TMI Blog1962 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 25,000/- which was subsequently altered to ₹ 20,000/- and that any change of figure was a material alteration resulting in the avoidance of the contract, even though the alteration might have been advantageous to him, the obliger. It was argued that howsoever innocent the obligee might be or howsoever innocent the alteration might have been made so far as it is material the non-accepting obliger-the appellant in this case-cannot be held liable on the obligation in the altered form because he never made be consented to such an obligation and he cannot be held liable on the obligation in the original form because the obligation was never assented to by the creditor respondent Bank. Now an unauthorised material alteration avoids a contract so that if a promisee after a written contract has been executed materially alters it without the consent of the promisor whether by adding anything to the contract or striking out any part of it or otherwise the contract is avoided as against the person who was otherwise liable upon it (Halsbury's laws of England, 3rd Edn., Vol. 8, para 301, p.176). It may also be taken to be the law that even if the alteration is made by a stranger wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. The suit was decreed against Sankaran by the trial Court and he never, appealed from that decree. We will, therefore, be concerned in this appeal only with the claim against the appellant. The suit against the appellant was based on a letter of guarantee dated May 24, 1947. It was stated in the plaint that by this letter of guarantee the appellant had undertaken to repay to the Bank the balance due on the overdraft account opened in favour of Sankaran, up to a maximum of ₹ 20,0001/- which was also the maximum amount for which the overdraft had been arranged. The appellant's defence to the suit was that he had agreed to guarantee the liability of Sankaran on the overdraft up to ₹ 5,000/-and had signed the letter guaranteeing thereby repayment up to that sum but the letter had been altered without his consent by substituting ₹ 20,000/- for ₹ 5,000/-. The appellant contended in the courts below that as this was a material alteration of the instrument of' guarantee. he was absolved of ill liability on it. The trial court found, that the amount guaranteed had originally been mentioned in the letter as ₹ 25,000/- and this had been alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned judges of the High Court thought it was and so held that the letter of guarantee as altered could be enforced. I am unable to accede to that view. It seems to me that the intention to carry out which an alteration is permissible under the rule on which the High Court has relied, is the intention with which the instrument was executed. That is why in formulating the rule it has been stated in Halsbury's Laws of England that the intention has to be already apparent on the face of the deed . I need only refer to the observation of Le Blanc, J., in Knill v. Williams (1809) 10 East. 931; 103 E. R. 839. in support of this proposition, If I had thought that there was any evidence on which the jury might have found that the words afterwards added had been originally intended to have have been inserted, and were omitted by mistake, I 'Should certainly have left it to them so to find; the case of Kershaw v. Cox 3 Esp. N. Cas. 246. (3) A. I. R. 1939 All. 248. being then fresh in my mind; but. according to my recollection of the evidence, it was impossible for them to draw that conclusion from it. The opinion which I delivered in Karshaw v. Cox can only be supported on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mistake in Ext. C (the letter of guarantee). There was not the slightest warranty for; this conjecture. In fact the evidence indicates that ₹ 25,000/-had been mentioned intentionally in the letter of guarantee. That evidence was given by the Banks agents too., He said that the overdraft arrangement commenced on February 24, 1947, when Sankaran executed a promissory note for ₹ 20,O00/- in favour of the Bank. At that time the appellant was not available to sign the letter of guarantee. The letter was typed by the Bank with blank spaces left for entries to be made by the guarantor regarding the maximum limit of the account, the rate of interest, and the date. Sankaran brought this letter back to the Bank in May 1947. At that time the space for the amount of the limit was filled up with the figure ₹ 25,000/-. Sankaran said that he required ₹ 25,000/-and would renew the promissory note for that amount. The Bank was not prepared to advance to him more than ₹ 20,000/- and so the letter of guarantee was returned to Sankaran who then took it away and brought it back some time later with the amount of the maximum limit corrected to ₹ 20,000/-. This is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter from another point of view. He said that in order that an alteration in an instrument made without a party's knowledge might be avoided against him that alteration had to be material and in support of it he referred us to a passage in Halsbury's Laws of England 3rd Ed., vol. 11, p. 380. He then said that no alteration could be material unless it was to the prejudice of a party. He pointed out that the alteration in the present case had reduced the limit of the appellant's liability from ₹ 25,000/- to ₹ 20,000/- and it was not therefore a material alteration. Hence he contended that the letter of guarantee had not been avoided by the alteration. I do not think that this contention assists the Bank at all. I will assume that an alteration in an instrument which is not to the prejudice of a party to it is not a material alteration and does not release him from his liability under the instrument. This rule however does not make the instrument as altered binding on that party. If it did, that would amount to changing by unilateral action the terms of a contract made by common consent or to changing the terms of an offer made by one without his consent. