Present : Lascelles C.J. and De Sampayo A.J.
APPUHAMY et al. v. SILVA.
420—D. C. Ghilaw, 4,699.
Agreement to re-convey land—Penalty in case of default—Action forspecific performance—Refusal to abide by the terms of the agree*ment—Is formal tender of price necessary <
An agreement between the plaintiffs and defendant was in theseterms: “ On the said Appuhamy and Yohanna (plaintiffs) of thesecond part tendering to me the sum of Bs. 1,715 and demanding atransfer of the lands, 1 (defendant) shall convey the same to them
Should I of the first part be unwilling or neglect to
transfer the said lands on their demanding a transfer and tenderingthe said sum of Bs. 1,715 within two years from the expiry of thesaid period, a sum of Bs. 450 Bhall be paid by me as a penalty tothe second party, and if we of the second part fail to get a transfer…….. within the said period by paying the said sum of Bs. 1,716
we shall not be allowed to demapd a transfer of the said propertyafter the said period, and we shall not so demand.**
Heldf that plaintiffs were entitled to enforce specific performanceof the agreement on tender of the money within the stipulatedtime, and that defendant had not the option of either conveyingthe property or of paying Bs. 450 as an alternative.
Held, further, that plaintiffs were not precluded from suing cmthe contract for specific performance by their failure to make a legaltender of the money, inasmuch as the defendant by his own actin repudiating the contract had made actual tender unnecessary andmeaningless.
HE facts are set out in full in the judgment.
E. W. Jayewardeave, for the plaintiffs, appellants.Sansoni (with Bawa, K.C.), for the respondent.
. January 22, 1914. Lascelles C.J.—
Cur. adv. vtdt.
The facts which gave rise to this appeal are the following. Bydeed P 1 dated February 9, 1907, the plaintiffs granted a usufructuarymortgage of the property now in question to the defendants to securea sum of. Bs. 1,275. This deed contained a covenant on the part ofthe mortgagors that they would not redeem the mortgage for a termof five years, the intention being that the mortgagee should enjoythe rents and profits of the land, which are of considerable value, forat least that period.
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In 1908 the plaintiffs fell into trouble. They Bad remained inoccupation of a house on the mortgaged premises, and were arrestedon the complaint of the defendant on a charge of stealing coconuts.The plaintiffs then entered into negotiations with the defendant fora settlement of the criminal charge. The matter ended in theagreement which the plaintiffs are now suing to enforce. Thesubstance of the agreement was that the plaintiffs should convey theproperty to the defendant for a consideration of Es. 1,715, whiohwas made up of the original mortgage debt of Es. 1,275, whioh wasdischarged, a further advance of Bs. 200, and a balance of Bs. 240to cover costs and damages in the Police Court and notarial expenses.
The deed of transfer to the defendant was executed on January7, 1908, when about four years and two months of the defendant’sterm of possession under the usufructuary mortgage was still to run,On the same day the parties executed the agreement on which thepresent action is brought.
After reciting the conveyance to the defendant, the agreementdeclares that the property comprised in the conveyance " shall bepossessed by me as I like from this date Bntil the expiration of thefour years and two months, and we; the said two parties, herebybind ourselves that within a period of two years after the expiryof the said four years and two months, on the said Don HendrickPeris Appuhamy and Yohanna Hamine, who have bound themselveshereto as of the second party, or either of them tendering to me thesum of Bs. 1,715, which was the purchase amount, and demanding atransfer of the said two lands and portion of land, I shall receive thesaid amount, and I shall convey the same to them upon, a transfer,and we of the said second part shall have the same conveyed to us.
