067-NLR-NLR-V-25-ANOHAMY-et-al-v.-HANIFFA.pdf
( 289 )
[Fitll Bench.]
Present; Bertram C.J., Ennis, Porter, and Schneider JJ.,and Garvin A.J.
ANOHAMY et al. v. HANIFFA.
67—D. C. (Inty.) Matara, 199 H.
Lis pendens—Gift by husband to wife—Liability for debts of husband—
Mortgage action not registered—Relation back of decree to mortgage^
On August 31,1918, Senaratne transferred four lands to his wife.Both husband and wife mortgaged the lands to Bastian on October7, 1918. The deed was registered on October 16, 1918. Seyanisinstituted an ordinary money action against Senaratne on October10, 1918, and obtained judgment on February 3, 1919. Bastianput his bond in suit and obtained decree on December 1,1920.. a Thesale under the mortgage decree was held on February 6, 192f, andthe lands were purchased by defendant, who obtained a Fiscal’stransfer on April 7,1921 (registered on the same day). Bastian didnot register the Us pendens. Meanwhile Seyanis seized the lands inexecution of his decree. Bastian caused notice to be given of hismortgage and that the bond had been put in suit. The lands werepurchased by the plaintiffs, who obtained Fiscal’s transfer onFebruary 4, 1921 (registered on February 7). The plaintiffsinstituted the present action for declaration of title.
Held, that the plaintiffs were not bound by the mortgage decree,but that the defendant, who purchased under the mortgage decree,had certain rights in equity.
The rights of the parties were not affected by any supposeddoctrine of relation back of the title of the purchaser under themortgage decree to the date of the mortgage.
(Per Full Court, Garvin A.J. dissentiente).—Where a husbandmakes a gift in favour of his wife, and the wife has thereafter madea bona fide alienation of the property (along with the husband),it cannot be seized and sold to satisfy a debt of the husband.
Ennis J.—A creditor can proceed against the property of thewife (acquired from the husband) to satisfy the husband’sdebt to the same extent and in the same manner as he couldhave proceeded against the property had it remained' his.The extent to which a man’s property is subject to his debt is solong as it is in his hands or can be followed; the moment he hasmade a bona fide alienation of the property, it cannot be seized andsold to satisfy a debt.
Bertram C.J.—These words (“ to the same extent ” in section13 of the Matrimonial Bights Ordinance, 1876) are words oflimitation, and 1 would construe them as intimating that the chargein favour of the creditors, created by the section, is subjectalways to the' right of the person in whom the property is vested
to alienate it or charge it.
xxv.
1628*
12(60)29
( 290 )
1928.Gabvin A.J.—It is clear from the language employed, that not-
—withstanding that a husband has made a gift to hia wife, the property
Ar&hamyremains subject to his debts and engagements in the same'manner
v. Haniffaand to the same extent as if the gift had not been made. It gives
a creditor the right to take the property in execution as if the titleto the property were still in the husband. By creditor is meanta person who was a creditor at the time of the gift.
T
HIS case was reserved for argument before a bench of fiveJudge? by the following judgment by Ennis J.:—
The facts an this case are as follows. Four lands were conveyedby one Charles Edward Senaratne by deed No. 1,161 oh August 31,1918, to his wife, Johanna Francina Goonewardene. On October7,1918, the husband and wife acknowledged their joint indebtednessto one Don Bastian, and executed a mortgage of the properties infavour of Don Bastian. This mortgage was registered on October16, 1918. Don Bastian put the bond in suit in D. C. No. 9,300 andobtained a decree on December 1, 1920. At the sale in execution,the defendant purchased and obtained a Fiscal’s transfer of the'three lands on April 7, 1921. This was registered the same day.It appears that one Seyanis was a creditor of Charles EdwardSenaratne, and in D. C. No. 8,446 he obtained judgment against himand seized the lands in question.. In D. C. 8,777 he brought anaction to have it declared that the lands were liable in execution inNo. 8,446. He ^obtained a decree in his favour, which wasregistered on July 14, 1920. Thereafter the lands were sold inexecution of the decree in No. 8,446, and purchased by plaintiffs,who obtained Fiscal’s transfers on February 4, 1921, which wereregistered on the 7th of that month. The learned Judge found infavour of the plaintiffs on the ground that the plaintiffs purchasedthe land subject to a liability to pay the debts of Charles EdwardSenaratne. An issue had been raised in the case as to whether thelis pendens of the mortgage action on which the defendant purchasedwas registered. It seems to have been admitted in the Court below,and also appears to have been admitted in the petition of appeal,that the Us pendens was not registered. The learned Judge did notdecide the case on the question of lis pendens, and did not in factdecide the issue as to whether the lis pendens was registered. Hisdecision turned on the fact, as found by him, that the lands wereliable for the debts of Charles Edward Senaratne. He appears tohave overlooked the fact that Charles Edward Senaratne joined inthe mortgage to Don Bastian, and acknowledged a debt to DonBastian in the deed itself; so that the defendant also, in a sense,may be regarded as a creditor of Charles Edward Senaratne. TheJudge’s finding, therefore, does hot help the judgment in the case.On appeal it was urged by the. plaintiffs-respondents that theabsence of any registration of lis pendens gave the plaintiffs titlewhich was .good as against the defendant. On this point we have
( 291 )
been referred to a number of eases which it is difficult to reconcile loss,with one another. The first of these cases was one decided by my Af^j^nybrother Porter and myself in 1922—Davit v. Davith.1 We were v. Hanjffatold by Mr. Hayley, who appears for the respondent in this case,that in that case also the mortgage bond was registered, although thefact is not mentioned in the report. It was there held that thenon-registration of a lis pendens gave the purchaser title, and inthat case his title was upheld in the absence of any contention asto the rights of the purchasers under the mortgage sale. This casewas followed in 1923 by the case Mohamadu Buhari v. Silva2where .it was held by two Judges that the question of registra-tion of lie pendens did not affect a title, under the mortgage,by any other means, and it was ■ suggested that the title of thepurchaser at the mortgage sale related back to the date of themortgage, although the two cases referred to appear to relate to aquestion of priority of registration. Following this case was thecase o f Fernando v. Peris,3 where it was held that a purchaser hassuperior title if the lie pendens has not been registered. It wouldseem that the mortgage action No. 9,300 was properly constituted,inasmuch as every one that could be made a party at the date ofthat action was included; and any title under the action is notvoid by the provisions of section 3 of Ordinance No. 29 of 1917.
That provision says that no lie pendens shall bind a purchaser, a"mortgagee, or a lessee unless and until registered. If, therefore,the plaintiffs claim the benefit of this, it is difficult to see howthey can claim an absolute title, seeing that they purchased subjectto the mortgage which had been duly registered, and the purchaserat the mortgage sale undoubtedly obtained some rights in theseproceedings.
I would accordingly refer the case to a bench of five Judges forfuller consideration of the legal points involved.
The cost will abide the event.
Porter J.—I agree.
Keuneman (with him Croos DaBrera), for defendant, appellant.—
A mortgage action has been held to be alia within the meaning of theOrdinance. Muheeth v. NadarajapiUa.4 The only effect ofOrdinance No. 29 of 1917 as amended by No. 21 of 1918 is that a lispendens does not bind a purchaser, mortgagee, or lessee unlessregistered. The result is that the mortgage decree (when the actionhas not been registered) does not operate as res judicata against anypurchaser from the judgment-debtor pending the mortgage action,and such purchaser may accordingly re-agitate any matter whichwas in issue in the mortgage action. The Ordinance.does not vest insuch purchaser a title free of the mortgage and the mortgage action.
