CHITHRAPOOPALAPILLAI v. CHINNIAH et al

135-NLR-NLR-V-39-CHITHRAPOOPALAPILLAI-v.-CHINNIAH-et-al.pdf


Chithrapoopalapillai v. Chinniah.
489
1937Present: Hearne J. and Fernando A.J.
CHITHRAPOOPALAPILLAI v. CHINNIAH et al.
45—D. C. Trincomalee, 1,868.
Action for account—Claim for general account—Particulars as to items—Practice—Principal and agent—When agent is trustee—Claim againstagent—When it may be barred—Fiduciary relation—Recovery of interest—Trusts Ordinance, No. 9 of 1917, s. Ill, Ordinance No. 22 of 1271, s. 8.Where property is entrusted to an agent for investment, sale, or custodythe agent is trustee for the property, and a claim to recover such propertywould not he barred by the provisions of the Prescription Ordinance,No. 22 of 1871.
In such a case interest would be recoverable on the claim.
Where an agent merely collects rents or debts he is not a trustee unlessthe agency is of an exceptionally fiduciary character.
In the latter case, the provisions of the Prescription Ordinance wouldapply except when the proviso operates.^
In this case no interest would be chargeable in the absence of an agree-ment.
^^PPEAL from a judgment of the District Judge of Trincomalee.
F. A. Hay ley, K.C. (with him N. E. Weerasooria and N. K. Choksy), fordefendant, appellant.
H. V, Perera, K.C. (with him S. J. V. Chelvanayagam and. A. Muthu-cumaru), for plaintiffs, respondents.
Cur. adv. vult.
480
HEARNE J.—Chithrapoopalapillai v. Chinniah.
July 29, 1937. Heabne J.—
When the plaintiff filed his suit'in the District Court of Trincomalee heasked for an order directing the defendants to pay him Rs. 15,475.31made up as follows:—
Rs. c.
Schedule A.Schedule B.
Schedule C.Schedule D.Schedule E.
Moniesallegedtohavebeenreceivedbythe
defendant and not. accounted forMoniesallegedtohavebeenreceivedbythe
defendant from third parties on account of theplaintiff and not accounted forWhich were for small amountsDo.do.
Do.do.
10,446 67
2,510 311,451 15942 27i124 90i
15,475 31
This was his first cause of action.
As a second cause of action he asked for a further accounting from thedefendant and estimated that the amount that would be found- due onsuch accounting would be in the region of Rs. 14,000 (paragraph 15 ofplaint) and in (c) of his prayer he also asked for an order on the defendant“ to pay such other sums of money as may be found due from him at atrue and full accounting, and in default of such accounting, to pay a sumof Rs. 14,000 ”.
A plaintiff can, of course, file a suit for money which will be found to bedue on taking accounts. It is ordinarily done when a defendant is undera legal obligation to render accounts which a plaintiff is not in a position,to ascertain. It is usual in such a. case for a Court, where liability toaccount is established, to direct that an account be taken of the trans-actions between the parties. But in the present case, in regard to thesecond cause of action, the defendant was most seriously prejudiced bythe fact that, as the result of what transpired, the plaintiff did not merelyset,out to establish that the defendant was liable to account. He set outto establish that the defendant owed him Rs. 15,475.31 in accordancewith Schedules A to E as well as a further sum of money in regard to whichtie would not condescend to particulars. (Page 27 of typed record.)It is a rule of practice for which no authority is necessary that where aclaim is for a general account, that is where the accounts are unsettledand it is sought to have them settled, particulars as to items, initially atany rate, need not be given. But when a definite sum made up of severalitems is claimed for which judgment is asked, particulars of the items willbe necessary.
What occurred in the case was this. The Judge made an order thatboth parties should file accounts. In his accounts the defendant set out“ the bonds in favour of second plaintiff .which he had despatched to her”(D 1 a) , “ the account left in his charge by the first plaintiff before heleft for the F. M. S. ” (D 1 b) , “ the re-investment account ” (D 1 c),“receipts on the plaintiffs account” (D 1 d) and finally “the expenseshe had incurred ” (D 1 e) . He did not set out the sums of money hehad received from the plaintiffs. But the first plaintiff in his accountsdetailed (a) the monies he claims to have remitted to the defendant, and
HEARNE J.—Chithrapoopalapillai v. Chinniah.
491
(b) the monies he claims that the defendant received on account of theplaintiffs from third parties. These documents are P 1, the sum in (a) isshown as Rs. 47,122.11 and the sum in (b) as Rs. 11,569.
The Judge at this stage proceeded to frame issues—at page 25 of thetyped record. In particular he framed issues 8 to 11.
Issue 8.—Did the plaintiifs entrust to the defendant the sums ofmoney mentioned in the statement filed by them on March21, 1935 ? (P 1).
Issue 9.—Has the defendant failed to render the plaintiffs a true andfull account. …?
Issue 10.—Is the defendant liable to render .the plaintiffs a true and-full account ?
Issue 11.—If issue It) is answered in favour of the plaintiffs, whatamount would plaintiffs be entitled to in the event of thedefendant failing to render a true and full account ?
