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Simon and ors. Vs. Hakim Mohamed Sheriff - Court Judgment

LegalCrystal Citation
SubjectBanking;Property
CourtChennai
Decided On
Judge
Reported in(1896)ILR19Mad368
AppellantSimon and ors.
RespondentHakim Mohamed Sheriff
Cases ReferredSalmon v. Webb and Franklin
Excerpt:
promissory note - contemporaneous collateral agreement consistent with the terms of the promissory note--suit properly brought under chapter xxxix, civil procedure code. - - he, however, having failed to do so, the plaintiffs instructed their solicitors, messrs. cas 510 rests is clearly in favour of the view that an agreement by the payee not to enforce payment of the debt due under a promissory note, for a limited time does not, in any way, trench upon the negotiable character of the instrument. in that case, it was found that the payees of a promissory note, payable on demand, had entered into a contract with the maker of the note and with certain other parties who, like the maker himself, had an interest in the money, lent under the note, that no suit should be brought thereon till..........exhibit a and forwarded with it exhibit ii which runs thus: 'with reference to the promissory note (exhibit a) executed by us this day in your favour for rs. 7,210-9-11, we undertake to ship fortnightly through you free consignments of not less than rs. 2,000 in value each, until the promissory note is liquidated, the first of such consignments to be made within fourteen days from this date.' admittedly, the defendant did not send any consignment as he promised to do.2. the present suit for the recovery of the amount due under exhibit a was instituted under chapter 39 of the civil procedure code. the defendant applies for leave to defend on the ground that if exhibit a and exhibit ii are taken together, it will be seen that the former was not a mere promissory note and the suit.....
Judgment:

Subramania Ayyar, J.

1. The plaintiffs advanced a sum of money to the defendant on his promising to supply certain goods. He, however, having failed to do so, the plaintiffs instructed their solicitors, Messrs. Wilson & King, to take steps for the recovery of the amount advanced. When the defendant learnt this, he requested the solicitors, through his vakil Mr. Ambrose, that they should defer taking legal proceedings. Thereupon Messrs. Wilson & King addressed to Mr. Ambrose, on the 2nd May 1896, Exhibit I, which is as follows:

'With reference to my conversation with you this morning regarding Messrs. Carl Simon's claim against Ghouse Sheriff Sahib and Co., I am instructed to inform you that they are prepared to stay proceedings on your clients giving them an on-demand promissory note for the amount due up to date, viz., Rs. 7,189-9-11, plus Rs. 21, costs already incurred by them, such promissory note to carry interest at 9 per cent., and on your client undertaking to ship fortnightly through our clients, free consignments of not loss than Rs. 2,000 in value each, until the note is liquidated. The first of such consignments to be, made at the expiration, of fourteen days from, the date. If those, terms are agreeable to your client, please send us a promissory note in the terms above mentioned signed by your client and a letter also signed by your client undertaking to make the above shipments. The above offer is open until 3 P.M. to-day and is made without prejudice to our clients' strict legal rights.' This offer was accepted by the defendant, who executed Exhibit A and forwarded with it Exhibit II which runs thus: 'With reference to the promissory note (Exhibit A) executed by us this day in your favour for Rs. 7,210-9-11, we undertake to ship fortnightly through you free consignments of not less than Rs. 2,000 in value each, until the promissory note is liquidated, the first of such consignments to be made within fourteen days from this date.' Admittedly, the defendant did not send any consignment as he promised to do.

2. The present suit for the recovery of the amount due under Exhibit A was instituted under Chapter 39 of the Civil Procedure Code. The defendant applies for leave to defend on the ground that if Exhibit A and Exhibit II are taken together, it will be seen that the former was not a mere promissory note and the suit would not lie under the chapter quoted.

3. Of course parties to what purports to be a mere promissory note may, contemporaneously with its execution and delivery, enter into another agreement with reference to such instrument. The terms of that agreement may, on the one hand, be so inconsistent with the terms of the document, purporting to be a promissory note, as to render it clear that the parties never intended to invest what seems a promissory note with the attributes of an instrument really of that description. On the other hand, the terms of the agreement may go to show that it was not intended that the document which on the face of it is a promissory note, should not operate as such. In the former class of cases the two agreements must be construed to be parts of but one contract, not severable by the Court for the purpose of giving to one of the two parts, an effect, that it would have had, if such part alone formed the whole contract. In the latter class of cases the agreements are treated as distinct contracts capable of standing side by side.

