Karimjee Jivanjee and Co. v Dhanjee (C.C. 47/1932 (Mombasa).) [1933] EACA 8 (1 January 1933)

ORIGINAL CIVIL.

Before Dickinson, J.

KARIMJEE JIVANJEE AND CO. (Plaintiffs)

$\boldsymbol{v}$ .

ALIBHAI MOHAMED DHANJEE (Defendant). C. C. 47/1932 (Mombasa).

- Bills of Exchange Ordinance, 1927, section 64-Indorsement-Material alteration. - $Held$ (30-9-32).—That, whatever was the intention of the holder and<br>indorser of a promissory note at the time of indorsement, the sub-<br>sequent insertion, without the knowledge or consent of the in-<br>dorser, of the words "Pa alteration in the document as to discharge him from all liability thereunder.

Patel for the Plaintiffs.

Burke for the Defendant.

Burke submitted that there is no case to answer, as pleadings are drafted. This is a suit on a promissory note, and until to-day there was nothing to show that the words importing guarantee were added later. The admission that the Bill was altered after signature creates in effect a material alteration: Brett, L. J., in Suffell v. Bank of England (1882), 9 Q. B. D. 555 at 568. This alters the effect of the instrument. Referred to section 56, Bills of Exchange Act, 1882, and to the Kenya Ordinance; K. E. Jones Ltd. v. Waring and Gillow Ltd. (1926), A. C.

670. Plaintiffs are suing on a promissory note and endeavouring to impose on defendant the liability of an indorser to a holder in due course: Steele and Others v. Mackinlay, 5 A. C.

754.

Patel replied alleging that defendant agreed to guarantee and did guarantee, and for that purpose indorsed the promissory note. Referred to sections 20, 34 (4) and 64 of the Bills of Exchange Ordinance, and to Chalmers' Bills of Exchange, particularly with reference to section 64 (2) of the English Act.

Burke, replying, cited Gerald McDonald and Co. v. Nash and Co. (1924), A. C. 625, and M. T. Shaw and Co., Ltd. v. Holland and Another (1913), 2 K. B. D.

15.

JUDGMENT.—In this action plaintiffs claim from the defendant a sum of Sh. $2,114/59$ , being the amount of seven promissory notes drawn by plaintiffs accepted by the firm of Karachiwalla and Co., now bankrupt, and endorsed by the defendant as guarantor.

The manager of the plaintiff firm gave evidence, and Mr. Patel closed his case.

Mr. Burke, for the defendant, in cross-examination of the plaintiff, elicited the fact that long after the defendant endorsed the promissory notes, he (the witness) inserted or caused to be inserted before the signature of the defendant the words "Payments guaranteed by me". Mr. Burke submitted that defendant had no case to answer.

Mr. Burke submits that is "material alteration" within the meaning of Lord Justice Brett in Suffell v. Bank of England, reported 1882, 9 Q. B. D. p. 555 at p. 568, in that it alters the effect of the instrument.

Section 58, Bills of Exchange Act, makes an endorser liable to a holder for value, but it has been held that an endorser is not liable to any but subsequent holders in due course, and that such endorsers are not liable to the parties to the note. Steel $v$ . Mackinlau, 5 A. C.

754.

Mr. Burke submits that if the addition of the words "Payments guaranteed by me" effects any change or alteration in the legal position of the defendant as an "endorser" then it is a "material alteration" and that was held in Suffell v. The Bank of England, supra, to vitiate the document.

Mr. Burke submits the defendant is not liable as an endorser to the plaintiffs, and as the notes have been altered materially he also is not liable thereon.

This argument seems to me conclusive.

The only matter left for me to consider is whether the plaintiff has claimed against defendant as a guarantor under a separate contract apart from the promissory notes themselves.

The witness' evidence is that the defendant agreed to sign as guarantor, but plaintiffs' witness did not ask the defendant to add such words to his endorsement.

I think that all the defendant did was to endorse the promissory notes in the usual way.

Had the promisorry notes been endorsed over by the plaintiffs to "holders in due course" the defendant would have been liable as an endorser, but no such transaction having taken place, defendant's potential liability has never arisen.

I dismiss the action with costs to the defendant.