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Present: De Sampayo and Schneider JJ.
HANIFFA v. MOHAMADO.
366—D. C. Matara, 9,432
Alienationinfraud of creditors—Action byjmrckascrfrom judgment-
debtor against purchaser at Fiscal's sale—Can purchaser at Fiscal'ssalesetup thedefence that transferin favourof plaintiff to as
tainted with fraud1—Transfer of all debtor's property on three *successive days—Did debtor make himself insolvent before the lasttransfer?—Bondgiven by debtor andsurety—Alienationby
principal debtor—Is creditor defrauded?
A as principal debtor and B as surety granted a bond, in favourof C.Adid notmortgage any propertj', but Bmortgaged some
property of his own. On a decree obtained on the bond, a propertywas seized as the propertyofA, and was purchasedby defendant
at the sale in execution. Before the sale, A transferred all hisproperty by three deeds executed on three successive days; theproperty purchasedby defendant at theexecutionsale was trans-ferred on the seconddaytothe plaintiff.Plaintiffinstituted an
action for declaration of title to the property against defendant.
Held,thatit was open tothe defendant toshow that the deed
in favour of the plaintiff was executed in fraud of creditors.
Plaintiff contended that as the deed in his favour was the secondof the series of three deeds, A had not made himself insolvent byexecuting the deed.
Held, that the three deeds must be taken to be one and the sameact of alienation “ To hold that before the execution of the lastof the three deeds Awasnot insolvent, ashe hadsome properly
left, would be to give effect to a mere subterfuge. ”
It was contended that A in alienating his property in favour ofthe plaintiff could besaidj£ohave intendedto defraud the surety
and not the creditor..
Held,thatas the principaldebtor’s propertywas first liable, the
creditorwasintended to bedefrauded by thealienation, especially
as it was not shown that the property morgaged by the suretywould have been sufficient to pay the debt in full.
HE facts appear from the judgment.
Samarawickreme (with him Chas. de Silva), for plaintiff, appellant.
Bawa, K.G. (with him E. W. Jayawardene), for defendant, res-pondent.
November 3, 1922. De Sampayo J.—
The plaintiff brought this action to vindicate title to two lands:(1) Modingewila Mahakuttiya and (2) Modingewila Punchikuttiya andOkanda. The defendant disclaimed title to the second of' theselands, and the dispute was therefore confined to the first land.The land admittedly belonged to one Ismail Lebbe. The plaintiff'sclaim is founded upon a deed No. 15,028 executed by Ismail Lebbein his favour on January 20, 1919. The defendant impeaches thisdeed as being fraudulent and collusive, and executed to defraudIsmail Lebbe’s creditors. At that time Ismail Lebbe appears, infact, to have been in pecuniary difficulties, and by three deedsexecuted about the same time he transferred away all his propertyin favour of his close relatives. The first deed was executed onJanuary 18, 1919, for some lands, the second was the deed in favourof the plaintiff for this and two other lands, and the third deeddated the next day was for the rest of Ismail Lebbe’s property.It is proved that notwithstanding these deeds of transfer IsmailLebbe continued to be in possession of the lands. In the meantimehe had been sued by one of his creditors, and under writ issued inthat case the land now in dispute was sold in April, 1919, andpurchased by the defendant. The Fiscal granted a transfer to thedefendant on July 10, 1919. The learned Judge held that thedeeds executed by Ismail Lebbe were intended to defeat his creditors,and dismissed the plaintiff’s action.
One or two questions of law are raised on behalf of the defendant.It is contended that the defendant, not being a creditor of IsmailLebbe, but only a purchaser at the execution sale, was not entitledunder the Roman-Dutch law to have the plaintiff's deed set asideon the ground that it was an alienation in fraud of creditors.Defendant, however, is not seeking to have that deed set aside—heis on the defensive, and sets up superior title on the ground that theplaintiff’s deed is tainted with fraud. The point in any case, iscovered by judicial authority. Suppiah Naidu v. Meera Snibu,1where Hutchinson C.J. observed that “ if a creditor could claim onthat ground to have the deeds declared void as against*' him, anyone claiming, as this plaintiff does, through the creditor, has thesame right.” See also Mohamado v. Manupillai.2 Mr. Samara-wickreme invited us to review these decisions, but I think that,constituting as we do, a bench of two Judges, we must follow them,i 3 Bal. 129.• 3 C. W. JR. 19.
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1882. xt appears that the action in which the land was sold and purchasedDa sZmpayo by the defendant was on a bond granted by Ismail Lebbe as principalJ* debtor and by another party as surety. The surety mortgagedHaniffa v. some property of his own, but there was no mortgage of any propertyMohamado by Ismail Lebbe himself. It was contended that in these circum-stances Ismail Lebbe, in alienating his property in favour of theplaintiff, could be said to have intended to defraud the surety andnot the creditor. But the law required, and it was expresslydeclared in the decree in the action, that the property of IsmailLebbe as principal debtor should be first discussed, and that theproperty mortgaged by the surety should be liable to be sold onlyfor any deficiency. If Ismail Lebbe’s property was put out of theway to prevent its being so discussed, I think the creditor wasintended to be defrauded, especially as it is not shown that theproperty mortgaged by the surety would have been sufficient topay the debt in full.
As shown above, the deed in favour of the plaintiff was the secondin the series of three deeds by which Ismail Lebbe alienated allhis property. This being so, it is contended that by the executionof the deed in plaintiff’s favour Ismail Lebbe could not be said tohave made himself insolvent, because Ismail Lebbe still had thelands alienated by the third deed which wag executed the next day.But it is quite clear that all the three deeds, though executed oneafter the other within three days, had one object in view, and wereexecuted in pursuance of an intention conceived at the same time,namely, to defeat Ismail Lebbe’s creditors. In my opinion the factof the three deeds being executed in three consecutive days andnot on one and the same day makes no real difference. They mustbe taken as one and the same act of alienation, and to hold thatbefore the execution of the last of the three deeds Ismail Lebbe wasnot insolvent, as he had some property left, would be to give effectto a mere subterfuge.
In my opinion the judgment of the District Judge was right, andI would dismiss this appeal, with costs.
Schneider J.—I agree.
HANIFFA v. MOHAMADO