4. The contention on behalf of the defendant seemed to be that the present case fell under the first class of cases. Now if, as in Hartley v. Wilkinson 4 Camp. 127 the unconditional promise to pay contained in Exhibit A were qualified into a conditional one by Exhibit II, the former instrument cannot of course be held to be a promissory note. Manifestly, however, no such qualification is found to exist in Exhibit II. Again if, as in Leeds v. Lancashire 2 Camp. 205 the effect of Exhibit II were to render the amount mentioned in Exhibit A a sum not certain that also would be fatal to the view that the latter document is valid as a promissory note. But it cannot be pretended that Exhibit II affects in any way the certainty of the amount payable under Exhibit A. Yet again, if the provisions to be found in Exhibit II had been inserted in the same paper as Exhibit A and as a part of the contract to pay the amount therein mentioned, then the instrument would of course have had to be declared to be one containing more than what a proper promissory note should contain, and therefore not a negotiable instrument, compare Kirkwood v. Smith (1896) 1 Q.B.D. 582 . For in the case just supposed, the circumstance that all the provisions were thus linked together in one and the same document would by itself lead, almost irresistably to the conclusion that the intention was to make the promise to pay the money and the agreement to send the free consignments, terms of the same indivisible contract. Here, however, the two agreements are evidenced by separate documents, and the fact that the parties thought it necessary to make the undertaking set forth in Exhibit II, quite distinct from the promise to pay money, contained in Exhibit A, is pregnant against the suggestion that the parties meant to qualify the negotiable character of the latter instrument. That the requisition that free consignments should be sent by the defendant emanated, not from him, but from the plaintiffs, is strongly in favour of the view that so far as the latter were concerned, the arrangement about these consignments was merely a supplemental provision made for securing a speedy realization of the debt due to them, and by no means intended to derogate in any way from their right, as payees under the promissory note, to demand unconditional payment of the sum due. As to the defendant's intention, the circumstance that, until the present contention was put forward about three weeks ago, he had spoken of Exhibit A as a promissory note and acted upon the footing that it was such, cannot but lead to the inference that he also intended it to be a valid promissory note.

5. Such being my opinion of the transaction with reference to the circumstances in which the two documents came into existence, is there anything in the provisions contained in Exhibit II, which compels me, in spite of the obvious intention of the parties as explained above, to decide that Exhibit A is not in reality a promissory note? The learned Counsel for the defendant seemed to argue that, reading the documents, in question, together, it must be held that the plaintiffs agreed not to enforce payment of the amount of the note until the defendant had had time to send free consignments sufficient to discharge the debt. I have no doubt that the plaintiffs meant to wait and would have waited if the defendant was at all inclined to keep his engagement to forward such consignments, But I should hesitate to say that they entered into a legally binding arrangement not to claim payment before the expiry of the period during which the consignment's were to be sent. I think it would be scarcely reasonable to hold that the plaintiffs entered into such a contract with the defendant, simply because they were prepared to afford him facilities for his repaying the money due to them, in the manner contemplated by Exhibit II. But suppose that the plaintiffs legally bound themselves to wait, as suggested on behalf of the defendant, it is difficult to see how that renders Exhibit A the less a promissory note. The reasoning on which the decision of the House of Lords in Salmon v. Webb and Franklin 3 H.L. Cas 510 rests is clearly in favour of the view that an agreement by the payee not to enforce payment of the debt due under a promissory note, for a limited time does not, in any way, trench upon the negotiable character of the instrument. In that case, it was found that the payees of a promissory note, payable on demand, had entered into a contract with the maker of the note and with certain other parties who, like the maker himself, had an interest in the money, lent under the note, that no suit should be brought thereon till the youngest of the persons, so interested, had arrived at a certain age. Nevertheless, the payees sued on the note during the life time of the specified individual and before he had attained the age fixed. The agreement referred to was pleaded by the maker as a defence to the claim. Baron Parke in stating the opinion of the majority of the Judges, who were consulted on the occasion, expressed himself thus: 'My brother Brie thinks that upon the facts stated in the plea, the defendant did not intend to deliver the note so as to make himself liable until the happening of one of the contingencies there specified. The other Judges think that the meaning of the phrase 'contemporaneously with and at the same time' is merely that the agreement alleged in the plea was made at the same time with the promissory note, not that it was part arid parcel of the same instrument and to be treated and construed as if it was written on the same paper. We consider it, therefore, to be a collateral undertaking, perfectly consistent with the existence, of a note containing an absolute promise to pay; and such a collateral agreement is no answer to the declaration; because it is an agreement not to sue for a limited time only and a covenant not to sue for a limited time is no answer to an action.' The House of Lords agreed with the view taken by the majority of the Judges as expounded by the learned Baron, and held that the plea set up by the maker was bad in substance.

6. I am, therefore, of opinion that the ground of defence urged by the defendant is unsustainable, and I refuse to grant leave to defend. The application is dismissed with costs. There will be a decree for the plaintiffs as prayed.


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