1. This second appeal is against the decision of the lower appellate Court in the matter of a promissory note claim. The promissory note dated 9th June 1920 was executed by defendant 1 in favour of plaintiff 1 on behalf of the joint family of which he was the manager. In a partition suit decree, this promissory note was allotted to the share of one Balkrishnayya although the promissory note appears to have remained with plaintiff 1. On 14th September 1922, Balkrishnayya executed a release deed relinquishing his rights in the suit note in favour of both the plaintiffs. Both the plaintiffs filed this suit to recover the full amount due upon the note. The defence pleaded was a discharge to Balakrishnayya partly by cash and partly by execution of another promissory note. The trial Court held that the payment pleaded by the defendants was true but that it was not binding on the plaintiffs. The lower appellate Court agreed in holding that the payment was true but held further that the plaintiffs had no title to sue, not being holders in due course. It therefore dismissed the suit and the plaintiffs appeal.
2. The first contention urged by them is that as the promissory note is in the name of plaintiff 1 and has not been endorsed by him to any one else, he is the holder and entitled to recover from the defendants. This to my mind is entirely a new case set up here for the first time. It may be a good case or a bad case, but the defendants have never been given an opportunity of meeting it. It is argued that this is a pure question of law but clearly that is not so. I cannot speculate as to what would have been the defendants' defence if plaintiff 1 alone had sued upon the note. Attempts to raise in second appeal points which are not even in the pleadings and which the other side has never been called upon to meet are not to be lightly permitted in second appeal. The Privy Council has lately condemned such a practice:
It appears to their Lordships to be highly irregular for any Court either to assume without the admission of all parties that material facts are not in dispute or to proceed to draw inferences from those facts where no evidence of them has been placed before the Court.' James R. R, Skinner v. Nannihal Singh A.I.R. 1929 P.C. 158.
3. That this present contention is a new case is clear from a perusal of the pleadings and the judgment of the lower Courts. There is no hint in the plaint that plaintiff 1 has any cause of action apart from that of plaintiff 2. The manner in which the plaintiffs became 'absolute hukdars' of the promissory note is stated in paragraph 6 to be the release deed. The only prayer in the plaint is to pay the suit amount to both the plaintiffs. There is no issue whatever on this present point and the frame of the only issue shows that it was never raised. The only issue is:
whether the discharge set up by the defendants is true and binding on the plaintiffs.
4. If there had been any case that plaintiff 1 alone was entitled to sue as holder the plea of discharge to some one else who never was holder was irrelevant and could not have arisen. A perusal of the judgments of both Courts shows also that the present contention was never raised there, and neither Court has given any finding which can remotely be related to such a contention. I therefore refuse to allow this contention to be raised at this stage.
5. We are then concerned with the joint rights of both plaintiffs to sue on the footing of the release deed. Plaintiff 1's rights in this matter are no more than plaintiff 2's. So it will be convenient to ask what rights plaintiff 2 now has to sue upon the promissory note. His right is derivable, if anywhere, from the release deed which conveyed to him the right which Balakrishnayya had in the promissory note. What right had Balakrishnayya? The note was not endorsed to him, so that he is not a holder by endorsements. Is he otherwise a holder in due course? It must be held that he clearly was not. A holder in due course must have come into possession of the note if payable to bearer or be an endorsee or payee if payable to the payee. Balakrishnayya never came into possession of the note and in any case the note is 'payable to plaintiff 1 and not to bearer, and the note was never endorsed to him. He cannot therefore be a holder in due course. That being so, he cannot make his assignees by a release deed holders in due course. The lower appellate Court is therefore quite correct in deciding that the plaintiffs are not holders in due course.
6. Nor are they joint holders. Plaintiff 2's name does not appear upon the promissory note. No one can sue on a negotiable instrument as holder unless he is named therein as the payee or unless he becomes entitled to it as endorsee or bearer: see Subba Narayan Vathiyar v. Ramaswami Ayyar  30 Mad. 88 which is a binding authority on me.
7. The only right that plaintiff 2 and therefore plaintiff 1 can have is any right which he may have acquired from Balakrishnayya by the assignment itself. That a party can acquire such rights in a negotiable instrument has been held by this Court in several reported cases, the ratio decidendi being that such an assignment is an assignment of a chose in action. No doubt there has been some difference of opinion in this Court as to whether a suit lies on a promissory note by a party as an assignee of a chose in action: early cases, Pattal Ambadi Marhar v. Krishna  11 Mad. 290 Abhoy Chetti v. Ramachandra Rao  17 Mad. 461 Arunachala Reddi v. Reddy Subba  17 M.L.J. 393, and Ulagappa Chetty v. Ramnathan Chetty  3 M.L.W. 171 saying that he cannot sue, later cases Muhammad Kumarali v. Ranga Rao  24 Mad. 654, Muthar Sahib v. Kadir Sahib  28 Mad. 544, and Venkatadri v. Lakshminarasimha  21 M.L.J. 80 and Kutalingum Pillai v. Pakiyam Fernandez  21 M.L.J. 422 saying that he can sue, subject to the condition that he takes over the equities to which his assignor was subject. Subramanian Chetty v. Alagappa Chetty  30 Mad. 441, Sowcar Lodd Govindoss v. Munappa Naidu  31 Mad. 534 and Ramnathan Chetty v. Katha Velan  41 Mad. 353, lay down that a negotiable instrument may pass by operation of law without endorsement. The plaintiffs ask me in consequence of this difference of opinion to refer the present appeal to a Full Bench, but clearly that is not necessary for a decision of this case since on neither view can the plaintiffs succeed in their claim. If they cannot sue on the assignment as assignees, they cannot sue at all, since they are not suing as holders, nor was their assignor, Balakrishnayya, from whom they derived their rights as holders. The plaintiffs therefore must sue as assignees of a chose in action or be non-suited and it is only if I follow the cases which rule that they can that the plaintiffs have any case.
8. Such an assignment only transfers to the assignee such rights as the assignor had at the time and not the full rights of a holder or of a holder in due course. If the plaintiffs are to be given any relief as assignees of a chose in action, they can only take what Balakrishnnayya had to give, namely the right to recover the unpaid balance of the promissory note amount. But again the question arises if they can be given that relief in this suit, and I do not see how that can be done. Both the lower Courts have found on the facts that the suit promissory note has been fully discharged by part payment and by the execution of a fresh promissory note, and in the lower appellate Court the present appellants did not seriously dispute that. Therefore the promissory note on which they now take their stand has been discharged and is no longer in force. It is not a case where a mere part payment has been made and the balance is still owing on the note itself. It is a case where the note sued upon is dead in law and therefore cannot be a source of any legal rights. Any relief on the footing of the balance still due on the original note can only be granted either by having the fresh note in favour of Balakrishnayya cancelled or by having it endorsed to the plaintiffs. But Balakrishnayya is not a party to this suit, so that neither course is open to me here. I may observe also that this present claim was never raised before the lower appellate Court and has not been raised in the grounds of appeal here.
9. The appeal must therefore fail in toto and is dismissed with costs.