» {1922) 4 C. L. B. 42.* (2922) 24 N. L. B. 121.
• (1923) 24 N. L. B. 477.4 (1917) 19 N. L. B. 421.
1928. As regards title different considerations apply. The purchased
7T.. under mortgage decree is entitled to regard the mortgage actionfanifia and the decree culminating in the mortgage side as valid linka in hisChain.' In this case the mortgage purchaser’s title relates back to,and has its source in, a mortgage which is prior both in date ofexecution and registration to the deed given by the judgment-debtor pending the mortgage action. He has accordingly thebetter title. ' This Was so held in Mohamadu Buhari v. Silva (supra)where the, earlier case erf Davit v:Davith (supra) was considered.The prhicijple is derived from the two Full Bench cases—MvMuramenv, Massilamanyf and Silva v. Ounawardena.2
The purchaser from the judgment-debtor pending the mortgageaction in any event does not get a title free from the mortgage bond.His title is burdened with the mortgage. It has been held in Indiathat at a sale in execution of a mortgage decree the purchaser acquiresnot only the interest of the mortgagor, but also that of the mortgagee.Khevraj Jusrup v. Lingaya? Skeshgiri Shanbhog v. Salvador Fas,4MaganlaX Shahra v. Oirdhr .5 It cannot be said that the purchaserobtains no rights whatever. Even assuming that the mortgagorwas free to alienate his interest the interest of the mortgageeremains, and that has been vested in the mortgage purchaser, whois entitled to enforce this right.
Alternatively it may be argued that the mortgage purchaseris entitled to claim compensation in view of the fact that he hascleared the land of the mortgage. It has been held that dischargeof a mortgage by a co-heir may be regarded as an ulilis impensaentitling the co-heir to a jus retentionis until it is discharged.De Silva v. Shailc AW and Ukku v. Banda.7 On equitable groundstoo compensation is payable to the mortgage purchaser.
The purchaser from the judgment-debtor had notice of themortgage action before he purchased, and is bound by the mortgagedecree* Rowel v. Jayawardene,8
Counsel also cited Suppramaniam Chetty v. Weerasekera*Morals v. NaMan Chetty™ and Kristnappa Chetty v. Horatala.1 11
SamarawicJcreme (with him H.' V. Perera), for the plaintiffs,respondents.—The plaintiffs did not buy the property subject to themortgage and are not bound by -the mortgage decree.' Where aperson buys a mortgaged property after: a mortgage; he should beeither made a party or given notice of the mortgage action, if themortgage decree is to bind'him. If a person buys a mortgagedproperty after the mortgage action, the mortgage decree would not
1 (1913) 16 N.L. R. 289.
(1915) 18 N. L. R. 241.8 (1873) 5 Bom. 2.
« (1873) 5 Bom. 5.
(1897) 22 Bom. 945. *
8 (1895) 1 N. L. R. 228.
(1902) 6 N. L. R. 45.
(1900) 14 N. L. #. 47.
8 (1916) 20 N. L. R. 170.10 (1923)M'Jd. L. R.29'7.
n (1923) 25 N. L. R*'39.‘
( 293 )
bind him unless the lie was registered; – The registration of the lie is t92&.
notice to the purchaser. In either case the party would have notice
of the action, and he would be in a position to put forward a defenceif he had one. If he had no defence he would be in a position toredeem the property if the lie had been registered. If the lie wasnot registered the plaintiffs’ title must prevail. The mortgagedecree is not admissible in this case. The plaintiffs are not evenprepared to admit that there was a mortgage. Counsel citedWeerappa Ghetty v. Arunaselam Ghetty.1
The case of Mohamadu Bvhari v. Silva (supra) was wronglydecided on the supposed authority of Mutturamen v* Maesilamany(supra) and Silva v. Gwzawarddna (supra). The points for decisionin those cases were different; the cases are not in any event binding.on this Court.,
It is not possible to regard the purchaser at the mortgage sale asan improver of land entitled to compensation (see Muttiah Ghetty v.Latchimanan Ghetty* Jayasinghe v. Menike 3). The purchaser atthe mortgage sale cannot be said to have acquired the rights of themortgagee. Counsel cited Mutta’s Code of Civil Procedure, p. 666.
Plaintiffs’ title is derived from Senaratna, but is not bound by themortgage. By section 13 of the Matrimonial Rights Ordinance thecreditor of Senaratna can ignore the gift to his wife by Senaratna.Senaratna joined in the execution of the mortgage bond, not in hisright as owner, but only as husband, to give validity to the act of hiswife. As against creditors of Senaratna the gift must be considered“ as not having been made.” See section 13.
Keuneman, in reply.—Section 13 of the Matrimonial RightsOrdinance, only enables creditor^ to proceed against a propertygifted to a spouse so long as the property has not been alienated toan outsider. If any further burden on the property was intended,clear language would have been used. Otherwise the result wouldbe curious. A husband may alienate to a stranger who would obtaina good title. But if a husband gifted his property to his wife whoalienated to-a stranger, the stranger’s title would be burdened tomeet the debts of the husband’s creditors.
December 21, 1923. Bertram C.J.—
In this case I have had the advantage of reading my brotherEnnis’s judgment. I entirely agree with his conclusions on allpoints, but I should like to express myself somewhat more fullythan he has done upon the'issues of law involved. I need notrecapitulate the facts, as they are so completely and preciselyset out in his judgment.
(1909) 12 N. L. R. 139, at page 143.* (IW3) 6 Dal. N. C. 3.
* (1911) 4 Bal. N. C. 21.
( 294 )
1928.
Bertram
C.J.
Anohamy v.Haniffa
The questions of law which we found it necessary to discuss arethe following.:—(A) The interpretation of section 13 of the Matri-monial Bights Ordinance, No. 15 of 1876 (recently repealed); (B)the effect of the nonregistration of a lia pendens; (G) the supposedrelation back of the title of a purchaser under a mortgage decreeto the date of the mortgage; and (D) the equitable rights of thepurchaser under a mortgage decree as against a purchaser under anordinary execution who bought subject to the mortgage but is notbound by the decree.
I will take these questions in order :—
(A) The interpretation of section 13 of the MatrimonialBights Ordinance, No. 15 of 1876.
The question here is whether when a husband, under section 13of the Ordinance, makes a voluntary grant to his wife, the propertyso granted is thereupon immobilized in her hands, and cannot beeither alienated or charged as against her husband’s creditors.This result is said to foUow from the words, “ shall …. besubject to the debts and engagements of each spouse in the samemanner and to the same extent as if such grant …. hadnot been made . . . . I cannot myself so interpret,the section.To do so would go beyond any possible intention that can beimputed to the Legislature. It would be to put the spouses in aworse position than they would have been before the alteration ofthe law. The effect of the section has already been considered in aFull Court case (see Louis v. Dingiri1). It was there held that theprovision we are now considering must be limited (in the absenceof fraud) to debts and engagements existing at the time of thealienation, and does not apply to future debts. Much of the rea-soning of the judgments of that case applies to the present. It wasthere pointed out that the object of the Legislature was to relaxHie common law in favour of the spouses, and it could not have beensupposed to place them in a worse position than under the old lawof community. The same reasoning applies here* Some effectmust be given to the words “ to the same extent.” These words arewords of limitation, and I would construe them as intimating thatthe obarge in favour of the creditors, created by the section, issubject always to the right,of the person in whom the property isvested, to alienate it or charge it. The husband always had thatright, notwithstanding the fact that his property was always liableto be made subject to the debts of his creditors, and, in my opinion,a wife has still a corresponding right.
