Case No.:

AC-REV-146 1957

Court:

Court of Appeal

Issue No.:

1964

Principles

·  Negotiable Instruments---Parol evidence—Inadmissible to vary terms—Written contemporaneous evidence may be admissible            -

It is no defence for the guarantor of a negotiable instrument to allege that the guarantee was given on the basis that his liability depended on performance of a condition precedent, still unperformed, where no written evidence exists of such agreement. Oral evidence is inadmissible to vary the terms of a negotiable instrument.

Judgment

(COURT OF APPEA)

IBRAHIM EL SAYED EL BERBERI v. DAOUD TRADING CO. LTD.

AC-REV-146 1957

D. S. Abu Ghazaleh P.1. HC•REV.235 1956 July 29, 1957:—This is an application for revision, filed by second defendant, of the judgment and decree passed by the learned District Judge attached to the High Court, in

HC-CS-227-1957

The agreed facts in this case are these:

1. First defendants owe plaintiff a sum of £S.2,200.000m/ms., secured by twenty-two promissory notes of £S.100.000m/ms. each, payable at Khartoum as from April 1,1955 and bearing interest at 12 percent. per annum from the date of maturity.

2. Second defendant is the guarantor of the said debt according to the terms of the said agreement.

The only disputed issue in the case is this:

Was the loan of £S.2,200.000m/ms. subject to a condition precedent in that the plaintiffs promised that they would enter with first defendant into contracts for forwarding and clearing and deduct the debt due to them from the first defendant’s entitlements?

The learned trial judge heard extrinsic evidence to prove this precedent condition, but finally came to the conclusion that such evidence is in admissible and gave judgment according to plaint

It is maintained by applicant that the trial judge was wrong in holding that extrinsic evidence to prove the existence of the collateral agreement

was inadmissible. In other words, he submits that it is admissible to prove by oral evidence that his liability as a surety was conditional, the condition precedent being plaintiff’s promise to give first defendant the benefit of forwarding the clearing contracts; that plaintiffs, having obtained applicant’s signature as a guarantor, failed to fulfil the said condition; and that as such he (applicant) is not liable to pay the bills.

Now the general rule is that where private documents are required by law to be in writing, e.g., bills of exchange, extrinsic evidence is generally inadmissible to contradict, vary or supplement their terms. See Phipson, Evidence 603 (9th ed. Burrows 1952)

But can the condition precedent alleged in this case be proved orally as an exception to the said general rule? I am of the opinion that it cannot. The said condition precedent is inconsistent with the promissory notes and is not part of the consideration for the said documents.

It is clearly stated in Phipson, Evidence 603 9th ed. Burrows 1952), that bills and notes cannot be varied by contemporaneous oral agreement:

“Bills and notes, though required by law to be in writing, may however, be varied by contemporaneous written (but not oral) agreement, provided it is made between the same parties and is parcel of the transaction, i.e., that the bill and ‘writing together form one contract.”

Therefore, this revision is dismissed and decree passed by the learned trial judge is hereby confirmed.

R. C. Soni J. August 27, 1957:—I have read the evidence in this case. The plaintiff denies the allegation of any promise having been made to him which is alleged by the other side. The other side, besides going into the witness-box, has produced one witness. I am not impressed by this evidence of the other side.

It is easy to make allegations of the kind when one finds oneself in an awkward condition. I quote James L.J.’s words in Hill v. Wilson (1873) 8 Ch.App. 888, 900—901:

Even if such evidence be legally admissible for any purpose, the interests of mankind, in my opinion, imperatively require that, unless corroborated, it should be wholly disregarded. Nobody would be safe in respect of his pecuniary transactions if legal documents found in his possession at the time of his death, and endeavoured to be enforced by his executors, could be set aside, or varied, or altered by the parol evidence of the person who had bound himself. It would be very easy of course, for anybody who owed a testator a debt to say, ‘I met the testator, and he promised he would not sue.’ ‘I met the testator, and I gave him the money.’ ‘I met the testator, and in consideration of something, he agreed to release me.’ The interests

of justice and the interests of mankind require that such evidenc should be wholly disregarded. In the present case such evidence is inadmissible because it is the rule of law and the rule of this court also that parol evidence cannot be tendered for the purpose of altering the terms of a written contract.”

In the case before us, the evidence of the corroborating witness is wholly unsatisfactory. Allegations can easily be made and, as James L.J. observed, it is in the interests of mankind that such allegations should be disregarded.

In effect it comes to this: the defendant is varying the consideration for which he signed the documents. He now says that there was not one consideration, viz., the giving of time by the plaintiff to the other defendant to pay, but also a further consideration, viz., that something else is to be done for the contesting defendant also. Surely this allegation cannot be allowed.

I agree therefore with the Province Judge.

Advocate for the petitioner presumes that the defendant has been able to prove by the evidence of the defendant and his witness that there was an extra promise. I do not read the evidence that way. There is also force in the reply dated January 24. 1957 (given in paragraph 4), of the advocate for the plaintiff that nobody else has come forward to prove the defence’s contentions. The law relating to Bills of Exchange presumes a valid and unconditional delivery of the bill until the contrary is proved.

It is not in all cases that oral evidence is admissible.

M. A. Abu Rannat C.J. August 27, 1957:—I agree. Application is summarily dismissed