Gour Chandra Das v. Prasanna Kumar Chandra

1. This is a Rule issued by this. Court under Section 25 of the Provincial Small Cause Courts Act,, calling upon the first defendant in the suit to show cause why the decree of the Court below, in so far as it dismisses the claim of the plaintiff as against him, should not be set aside. The plaintiff sued the defendants for recovery of money due on a bond alleged to have been executed in his favour by the defendants jointly on the 12th April 1901. The consideration for the bond is stated to have been money due on an earlier bond, which was satisfied by the execution of the bond now in suit. The second defendant alone entered appearance and resisted the claim on the ground that what purported to be his signature on the bond was a forgery. The Court below found on the evidence that the bond was executed by the first defendant, and after, it had been delivered to the plaintiff and while it was in his custody, the name of the second defendant was forged either by or on behalf of the plaintiff. The learned Small Cause Court Judge therefore held that as the bond had been materially altered, no suit could be founded on it, and in this view of the matter, he dismissed the entire claim against both the defendants. Thereupon the plaintiff moved this Court and obtained the Rule now under consideration.

2. In support of the Rule it is argued, first, that the alteration in the bond was not of such a description as to vitiate it entirely, and that the plaintiff is entitled to enforce its terms as against the first defendant; secondly, that assuming the bond to have been vitiated by a material alteration, the original debt was not extinguished, and the plaintiff is entitled to succeed on the basis of the original consideration, using the recital in the bond as a valid acknowledgment sufficient to prevent the operation of the Statute of Limitations. In our opinion these contentions are unsound, and must be overruled.

3. In support of the first contention, it is argued that as both the defendants are described as executants in the body of the deed, it must be assumed that after the bond had been executed by one, the plaintiff had authority to insert the name of the other. This, in our opinion, is entirely fallacious. It is not proved that the two defendants had agreed that a new deed should be executed by both of them in renewal of the old bond; and even if this was established, it would be necessary for the plaintiff to show that he had authority, express or implied, from the defendants to sign the name of the other so as to bind him by the deed. "We must consequently hold that, after the bond had been executed by the first defendant and delivered to the plaintiff, the name of the second defendant was added as an executant without any authority from him and without the assent of the first defendant. The rule there fore in Cariss v. Tattensall (1841) 2 M. & Gr. 890 : 10 L.J. C.P. 187, Bodge v. Pringle (1860) 29 L.J. Ex. 115, In re Howgate & Ostorn's Contract(1902) 1 Ch. 451 that an alteration made in good faith to carry out the original intention of the parties does not vitiate the instrument, has no application here. The question accordingly arises, whether under these circumstances there has been such a material alteration in the deed as would vitiate it against the first defendant. In our opinion, this question ought to be answered in the affirmative as was done by this Court in the case of Gogun Chunder Ghose v. Dhuronidhur Mundul (1881) I.L.R. 7 Calc. 616. We were invited, however, by the learned vakeel, who appeared in support of the rule, to consider whether the decision can be supported on principle and authority. Sir Richard Garth. C.J., in support of the conclusion at which the Court arrived in that case, placed reliance upon the decision in Davidson v. Cooper (1814) 13 M. & W. 343 : 67 R.R. 638 and Gardner v. Walsh (1855) 5 E.& B. 83 : 24 L.J. Q.B. 285. In the first of these cases, after a guarantee had been made and delivered to the plaintiff, while it was in his hands, it was, without the knowledge of the defendants, by some person to them unknown, altered by affixing two seals by and near to the signatures of the defendants as and for their seals. It was contended on behalf of the defendants that the guarantee had been materially altered and had thus become void in law. The Court of Exchequer Chamber held that the instrument was vitiated Lord Denman C.J., in delivering judgment, laid down as a test for determining the materiality of the alteration, whether the addition gave a different legal character to the writing and whether it would completely change the nature of the relation towards each other of the parties to it and their remedies upon it. The learned Judge further explained the reason for the rule to be that a party, who has the custody of an instrument made for his benefit, is bound to preserve it in its original state. In the second case, Gardner v. Walsh (1855) 5 E.& B. 83 : 24 L.J. Q.B. 285, after a promissory note had been executed by A and "B and delivered to the plaintiff, he induced C to sign it as a joint and several maker. The Court of Queen's Bench held that the promissory note had been materially altered and had become void, Lord Campbell C.J. holding that the entire instrument had been avoided on the principle that, if a party to a deed makes an alteration in a covenant after the deed is executed, not only the covenant but the whole deed becomes void. That the rule thus slated is still regarded as the law in England is clear from the notes to Master v. Miller (1791) 1 Sm. L.C. 767 (11th Ed.); 2 R.R. 399. Any change in an instrument, which causes it to speak a different language in legal effect from that which it originally, spoke, which changes the legal identity or character of the instrument either in its terms or the relation of the parties to it, is a material change, or technically, an alteration, and such a change will invalidate the instrument against all parties not consenting to the change. This is a wholesome rule founded on sound policy and may be defended on two grounds, namely, first, that no man shall be permitted, on grounds of public policy, to take the chance of committing a fraud without running any risk of loss by the event when it is detected, and, secondly, that by the alteration, the identity of the instrument is destroyed, and to hold one of the parties liable under such circumstances would be to make for him a contract, to which he never agreed. (See Lee v. Butler) (1897) 167 Mase. 426, 57 Am. 'The question, to what extent the identity of an instrument must be changed in order that its legal effect will be altered so as to bring the case within the terms of material alteration vitiating the instrument, must depend upon the nature of the "alteration in each particular case. The test is not necessarily, however, whether the pecuniary liability of one of the parties has been increased by the change; it is of no consequence, whether the alteration would be beneficial or detrimental to the party sought to be charged on the contract. The important question is whether the integrity and identity of the contract have been changed. It is to prevent and punish such tampering as changes the identity of the contract, that the law does not permit the plaintiff to fall back upon the contract as it was originally, or in the language of Swayne J., " in pursuance of a stern but wise policy, the law annuls the instrument as to the party sought to be wronged"; Woody. Steel (1807) 6 Wallis 80. If we apply these principles to the case of an addition of a party to a contract, it is clear that such addition constitutes a material alteration. It is not necessary for our present purposes to examine and reconcile the divergent judicial views taken in all the cases in which a party was actually added after complete execution and delivery of the instrument; but there is great force in the argument that the effect of such an alteration is to destroy the identity of the instrument, because it may seriously affect the position of the parties, e.g., if the original makers have a demand against the payee, which they could lawfully set off against the bond, the addition of another maker might destroy that right, or the place of residence of the additional maker might enable the payee to change the forum of the suit brought by him to enforce the bond Soaps v. Eichberg 42 111, 375. Daniel on Negotiable Instruments, Sections 1387--1390. But the present case is very much stronger, because we have not here the addition of a party, but an alteration, consisting in the forgery of the name of a person, who was thus fraudulently sought to be made liable. In such a case, there can he no doubt that the instrument is avoided; see Farmers' Bank v. Aiyers 50 Mo. 157, where it was held that the addition of a forged signature to a note after its execution and delivery was material. On the whole, therefore, we must affirm the doctrine laid down in Gogun Chunder v. Dhuronidhur (1831) I.L.R. 7 Calc. 616 which was followed in Karam Ali v. Narain Singh 2 Punj. L.R. 107 and overrule the first point taken on behalf of the petitioner.