The mortgage, therefore, was a valid mortgage, and any subse-quent sale of the property, at the suit of an execution-creditorof the husband, was subject to that mortgage.
1 (1915) 18 N. L. R. 161.
( 295 )
(B) The effect of the non-registration of a lis pendens.1928.
Mr. Keuneman argued that the only effect of this default was to B^toahallow a person who pleaded it to re-open any of the issues whichwere decided* or which might be deemed to have been decided* in the Anohatny v.action* He sought to throw upon this person the onus of invali- &aniffadating the judgment by showing that it was given in ignorance ormisapprehension of some consideration of fact or law. He urgedthat the judgment under which he claims must have its full legaleffect* subject to the right of the plaintiffs so to invalidate it. But,in my opinion* this is unarguable. The Ordinance expresslydeclares that “ no lis pendens unless duly registered shall bind thepurchaser.” This applies equally to a purchaser under a privatesale and to a purchaser at a sale by a Fiscal. Such a person is notbound* in any way at all* either by the suit or by any decree orsale pronounced or held in pursuance of it. He is entitled to ignorethe suit, and all consequences proceeding from it, as though theyhad never occurred. Whatever legal rights he had are unaffectedby the suit or its results, and the material right in this case wasthe right of the execution-creditor to have the property of hisexecution-debtor sold in satisfaction of his own decree.
The supposed relation back of the title of a purchaserunder a mortgage decree to the date of the mortgage.
*
Mr. Keuneman sought to escape from the situation just explainedby pleading the supposed doctrine of the relation back of the titleof a purchaser under a mortgage decree. In my own opinion, nosuch doctrine', even though it existed, could avail him. It is amatter of the utmost indifference to a purchaser not bound by thelis pendens to what date a title resulting from that lis is said todate back. He is not affected by that title, at whatever date it isdeemed to originate. He may treat the title as though it neverexisted at all.
But, in my own opinion, there is no such doctrine. De Sampayo J.,in Mohamadu Buhari v. Silva (supra),only gave effect to thatdoctrine,because he supposed himself to be bound by two previous decisions,and Schneider J. concurred in the same view. I venture to think,with the greatest respect, that no such doctrine was established by thedecisions referred to. Indeed, it has been more than onoe expresslyheld by this Court that there was no such relation back. (Abeya-goonewardene v. Andris Appoo,1 TJnge Appu v. Babuwe2) If thefacts in the cases referred to by my brother De Sampayo areexamined, it will be seen that there could be nothing in a decisionon those facts which would invalidate the authority of those twoearlier decisions'.
1 U89i) 3 C. L. X. 71.
* (1894) 3 0. L. R. 76.
( 296 )
1923.
Bertram
C.J.
Anohamy v,Haniffa
The first of these two decisions (both of them are decisions by Courtsof three Judges) was Mutturamen v. Massilamany (supra). Thatwas a case in which a mortgage had acquired priority against a lease,antecedent in date to itself, by virtue of prior registration. It washeld that the priority so acquired applied to all steps necessary forthe effective enforcement of the mortgage, and that that priority wasnot lost simply because the date of the registration of the Fiscal’stransfer was (as it almost necessarily must have been) subsequent tothe date of the registration of the lease. As it was forcibly expressedby Wood Renton J., “An instrument which acquires priority by regis-tration pushes out of its way every competing unregistered instru-ment of prior date for all purposesIn the circumstances of thecase, the words “ for all purposes ” must be considered as referringto'all purposes connected with the enforcement of the documententitled to priority. There is nothing of that sort in the presentcase, nor was there anything of the kind in the case of MohamaduBuhari v. Silva (supra). In spite of some general remarks ofLascelles C.J., which may seem to imply the idea, no generaldoctrine of relation back of the title of the purchaser under amortgage decree was formulated in Mutturamen v. Massilamany(supra). Nor could.such a doctrine legitimately have been formu-lated upon the facts of that case. The other case above referredto was Silva v. Qunatoardene (supra). Here, again, a registeredmortgage bond “ pushed out of the way ” a deed prior in date butsubsequent in registration, that is to say, a deed by which the.mortgagor had gifted his land prior to the mortgage. In thiscase the Judges carried the doctrine “ of pushing out of the way ”to very great lengths. They appear to have considered thatthe prior registered deed not only pushed the other out of theway, but absolutely obliterated it, so much so, that the parlyclaiming under that deed was bound by the judgment in an actionto which he was not made a party and could not claim to hold theland gifted to him even subject to the subsequent mortgage. DeSampayo J. adopted this view with reluctance, * understandinghimself to be bound by Mutturamen v. Massilamany (supra). Iwould venture to express the hope that the view suggested byDe Sampayo J. in this case may some day receive furtherconsideration. ^
. I agree with my brother Garvin that the decisions in these casesdo present very great difficulty. The difficulty does not lie in whatI understand to be their main principle. This I take to be that amortgage, which by diligence in registration acquires priority overa deed prior in da'te to its registration, retains this priority for thepurpose of its enforcement. This seems to me reasonable and just.The difficulty ia that these decisions lay down that persons claimingunder the postponed deed are not entitled to be made parties to themortgage action. One can understand that the mortgagee should
( 297 )
retain his priority, but surely he ought to assert that priority in thenormal way by joining in the action the person against whom heasserts it, more particularly when he has notice of that person’sclaim and when the person is in actual possession of the propertymortgaged.
I do not think, however, that this is an appropriate occasion forentering into these questions.
In the present case there is no “ pushing out of the way ” of anydeed prior in date. We have no occasion, therefore, to considerwhat are the consequential results of puch a process. In my opinion,therefore, the rights of the parties are not affected by any supposeddoctrine of relation back.
The equitable rights of the parties.
On this question one thing is dear. The execution-creditor,whether he was bound by the lie pendens or not, could only sell theland subject to the mortgage, and the purchaser at the Fiscal’s saleheld for the purpose could only take a title subject to the mortgage.He cannot, therefore, claim a clean title to the property. His titleis subject to an equity. But the question is, who can enforce thatequity ? The mortgage no longer exists, having been extinguishedby the sale. How can the purchaser who merely bought themortgagor’s interests set up an equity derived from a mortgage towhich he was a stranger ?
