(COURT OF APPEAL)’

HASSAB EL RASOUL HAMAD ……………Applicant

and

MOHAMMED EL AMIN IBN OAF ……….Respondent

(AC-REV-1 -56)

 Principles

·  Negotiable Instruments – cheque dishonoured - cheque conditional payment only - liability of endorser.

A bill of exchange given for a debt amounts to conditional payment of that debt, and if the bill is dishonoured the creditor is entitled to recover payment of the debt from the endorser, in the absence of any special agreement, unless the creditor has failed to present or protest the cheque and the endorser has been prejudiced thereby. -

Appeal

The facts are set out in full in the judgment.

Advocates: El Sayem Mohd. Ibrahim ……..for Applicant

Mohd. Ibrahim Khalil…………………... for Respondent

R.C. Soni; J. This is an application for revision of a decree passed by the learned Judge of the Khartoum High Court, dismissing the Plaintiff’s case in HC/REV/118/55, which had been decreed by the Trial Judge in CS/3007/54.

The acts of the case are simple but the Learned Judge in revision fell into a grave error of law, and for that reason we are of the opinion that his judgment cannot be sustained.

The facts are these

A man called Ali Bakhit. Fadlalla was a merchant having dealings with the Defendant. Ali Bakhit Fadlalla does- not appear to have been flush with money, for when he was settling his account with the Defendant he gave him a post-dated cheque for £E.114  to liquidate wholly or partly his liability to Defendant.

( M.A. Abu Rannat. C.J. and R.C. Soni J.)

The Defendant Mohamed El Amin Ibn Oaf came to Khartoum on 9.9.54  and bought goods from the Plaintiff Hassab El RasoulHamad and in part payment of those goods he endorsed Ali  Bakhit Fadlalla's  cheque for £E.114 in favour of the Plaintiff. The Plaintiff went to the bank on which the cheque was drawn On 10.9.54. The cheque was then not honoured. He presented  thecheque again on 22.9.54 and it was again returned to the Plaintiff dishonoured. The cheque bears the word “Waste” twice with the Bank’s stamps. The Plaintiff says that he did not know Ali Bakhit Fadlalla. He only knew the Defendant. who had dealings with him as a customer.

The Defendant was plying between Halfayat El Miluk, Fiteha (Tanbul village) near Rufaa, and in the rainy season the Plaintiff could not contact him.

At about the end of September or early in October, the  Plaintiff met the Defendant  in Omdurman and informed him that thecheque had been dishonoured. It is said that on the first occasion when the two met the cheque had been misplaced and could not be traced, but on the second occasion the cheque was presented to the Defendant but he refused to take it back.

The Defendant says that he heard of Ali Bakhit Fadlalla’s death on the 28.10.54, he having died on the 5.10.54. Sometime in November the Defendant was persuaded to take the cheque back. He said he would approach the heirs of Ali Bakhit Fadlalla but they refused to meet it. in the defence it is pleaded that Ali Bakhit Fadlalla died insolvent.

The Plaintiff made attempts to get money from the Defendant but not having succeeded, he instituted the present suit. Thedefence to the suit is that the cheque had not been presented in time, that it had not been protested, and that in having not been presented nor protested, the Defendant was discharged from any liability on the cheque.

Issues were framed on these points and also an issue was framed because of the pleadings, which is Issue 4 (d) that by his delay to present the cheque for payment for a reasonable time, Plaintiff caused Defendant to lose his remedy against the drawer AliBakhit Fadlalla who died insolvent. The learned trial Judge held that the cheque ad been presented on two occasions — 10th &22nd Sept. 1954 — and that it had been presented within a reasonable time. He also held that the Plaintiff informed the Defendant of the dishonour which according to the circumstances was within a reasonable time as the Defendant could not be found — because of the rainy season. He held that the

cheque had not been protested, but he came to the conclusion that this, was a matter of procedure which was not fatal. The impression that the Defendant created in the mind of the Trial Court was that he knew that Ali Bakhit Fadlalla was in bad financial position and that the Defendant was really trying to palm off a worthless piece of paper on an innocent man. The Trial Judge decreed the Plaintiff’s claim.