“ 2. Should I of the first part be unwilling or neglect to transferthe said two lands and the portion of land and all things appertainingthereto after possessing them till the expiration of four years andtwo months on their demanding a transfer and tendering the saidanm of Bs. 1,715 within two years from the expiry of the said periodas mentioned in the first paragraph, a sum of Bs. 450 shall be paidby me as a penalty to the second party, and if we of the secondpart fail to get a transfer for the said two lands and the portion ofland and all things appertaining thereto within the said period bypaying the said sum of Bs. 1,715, we shall not be allowed to demanda transfer of the said property after the said period, and we shallnot so demand!”
The plaintiffs’ case is that soon after March 7, when theterm of four years and two months expired, they tendered tothe defendant the Bs. 1,715 and demanded a conveyance of theproperty, which the defendant refused to give.’ The plaintiffs nowsue for specific performance, for B6. 450 damages, and mesne profits.The defendant denies the tender of the Bs. 1,715, and contends that,on the true construction of the agreement, he had the option of
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either re-conveying the properly to the plaintiffs or paying them thepenalty of Bs. *450, and that he is not liable even to pay the lattersum, as the plaintiffs had made default in tendering the Bs. 1,715.No issue was fixed on the question of tender, but the question of thedefendant’s liability under the agreement to re-convey the propertywas raised in general terms. The issue framed with regard toenormi8 Icesio was not argued on the appeal.
The plaintiffs now appeal from the dismissal of the action.
Before dealing with the construction of the agreement, 1 will noticethe learned District Judge’s finding with regard to the question oftender. In his judgment the District Judge framed an issue. “ Wasthere, as a matter of fact, a tender in law of Bs. 1,715 by the plaintiffsto the defendant? ” It is not easy to see what good purpose isserved by framing an issue of fact after the trial is closed. But Ithink the issue may fairly be treated as covered by the generalquestion raised in the second issue. Even if this be not the case,I do not think that the question of tender can be excluded. It wastreated by the parties as being in issue, and evidence on the pointwas adduced by both parties.
The learned District Judge disbelieved the evidence that therehad been an actual tender, characterizing it as false and perjured;and on this ground held that the plaintiffs were not entitled even. to the penalty of Bs. 450. The result is curious. Accepting thefinding of the District Judge as regards thp actual tender of themoney, there cannot be the slightest doubt that the first plaintiff,at a time when the plaintiffs were entitled to the benefit of theagreement, formally called on the defendant to transfer the property,and that the defendant unequivocally refused to do so. This isadmitted by the defendant in paragraph 4 of his answer; it is swornto by the first plaintiff and the Police Headman Philip Dabrera; andagain substantially admitted by the defendant himself in his oralevidence.
The plaintiffs are thus held to have lost their right to sue on theagreement, because they have not gone through the formality ofdisplaying the Bs. i;715 to the defendant, who had positivelyannounced his refusal to be bound by the agreement to re-conveythe property.
There can, I think, be no doubt but that the defendant, by announc-ing his refusal * to. accept the money, had waived his right to have aformal legal tender. The principle of law has been thus stated incases where tender is pleaded as an excuse for non-performance:“ If the debtor tells his creditor that he has come for the purpose ofpaying a specified amount, and the creditor says that it is too late,or is insufficient in amount, or otherwise indicates that he will notaccept the money, the actual production is thereby dispensed with,and there is a good tender of the amount mentioned by the debtor ”(Halabury’s Laws of England, vol. 7/7.t p. 419).
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The same principle also applies where there is a contract with acondition precedent. The performance of the condition is excusedwhere the other party has intimated that he does not intend toperform the contract. (Bank of China, Japan, and the Straits v.American Trading Go.1) I think it is quite clear that the plaintiffsare not precluded from suing on the contract by failure to make alegal tender of the redemption money, inasmuch as the defendantby his own act in repudiating the contract had made actual tenderunnecessary and meaningless.
I now pass on to what is the real question in the case, namely,whether, on a true construction of the agreement,.the defendant wasbound to re-convey the property, the Bs. 450 being merely a penaltyto secure compliance with the agreement; or whether, on the otherhand, the defendant had the option of either re-conveying theproperty or paying Bs. 450 as an alternative.
