ALBERT PERERA, Appellant, and MARIMUTTU CANNIAH Respondent

083-NLR-NLR-V-45-ALBERT-PERERA-Appellant-and-MARIMUTTU-CANNIAH-Respondent.pdf


Albert Perera and Marimuttu Canniah
337
1944Present: Howard C.J. and de Kretser J.ALBERT PERERA, Appellant, and MARIMUTTU CAKNIAH,
Respondent
265—D. C. Badulla, 7,378.
Administration—Right of creditor to follow property sold by heir—Other assetsavailable—Roman-Dutch law.
The creditor of an estate may follow property sold by an heir evenwhen there are other assets in the estate.
Where the proceeds of property sold by an heir are not applied towardsthe payment of debts a creditor may follow the property in the handsof the purchaser.
PPEAL from a judgment of the District Judge of Badulla.
H. Y. Perera, K.C. (with him H. W. Jayewardene), for the plaintiff,appellant.—A creditor can, even when there are other assets, follow anyparticular property belonging to the estate of his deceased debtor whenit has been transferred by an heir and the proceeds of the sale had notbeen utilized for the purposes of administration. He can Seize anyproperty he likes. The case of Tillekeratne v. Wijewardene 1 is directly inpoint. The dictum in Suriyagoda v. William Appuhamy 2 expressing aconflicting view is merely obiter. In Muttiah Cheity v. Ukkurala Korala 3the validity of sale of property by the heirs of a deceased person is fuRydiscussed. In the present ease the purchase price of the properly inquestion was not expended for purposes of administration.
N. E. Weerasooria, K.C. (with him C. Renganathan, S. R. Wijayatilake)for the defendants, respondents.—On the question of fact there is evidencethat there are other properties, in the hands of the executor, belongingto the estate of the deceased. According to Pasupathy Chettiar v. CantarPandary 4, when a bona fide alienation has been made by an heir, a legalrepresentative who seeks to reach that property for payment of debtshas to make a prima facie case showing that it is necessary to resort tothat particular piece of property. There is no difference in principlebetween the position of a legal representative and that of a creditor.See Muttiah Chetty v. Ukkurala Korala (supra). Pasupathy Chettiar v.Cantar Pandary (supra) which was a Full Bench decision, was notconsidered in Tilakaratne v. Wijewardene (supra). The legal position iscorrectly stated in • Suriyagoda v. William Appuhamy (supra), and theappellant in the present case cannot succeed &s long as there are otherassets available for seizure.
Sections 96, 65 and 66 of the Trusts Ordinance (Cap. 72) are applicableto the facts of this case. We are bona fide purchasers for considerationfrom a transferee of the executor.
H. Y. Perera, K.C., in reply—Pasupathy Chettiar v. Cantar Pandary(supra) would be applicable only where an executor seeks to single out a
(1937) 2 C. L. J. R. 89.(1941) 43 N. L. R. 89.
(1925) 27 N. L. R. 336.(1889) 8 S. C. C. 205.
338
x>E ERETSER J.—Albert Perera and Marimuttu Canniah
particular devisee. But a creditor, unlike an executor, owes no duties-of a fiduciary nature to the devisees, A creditor's position is differentfrom that of an executor.
Section 98, and not section 96, of the Trusts Ordinance- is applicable.According to that section the burden was on the defendants to proveaffirmatively that they were bona fide purchasers for consideration.
Gur. adv. vult.
May 29, 1944. de Kretser J.—
This case may be looked at from two points of view, viz., the law andthe facts, but as it has been argued mainly on a point of law it is usefulto deal with that first, and to deal with it without reference to thefacts. The question is whether the creditor of an estate may followproperty sold by an heir even when assets remain in the estate. Wewere not referred to the English law and no doubt for the very goodreason that it differs from our law in some respects.
In dealing with the question it is useful to get our ideas clear on certainpoints and the most important is whether the position of an executorand a creditor are on the same footing in all respects, as it has been urgedthey are on the strength of some cases where their positions were sosimilar as to be conterminous regarding rights. What is the position of anexecutor? What are his duties and rights under our law? He must—
as regards the Crown, pay duty;
as regards the Court, administer faithfully and collect the debts
due to and pay the debts owing by the deceased and render anaccounting;
as regards the heirs or legatees, conserve their interests to the best
of his ability;
(rl) as regards creditors, pay them or see them paid.
A creditor has none of these duties. He has a right to be paid. In thedeceased’s lifetime he could levy against any of his properties and thereis no reason why his rights should diminish because of the deceased’sdeath. In other words his position is totally different from that of anexecutor.
