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Present: Dalton J. and Jayewardene A.J.RATTARANHAMY w. APPUNA1DE el al.
97—D. C. Ralnapura, 4,607.
Usufructuary mortgage—Agreement not tq lease or mortgage—Subsequentmortgage—Right of second mortgagee to discharge the previousmortgage—Authority.
The owner of certain property gave a usufructuary mortgageto the defendants, covenanting that “ he will not, during the con-.tinuance of this mortgage, lease or mortgage the said premises ordo any act or deed whatever, which may impeach the rents andincome thereof, without the consent in writing first had andobtained.”
Thereafter he gave another usufructuary mortgage to theplaintiffs, who were authorized to retain a portion of the consider-ation for the discharge of the previous mortgage.
Held, that the plaintiffs were entitled to redeem the mortgagegranted to the defendants.
HIS was an action brought by the plaintiffs to redeem a usufruc-tuary mortgage granted by one Mohottihamy on September 16,
1922, in favour of the defendants to secure a sum of Rs. 350. OnApril 24, 1925, Mohottihamy executed a further usufructuarymortgage in favour of the plaintiffs for the sum of Rs. 1,400, ofwhich a sum of Rs. 675 was retained in the hands of the plaintiffsfor the purpose of discharging among others, the mortgage in favourof the defendants. On the defendants refusing to receive paymentof the debt due to them, the plaintiffs instituted this action, bringinginto Court the sum of Rs. 350. The learned District Judge dismissedthe plaintiffs’ action.
Navaratnam, for plaintiffs, appellant.—A debtor has the right to. .pay his debt and to redeem a mortgage bond securing the debt.This right he can exercise directly or through an agent. Covenantsrestraining him from executing a subsequent lease or mortgage tothe property hypothecated cannot be construed to mean a re-nunciation of the right to redeem. The debtor, in the presentcase, seeks to pay the debt and redeem the earlier bond through .his duly constituted agent, the plaintiff. No privity of contractbetween the first mortgagee and the plaintiff need exist to enablethe latter to act as the debtor’s agent. Apart from being thedebtor’s agent, the plaintiff*relies on the usufructuary bond in hisfavour. He can enforce by action his right to possess and cultivatethe field mortgaged to him and get out of the way the earlier bondby payment of his mortgagor's debt.
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Rajakariar, for defendants, respondent.—The mortgagor hasdefinitely bound himself not to lease or mortgage to another. Hehas acted in breach of this express condition by giving the secondusufructuary mortgage. The right to redeem is, under thecircumstances, personal to him and cannot be exercised by theplaintiffs.
July 3, 1928. Dalton J.—
One Mohottihamy executed a usufructuary mortgage No. 9,959on September 16, 1922 (D 1), in favour of Appunaide and Punchi-naide,- the defendants (respondents) in this action, for a sum ofRs. 350. That bond contained the following covenant:—
“ And I, the said debtor, do hereby covenant . . . . that Iwill not, during the continuance of this mortgage, lease ormortgage the said premises or do any other act or deedwhatever which may impeach the rents and incomethereof without the consent in writing first had andobtained ….”
On April 24, 1925, Mohottihamy executed a further usufructuarymortgage No. 6,974 in favour of Rattaranhamy and Punchimenika,the plaintiffs (appellants) in this action, for the sum of Rs. 1,400.It is clear that it was raised to pay off the sum due on the first bond.The attestation clause is in the following terms :—
“ And I further certify and attest that Rs. 75 out of- the con-sideration therein expressed was paid in my presence,Rs. 675 was retained in the hands of the creditors to payand settle mortgage bonds No. 9,959 . . . ., No. 4,956. . . ., and No. 4,238 . . . ., and the balance wasacknowledged to have been previously received •….’
I can find nothing to show this bond No. 6,974 has ever beenadmitted in evidence. No point has been made of this on theappeal, but want of care in dealing with and marking exhibitsrenders the work of this Court unnecessarily difficult to find one’sway about the record.
On August 16, 1926, Mohottihamy and the plaintiffs requested(see exhibit P 1) the defendants to receive payment of their bondNo. 9,959 and to execute a discharge. They apparently refused todo so, and the plaintiffs, on November 26, 1926, commenced thisaction, requesting that the defendants be ordered to accept the sumof Rs. 350 and to discharge the bond.. They brought the sum of. Rs. 350 into Court. The defendants answered that they wereunaware of the execution of bond No. 6,974, and that in any caseplaintiffs could not maintain the action against them. Theyfurther pleaded that their right to possess the lands mortgaged
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under their bond No. 9,959 did not commence until 1928, andtherefore they were being deprived of the return from the landswhich they expected to receive.
Only two issues have been raised on this appeal—
Was Mohottihamy entitled to grant a mortgage to plaintiffs
without the consent of the defendants ?
Can the plaintiffs maintain this action ?
The trial Judge dismissed.the action apparently on both grounds.Ho held the mortgagor had bound himself not to lease or mortgagethe lands without the consent of the defendants, and further, thatthere was no privity of contract between the plaintiffs and thedefendants.
On the first point, it seems to me that the covenant has not beenread with sufficient care. It is not a covenant not to mortgageor lease simpliciler, but not to mortgage or lease or do any otheract in such a way as “ to impeach the rents and income ” thereof.I presume that means an act that may imperil the rents and incomereaching defendants hands. It has not, in my opinion, been shown,having regard to the terms of the deed, that defendants’ rightsunder the deed to obtain rents and produce have in any way beeniniperilled between September 16, 1922, the date of the executionof deed No. 9,959, and April 24, 1925, the date of the executionof deed No. 6,974, or thereafter. They purport, however* to set upsome other agreement whereby they say they were only to enterinto possession of the lands mortgaged and obtain their rightsthereunder in 1928, entirely changing the effects of the bondNo. 9,959, but I am not satisfied they can do so. That is quiteinconsistent with the terms of their deed. The argument advancedon their behalf would extend to an entire prohibition against themortgagor to pay off the debt so long as the defendants, havingonce entered into possession of the lands mortgaged, wished toremain in possession and declined to accept the sum advanced bythem on the bond. I am unable to see that by the execution ofbond No. 6,974 here, under the circumstances set out, there hasbeen any breach of the covenant set out above. Defendants wereapparently willing, if their evidence is to be accepted, to lendtheir money on the bond in 1922 and take their chance of gettingsome return from the land in 1928. They could not, however,prevent the mortgagor paying off his liability before that date,under the terms of the contract into which he and they entered.In my opinion, the trial Judge’s conclusion on the first point.waswrong. '
With regard to the question of privity of contract, having regardto the attestation clause of bond No. 6,974, it is clear that themortgagor authorized the plaintiffs to pay off the first mortgage.
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This is confirmed by the evidence of the mortgagor himself. Inrequesting the defendants to receive the sum of Bs. 350, the plaintiffswere acting as the agents of the mortgagor. This, it seems to me,on the facts, is a stronger ease than that of Heema v. Punchibaba,1in winch de Sampayo J. held all the necessary conditions existedto make, effective a payment made by a person other than thedebtor. The learned Judge’s conclusion on the second point wasalso, in my opinion, wrong.
For these reasons I would set aside his order dismissing plaintiffs’action with costs. They are entitled to the order they sought,with costs in the lower Court and costs of this appeal.
Jayewabdene A.J.—I agree.
RATTARANHAMY v. APPUNAIDE et al