The Learned Judge on revision agreed with the Trial Judge that the cheque had been presented on the 10th and 22nd Sept. 1954 to the bank for payment. He also held that it was not properly protested as it should have been. He came to the conclusion that because it had not been protested, the Defendant was discharged from liability on the cheque. The Learned Judge, however, went on to say:- I notice that the District Judge referred to another cause though he failed to give it any consideration.. He asked whether Defendant was liable on the value of the goods: true the Defendant bought from Plaintiff goods to the, value of thecheque which he endorsed to the vendor. The cheque is a negotiable instrument and endorsement meant payment of value. The cause has thus merged in the instrument and “Plaintiff could not sue except on the bill.”

In our opinion this is an erroneous statement of the law. It is well known that when a negotiable instrument is given in payment, a conditional payment is only made. The debt is not satisfied unless he negotiable instrument is paid. If it is not paid the right to recover the money is, not lost. It is not necessary to cite many authorities for this proposition of the English Law. One may be cited. In Re Romer & Haslam, [1893] 2 Q.B. 286, Lord Esher M.R. said at page 296 : - It is perfectly well-known law, which is acted upon in every form of mercantile business, that the giving of negotiable security by a debtor to his creditor operates as a conditional payment only, and not as a satisfaction of the debt, unless the parties agree so to treat it. Such a conditional payment is liable to be defeated on non-payment of the “negotiable instrument at maturity.”

Lord Esher continued to say it. is surprising that there can be at the present day any doubt as to the business result of such a transaction.”

Bowen L.J. at page 300 said:-It has been established by a series of authorities, which it would be ridiculous to go through seriatim. that a bill of exchange given for a debt amounts to conditional payment of that debt, and is only conditional payment so long as it is running; the payment is liable to be defeated when the bill is. dishonoured.

This case was decided more than 6o years ago. The law of England

has not changed., The same rule of law is enunciated in the. 3rd Edition of Halsbury’s Laws of England. Vol. 8, pages 212 & 213.

It is, however not really necessary nor indeed proper to refer to the English Law. on the subject, when the law of the Sudan is quite clear. Section 55 of the Bills of Exchange Ordinance runs as follows When the drawer or endorser of a bill is discharged from liability on the instrument by reason of the holder’s failure duly to present it or protest it or give notice of dishonour, the drawer or endorser shall not thereby be discharged from his liability on the consideration for the bill unless he has been prejudiced by the holder failure to perform his duties and then only to the extent of any loss which he may have “suffered”.

It is therefore clear that unless there has been a special agreement that the Plaintiff took the cheque as an absolute payment to him, his right to sue for the money is not denied to him. It was never so pleaded that the cheque had been taken by the Plaintiff in absolute payment and from the circumstances of the case we do not consider this could have happened. The Defendant must, therefore, prove according to S. 55 of the Bills of Exchange Ordinance, that he had been prejudiced by the Plaintiff’s failure to perform his duties. If he succeeds in doing so, then only to the extent of the loss which the Defendant may have suffered, he may be excused.

Issue 4 (d) did refer to prejudice, but there is no evidence led to show what the prejudice has been. It should be noticed that AliBakhit Fadlalla was not in good circumstances. If he had been in good circumstances he would not have given a post-datedcheque. There is no evidence to show that he was a merchant doing well; and as a matter of fact the Defendant pleaded that at the time of the death which took place on the 25.10.54 he died insolvent. The interval between the 9.9.54 the date of the post-datedcheque and 25.10.54, the date of Ali Bakhit Fadlalla’s death, is about 6 weeks. The interval between 22.9.54 when the chequewas dishonoured a second time and the date of death is but a month.

When S.55 was referred to in arguments, learned Counsel for the Respondent said that it had come as a surprise to him. We do not see why it should have come as a surprise. The law of Negotiable Instruments is well known and both Lord Esher & Bowen L.J. referred to the matter in strong terms as a thing well known that when a negotiable instrument is given in payment, it is a conditional payment only. We asked learned Counsel for the Respondent whether he would like to

have an opportunity so lead evidence to show that Ali  Bakhit Fadlalla was is good circumstances or that the Defendant had any other evidence discharging the burden that lay on him. The learned Counsel’s reply was that it was too late and that he would not be able now to find any evidence, and declined  to avail himself of an opportunity which we were willing to give him.

In the circumstances we must hold that the Defendant has not been able to discharge the burden under S.55  of the Bills of Exchange Ordinance. In our-opinion he must pay £E.114

We would, therefore, set aside the decree of the Learned Judge in the Court below and restore the decree of the Trial Court. The Plaintiff will also get his costs in the Court below. The Plaintiff will get the amount spent on Court fees in this Court, but not his Advocate’s costs.

MA. Abu Rannat, C.J. — I concur with this judgment.

(Revision allowed.)