Case No.:

(HC-CS-6 17-1956)

Court:

The High Court

Issue No.:

1960

Principles

·  Sale of goods—Payment by post-dated cheques—Whether action or promissory notes or on original contract—Presumption of conditional payment

Plaintiffs 501(and delivered goods to the defendants, two brothers running a partnership. A brother of the defendants who ran a business next to the partnership was drawer of four post-dated cheques that were delivered to the plaintiffs by one of the defendants in payment for the goods. The cheques were dishonoured and an action for the price of the goods was brought.
Held: The delivery of post-dated cheques in payment for goods does not automatically discharge the buyer, but merely raises the question of the intention o parties. There is a presumption that such cheques are only a conditional payment, not a full payment, and the facts of the case support the presumption.
Hassab El Rasoul Hamad v. Mohamed El Amin Ibn Oaf (1956) S.I,J,R. 69 applied.

Judgment

                                                 (HIGH COURT)

HEIRS OF KISHA ABDEL SALAM v. MOHAMED AHMED BAN!DAAND SAYED AHMED BAND! AND SALIH AHMED BANDA!

(HC-CS-6 17-1956)

Action

Advocates: L. Sorial…………. for plaintiffs

                   I. A. Ibrahim…….. for defendants

January 5, 1960. T. Cotran, Acting J.: —The plaintiffs are the Heirs of Kisha Abdel Salam. The two defendants are brothers who traded under the name of “Bandi Brothers.” The firm “Bandi Brothers” is a registered partnership and consisted of first defendant Mohamed Ahmed Bandi and second defendant Sayed Ahmed Bandi. Salih Bandi is the brother of the first and second defendants. He was joined at one time as a third defen- 1 dant on the assumption that he was a partner of the firm “Bandi Brothers.”

The plaintiffs have now abandoned the third defendant in toto, and they admitted that Salih Bandi is not a partner in the firm ‘ Bandi Brothers.” I the plaintiffs are now only suing the first and second defendants. That answers the point raise on Revision by the honourable judge of the high Court. I have not the slightest doubt in my mind, having heard the evi dence for the plaintiffs and the evidence of first defendant (and also by agreement of both parties having read the evidence of Sayed Ahmed Bandi the second defendant and Salih Bandi in former pro ceedings) that the goods, the subject-matter of this transaction, were bought by Sayed Bandi on behalf o the partnership “Bandi Brothers.” I am also satisfied that the goods were actually delivered to the restaurant of Bandi Brothers. I am also satisfied that the four cheques, the subject-matter of this case, were delivered to the plaintiffs for the goods supplied by them to first and second defendants, I find that these goods were not supplied to Salih Bandi at all. I have come to these conclusions of fact on both direct and circumstantial evidence. The direct evidence is that not only of the plaintiffs personally, but also of the witness El Aghbash (PW.4) whose evidence has struck me as completely genuine. This witness was attacked on the ground that he is a relative” of the plaintiffs, but it must be remembered that he was called only after the judge of the High Court had recommended that he be called for the retrial. If the plaintiffs were fabricators, and El Aghbash was a witness, who would have readily given his testimony for the plaintiffs, surely he would have been called by them initially, without the inter ference of the revising authority. Furthermore, the circumstances of the case support El Aghbash’s testimony. After all Salih Bandi had a bakery and he has been a baker for many years. The two defendants are restaurateurs. The goods, which the plaintiffs supplied, are those that are usually suppiied by grocers to restaurant owners. The court cannot under- stand why, for example, rice, oil, vegetable-cooking fat would be supplied to a baker. I cannot accept advocate for the defendants’ insinuation that the invoices were prepared after the case to support plaintiffs’ claim against the defendants. There is evidence (Abdullah El Tuhami PW.2) that it was he who introduced Bandi Brothers to the plaintiffs’ firm. Therefore first defendant’s statement to the effect that he did not know that his own firm had dealt with plaintiffs’ lacks candour. He appears to be a witness who is prepared to say anything even if it is untrue, to help his case. Defendants 1 and 2 paid for the goods they normally took in several ways. Defendants 1 and 2 had an account in the bank known as “Bandi Brothers” and either first or second defendant could sign cheques on this account. The plaintiffs were paid cheques drawn by Bandi Brothers and signed mostly by second defendant who appeared on the evidence to have been the manager of the business.

The cheques, the subject matter of this case, are four in nui They are drawn by Salih Bandi and they are made out in favour of the plaintiff (the late Kisha Abdel Salam). These cheques are dated April 25, 1956, May 7, 1956, May 17,1956 and May 28, 1956. The plaintiffs delivered the goods on January 22, 1956, January 31, 1956, and March 16, 1956 (see Exh.P.1-p.4) The cheques were all post-dated (Exh. P.I-P.4).