To extricate himself from this difficulty, Mr. Keuneman hadrecourse to a doctrine which appears to have been developed in theIndian Courts. That doctrine is that at a sale in execution of amortgage decree the purchaser acquires, not only the interest of themortgagor, but also that of the mortgagees. See Khevraj Jusrup v.Lingaya {supra), Sheshgiri Shanbhog v. Salvador Vas (supra), andMaganlal Shahra v. Girdhr (supra). It appears to be the practice inBombayfor the mortgagee actually to convey his interest, because it isstated that, though this practice does not prevail in ihp Mof ussil, yet .the interest of the mortgagee passes by estoppel. In the researchesI have been so far able to make I have not been able to trace theprinciple of this doctrine. It mayperhaps ultimately be derived fromthe English practice, under which the mortgagee, in whom th£ feesimple is necessarily vested, himself conveys the property upon itssalo.The working out of the doctrine in India has resulted in obscurity.It is there agreed* that where a puisne incumbrancer, not boundby a mortgage decree, seeks to disturb a purchaser under that decree,he. must redeem the land by paying the amount of the mortgagedebt, but it is not agreed whether, the whole of this'sum is to go tothe mortgage purchaser, or whether it is to be apportioned betweenhim and the still unsatisfied mortgagee. S^e Mutta's Code of CivilProcedure, 6th ed., p. 666. This doctrine has so far not been
1028.
Bebtbam
C.J.
Anahamy v.fianiffa
( 298 )
1928,
Bertram
ex
Anokamy v.Hatofiffa
introduced into Ceylon, and until 1 can, be shown some logical basisfor its introduction, I prefer not to introduce it. Whatever may bethe case where the mortgagee is himself the purchaser (and on this Iexpress no opinion), I cannot at present see that a stranger purchasercan in any way invoke the rights of the mortgagee.
The purchaser, nevertheless, is clearly a person entitled to equit-able considerations. By his purchase he has freed the land fromthe mortgage. It is not just that the purchaser at the executionShould thus acquire the land freed from the mortgage at the expenseof a purchaser under the mortgage decree without making him somesatisfaction. The question is, On what principle can we direct thisto be done ? There are oases in which it has been held that thedischarge of a mortgage by a co-heir may be regarded as an utilisimpensa entitling the co-heir to a jus retentionis until it is discharged.See De Silva v. Saik Ali (supra) and Ukku v. Banda (supra). Thisdoctrine, however, on its application to cases like the present, hasbeen critioised in Muttiah Chetty v. Latch^manan Chetty (supra) andJayasinghe v. Menike (supra), and was repudiated by Lascelles C.J:and Wood Renton J. in Elyakmby v. VxUliarnma.1 Indeed, it is clearthat so far as this doctrine goes it cannot apply . Utiles impensm areexpenses incurred by a person while in the possession of land whichhein good faith believes to belong to himself. The expenses in thiscase are incurred before the purchaser enters into possession, and inorder to enable himself to get into possession.
Nevertheless, though this particular doctrine does not apply, Ishould be very sorry to hold that in cases of this kind we are not freeto give effect to equitable principles. We are, administering, not adead, but a living system of law. In Muhammadan law there is apoint known as “ the closing of the door of effort/1 at which construc-tive jurisprudence is understood to have ceased, and from whichthe Courts confine themselves in all matters to doctrine alreadysettled by authority. I should be sorry to hold that this stagehas been reached in our own law. In a recent case, KristnappaChetty v. Horatala (sypra) my brothers Ennis and Jayewardeheintimated that a purchaser, in somewhat analogous circumstances,might claim equitable satisfaction, though they did not feel able togrant such satisfaction in the case as then before them. In thiscase the facts are .clear, and I see no reason why we should notoufselves direct that the plaintiffs’ rights should be subject to thedefendant’s right of equitable relief. As to the nature of that relief,I was fully prepared to concur in the order proposed by mybrother Ennis. Inasmuch, however, as the Court is divided, andthere is no other, means of giving an effective judgment, I amprepared to adopt the intermediate course proposed by my brotherSchneider.
1 (2913) 2$ N. L. R. 210.
( 299 )
Ennis J;—
Certain lands belonged to Charles Edward Senaratne, and onAugust 31, 1918, be transferred four of them to his wife. OnOctober 7, 1918, by the document D 4 , Senaratne and his wifeacknowledged that they were Jointly and severally indebted to oneDon Bastian in the sum of Rs. 500, as security for which theymortgaged the four lands to Don Bastian and gave him possessionin lieu of interest. The attestation clause in this document statesthat the money was paid in the presence of the notary, and thelearned Judge in his judgment under appeal has held that DonBastian must be regarded as “ an honest man who lent good moneyon his bond.” The bond was duly registered on October 16, 1918.
On October 10, 1918, one Seyanis instituted an ordinary moneyaction, No. 8,446, against Senaratne, and got judgment in his favouron February 3,1919. On July 1,1919, Seyanis instituted an action,No. 8,’777, against Senaratne and his wife to have it declared thatthe deed of August 31, 1918, was null and void, as it was executedin fraud of creditors, and for ar further declaration that the landsdealt with by that-deed were subject to be seized and sold tosatisfy the debts of the husband, Senaratne. Seyanis lost his case,for it was held that the wife had paid for the lands with her ownmoney. On appeal, however, it was held that the money used bythe wife came from a fund which belonged to the husband, and,that under section 13 of the Matrimonial Rights Ordinance, 1876,the property in question was liable to be taken in execution forthe husband’s debts. It is to be observed that Seyanis did not makeDon Bastian a parly to this action, notwithstanding that Bastian’smortgager had been registered before he instituted the action; it isalso to be observed that there was no finding that the deed ofAugust 31, 1918^ had been executed in fraud of creditors.
At this stage Don Bastian put his bond in suit in action No. 9,300and obtained a decree on December 1, 1920. The record does notshow when the action was instituted. The sale under the mortgage'decree was held on February 5, 1921, and three of the lands werepurchased by the defendant, who obtained Fiscal’s transfers onApril 7, 1921, which were registered the same day. Don Bastiandid not register a lie pendens.
Meanwhile Seyanis seized the lands in execution of his decree incase No. 8,446. Don Bastian then caused notice, D 5, to be givenof his mortgage and that the bond had been put in suit in actionNo. 9,300. The lands were then sold under Seyanis’s writ andpurchased by the plaintiffs, who obtained Fiscal’s transfers onFebruary 4, 1921, which were registered on February 7.
The plaintiffs then instituted the present action, praying for adeclaration of title and for the ejectment of the defendant. Thelearned Judge found hi favour of the plaintiffs, and the defendantappeals. On appeal the case was referred to the Full Court.
25/24
1923*
Anohamy v.Haniffa
( 300 )
1623.
Ennis J.
Anohamy v.Haniffa
Mr. Keuneman, for the appellant, submitted (1) that the con-veyance by Senaratne to his wife was valid ; (2) that Bastian’saction on his bond was perfectly constituted, and that the plaintiffsare estopped from denying the defendant’s title as they had noticeof the mortgage action ; and (3) if not estopped, that they cannotclaim more than they bought, viz., the land subject to the mortgage.
I am unable to see how the validity of the conveyance canbe challenged. Section 13 of the Matrimonial Bights Ordinanceexpressly legalized grants and gifts between husband and wife. Thedeed was not declared void in Seyanis’s action, No. 8,777, and thedecree in that action declaring the lands liable for Senaratne’s debtswas not binding on Don Bastian, as he was not a party to it. Thereis no prayer to set the deed aside in the present action, and theeviddnoe does not seem .to justify setting it aside, for Seyanis’sevidence in this case seems to indicate that Senaratne had otherproperty which might have been available to meet his debt toSeyanis. Seyanis says that at the end of 1916 Senaratne sold one-half only of a land belonging to him for Bs. 6,000. It was argued,however, that section 13 of the Matrimonial Bights Ordinanceenable a creditor of a husband to disregard his gifts to his wifeand deal with the property as if the grants or gifts had never beenmade. The section is somewhat obscurely worded, for, after makingit lawful for a husband to gift property to his wife, it proceeds:“ but all property so granted, gifted, or settled, and all acquisitionsmade by a husband or wife out of or by means of the moneys orproperty of the other shall, except as otherwise provided by section11, be subject to the debts and engagements of each spouse in thesame manner and the same extent as if such grant, gift, settlement,or acquisition had not been made or occurred.”
