Swaminathan Chetty V. Gordon Douglas Et Al.,

1931

Present: Lyall Grant J. and Maartensz A. J.

SWAMINATHAN CHETTY v. GORDON DOUGLAS et al.

286-D. C. Colombo, 31,784.

Contract Illegal consideration-Money lent to Turf Commission Agent-Share of profits-Promissory note.

Where the plaintiff lent money to the defendants on a promissory note for the purpose of carrying on business as Turf Commission Agents and the defendant agreed to give the plaintiff a share of the profits in the business as part consideration for the loan,-

Held, that the money was not recoverable.

THE plaintiff sued the defendants on a promissory note for the recovery of a sum of Rs. 4,000 with interest. Only the third defendant filed answer, and stated that the note was granted to the plaintiff on his undertaking among other things, to enter satisfaction of a judgment in a case and to apply the balance in financing the business of Turf Commission Agents, carried on by the defendants. At the trial, certain issues were framed of which the fifth was as to whether the consideration for the note was illegal. The third defendant gave evidence and produced an agreement having reference to the loan. This agreement was signed by all the defendants only. But the plaintiff admitted that he agreed to its terms. He further admitted that the defendants agreed to pay him 15 per cent, interest and in addition agreed to give him a share in the profits of a bucket shop. The learned District Judge, however, held that the loan was not in fact used for purposes of the Turf Commission Agency and gave judgment for the plaintiff.

H. E. Garvin, for defendant, appellant.- The plaintiff admits that the money was lent to the defendants for the purpose of carrying on the business of Turf Commission Agents. It was even part of the agreement that the plaintiff was to take a share of the profits. The money is therefore not recoverable at law. He who lends another money with which to gamble or wager has no right to recover it. (Walter Pereira's Laws of Ceylon, p. 600 ; Van Leeuwen 4-14-5 ; Halsbury, vol. XV. p. 278).

Hayley, K.C. with him E.F.N. Gratiaen, for plaintiff, respondent.-The evidence discloses that the defendants did not require money to pay their losses on wages. The money lent by the plaintiff was therefore clearly employed for some other purpose. It has been held in England that a loan to bookmakers is recoverable where there is no evidence of the illegal purpose of the loan, for the money may have been required for rent, salaries, &c. (Humphrey v. Wilson [ (1929) 141 L. T. 469.] )

Under the Trusts Ordinance, No. 9 of 1917, section 86, a person to whom property is transferred for an illegal propose which is not carried out into execution holds the property in trust for the transferor. The plaintiff is therefore entitled to recover his money unless there is strict proof that the money was spent, and lost, by the defendants on the wagering contracts.

The evidence discloses that the defendants were successful in the Turf Commission Agency business. The money is therefore recoverable at law. If A successfully stakes money on B's behalf on a wager, B is entitled to recover the proceeds from A. (Maasdorp III., 28.)

Garvin, in reply.

March 30, 1931. LYALL GRANT J.-

This is an appeal from a decision of the District Judge of Colombo rejecting the defence in an action on a promissory note. The plaintiff is a Chetty and he sued the defendants on a promissory note dated December 21, 1928, for the sum of Rs. 4,000, with interest thereon at the rate of 15 per cent, per annum.

There were three defendants, but only the third defendant entered a defence. He admitted the he signed the note but stated in paragraph 2 of his answer that the note was granted to the plaintiff on his giving the following undertaking :- (1) to enter satisfaction of judgment in a certain case, (2) to pay a third party a sum of Rs. 1,505, and (3) to apply the b

Click Here to Read the rest of this document