Present : De Sampayo J.

KARUNAWATTY v. DINESHAMY.

140-C. R. Gampola, 4,048.

Promissory note-Port payment-Subsequent endorsement to holder in due course-Part payment does not bind endorsee in due course-Note payable on demand overdue.

In July, 1917, the defendant made a note for Rs. 122 payable on demand in favour of A. In April, 1918, the defendant paid Rs. 100 to A. Thereafter A endorsed the note to the plaintiff.

Held, that if the plaintiff was an endorsee in due course the payment did not bind him, and that he could recover the full amount of the note.

A promissory note payable on demand as distinguished from a bill of exchange is not overdue by reason only that it had been outstanding for an unreasonable time.

Payment of the full amount due on the note renders the note incapable of further negotiation, but a part payment does not have that effect.

THE facts are set out in the judgment of the Commissioner of Requests (R. B. Naish, Esq.): -

In this case plaintiff sues defendant on a promissory note produced and filed in the case for Rs. 122 dated July 27, 1917. Defendant admits having made the note, but avers payment of Rs. 100 principal and costs Rs. 15.56, interest on the whole amount up to that time, on April 6, 1918, to one Gomas, the agent of the plaintiff's endorser. He. therefore, pays Rs. 22, the balance of the principal, and Rs. 3.63, the interest due thereon from April 7, 1918, to January 27, 1919, into Court, and prays that plaintiff's claim in excess of this amount be dismissed.

There is only one issue, viz., whether defendant did, in point of fact, make the payment of Rs. 100 and interest as alleged.

On the issue of fact I accordingly find for the defendant.

It remains to consider the question whether the plaintiff, if he took -the note without notice of this part payment, is bound thereby. In connection with the question, plaintiff's proctor referred me to D. C. Anuradhapura, 203, Sana Sathaswam v. Ena Vawaweepillai, reported in Tamb. Rep. VII. On reading the judgment in that case I am, however, unable to discover anything directly bearing in the point at issue in this case; and even if it was decided in that case that part payment does not bind a subsequent endorsee without notice, that case must be considered to have been over-ruled by Tenna v. Balaya, [1 (1908) 11 N. L. R. 27.] in which it was held that when payment is made the note is discharged and ceases to be negotiable, and the endorsement and the delivery of the

note after such payment to a third party gives each third party no right to sue on it. In this latter case of Tenna v. Balaya [1 (1908) 11 N. L. R. 27.] the following words from Chalmers on Bills of Exchange were quoted with approval: " Payment and other discharges are sometimes spoken of as equities attaching to a bill, but this seems incorrect- they are rather grounds of nullity. That which purports to a bill is no longer such, it is more waste paper." From this finding the legal inference is that where a bill has been partially paid, it is pro tanto waste paper, i.e., that an endorsee, even without notice, cannot recover more than the balance actually due on the bill. To hold otherwise would be to perpetrate the absurdity of saying that where Rs. 99.99 out of Rs. 100 due on a note has been paid, an endorsee without notice can recover Rs. 100, but that where the whole amount of the bill, i.e., one cent more, has been paid, he can recover nothing.

There is, however, another ground on which the plaintiff is bound by the part payment. It is unquestionable law that an endorsee of a promissory note, who becomes such after the note is overdue, holds it subject to equities, whether he had notice of the equities attaching to the note or not. Now, a demand note, on which even a part payment is made, must be due, and any subsequent transaction in respect of that note must take place when it is overdue. In this cas