The plaintiffs’ allegation, which the court accepted, is that Sayed Bandi had given those cheques to the plaintiffs for the goods received. The issues are framed at page ii of the proceedings and it will be convenient to answer them briefly here before I proceed to discuss the legal issues involved. First issue is answered in the affirmative, that is to say that the plaintiffs sold the goods to j3andi Brothers. The burden of proof of this point is on the plaintiffs and for the reasons I mentioned previously this burden has been discharged. Issue 2 as framed is meaningless and is part of the first issue. If it has to be answered I would answer it in the negative. It must be remembered that since the plaintiffs are the payees on the cheques and Salih Bandi is the drawer, prima facie, there is no connection between the cheques and the first and second defendants. It was the duty of the plaintiffs to adduce facts showing that first and second defendants for goods supplied in fact paid these cheques to them. This has been proved beyond doubt and issue No. 3 is answered in the affirmative. The position as the court finds it is that these cheques which were made payable to Kisha Abdel Salam were delivered to the plaintiffs by the second defendant. The defendants’ brother Salih Bandi drew them.

The legal position that should be now discussed is whether by the mere delivery by the defendants of post-dated cheques to the plaintiffs in pay ment for goods there is a complete discharge of the defendants. In other words are the plaintiffs entitled to disregard the cheques and sue the defen dants on the contract or must they be thrown to sue on the cheques? I think the essential point is to try to discover the intention of the parties. Did the parties intend that the post-dated cheques be a full settlement of the debt due to the plaintiffs, or were the post-dated cheques only condi tional payment? In the absence of any evidence as to intention the presumption is that cheques are conditional payment. This presumption also prevails in this case and there is not the slightest evidence to show that the parties intended the cheques to be in full settlement and an absolute discharge of the defendants. On the contrary the evidence goes far in favour of the presumption for it has been admitted by Sayed Bandi that he resorted to his brother’s (Salih’s) account because Bandi Brothers’ account in the bank had been closed. There is evidence to show that there existed between the three brothers, viz., Sayed, Mohamed and Salih, a very close relationship, though the last named was not a partner in the former’s restaurant business. His bakery was next to the restaurant, and he was often seen there sitting on the cash box. When the plaintiffs accepted Salih’s cheques it was obviously for the defendants’ convenience and was not intended by defendants or by plaintiffs to be a discharge of defendants’ contractual liability on the goods.

The best statement of the law is found in Anson, Law of Contract (19th ed., pp. 3I5-316)where in it is stated:

“A negotiable instrument may be given in payment of a sum due, whether as the performance of a contract or in satisfaction for the breach of it; and the giving of such an instrument in payment of a liquidated or unliquidated claim is the substitution of a new agree ment for the old uric: but it may affect the relations of the parties in either one of two different ways. The giver of the instrument may be discharged from his previous obligation either absolutely or conditionally.

“A may take the bill or note and promise, in consideration of it, expressly or impliedly to discharge X altogether from his existing liabilities. In such a case he relies upon his rights conferred by the instrument, and, if It is dishonoured, ‘must sue on it and cannot revert to the original cause of action. ] But the presumption, where a negotiable instrument is taken in lieu of money payment, is that the parties intended it to be a conditional discharge only (Re Romer and Haslam [1893] 2 Q.B., per Lord Esher M.R. at p. 296). Their position, then, is this: A, having certain rights against X, has agreed to take a negotiable instrument instead of immediate payment or immediate enforcement of his right of action: so far X has satisfied A’s claim. But if the bill be dishonoured at maturity, the consideration for A’s promise has wholly failed and his original rights are restored to him. The agreement is ‘defeasible upon condition subsequent’; the payment by X, which is the consideration for the promise by A, is not absolute but may turn out to be, in fact, no payment at all.

“Payment, then, consists in the performance either of an original or substituted contract by the delivery of money, or of negotiable instruments conferring the right to :receive money; and in this last event the payee may have taken the instrument in discharge of his right absolutely, or subject to a condition (which will be presumed in the absence of evidence to the contrary) that, if payment be not made when the instrument falls due, the parties revert to their original rights, whether those rights are, so far as the payee is concerned, rights to the performance of a contract or rights to the satisfaction for the breach of one.”

The same principle is enunciated further in Halsbury’s Laws of England,

3rd ed., Vol. 8, pp. 212 and 213. The same principle was applied in the’

Sudan by the Court of Appeal (Abu Rannat C.J. and Soni J.) in Hassab El

Rasouj Hamad v. Mohamed El Amirm Ibn Oaf (1956) S.L.J.R. 69. This case Is very instructive.

For all these reasons I give judgment for the plaintiffs with costs both in the original trial and in the retrial.

                                                                           (Judgment for plaintiffs)