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Present: Bertram C.J. and Garvin'A. J.
MAR ALIYA 9. GUNASEKERA et al.
120—D. C. Ratnapura, 3,528. .
Buddhist Temporalities Ordinance, 1889—Action by trustee on contractsmade by his predecessor—Trustee personalty liable on contractsr—Trusts Ordinance, 1917, s. 7Investing of chose in action on newtrustee.
Under the Buddhist Temporalities Ordinance a trustee for thetime being can sue on contracts made by his predecessor.
A trustee is not free from personal liability. But if he incursa liability in the bona fide execution of his trust, he has a rightof indemnity against the trust property.
A trustee is not entitled to an order that the property belongingto the trust should first be discussed before he is made personally-liable.
^|TBE facts appear from the judgment.
Amaresekera (with him E. G. P. Jayatileke), for appellants.
A. St. V. Jayawardene, K.C. (with him D. B. Jayatileke), tor
December 21,1921, Bertram G.J.—
This is an action on a mortgage bond. The plaintiff is thetrustee of a Buddhist temple, and the defendants who are theofficers of the Saddaramodaya Society …. themselvesappear to be trustees. The property which they have mortgagedis property belonging to the society which they represent, and it isvested in them as trustees for the society. They have put thetemple trustee to the necessity of proceeding at law, not becausethey dispute the bond, but because of their sense of the uncertaintyof their legal position if they paid the money to him.
The question to be determined is whether the present trustee,who is not a party to the bond, can sue upon it, or whether it isnecessary that his predecessor, who executed the bond, should bejoined as a party.
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Speaking generally, no one can sue on an instrument to whichhe is not a party, except by virtue either of representation (as in thecase of an. executor or administrator), or amrignment (as in theordinary case of cessio), or by virtue of some statutory provision(as in the case of an assignee in insolvency).
In the case of trustees, it has always been necessary that on theappointment of a new trustee the trust property should be formallyassigned to him. All books of precedents of conveyancing containforms for such assignments. This was so, and in England is still so,even when the trustee nominated by the instrument of trust is theperson for the time being holding a particular office. Where Onlyone of several trustees had vacated his office, the assignment ofcertain classes of property had to be made to an intermediary,who subsequently re-assigned to the trustees in a body, on theground that a person could hot assign such property to himself.The necessity for this procedure was obviated by the Law ofProperty Amendment Act, 1859, and the principle of that amend-ment appeared in section 2 of our own Prdperty and TrusteesOrdinance, 1871, and survives in section 115 of the present TrustsOrdinance, 1917. The difficulties created by this principle of lawwere in England modified by various acts of legislation. Thus,by the Trustee Appointment Act, 1850, provision was made forvesting property held by trustees for religious or educational •purposes in the new trustees on their appointment without a specialconveyance (compare now our section 113 (2)), and by variousother provisions now embodied in the Trustee Act, 1893, provisionwas made in certain cases by vesting orders or otherwise under whichtrust property passed to new trustees in the same manner as if theretiring trustee had executed a regular transfer. Similar provisionsmay now be found in our own Trusts Ordinance, 1917 (see sections77,112, and 113). Our own provisions indeed go further than thelaw of England in this respect (see in particular section 113 (1) andsection 77).
Now, the matter in respect of which the present plaintiff suesis known in English law as a chose in action. The idea of a chosein action as a form of property has not been so fully developedin the Roman-Dutch law as in the English law, but it has becomedefinitely naturalized in Ceylon as part of our legal system. It isrecognized every day in insolvency and testamentary actions,where the debts due to a bankrupt or to a testator or an intestateare regularly scheduled as part of his property. It was alwaysrecognized under English law that trust property might consist of achose in action. Special provision was made for the vesting of a' chose in action in a new trustee under some of the English enact-ments above referred to, and though tlvsrd is no express mentionof the vesting of ohoses in aotior . * -ha sections of our own TrustsOrdinance above referred to (exc^ < section 77, where rights in
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“ rights of suit ” are referred to), it must be taken that ohoses inaction are deemed to be recognized as forms of trust property.Otherwise the effectiveness of these sections would be gravelydiminished.
A distinction is drawn between this form of property and otherforms of property for the purpose of vesting title by inheritance in ajudgment of this Court (see Fernando v. Dnnanse1). The dis-tinction is not material for the present purpose, but the judgmentis an indication of the fact that a chose in action is recognized as aform of property devolving by inheritance.
I will now proceed to consider the provisions of the BuddhistTemporalities Ordinance, 1905, which relate to this question.Section 19 provides that all contracts and all rights of action arisingout of contracts in favour of any temple or any person on its behalfmay be enforced by the trustee as though such contract had beenentered into with him. This relates only to the first appointmentsunder the Ordinance. There is no corresponding provision withregard to successive trustees. Section 20, however, provides thatall property, movable and immovable, belonging or in any wiseappertaining to or appropriated to the use of any temple ….shall vest in the trustee of the temple. It is clearly intendedthat such property should vest successively in the trustees forthe time being. Section 30 authorizes the trustees to sueunder the name and style of “ trustees of (name temple) ” for therecovery of any property vested in them under the Ordinanceor of the possession thereof, and for any other purpose requisite forthe carrying into effect the objects of this Ordinance.