Mr. Samarawickreme contends that the words of this section,“ the property .. shall be subject to the debts of the
husband . . . . as if such …. gift …. hadnot been made,” support his construction, and that something inthe nature of a permanent lien on the property in favour of thecreditors is created the moment such a gift takes place, and he wentto the extent of suggesting that it operated in favour, not only ofcreditors at the time of the gift, but of all subsequent creditors,and that all the creditors might be entitled to concurrence. Thisargument is obviously very much beyond the scope of an Ordinancedealing with matrimonial rights. In my opinion the words “ theproperty so granted, gifted, or settled ” must be read as definingthe property in the hands of the wife, and that the words “ shall besubject to the debts ” must be read as “ shall be liable to be seizedand sold in execution of a decree,” which is the only manner andextent to which the property of any person can be said to be“ subject to debts.” The section will then mean, that a creditorcan proceed against the property of the wife (which she has acquired
( 301 )
from the husband) to satisfy the husband’s debt to the same extentand in the same manner as he could have proceeded against theproperty had it remained his. The extent to which a man’s propertyis subject to his debts is so long as it is in his hands or can be followed;the moment he has made a bona fide alienation of the property itcannot be seized and sold to satisfy a debt. The mortgage bySenaratne and his wife to Don Bastian appears to have been a bofiafide transaction. I would hold therefore* that, if the plaintiffs arenot bound by Bastian’s mortgage decree, they purchased theproperty subject to the mortgage.
It was contended for the defendant-appellant that the plaintiffswere bound by Bastian’s mortgage decree. In support of thiscontention the case of Rowel v. Jayawardene (supra) was cited. . Thatcase, however, was decided in 1910, and since then there is the expresslegislative enactment No. 29 of 1917, as amended by No; 21 of 1918,that no lis pendens shall' bind a- purchaser, mortgagee, or lesseeunless it is registered.*
In my opinion the doctrine of estoppel by notice cannot over-ridethe express provisions of the Ordinance requiring registration.Don Bastian’s failure to register his Its pendens gave the plaintiffsan opportunity to purchase the mortgagor’s interest in the landwithout' being bound by the mortgage decree, but here we werereferred to the case of Mohamado Bukari v. Silva (supra), where itwas held that a mortgagee could go behind the effect of the non-registration of his lis and carry his title back to the date of themortgage. In that case the cases of Mutturamen v. Massilamany(supra) and Silva v. Qunawardene (supra) were regarded as decisiveupon the point.
In my opinion those cases do not apply, for they turned on thequestion of priority of registration to push aside all subsequentdeeds creating adverse interests. In Mutturamen v. Massilamany(supra) a lease, executed in 1905 and registered in 1910, was inconflict with a mortgage executed and registered in' 1907, and, forthe purpose of priority under section 17 of the Land RegistrationOrdinance, 1891, the prim* registration of the mortgage was held togive priority to’a subsequent purchaser under the mortgage decreeas against the lessee.- Similarly in Silva v. Gunawardene (supra)there Was a direct'conflict between & deed of gift and at mortgage.In the present case there are'no adverse deeds competing forpriority, the interests of the mortgagor and the interests of themortgagee were separate and distinct interests at the date of themortgage and of its registr&tiom^-there was no conflict. I am ofopinion, therefore, that Mohamddu Bukari v. Silva (supray does notafford reliable support to the appellant’? contention, in this respect.
There remains the -question as to whether anything survives tothe defendant, who purchased under the mortgage decree. Themortgagor’s title to the landiswitlr the plaintiffs, the mortgage
1923.
Ennis J.
Anohamy v.Hanlffa
( 302 )
1923*
Ennis J.
Anohanny v.Haniffa
had been extinguished in the mortgage action, and it is questionablewhether any further action can be taken under the mortgage.(Suppramaniam Chetty v. Weeresekere (supra) and Moraes v. NattanChetty (supra).) In a recent case Kristnappa Chetty v. Horatala(supra) my brother Jayewardene and I suggested that, in equity,a purchaser who had contributed to the extinguishment of themortgage was entitled to recompense at the hands* of the party whobenefitted thereby. Such a course is consistent with the Roman-Dutch principle, that a man should not benefit himself at theexpense of others, and with the broad principle of equity appliedby the Privy Council in a Ceylon appeal generally referred to as theDicJdanda Estate Case.1 In my opinion the defendant is entitledto stand in the shoes of the mortgagee to the extent of his purchase.In'the present case there is no difficulty in the ascertainment of hisposition, the mortgage was a usufructuary one, the defendant isin possession, and the amount paid to extinguish the mortgage isknown, viz., Re. 375. I would accordingly vary the decree appealedfrom, and, while granting the plaintiffs a declaration of title to thelands, declare that the defendant is entitled to remain in possessiontill the sum of Rs. 375 is paid.
The appellant will be entitled to the costs of the appeal.
For the purpose of concurrence I am prepared to adopt the orderproposed by my brother Schneider.
Porter J.—
I have had the advantage of reading the judgment of my brothersSchneider and Garvin in this case, with which'judgments I entirelyagree and for the same reasons.
I further agree with my brother Schneider that in a case such asthe present the purchaser under the mortgage decree would appearto be entitled to some equitable relief if it be the fact that he hadcleared an encumbrance which had existed and the party claimingtitle against him successfully has derived the benefit of that act.
No equitable claim was put forward or even referred to either inthe lower Court or on appeal. The first plaintiff has had no oppor-tunity of meeting such a claim. The facts of the case as they nowstand justify the inference that she was probably aware of theexistence of the mortgage and that it was put in suit, but she doesnot admit the genuineness or that any money is due under it orthat she purchased subject to it.
Her counsel claimed an absolute title.
It is difficult without a further consideration of the law tosay upon what principles, relief, if any, should be granted to thedefendant. I would remit his action to the District Court in orderthat the defendant may formulate his claim, and that the firstplaintiff may be afforded an opportunity of meeting it. In the
1 10. L. R. Sit
( 303 )
circumstances I would affirm the decree, except as to the orderregarding the costs of the action, and remit the case for trial of anyclaim which the defendant, if so advised, would prefer against thefirst plaintiff within a time to be fixed by the District Judge. Inthe event .of his failing to comply with that order, his appeal isdeemed to have been dismissed, with costs, as from the date of thejudgment of this Court, and the decree of the lower Court affirmedin its entirely.
Schneider J.—
The day after the conclusion of the argument of this appeal I leftColombo on circuit. On circuit it is not convenient to have accessto the several authorities cited at the argument. I have had theadvantage of studying the judgment of His Lordship the ChiefJustice. I agree, if I may say so with all respect, with his judgmentas regards the questions of law discussed by him under the heads(A), (B), and (C).