4. The second ground taken on behalf of the petitioner is that he is entitled to succeed on the basis of the original consideration and to rely upon the altered bond as embodying an acknowledgment sufficient to save the bar of limitation. In support of this position, reliance is placed upon, the cases of Moti Lal Saha v. Monmohan Gossami (1900) 5 C.W.N. 56, Aimaram v. Umedram (1901) I.L.R. 25 Bom. 616, Subrahmania Ayyen v. Krishna Ayyan (1899) I.L.R. 23 Mad. 137, and Mimgal Son v. Shankar Sahai (1903) I.L.R. 25 All. 580. In our opinion the position the petitioner takes up is not maintainable and the authorities relied upon are distinguishable, First it is obvious from the plaint that the suit is not based on the original consideration: the original bond, which is supposed to have been renewed, was not produced in evidence, and we have no-materials from which we could ascertain, when the loan was first advanced, when it was repayable and assuming the new bond to be admissible as a proof of acknowledgment, on the principle explained in Atmaram v. Umedram, whether it would be sufficient to prevent the operation of the Statute of Limitations. The case of Moti Lal Saha v. Monmohan Gossami (1900) 5 C.W.N. 56 is, therefore, of no assistance to the petitioner. Secondly, it is by no means clear that the original debt itself may not be extinguished by a fraudulent alteration in the instrument; see, for instance, Alderson v. Langdale (1832) 3 B. & Ad. 660 and the notes to Master v. Miller (1791) 1 Sin. L.C. 801. It has been maintained by high authority that, where a party by his own act alters a genuine instrument, so that it cannot be the foundation of any legal remedy, he ought not to be permitted. to prove the promise contained in it by any other evidence, on the principle that the debt is merged in the instrument and hence the destruction of the latter leaves nothing upon -which to sue. This doctrine, perhaps, may be regarded as somewhat technical; but, although we may hold, that in the absence of fraud, the instrument only and not the original debt is destroyed, where a party has voluntarily and fraudulently altered a deed, and has thus destroyed the evidence of his debt, there is no reason why he should be allowed to fall back upon the original consideration and establish it by evidence, which he himself has destroyed. Warder Wittyard 24 Am. St. Rep. 250, Wilson v. Hayes 12 Am. St. Rep. 754 : 4 L.R.A. 196, Walton v. Campbell 16 L.R.A. 468, and Gettysburg v. Chisolm 47 Am. St. Rep. 929. Thirdly, the cases of Subrahmania Ayyan v. Krishna Ayyan (1899) I.L.R. 23 Mad. 137 and Mangal Sen v. Shankar Sahai (1903) I.L.R. 25 All. 580, upon which great reliance was placed, are clearly distinguishable, if we remember the well recognized distinction between the effect of an alteration of an executory contract and an alteration of a contract which is fully executed. In the first case, the rights under the instrument are gone; in the second, the title vested by the executed instrument remains unaffected by any subsequent alteration, as the alteration does not by itself revest the title in the original owner. We may add, however, that, although it has been held in some cases that a mortgage is not destroyed by an alteration, the opposite view has also been maintained on the principle, that the mortgage remains executory until its enforcement, as it is nothing but a mere lien or incidental security for the debt, Walton v. Campbell 16 L.R. A. 468. For the purposes of the present case, however, it is not necessary to pursue this line of investigation further. The second point fails and must be overruled.

5. It was suggested on behalf of the petitioner that, as the second defendant did not raise the defence that the bond had been avoided, even as against the first defendant by reason of a material alteration, it was not open to the Court to dismiss the suit on that ground. In our opinion there is no substance in this contention. No doubt as an ordinary rule, where the defendant has notice of an alteration in an instrument, which is the foundation of the action, he should raise the issue by his pleading, whether the alteration is material and the instrument has become void. If, however, in proving the execution of a note the testimony discovers the fact that it was designedly changed by the payee, there is nothing to prevent the Court from giving effect to the well settled rule of law, that an instrument is avoided by a material alteration.

6. This Rule will, therefore, stand discharged with costs.