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of Sankaran's dues to the Bank up to ₹ 20,060/-. There is no evidence of, any verbal contract of guarantee. The appellant' wrote a letter guaranteeing repayment of those dues up to ₹ 251000/-. Sankaran also signed this letter but that signature is of no consequence to the question of guarantee which alone arises in this appeal for Sankaran could not guarantee his own debit and his signature would therefore only be evidence of his liability for the amount advanced to him by way of overdraft. Such liability, however, he had already undertaken by executing a promissory note for ₹ 20,000/- in favour of the Bank. His signature on the letter of guarantee therefore made no difference in the legal relations that have to be considered in this appeal. Returning now to the letter of guarantee Written by the appellant, the Bank refused to accept that letter and, therefore, on the Bank's own case no contract on its terms was ever made. That letter was altered without the consent of the appellant probably by Sankaran by substituting ₹ 20,000/- for ₹ 25,600/-. If the alteration was without the appellant's consent, it could not have been authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the corresponding change in the words by the addition of the words twenty and the scoring out of word five has not been believed. Thus the case made out by Anirudhan has not been accepted. The correction. however, is patent and the question that has arisen in this case is whether by the alteration of the letter of guarantee the surety is discharged. The finding of the High Court is that there was no prior oral agreement between the Bank and Anirudhan. This letter, as is obvious from the dates, was give after the loan had already been made. The contention of the Bank was that when Sankaran brought this letter and asked for additional loan of ₹ 5,000 the Bank refused to advance any further amount and declined to accept this letter of guarantee for ₹ 25,000 lest the Bank might be compelled to loan a further sum of ₹ 5,000. Sankaran then took back the letter and after some time brought it back with the figure 5 changed into O and the word five scored out. These corrections were not initialled either by Sankaran or by Anirudhan. The Bank, however, accepted this letter and kept it and sued Anirudhan upon it. The question is whether Anirudhan's liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is a plea of non est factum. Both the arguments rest upon the alteration of the contract into which Anirudhan wished to enter. A surety is considered a favoured debtor and his liability is strictissimi juris. Lord Westbury, L.C., in Blest v. Brown (1862) 4 De G. F. J. 365 ; 45 E. R. 1225 stated this liability in the following words:- It must always be recollected in what manner a surety is bound. You bind him to the letter of his engagement. Beyond the proper inter- pretation of that engagement you have no hold upon him. He receives no benefit and no consideration. He is bound, therefore, merely according to the proper meaning and effect of the written engagement that he has entered into. If that written engagement is altered in a single line, no matter whether the alteration be innocently made, he has a right to say, 'The contract is no longer that for which I engaged to be surety; you have put an end to the contract that I guaranteed, and my obligation, therefore, is at ail end. It is not necessary to go into the fact of that case where the surety guaranteed fulfilment of a contract for the supply of, flour to a banker who in his turn had undertaken to suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case for a long time was Pigot's case 11 Co.Rep.26 b;77E.R.177 where Lord Coke stated the doctrine as follows:- These points were resolved: 1. When a lawful deed is raised, whereby it becomes void, the obligor may plead non, est factum, and give the matter in evidence, because at the time of the plea pleaded, it is not his deed. Secondly, it was resolved, that when any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it by interlineation, addition, raising, or by drawing of a pen through a line, or through the midst of any material word, that the deed thereby becomes void so if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed, is void: but if a stranger, without his privity, alters the deed by any of the said ways in any point material, it shall not avoid the deed. The passage is also to be found in an article Discharge of Contracts by Alteration by Williston in 18 Harvard Law Review, p. 105. The strictness of this rule was tempered in subsequent cases and was departed from in Aldous v. Cornwell (1868) 3 Q. B. 573 where Lush, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssolved when A takes the note and finding that the tradesman has only six bags of wheat in stock, corrects his order as well as the endorsement by altering ten' into 'six'? In my opinion, to such a correction neither the one rule nor the other can apply. The strict rule of law which was brought to our notice from the well-known Suffell's Case (1882) 9 Q. B. D. 555 , where a Bank of England note was mutilated and its number destroyed, depended upon its special facts. The number of the Bank of England note was considered its vital part and the alteration a material alteration. Suffell's Cage (1882) 9 Q. B. D. 555 was not followed by the Privy Council in a case where a bank note issued by bank which was only a contract and not currency, as in the other case, was destroyed because the owner had forgotten that the note was in the pocket of a garment and the garment had been washed. The note was reconstructed and showed the contract but not the number. The Privy Council held the bank liable even though the contract had been Altered by eraser (see Hong Kong and Shanghai Banking Corporation v. Lo Lee Khi [1928] A. C. 181. These cases establish that both the limbs of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
