852 introduces the English law on all matters relating to promissory notes. This is a contract relating to a promissory note. Under the English law a surety may be sued before the principal debtor. The defendant cannot, therefore, plead the benefit of excussion.

Hayley (with him Canekeratne), for defendant, respondent.- The Roman-Dutch law applies to this case. Section 2 of Ordinance No. 5 of 1852 applies only to actions " arising on or upon a bill of exchange." Here the action does not arise on the promissory note. It arises on the guaranty. It makes no difference that the guaranty was given to cover a loan on a promissory note. The defendant is liable to no one except the plaintiff-the payee of the note. If the note is circulated, the defendant would not be liable to any holder of the note. That shows that the defe

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