It has been laid down in a number of cases, and the position is notcontested, that he may follow property alienated by an heir, who takesonly a defeasible title. In those cases the question raised in .this case wasnob raised and it is possible that in them no assets remained in the estate.On the specific question before us there is a direct authority—Till eke-ratne v. Wijewardene 1 and a statement obiter by Soertsz J. in Surly agoda.■v. William Appuhamy 2 to which in particular our attention was directed.Soertsz J. said "It is well settled law that transfers by the heirs of anestate are subject to the debts of that estate if, -without recourseto the lands transferred, the debts cannot be satisfied”. He relied onFer-nando v. Perera 3, Ekanayaka v. Appu 4, Silva v. Silva s, Gopalasam.y v.Ramasamy Pulle 6 and Muttiah Chetty v. Ukkurala 7 as authority.
2 C.L. J. 89.
43 N. L. R. 89.
8 S.C. C. 54.
7 27 N. L. R. 336.
3 N.L. R. 350.
6 10 U. L. R. 234.• 14 N. L. R. 238.
DE TCRETSER ,T.—Albert Perera and Marimuttu Canniah
339
This statement of the law, so far as it goes, is correct. But I ventureto doubt—
whether it is a corteet summary of the decision; and
whether it necessarily follows that if there are assets in the estate
then the creditor cannot follow the lands transferred by theheirs.
The cases referred to did not say so and the mere fact that when thereare no assets the lands transferred may be followed does not compelone to say that when there are assets they may not be followed. Earlierin his judgment Soertsz J. had said “The learned Judge stated the lawin regard tcJ the matter too widely when he declared that even when thereare lands undisposed of the entire estate is subject- to the debts of thedeceased and the creditor is entitled to proceed against any of them.But Counsel attacked the finding on other grounds as well.” Soertsz J.decided the case on other grounds. His attention does not seem to havebeen drawn to the case of Tillekeratne v. Wijewardene1 where Hearne J.(with whom Fernando A.J. agreed) had this specific question before himand answered it in the creditor’s favour. He said there was no authorityto the contrary, and Mr. H. V. Perera who appeared for the appellant,is not likely to have failed to quote all authorities and use all argumentspossible. So far as the proposition with which we are concerned goesa direct authority exists, which we ought to follow unless we can seegood reason to the contrary. I can see none. Suppose there are threeheirs or three legatees and one of them only sold his rights, so leavingthe other rights still as assets of the estate, is it open to the heir who soldand the transferee to compel the creditor to go against the rights of theother two? It seems manifestly unfair and one cannot see on whatprinciple of law such a compulsion would be based.
Where the administrator seeks to follow property alienated by an heirand he does have assets left, the Court would naturally not disturb the heir’salienation unless it were really necessary. But that is where an adminis-trator is concerned and as I have tried to show his rights and duties aredifferent from those of a creditor. An administrator is faced with theposition that he can only sell if it is necessary for purposes of administra-tion. A creditor has no such limitation. We have cases of an adminis-trator being restrained in Ahamat v. Cassini 2, Wijeratna v. Don DavitAbeyweera 3, Ferdinandis v. Fernando 4, Fernando v. Perera 5, Silva v.Silva 6 and Pasupathy Ghettiar v. Gantar Pandary 7.
The cases which I have examined seem to lead to the followingpropositions: —
An heir has title and may pass title but it is a defeasible title;
An administrator may follow property alienated by an heir but he
should show that it is necessary to do so;
A purchaser may show that the money he paid went in payment of
the debts of the deceased. In other words-, that the heirs didpart of the work of administration and sold in the course of
such administration;
1 (1937) 2 C. L. J. 89.
* J S.C. C. 36.
3 5 S.G. C. 70.
’ 8 S.C. C. 205.
* 5 S.C. C. 162.
3 8 S.G. C. 54.
« 10 N. L. R. 234.
340
WUEYEWABDENB J.—Karuna.Ta.tne Banda v. Aladin
The burden is on the purchaser to see that the money is properly
applied-;
Where it is properly applied a creditor cannot follow the property—
not apparently on a specified ground in Equity but on theground that the heirs have done part of the administrator’s work-.
Where it is not properly applied a creditor’s rights are not limited.
Applying these principles to the undisputed facts of the present ease-it is proved and admitted that plaintiff's debt is unsatisfied; also that thepurchase money did not go in payment of this debt and the evidence is-that no other debt ever existed. The plaintiff’s action succeeds and thedecree is set aside, the appeal being allowed with costs ill this Court,
and the Court of trial.
Howard C.J.—I agree.
Appeal allowed.