Specific performance is an equitable remedy, and in decidingwhether this remedy should be given, the Courts in Ceylon are guidedby the same principles as Courts of Equity at home. (Holmes v.Alia Marikar,2)
The real question is, what'is the true intention of the parties?Was it intended that the plaintiffs should be entitled to a re-convey-ance on payment of the agreed sum, a penalty of Bs. 450 beingannexed to secure performance? If this is the true construction,the fact, of a penalty "being annexed will not prevent the Courtenforcing performance of what is the real object of the contract. ‘ Or,does the contract mean that one of two things has to be done,namely, the re-conveyance of the property or the payment of thepenal sum at the election of the defendant? If this is the case, thecontract is satisfied by payment of the penalty, and there is noground for claiming performance of the other alternative.
I have no doubt but that the present agreement falls under theformer head, and that the true meaning and purpose of the contractis that the plaintiffs should be entitled to redeem, their property onpayment of the Bs. 1,715.
The agreement, after reserving to the defendant the right topossess the land for so much of the term of five years as was thenoutstanding, goes on to provide in very simple language that if theplaintiffs, within a period of two years from the end of the above-mentioned term, should tender to the defendant the sum of Bs. 1,715and demand a re-conveyance, then the defendant should transferthe property to them.'
Here we have a very plain agreement to re-convey on tender of thestipulated sum.
Then the agreement proceeds to provide that if the defendantshould be unwilling or neglect to transfer the property on demandand tender of the agreed sum within the stipulated period,> P. C. (1894) A. C. 266.* 1 N. L. R. 282.
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then “ the said sum of Rs. 450 shall be paid by me as a penalty.”What is this but an ordinary penal clause to enforce the principalobligation?
It cannot be inferred from the use of the word “ unwilling ” thatthe defendant had any option in the matter; for the phrase is “ beunwilling or neglect to transfer.”
Then the agreement goes on to provide for the case of the plain-tiffs failing to get a transfer within the stipulated time. In this casethe plaintiffs have no further rights under the agreement. How isthis expressed? ” We shall not be allowed to demand a transferafter the said period.” The right to a transfer is here used to denotethe plaintiffs' principal right under the agreement. I can findnothing in this clause or elsewhere in the agreement which pointsto the defendant being allowed to elect between re-conveying theproperty and paying Rs. 450. There are several other considerationswhich point to the s&me conclusion. The Korale Mudaliyar valuesthe two pieces of land at Rs. 4,370. Making the fullest allowancefor the recent appreciation of property, the privilege of redeemingthe property for Rs. 1,715 must have been worth much more thanRs. 450 in 1908. It is therefore unlikely that it should have beenintended that the defendant could escape the liability to re-conveyby paying Rs. 450. Again, the conveyance, coupled with an agree-ment for re-conveyance ^on payment of the consideration, suggeststhat the plaintiffs intended to charge the land with repayment ofthe Rs. 1,715 rather than to alienate it permanently.
The plaintiffs are, in my opinion, clearly entitled to specificperformance. I understand that no claim is made with regard tothe penalty, and the question of meme profits was not discussed onappeal.
The order will be that the judgment of the District Court be setaside, and on the plaintiffs paying into the District Court, withinone month from the return of the record to the District Court thesum of Rs. 1,715, the defendant is ordered to re-convey the propertydescribed in the writ to the plaintiffs. The costs of preparing theconveyance to be borne by the plaintiffs, and the conveyance to besettled by the District Judge.
If the defendant fails to obey the order, the Court will enforceexecution in accordance with section 331 and the followingsections of the Civil Procedure Code. On the execution of a properconveyance, whether by the defendant or by the Court, the moneyin Court will be handed to the defendant and the deed to theplaintiffs.
The plaintiffs will have their costs here and in the Court below.
De Sampayo A.J.—
I entirely agree.