In regard to Mohamadu Buhari v. Silva (supra), in which I con-curred in the judgment of my brother De Sampayo, I confess that ifthe reason given for the decision had been stated differently it wouldhave been better. It should have been stated that the plaintiff’stitle was to prevail, in that it was derived under a sale subsequentin date to the sale to the defendant, but anterior in date in tespectof registration, inasmuch as the sale under which the defendantclaimed was on May 4, 1921, and that under which the plaintiffclaimed was on May 11,1921, and the plaintiff’s deed was registeredin August, and the defendant’s deed in September, 1921. It was asimple case of a subsequent deed obtaining priority by registration.But where no question of such a competition by reason of registra-tion arises, the principle which should govern a case such as thepresent was followed by me in deciding Fernando v. Peris (supra).
As regards the questions discussed under head (D), I am of opinionthat there is nothing either in our law of mortgage or in the procedureby which a mortgage is realized which supports the argument thatthe purchaser at a sale in execution under a mortgage decree acquiresthe rights of the mortgagee.
I agree that in a case such as the present, the purchaser underthe mortgage decree would appear to be entitled to some equitablerelief if it be the fact that he has cleared an encumbrance which hadexisted, and the party claiming title against bim successfully hasderived the benefit of that act. The only question raised and triedin this case was that of the title of the parties. No equitable claimwas put forward or even referred to in the lower Court. The firstplaintiff has had no opportunity of meeting -such, a claim. Thefacts of the case as they now stand justify the inference that shewas probably aware of the existence of the mortgage and that itwas put in suit, but she does not admit its genuineness or that any
1928.
Poster J.
Anohamyv.
Haniffa
( 304 )
1929.
Schneider
J.
Anohamy v.Haniffa
money is due under it or that she purchased subject to it. Hercounsel, Mr. Samarawickreme, on the contrary, claimed an absolutetitle.
I am very diffident without a further consideration of the lawto say upon what principles, relief, if any, should be granted to the.defendant. It would appear to be upon the footing of compensationfor some benefit derived by the owner of the land. I am of opinionthat before any relief can be granted to the defendant he shouldformulate his claim, and the first plaintiff should be afforded anopportunity of meeting it.
In the circumstances I would affirm the decree, except as to theorder regarding the costs of the action, and remit the case for thetrial of any claim which the defendant, if so advised, would preferagainst the first plaintiff within a time to be fixed by the DistrictJudge. In the ;event of his failing to comply with that order, hisappeal is to be deemed, to have been dismissed, with costs, as fromthe date of the judgment of this Court, and the decree of the lowerCourt affirmed in its entirety.
Garvin A.J.—
The facts of this case are so fully set out in the judgment of mybrother Ennis that they need not be recapitulated. It is notChallenged that the conveyance made by the husband to the wifewas in effect a gift. . The plaintiff seized, sold, and purchased thisproperty as property which by reasons of the provisions of section 12of the Matrimonial Rights Ordinance, No. 15 of 1876, was subject tothe debts and engagements of the husband “ in the same mannerand to the same extent as if such …. gift ■. . . . 'hadnot been made . …” He does not claim to have seized,sold, or purchased the interests of the wife. What he does claim isto have acquired a title to this property superior to, independentof, and despite such title as passed to the wife by the gift.
The defendant is the purchaser in execution of a hypothecarydecree obtained by the holders of a mortgage created by the wife.Such title as he acquired by this purchase is and can only be thetitle of the wife. That was the title she obtained by and under herhusband's gift. The respective titles now under consideration aretherefore wholly independent of each other. The defendant claimsunder !the wife; the plaintiff claims despite such title as the wifemay have taken by the gift, and as if the gift had never been made.
.It is clear from the language employed that notwithstanding thatalhiisband has made, a gift to his wife the property remains subjectto his debts and engagements. “ in the same manner and to the sameextent as if the gift had not been made.” It gives to a creditor theright to take the property in execution as if the title to the propertywere still in the husband. By creditor is meant a person who was acreditor at thegifts Xvick Louis v. Dingiri) (supra).
( 305 )
The section confers upon spouses the right to make gifts to. eachother. This is a privilege which they had not hitherto enjoyed, forthe law forbade such gifts. When conferring this privilege, the lawdoes so upon a condition that the property is to be always availableto the creditors of the spouse who makes the gift. This briefnotice of the historical development of the law on the point helpsto emphasize the plain meaning and intention of the section, whichis, that so far as the rights of creditors were concerned, theproperty was to be as if it had not been made the subject of a gift.
It was conceded in the course of argument that so long as theproperty remained in the wife this section gave a creditor the rightto take it in execution for the purpose of recovering his debt. Whatis that but an admission that the words of section 13 created acharge in favour of the creditor of the husband. It is said, however,that the rights of a creditor, which the law has been at such pains toconserve, can be defeated directly by the simple expedient of aconveyance, or indirectly by placing the property under a mortgagewhich by some process is said to become preferent to the chargecreated by law. That a wife to whom property has been giftedmay transfer or mortgage such title as she took by the gift no oneis concerned to deny. But it is denied that by so dealing with herinterests she can defeat either wholly or even partially the rightswhich the law has secured to the creditors of her husband.
An owner of property.who has himself hypothecated the samein favour of a creditor does not destroy that hypothec or defeat therights of a creditor so secured by subsequently transferring ordealing with the property. Upon what principle can it be contendedthat a statutory charge such as this is can be defeated in the mannersuggested by a person who takes it subject to the charge ? Thesection does not say that the charge placed on the property is toremain effective only so long as the wife remains vested with title,and it is to be subordinate to any charge created by the wife infavour of her creditors. To the argument that it does not say thatthe charge is to continue to adhere to the property after it is trans-ferred by the wife or is charged by her, it is sufficient to answer thatthe Legislature had apparently no reason to anticipate that it wouldbe contended that a person who takes a title subject to a chargecan by the act of making a conveyance pass on a title free of thecharge. No one can give a better title than he himself has. Inthe absence of express words in the Ordinance to restrict the chargein the manner suggested, there can be no reason for regarding ortreating it differently from any other hypothec or charge on property.
This is an instance of a statutory charge. It is not the onlyinstance of such a charge. By section 4 of the Crown Debts Ordi-nance, No. 14 of 1843, the property of the Treasurer of the Colonyand certain other officers employed in the collection, receipt, andexpenditure of the revenue, public moneys, stores, and other
xxv.] 2(60)29
1928.
Qabvzn A.J.
Anohamyp. Haniff 0
( 306 )
1928.
Gabvxk A.J.
Anohamyv. Hanjffa
property of Government is made liable for the payment, arrearages,or debts, fines, penalties, &c., due by such officer or officers. Asregards the lands and tenements present and future of such officers,the liability to be taken in execution is expressed as follows :—
“ In like and as large and beneficial a manner and to allintents and purposes as if the said officer …. hadthe day he became first an officer …. speciallymortgaged the said lands and tenements to Her Majestyfor the full payment of such arrearages . . . .”
It cannot well be contended that this is not a legal hypothec, norcan it be suggested that suoh a hypothec does not attach to theproperty when it is transferred by such an officer.
The language in which property gifted by* a husband is chargedis of even wider import. In each of the two instances under con-sideration the charge is created by a few simple words, such as“ shall be subject to the debts ” or “ shall be liable to the payment*,of debts ” ; the nature and extent of the charge in the case of giftsbetween spouses, is expressed to be even wider than in the case ofspecial mortgage—it is to be as comprehensive “ as if the gift hadnot been made.”
