Premji v Janmohamed (C.A. 25/1930 (Msa.).) [1930] EACA 131 (1 January 1930)

## 131

# APPELLATE CIVIL.

Before THOMAS, J.

## OVERMAN & CO (Appellants) (Original Defendant No. 1)

#### 11. 1. RAHEMTULLA AND PREMJI (Original Plaintiff)

### $2.$ ALIBHAI JANMOHAMED (added by order of the Court). (Respondents).

# C. A. $25/1930$ (Msa.).

Bills of Exchange Act, 1882, section 64—alteration of bill.

Held: -That an alteration of the bill by erasing the name of the payee and inserting another name in lieu thereof, without the consent of the acceptor, was a material alteration which discharged the bill as far as the acceptor was concerned.

Christie for appellants.

Patel for respondents.

JUDGMENT.—Rahemtulla Jetha and Premji Dhanji, trading as Rahemtulla and Premji, sued in the Resident Magistrate's Court Overman trading as Overman & Co., as the acceptor and Alibhai Janmohamed as the indorser of a bill of exchange. Judgment was given for the plaintiffs. Against that Judgment Overman & Co appeal. Alibhai Janmohamed did not appeal but his name was added as a respondent under Order XXXIX, R. 17. At the hearing of the appeal Mr. Christie appeared for the appellant and Mr. Patel appeared for both respondents. In the action in the Resident Magistrate's Court there was a third defendant, viz., one T. M. Jones who, however, was not served.

The facts are that Overman & Co., having acquired certain agency interests from T. M. Jones, accepted four bills of exchange drawn by him and made payable at ninety days after sight to the order of the Standard Bank of South Africa, Ltd., Mombasa.

One of these bills was altered by erasing the name of the payee and inserting in lieu thereof the name of Alibhai Janmohamed. That erasure and addition are initialled T. M. J. It was alleged at the trial that the alteration was effected prior to the acceptance by Messrs. Overman & Co. The Resident Magistrate did not accept that suggestion and I see no reason to differ from him since there appears to be ample evidence in support of his conclusion. The alteration having been effected, the bill was negotiated to Alibhai Janmohamed and by him endorsed to the original plaintiffs Rehemtulla and Premji. When presented the bill was not paid by Overman & Co. with the result that this action was brought.

A number of defences were relied on and those defences have in turn become the grounds of appeal. These grounds have all been argued, but the first which requires consideration is the objection that the bill has been materially altered without the assent of all parties liable on the bill and that it is therefore avoided under section 64 of the Bills of Exchange Act, 1882. The alteration alleged to be material is that which I have set out above.

In section 64 (2) particular alterations are mentioned. Those particulars are not intended to be conclusive but are given as examples of alterations which would be considered material.

The Resident Magistrate in his Judgment with reference to this matter has stated as follows: -" An alteration is material which in any way alters the liabilities of the parties and the operation of the Bill whether the change be prejudicial or beneficial (Gardner v. Walsh, 1885, 5 El. & Bl. p. 89; 119 E. R. p. 412) (I think that I should pause here to say that the question $p$ . of materiality is one affecting the first defendant; it is clearly not a point upon which the second or third defendants could or do rely). To continue it certainly could not be said that the liability of the first defendant has been altered by the alteration and this really is, I think, the test. As I understand the law on the point from as many of the cases referred to as I can find in the library as enumerated in Chalmer's Bills of Exchange at page 254 under the heading of "Illustrations, Material Alteration," it appears to me that the underlying principle throughout is-Has there been an alteration made on the Bill affecting the liabilities of any of the parties to pay under the Bill? If the alteration affects the amount, the time for payment, the interest payable, I do not think that I can hold that the first defendant's liability to pay has been affected by the alteration. There is nothing in my judgment, either prejudicial or beneficial to the first defendant in the alteration; the most that he could say is: "I prefer that my bills should await their maturity in lying in the Bank, rather than they should be exchanged for value in the Bazaar." I must hold that the alteration is not material."

Two cases have been cited to me which bear directly on this question. I regret that I have not been able to refer to either The first is Connor v. Fitzsimon, 1841, Ir. Civ. of them. Rep. 106; the second is Asch Ltd. v. Dufresne (1916) Q. R. 49, S. C. 508. Both these cases appear in the English and Empire Digest, Vol. 6, p. 376. The note to the former is as follows: Altering the name of the payee of a promissory note is a material alteration. The note to the second is: The substitution, after acceptance, of the name of a new holder is an essential alteration. if made unknown to the maker.

In addition to these authorities there is the case of Atwood and others v. Griffin and others, 172 E. R., p. 166. In that case the bill had been originally made payable to " $\ldots$ or order" and, after acceptance had been altered by the insertion of the name of Groves in the blank.

BEST, C. J., in his Judgment cited Lord Ellenborough as saying: "As the defendant has chosen to send the bill into the world in this form, the world ought not to be deceived by his The defendant by leaving the blank, undertook to be acts. answerable for it when filled up in the shape of a bill." He further cited Mr. Justice Bayley as saying: "that the issuing the bill with a blank for the payee's name was an authority to a bona fide holder to insert the name." He continues: "if so, then the plaintiff had a similar authority in this case."

That case is an authority for inserting a name of a payee where the name has been left blank and the leaving of the blank has been assumed to be an authority to insert a name. It would seem therefrom that where no blank has been left but a name has been filled in there is no authority to alter that name.

A similar question was considered by the Court in the case of Tidmarsh against Grover, 105, E. R., p. 275. The head-note reads as follows: -- When the drawer of a bill of exchange accepted payment at B. & Co's; after keeping it three or four years indorsed it to plaintiff, erasing the name of B. & Co. and substituting E. & Co. without the knowledge of the acceptor, B. & Co. having failed since the acceptance. Held that plaintiff could not recover against the acceptor. The question suggested was what difference is there in effect between inserting a place where none before existed and altering one which did exist. Lord Ellenborough considered that if the alteration led to no other consequence than this, that the holder might have protested the bill for non-payment at a place when the acceptor had never made it payable, and thereby put the party to an additional expense, that would be a sufficient objection.

LE BLANC, J., considered that the alteration materially varied the contract of the party who accepted.

That seems to be the answer in the present case. The contract of the party who accepted has been materially altered. The acceptor has been deprived of his knowledge of the name of the payee and his power to notify him of any defect relating to the bill. And it must be remembered that in this case it was alleged that the bill was obtained by fraud.

The bill having been, in my opinion, materially altered without the consent of the acceptor, the bill has been discharged as far as the acceptor who is the appellant in this case is concerned.

The appeal is therefore allowed. The judgment of the Court below against the defendants Overman & Co. is set aside and Judgment is entered for Overman & Co. with costs. The appellants Overman & Co. will also have the costs of this appeal to be paid by the respondent Rahemtulla and Premji.