Thamboo V. Philippu Pillai Et Al.,

1930 Present: Garvin A.C.J, and Maartensz A.J.

THAMBOO v. PHILIPPU PILLAI et al.

72-D. C. Jaffna, 25,277.

Promissory note-Given as additional security for mortgage debt-Discharge of debt- Note endorsed for valuable consideration -Action by endorsee.

A promissory note was given by way of additional security for a mortgage debt. After the debt was discharged, the promissory note was endorsed for valuable consideration to the plaintiff, who took it without notice of the circumstances.

Held, that the plaintiff was entitled to recover.

THIS was an action brought by the ' endorsee of. a promissory note. It was pleaded in defence that the note had been given as additional security for a debt due upon a mortgage bond which had been discharged. The learned District Judge dismissed the action on the ground that the plaintiff was aware of the circumstance that the note was given as security for the mortgage bond.
Nadarajah, for plaintiff, appellant.- There is no evidence in this case to rebut

the presumption that the plaintiff-appellant is a holder in due course, while the evidence of the payee clearly supports that presumption. The learned District Judge is wrong in holding that the promissory note sued on has been discharged by payment, for that is not the plea for the defence. An attempt has been made to prove that the promissory note sued on was given as additional or further security for a debt due upon a mortgage bond ; and that the mortgage bond having been paid, the promissory note was automatically discharged. To bring this case within the ruling of the Divisional Bench in Jayawardena v. Rahiman Lebbe,1 it must be shown that the promissory note was discharged by payment. The correctness of the ruling in the said case was doubted by Jayewardene J. in Muttucarpen Chetty v. Samaratunge.2 The case that is on all fours with the present one is Glasscock v. Balls,3 and the remarks of Lord Esher apply with great force to the present one. It is submitted that the decision in Glass-cock v. Balls (supra) is binding on this Court.

July 21, 1930. GARVIN A.C.J.-

This was an action by the endorsee of a promissory note. The defence was that the note had been given as additional security for a loan which had been secured by mortgage bond No. 7,206 of December 5, 1921, the defendants alleging that the plaintiff took the promissory note with full knowledge of the circumstances. He further pleaded that the mortgage bond had been duly paid and discharged. The case went to trial on the following issues :-

1. Was the promissory note given as additional security for the payment of the mortgage bond No. 7,206 of 1921 ?

2. Was the plaintiff aware of the circumstances under which the note was given ?

The learned District Judge found on both issues in favour of the defendants, but after a careful consideration of the

Foot notes

1 (1919) 21 N. L. R. 178.
2 (1924) 26 N. L. R. 381.
3 (1889)24 L.. R. Q.B. D. 13.

evidence I am unable to see any evidence which justifies the conclusion that the plaintiff had knowledge of the circumstances that this promissory note had been given as additional security for the mortgage bond referred to or that he was aware at the time he took the note that the mortgage bond had been paid. The mere fact that he is said to be a cousin of the payee is not of itself sufficient to justify this conclusion where there is no direct evidence on the point and no evidence establishing other circumstances which would justify such an inference, nor am I satisfied that consideration was not given for the promissory note. There is definite evidence upon the point proceeding from the payee and endorser that he did give consideration and I can see no sufficient reason for holding that consideration was not given. The learned District Judge is disposed to discredit the testimony of the payee, but nothing has been shown in his cross-examination or in t

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