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JAYAWARDENA v. RAHAIMAN LEBBE
NLR21V178
1919
[Full Bench.]
Present : De Sampayo J., Schneider A.J., and Loos A.J.
JAYAWARDENA v. RAHAIMAN LEBBE.
114- C. R. Gampola, 3,539.
Promissory note payable on
demand - Payment - Negotiation after payment-Bills of Exchange Act, ss. 36
(1) and 59 (1).
When a promissory, note payable on demand is paid by the
maker, it ceases to be a note. Negotiation after the date
of payment does not give any right to the endorsee to sue on it.
THE
facts are set out in the judgment.
Bartholomeusz, for plaintiff, appellant.-If the law be as laid down in
Tenna v. Balaya,1[1 (1908) 12 N. L. R. 27.] it would
seriously affect the negotiability of promissory notes. Then payment unknown to
the endorsee would be a defence. It is the duty of the holder to deliver the
bill when he is paid (section 52 (4), Bills of Exchange Act, 1882). When the
maker does not get it back, he must suffer the consequences.
Section 31 (1) enacts that a paid bill is not negotiable. But if a third party
takes a bill not overdue without any notice of any defect in the title, he is a
holder in due course (section 29), and acquires all rights under section 38.
[De Sampayo J.-The bill
will no longer be a bill, but mere waste paper. (Chalmers' Bills of Exchange
Act, note to section 36 (1), 6th edition, p. 120.)]
That passage is not a part of the Act. A holder in due course is not affected by
any defect of title or defences available to prior parties (section 38 (2) ).
Want of title is only a defect of title.
In Marikar v. Carolis 1 Perera J.
differs from the decision of Tenna v. Balaya.2 In Tenna v. Balaya 2
the rights of a holder in
due course were not considered.
Counsel also cited Silva v. Wijesekera 3 and (1873) L. R. 8 Q. B. 380.
A St. V. Jayawardene, for defendant, respondent.-The note was overdue,
because it had been paid at the time of the endorsement. After payment a note is
dead for all purposes. A note payable on demand is always mature, and if paid
at maturity, it ceases to be negotiable. It is not a defect, but renders the
note a nullity (section 36 (1) ). (9 Barnwell & Cresswell130, 1 Parry &
Davidson 207.) Payment before maturity would not be payment in due course (3
Camp. 93). In Marikar v. Carolis 1 the question of payment was not
considered. In this case the endorsee can proceed against Mr. Phillips.
Counsel also cited 7 M. & W. 174, (1854) L. J. 20 Q. B. 261, and 2 Hals. 549.
Cur. adv. vult.
October 15, 1919.
De Sampayo J.-
This case has been referred by my learned colleagues to a Bench of three Judges
for the decision of a point of law. This is an action on a promissory note for
Rs. 200, payable on demand made by the defendant on March 18, 1916, in favour of
one J. D. Phillips, and endorsed by the latter to the plaintiff. It is agreed
that the defendant paid or satisfied the amount of the note on August 24, 1916,
while it was still held by Phillips. But it appears that Phillips, who retained
the note fraudulently, endorsed it to the plaintiff on September 18, 1917. The
question for decision is whether, on the footing that the plaintiff had no
notice of the previous payment and gave consideration for the endorsement to
him, the defendant is liable to the plaintiff on the note.
Section 36 (1) of the Bills of Exchange Act declares that " where a bill is
negotiable in its origin, it continues to be negotiable until it has been
restrictively endorsed or discharged by payment. " Payment for this purpose
means payment by the acceptor or maker to the holder at or after maturity.
Section 59 (1) of the Bills of Exchange Act. In the case of a promissory note
payable on demand, the maker is at liberty to pay it at any time after its date.
The defendant duly paid and discharged the note in suit while it was held by
Phillips. Could Phillips thereafter validly ne