To my mind it is apparent that it .was the intention of theLegislature that suoh gifts were to be void as against the claimsof creditors.
As between husband and wife title passes by the gift, but asbetween the wife and. the creditors of the husband the conveyanceis of no avail. If the title of the wife is of no avail against herhusband’s creditors, how can any alienee or other person claimingunder the wife be heard to say that his title prevails over the rightsof such creditors ?
Section 14 of the Ordinance contemplates an inquiry upon aquestion between a creditor of the husband and the wife or a personclaiming under her “ as to the mode and time of the acquisition of anyproperty claimed by such woman ” and places the burden of proofas to the mode and time of acquisition “ on such woman or personclaiming under her.”
Suppose that as between a husband’s creditors and a person claimingunder the wife it is found that the mode of acquisition of the propertyby the wife was by gift from her husband during the subsistence ofa vaild marriage, what is to happen. Surely it must be followed bya declaration that the property is “ subject to the debts and engage-ments ” of the husband. If not, the inquiry and finding is purpose-less. The circumstances that section 14 contemplates such aninquiiy, and inferentiafiy such a declaration, not only between thehusband’s creditor and the woman, but also between such a creditor
( 307 )
and any person claiming under the woman, is a clear indicationthat the charge created by section 13 is to be effective, not onlyagainst the wife, but against all persons claiming under the wife.
Under the Roman-Dutch law a transfer of immovable propertywhich was not passed before the tribunal of the place was validinter partes, but void as against the claims of the creditors of thetransferor. Maasdorp, vol. 2, p. 71. The position created bysection 13 in regard to the respective rights' of donor, donees, andthe creditors of the donor in the case of a gift from husband to wifeis an exact parallel.
It is then argued, that inasmuch as the husband is a party to thebond of mortgage with his wife, this is a mortgage by the husband.Having parted with his title to his wife by a conveyance which wasvalid inter partes the husband had nothing to mortgage. Fromthe circumstances that the husband joined in the bond, it may fairlybe said that he has consented to his wife’s mortgage, and that thereis, therefore, a sufficient compliance with the requirements ofsection 9 as to a wife’s dealings with her property. But the wifemortgages her right, title, and interest, not those of her husband.
In my opinion, the plaintiff, who was a creditor of the husband ata time prior to the making of this gift, had the right to seize and sellthe property “ as if the gift had not been made, ” and when hepurchased the property he took a title superior to, and independentof, that of the wife and those claiming under her. This is decisiveof the matter, and the appeal fails.
If, on the other hand, it bejield that any dealing with the propertyby the wife defeats the charge—a view to which I cannot assent—that is also decisive, for the plaintiff has neither seized, sold, norpurchased the wife’s interests. The Contention that the plaintifftakes the property subject to the mortgage created by the wife isone which I cannot follow or appreciate. A wife may create ahypothec over her property or, in other words, hypothecate her title.She cannot create a valid hypothecation over her husband’s pro-perty. If the mortgage created by the wife in this case is superiorto the statutory charge in favour of creditors, it can only be becauseshe has by the act of mortgaging her title to the property enlargedher rights, and in fact mortgaged a title superior to the defeasibletitle she took under and at the date of the gift. That is to say,that by this act she has converted her title which was defeasibleinto a title which is not defeasible at the instance of her creditors,and it is such an indefeasible title which was mortgaged by her.
If such a conversion is possible, the defendant who purchased atthe sale in execution of the hypothecary decree takes a title againstwhich the charge in favour of creditors is of no avail, though as tothe balance proceeds of the sale, if any, after satisfying the mortgagedebt it may be possible to contend that this should go to thehusband’s creditors and not to the wife.
1928.
Gabvxn A.J.
Anohamyv. Haniffa
1988.
Garvin A.J.
Anohamyv. Hanijfa
( 308 )
If, on the other hand, she mortgaged only that which in my opinionshe h$d the right to mortgage, that is, her title, then the defendantby his purchase took a title to the property which is of no availagainst the claims of creditors.
Whether section 13 is construed in favour of the plaintiff, as Ithink it should be, or whether it be held that the charge ceases tobe operative against persons who claim under the wife, it is decisiveof the question of title. The respective title upon which we haveto pronounce are wholly independent, and do not proceed froma common source. The plaintiff does not claim under the wife,whereas the defendant does. If the wife’s mortgage leaves thecharge in favour of the husband’s creditors unaffected, the plaintiff’stitle is superior ; if, on the other hand, it be held that by dealingwith the property the wife frees her title from the charge in favourof creditors, the defendant’s is the better title.
But since this case has been referred to a Collective Court forthe decision of the question whether or not the case of MohamaduBuhari v. Silva (supra) has been rightly decided, and the majority ofthe Court takes the view that the facts of this case do raise thatquestion, it is perhaps as well that I should state what I deem tobe the correct answer to that question.
In that case it was held that in a contest between the title of apurchaser under a mortgage decree and the title of a person whoobtain a Fiscal’s transfer at a sale in execution of an ordinarymoney decree during the pendency of the action on the mortgage,the purchaser under the mortgage decree was entitled to refer histitle back to the mortgage, and thus acquire priority over theFiscal’s transfer, which was prior both in respect of date and inregistration to the transfer obtained by the purchaser under themortgage decree.
Is it a sound proposition of law that a purchaser under a mortgagedecree is entitled to refer his title back to the mortgage and therebyobtain priority over transfers of title made by the mortgagorsubsequent to the mortgage but prior to the transfer obtained bythe purchaser under the mortgage decree ?
The case of Mohamadu Buhari v. Silva (supra) is an instance of theapplication of this proposition, which the Judges who decided thatcase thought had been authoritatively laid down by the Full Benchof this Court. The cases referred to are those of Mutturamen v.Massilamany (supra) and Silva v. Gunawardene (supra). In each casethe decision was that of a bench of three Judges. This Court has onmore than one occasion held it was bound by a previous decisionof a Collective Court, which is only another term for a Full Bench.It has never decided, nor can I well see how it can decide, that atevery period in the history of the Supreme Court three Judgesconstituted a Full Bench or Collective Court. At a certain periodin the histoiy of the Supreme Court three Judges were a Full Bench.
( 309 )
Thereafter the constitution was changed, provision having beenmade for four Judges. Last year the constitution was • againchanged, and there are now five Judges on the bench of the SupremeCourt. During the period within which the two cases referred towere decided there were four Judges provided for by the constitutionof the Court, and four Judges had been appointed in accordancewith that constitution. The Full Bench, therefore, was onlycomplete when all four Judges sat together. Three Judges werenot, and cannot be considered, the Collective Court.
Five Judges, who together constitute the Collective Court, aretherefore free to examine, and-if need be over rule, the propo-sitions of law laid down in the cases to which reference has beenmade.
