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Present: Viscount Haldane, Lord Buckmaster, andLord Atkinson.
ARUNASALAM CHETTY v. SOMASUNDBAM CHETTY.
D. G. Jaffna, 7,668.Conveyance to a Chetty with a firm name annexed—Conveyance ae agentof the firm—The trust created thereby is 'not constructive trust, butexpress trust—Prescription.
Where a property was conveyed to a Chetty with the firm nameB. M. A. E. A. B., it was held that the property was transferredto l»»w> as agent of the firm, and not in his private capacity. As theChetty to whom the property was so conveyed was express trusteeand not constructive trustee, it was not open to him to pleadprescription as against the other members of the firm.
“ An express trust can only arise between the cestui que trustand his trustee. A constructive trust is one which arises when astranger to a trust already constituted is held by the Court to bebound in good faith and in conscience by the trust in consequenceof. his conduct and behaviour. ”
HE facts appear from the judgment of the Supreme Courtreported in 80 N. L. B. 321.
March 8, 1920. Delivered by Lord Buckmaster:—
The appellant and the first respondent are the heirs at law of oneArunasalam Chetty, who died intestate in January, 1901. Aruna-salam Chetty had two sons, the appellant and BamanathanChetty, who predeceased his father leaving an only son, the firstrespondent. The second respondent is the administrator of theestate of Arunasalam Chetty.
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The action'Out of which this appeal has arisen was institutedin the District Court of Jaffna by the first respondent on December16,. 1910, the claim being for one-half of certain lands and premisesof which the appellant was in possession, an order for accountsand payment of the rents, and transfer of the land.
The real and, in substance, the only question raised in the actionwas whether the appellant was benefically entitled to the property,or whether he had acquired it as trustee for his father. The secondrespondent was added as plaintiff by an order made by the DistrictJudge on January .8, 1918, on the application of the plaintiff, owingto the defendant having alleged in his amended answer that theplaintiff could not maintain the suit in the absence of the adminis-tractor. This, however, did not remove but rather added to theplaintiff’s difficulties, as a variety of technical questions were thenurged by the appellant both against the constitution of the suitwith the administrator and against the claim that the administratorcould bring.
All these points have been decided adversely to the appellant,both in the District Court and in the Supreme Court, and it wasfound impossible to urge them further on the hearing of this appeal.Nor can the appellant any longer contest that these lands originallycame into his possession as trustee for Arunasalam Chetty. Ina dispute between the same parties raising the same issue withregard to lands similarly held, it was decided by the learnedJudge who tried.the case, by the Supreme Court, and by thisBoard that there was abundant evidence to establish his fiduciaryrelationship, and this reduced the appellant’s case to the simplequestion of whether or no he can establish under the provision ofthe Prescription Ordinance Act of 1871 that he was in possession forten years (the necessary statutory period) before the commence-ment of the suit. It is clear he took possession under a deedof transfer of May 1, 1900, and, as already stated, the suit wascommenced in December, 1910. But section 14 of the Act providesthat if at the time when the right of any person to sue for therecovery of any. redeemable property shall have first occurred he hasbeen absent beyond the sea, then, during such absence, the possessionshall not be taken as giving the possessor any such right or title.
It is admitted that the respondent was, in fact, absent duringthe whole period, and also that, though absent himself, his agent,one Baman Chetty, received on his behalf rents and profits fromthe lands between the years 1901 and 1908, so that, in either view,the defence could not avail. Finally, it is to their Lordshipsplain that the appellant held these lands, not as constructive, butas express trustee, to whom the statute admittedly does not apply.The property was originally acquired by Arunasalam Chetty throughhis agent Subramanian Chetty, and by the latter transferred to theappellant by deed of May -1, 1900.
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Now Arunasalam Chetty traded under a firm name ol whichthe letters B. M. A. B. A. B. were the descriptive title. Theywere not the initial letters of the name of Subramanian Chettynor of the appellant, but the conveyance was made in the firstinstance to Subram ani an Chetty with this description, and, withthe same description, it was transferred to the appellant. Uponthe face, therefore, of the document of title there is the clearstatement that the appellant was the agent of the firm.
The distinction between an express and a constructive trusteeis clearly stated by Lord Justice Bowen in Soar v. AshweU1 inthese words:—
An express trust can only arise between the cestui que trust and his trustee.A constructive trust is one which arises when a stranger to a trust alreadyconstituted is held by the Court to be bound in good faith and in conscienceby the trust in consequence of his conduct and behaviour.
It is plain, therefore, that the defendant never held the propertyas a constructive trustee. The trust sought to be enforced arosedirectly between him and Arunasalam Chetty, through whomthe plaintiff claimed, and although' it would be possible to show,even if the descriptive character of the firm were omitted fromthe deed, that the fact of the purchase being made with the moneyof Arunasalam Chetty created a resulting trust in his favour, yetthis is unnecessary where the plain character of the fiduciaryrelationship is established upon the face of the document of title,and there is no evidence to contradict the necessary inference.
In their Lordships’ opinion there has never been any justificationwhatever for the appellant’s conduct in excluding the firstrespondent from his just share in the estate, and it is greatly tobe regretted, in these circumstances, that the determination of thisdispute, upon which apparently there has never been the slightestvariation of judicial opinion, should have occasioned such costlyand prolonged litigation. Their Lordships will humbly advise HisMajesty that this appeal should be dismissed, with costs.
C. A. (1893) 2 Q. B. 390, at p. 396.
ARUNASALAM CHETTY v. SOMASUNDRAM CHETTY