Adappa Chettiar V. Isadeen Et Al.,

1934 Present: Garvin S. P J. and Akbar J.

ADAPPA CHETTIAR v. ISADEEN et al.

284-D. C. Colombo, 44,669.

    Promissory note-Note delivered to the payee-Third party signs at back to accept liability as endorser-Payee's authority to fill note to secure endorser's liability-Bills of Exchange Ordinance, No. 25 of 1927, ss. 20 (1) and 56.

A promissory note was drawn in favour of a payee and delivered to him. Thereafter a third party put his signature at the back, intending to make himself liable as an endorser, and the payee placed his name above the endorsement.

Held, that the payee had authority to fill in his name to secure the endorser's liability and to make the note complete and enforceable.

THIS was an action brought to recover a sum of Rs. 2,000 due on J. a promissory note payable on demand, of which the payee was S. K. R. A. A. R. Suppiahpillai, the first defendant was the maker of the note and the second defendant was sued as endorser. The second defendant who is the father of the first defendant in his answer admitted his bare signature on the back of the note and set up the defence that by doing so he has not become liable thereon as endorser. The learned District Judge held that the plaintiff was not a holder in due course and dismissed the plaintiff's action.

H. V. Perera (with him Chelvanayagam), for plaintiff, appellant.-On the date of the making of this note, first and second defendants were both liable to plaintiff in the sum of Rs. 2,000. In payment of that liability first defendant made the note sued on in favour of plaintiff's manager or agent, S. K. R. A. A. R. Suppiahpillai. Suppiahpillai took the note under the impression that first defendant had made the note in favour of second defendant and that the second defendant had endorsed the same. On discovering his mistake, Suppiahpillai took the note to second defendant who put his signature at the back of the note and returned same to Suppiahpillai. It is true that second defendant was not the payee of the note. Nor had the note been endorsed to second defendant at or before the time of his endorsement. But the circumstances in which he put his name at the back of the note show clearly that the second defendant intended to become liable as an endorser. When it was thus endorsed and handed to Suppiahpillai, the note may be considered not complete and wanting in a material particular, namely, the signature of the payee Suppiahpillai himself above that of second defendant. Under section 20 of the Bills of Exchange Ordinance it was open to Suppiahpillai to supply this deficiency and he had done so by putting his signature above that of second defendant before plaintiff sued on the note. When the deficiency was so supplied the note was a complete instrument wherein the second defendant was in the position of an endorser liable to the holder Suppiahpillai. In other words the document looked as if it had been made by first defendant and delivered to Suppiahpillai who endorsed the same and delivered to second defendant who in turn endorsed and delivered to Suppiahpillai. Second defendant was therefore liable to plaintiff on

the note. This was the basis on which the House of Lords decided MacDonald & Co. v. Nash & Co.[1 (1934) A. C. 625.], the facts of which case are identical with the facts here with the exception that in the House of Lords case the instrument was a bill and not a note. That makes no difference to the principle applicable.

There is yet another section of the Ordinance which makes the second defendant liable on the note. Under section 56 "where a person signs a bill otherwise than as drawer or acceptor, he thereby incurs the liability of an endorser to a holder in due course ". Plaintiff is a holder in due course because the note has been finally endorsed to him for value by his agent, the said Suppiahpillai.

Counsel also cited McCall Bros. v. Hargreaves

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