It is, of course, possible to go round the difficulty which confrontsus by saying that in each of these two cases there was competitionbetween an instrument of earlier date and a mortgage of later datewhich acquired priority by reason of earlier registration, whereasin this case the mortgage was prior both in date and in registration.But the Judges who decided the case of Mohamadu Buhari v. Silva(supra) did not take so restricted a view of the applicability of thosedecisions. They appear to have taken the view that if the title of thepurchaser under a mortgage which obtained priority by registrationwas entitled to refer his title back to the mortgage, a purchaser undera mortgage prior both in date and registration was entitled to thesame privilege. To affirm the decisions in the two Three-Judgecases as sound law where the purchase is under a mortgage which.acquires priority by registration, and to deny this privilege topurchasers under mortgages which have the double advantage ofpriority in date and in registration would be to create a somewhatanomalous situation'. Why should the purchaser under a mortgagewhich is prior bofh in date and in registration be placed in a positionof disadvantage as compared with a purchaser under a mortgagewhich only takes priority by registration ?
Is it correct to say that this is the logical result of the applicationof section 17 of the Land Registration Ordinance, 1891 ?
The section runs as follows :—
“ Every deed, judgment, order, or other instrument as aforesaid,unless so registered, shall be deemed void as against allparties claiming an adverse interest thereto on valuableconsideration, by virtue of any subsequent deed, judgment,order, or other instrument, which shall have been dulyregistered as aforesaid. Provided, however, that fraudor collusion in obtaining such last-mentioned deed, judg-ment, order, or other instrument, or in securing suchprior registration, shall defeat the priority of the personclaiming thereunder; and that nothing herein contained
1928.
Gab vht A.J.
Anohamyv. Baniffa
t 310 )
shall be deemed to give any greater effect or differentconstruction to any deed, judgment, order, or other instru-ment registered in pursuance hereof, save the priority,hereby conferred on it.”
There can be no doubt that the effect of this section is to give toa registered mortgage bond priority over an unregistered instrumentof earlier date. Is anything more than this implied by the state-ment that an unregistered deed is to be deemed to be “ void, asagainst parties claiming an adverse interest thereto on valuableconsideration ” by virtue of any subsequent deed or instrument ?In the case of Silva v. Qunauardene (supra) De Sampayo J. said “ it isto my mind impossible to say that registration of the mortgage bondrendered the deed of gift (which was the earlier unregistered instru-ment) ' void1 for all purposes or in any other sense than that themortgage becomes prior in right though subsequent, in date.”This, if I may respectfully say so, is the correct meaning to beattached to the word “ void ” in section 17. The sentence whichfollows immediately after the one in which the word “ void ” occursrefers to the advantage gained by the unregistered instrument as“ the priority of the person claiming thereunder,” while the con-cluding words of the section on which De Sampayo J. specially reliesappear to me amount to an explanation of the sense in which theword “ void ” is to be understood. Moreover, the person who claimsan adverse interest by virtue of the mortgage bond is the mortgagee.The purchaser, who is often a stranger to the mortgage bond, takeshis interests by virtue of the transfer in his favour. Section 17does not expressly or by necessary implication confer any advantageon persons claiming by virtue of such transfers. The advantageconferred on a subsequent registered mortgage over an earlierunregistered mortgage is that it receives the status of a mortgagewhich is earlier in'date and prior in the matter of registration to asubsequent instrument. What reason can there be for penalizingan earlier unregistered instrument beyond this or for conferringany greater advantage on those claiming an adverse interest theretoon a subsequent registered mortgage bond ?
But the fruits of the advantage thus conferred on a subsequentregistered mortgage must, as in the case of a mortgage, which hasthe double advantage of priority in date as well as in registration,be harvested by due process of law. If the interest created by theearlier deed is such, that the person claiming under it has aright to be made a party to the action on the mortgage bondhe should be joined. If that is done, the mortgagee obtains ajudgment under which.be receives the full benefit of the priority.If he omits to take a necessary step in the procedure which the lawprescribes, he and those who claim under him have only themselvesto thank for the position in which they find themselves. I canassign no reason why sucb a mortgagee or a purchaser under such
1938.
Garvin A.J.
Anahqmyv. Haniffa
( 311 )
a mortgage should be in a better position than that which will bethe position of the mortgagee under a mortgage prior both in dateand registration, or of the purchaser under such a mortgage whenthere has been an omission to join as a party to the hypotheoaryaction a person claiming under a later instrument who was entitledin law to be joined as a party defendant.
For these reasons I must repeotfully dissent from the decisionsin Mutturamen v.'Massilamany (supra) and Silva v. Ghinaioardene(supra) in so far as they hold that a purchaser under a mortgageis entitled to refer his title back to the date of the mortgage, andby that process claim priority and preference as against the rightsof a person claiming under an instrument which is prior both asregards date of execution and in the matter of registration to thetransfer in favour of the purchaser under the mortgage, in any casein which such person was entitled in law to be made but was notmade a party defendant.
The case of Mohamadu Buhari v. Silva (supra) is, as I have said,only an instance of the application of the principle of these two casesto the case of a purchaser under a mortgage which has the advantageof the double priority. It is expressly based on the decision ofSilva v. Gunawardene (supra), and must stand or fall with that case.
I know of no principle which enables a purchaser under a mortgagewho claims on a conveyance made on a date specified therein toclaim that his conveyance shall be deemed to date as from the dateof the mortgage bond referred to in the hypothecary decree underwhich he purchased.
But in this case the mortgage was admittedly earlier in date andduly registered. The competing transfer was obtained pendentelite. Section 27 a (1) of the Registration Ordinance as amended byOrdinance No. 29 of 1917 compels the registration of such a liependens, and penalizes the omission to register by leaving a trans-feree pendente lite unaffected by the lis pendens. The Its pendensof the mortgage action was not registered, and as a result of thisomission the title of the purchaser is unfettered by the decree in theaction (vide Don Davith v. Don Davith1 (supra)).
But if the principle of Mohamadu Buhari v, Silva (supra) and thoearlier case on which it is based is to be applied, the purchaserunder the mortgage is entitled to claim that his title dates backto the mortgage, and in the process " pushes out ” the transfer madependente lite.
Before the passing of Ordinance No. 29 of 1917, there was no needto have recourse to this doctrine of dating back, because by reasonof 'the doctrine of lis pendens all transfers made by the parties toan action pendente lite were void as against the rights declared byor arising from the lis.
1 {1922} 24 N. L. B. 193.
1928.
Gabvtn A.J.
Anohaniyv. Haniffa
( 312 )
1928.
Gabvin A.J.
Anohamyv. Baniffa
It was felt, however, that this doctrine caused great hardship andprejudices to innocent purchasers who took transfers in ignoranceof the pendency of a Us. The Legislature stepped in and passedOrdinance No. 29 of 1917, declaring that a Us pendens should beregistered, and that unless it was registered no Us pendens was tobind purchasers pendente life. It is clear, therefore,* that the Legis-lature has decided that the “ weapon ” of Us pendens, to use thelanguage of DeSampayo J., was to be available only upon conditionthat the Us pendens is registered. This was the only weapon bywhich transfers pendente lite could be defeated, until a new one wasforged to meet the situation created by Ordinance No. 29 of 1917by adopting and extending the principle of MuUwramen v. Massila-many (supra) and Silva v. Chmawardene (supra).
The benefits which it is the policy of the Legislature to secureto purchasers who bought during the pendency of an unregisteredUs should not be defeated by the adoption and extension of aprinciple for which no proper legal foundation exists.
For reasons which I have already stated, I think that in this casethe plaintiff has established a title superior to and wholly inde-pendent of that of the defendant, and in this view I would dismissthe appeal, with costs.