In spite of the absence of any provision giving the subsequenttrustees the same i-ghts of suit on contracts not made withthemselves as are given to the first trustees appointed under theOrdinance by section 19, I think there can be no doubt that itwas the intention of the Ordinance that choses in action should vestsuccessively in the trustee for the time being holding officeunder the Ordinance in the same maimer as other trust property.The vesting of the choses in action in this maimer for.each successivetrustee carries with it by implication the right to sue upon thedocument, in which the title of the religious foundation to the chosein action is embodied and defined, even though the person suingwas not an original party to the instrument.
There is a previous decision of the Full Court which may seemto have a bearing upon this question, but which, when examined,has very little weight. Mudalihamy v. Karupanan* Burnside
J. dissented from the decision, and both Clarence J. andDias J. appeared to proceed upon the mistaken assumption that vsection 19 applies even .to contracts made after the Ordinancecame into operation. There is also an Indian case cited to
1 (IMS) 20N. L. R. m.* (1891) 1C. L. B. 88.
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us by Mr. Jayawardene, which seems to require some comment.(Ramanadhan Chetty v. Katha Velan.1) It was there held that apromissory note executed in favour of a trustee can be sued onby his executor without endorsement or assignment. The trustin question was a public charitable trust to which the IndianTrusts Act did not apply. It was there said: “ Broadly speaking,trustees exercise rights and obligations as agents of the trust. Thetrust being the owner, succeeding trustees derive their rights andoffice by relation to the trust, and not as the heirs of the last holderof that office. All of them form a chain of representatives inrespect of the trust, as was once said by the Judicial Committee.”
If by this it is meant to suggest that under the English law ofTrusts trust property, independently of the provisions of section76 of the Indian Trusts Act, would devolve from trustee to trusteewithout a transfer, I would venture to suggest that this dictummust have been uttered without as full a consideration of thesubject as it deserves. The analogy drawn in the judgmentbetween trustees and exeoutors and administrators is fallacious.Exeoutors and administrators have a title by representation whichtrustees have not. The words “thetrust being the owner” imply aview of the law of trusts which is foreign to the English law onwhich the Trusts Ordinance is based. It is that of the personifi-cation of what is known as the “ foundation.” This existed in theRoman law and to some extent in the Roman-Dutch law, and existsto-day in certain systems of continental law, but it is foreign to theEnglish law and to the modem law of Ceylon. See ii. W. Lee,Introduction to Roman-Dutch law, p. 105: “ We no longer attributeany kind of personality to an unincorporated charity, the onlypersons which come in question being those of the trustees in whomthe trust property is vested.” The fact that India has no commonlaw may have seemed to the Court in that case to justify theintroduction of this foreign principle into the law* of Lidia. Butwe are precluded from doing so by section 118 of our Trusts Ordi-nance, 1917, which declares: “ All matters with reference to anytrust, or with reference to any obligation in the nature of a trustarising or resulting by the implication or construction of law, forwhich no specific provision is made in this or any other Ordinance,shall be determined by the principles of equity for the time beingin force in the High Coart of Justice in England.”
The decision of the Privy Council referred to in the Indian judg-ment is not further identified, and it is possible that the expression of .opinion there referred to was made in another connection. Underour own Trusts Ordinance, devolution of property on new trustees,appointed under that Ordinance is now regulated by section 77,but trustees of Buddhist temples are not appointed under thatOrdinance, and the section does not apply to them.
1 (1916) 41 Mad, M.
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A difficulty arises in connection with the position of the defend-ants. The title deed to the property is made oat in their names,presumably as trustees for the property. Mr. Amaresehera asksthat judgment should he entered against them in their capacity astrustees, and that they should be freed from any personal liability.It is impossible to concede this. They are personally liable on thebond, which also, though not quite logically, makes them personallyliable as sureties. The law knows nothing of the idea of a trusteesuing or being sued in his oapacity of trustee. He has not a repre-sentative capacity like that of executor or administrator. If heinours a liability in the bona fide execution of his trust, he has arightof indemnity against the trust property. Mr. Amaresehera asks usto order that the property belonging to the trust should first be dis-cussed before the trustees are made personally liable. We cannot dothis, but I understood Mr. Jayawardene to give the undertaking onbehalf of his clients that this course would be taken. With regardto the mortgaged property which is the subject of this action,the mortgage decree will of itself have the effect desired by Mr.Amaresehera.
The trustees are in a further difficulty, that they have mortgaged. trust property without obtaining the consent of the Court undersection 42 (2) of the Trusts Ordinance. They will, therefore, haveto apply to the District Court for relief under section 31, and willno doubt obtain it. Subjeot to their obtaining this relief, I thinkthat in the circumstances of the case, as the point was a new andobscure one, the legal expenses they themselves have incurredshould be payable out of the trust property. The respondents areentitled to their costs in the ordinary way. I would dismiss theappeal, with costs.
Qabtin A. J.—I agree.
MARALIYA v. GUNASEKERA et al