Now P 1, as I have already said, indicated that the defendant hadreceived Rs. 47,122.11 from the plaintiffs and Rs. 11,569 from thirdparties on account of the plaintiffs, and gthe defendant did not know whenthe issues were framed for what proportion of these sums it was claimedhe had not accounted, for which judgment was being asked ; what itemsin those two statements supported the plaintiffs claim for judgment inaddition to the Rs. 15,475.31 mentioned in Schedules A to E. In factthe further sum of money for which the plaintiff was claiming judgmentwas, as it transpired, one of approximately Rs. 19,000 which is aboutRs. 5,000 more than the estimate he made of Rs. 14,000, in paragraph 16of the plaint. This sum was based on P 50 (Rs. 1,000) , P 51 (Rs. 500),
P 55 (Rs. 500), P 59 (Rs. 250), P 74 (Rs. 400), P 75 (Rs. 200), P 76(Rs. 330), P 77 (Rs. 300), P 78 (Rs. 25), P 79 (Rs. 45), P 80 (Rs. 25), P 81(Rs. 300), P 82 (Rs. 200), P 64 (Rs. 2,000), P 41 (Rs. 506), P 40 (Rs. 600),and P 42-49 for Rs. 12,000 on unendorsed seconds of exchange of drafts,the originals of two of which the plaintiff had admittedly paid to thirdparties (D 19 and D 20). But the defendant had no notice of these itemstill the plaintiff had entered on his case and in the case of P 42-49 not. tillhe was himself cross-examined after the plaintiff had closed his case.
It was eventually conceded that the procedure in regard to the secondcause of action was irregular and we were asked to deal with the appeals -on two lines. In the first place to send the case back for re-trial on thesecond cause of action with a direction to the Judge that he should noworder an account to be taken. In the second place to hold that theplaintiff is entitled to judgment in accordance with the. Judge’s findingson Schedules A to E.
I find it impossible to direct the Judge in the lower Court to order anaccount to be taken on the second cause of action, as that would involvethe implication that in my opinion the plaintiff had made out a case forthe defendant’s liability to account; and I cannot say that any resultcould be held to flow from the trial on the second cause of action in viewof the irregularities which prejudiced the defendant. It is not in everycase where a plaintiff establishes that a defendant "was his agent that theJudge automatically orders an account to be taken. The Judge does not<io so if the liability to account is not established or if the necessity for
492HEARNS J.—Chithrapoopalapittai v. Chinniah.
accounts is not made out. To this aspect of the matter the trial Judge didnot appear at the outset of the case to direct his attention. In hispleadings the defendant stated that up till 1928 he had accounted to theplaintiff for monies received by sending him the bonds obtained in hisfavour, while in his evidence he says that when'he was given a power ofattorney by the plaintiff he had satisfied him regarding previous trans-actions. The matter was not put in issue by reason of the course thetrial took, but had it been put in issue it appears that there is ground forsupposing that when the plaintiff executed the power of attorney indefendant’s favour he was satisfied that the monies remitted to thedefendant prior to 1928 had been duly invested by him. Apart fromJthese considerations, some of the items of the claim, for instance, those‘ based on the drafts, are palpably dishonest.
I find it equally impossible to hold that a case like this can be triedpiecemeal and that judgment should be entered in plaintiffs favour inaccordance with the Judge’s findings on Schedules A to E, especially assome of the findings do not appear to me to be justified by the evidence.In view of the conclusion at which I have arrived that there should be anew trial—it is the only satisfactory solution that I can envisage—itwould be inappropriate to refer specifically to many of the items ofaccount. I select three items of the plaintiffs claim where the amountsinvolved are small to indicate the mistaken view taken by the Judge inregard to the burden of proof.
In Schedule E there is a claim for Rs. 20, which according to the plaintiff“ was supposed to have been returned to Subramaniam on November 3,1928 ”. The plaintiff himself could give no relevant evidence; Subra-maniam said he had paid the full interest payable by him and that Rs. 20as interest had not been deducted, but the defendant in support of hiscontention that he had made a deduction of Rs. 20 produced a letterfrom the plaintiff in which he had authorized the defendant not to chargeSubramaniam one month’s interest (D 2). Of course it was open to theJudge to take the view that notwithstanding the plaintiff’s authority tothe defendant the latter did not deduct Rs. 20. But in his finding atpage 167 he makes no reference to D 2 and appears to have given it noweight at all.■ 0a
In Schedule C there is a claim for Rs. 50 which_ according to the firstplaintiff was alleged to have been paid to the second plaintiff. The firstplaintiff’s evidence was clearly hearsay. All he could say, and this couldonly be implied from his evidence, was that the second plaintiff had toldhim she had not received the alleged payment. The defendant said hehad received the Rs. 50 and had paid it over to the second plaintiff. The. Judge found against him in regard to this item on which he had givenevidence merely on the hearsay evidence of the first plaintiff.
In Schedule B an item of Rs. 108 appears. This was said to be theinterest paid to defendant on July 7, 1932. The receipt of the moneywas admitted by the defendant who showed that he had brought it tocredit on page 297. The Judge accepts this at page 162 but says that thedefendant is liable to pay an amount of Rs. 108 alleged to have been paidto the defendant on April 15, 1933. Apart from the fact-that the" defend-ant was said to be liable according to the pleadings not for mpney received
HE ARNE J.—Chithrapo opalapillai v. Chinhiah
493
on April 15, 1933, but on July 7, 1932, the money paid on April 15, 1933,was paid according to the receipt, to the plaintiffs themselves after theyhad returned from the F. M. S.
In my opinion the appeal should be allowed with costs and the cross-appeal dismissed, the decree of the trial Court rescinded and a new trialordered with the following directions concerning prescription, interest,and the claim in reconvention based upon the injunction. The costs in-the lower Court should remain in the discretion of the Judge of suchCourt.
Before the enactment of the Trusts Ordinance an action for conversionwas barred after two years from its cause, while an action to recover whatis in effect a trust fund fell within section 8 of the. Prescription Ordinanceor else within section 11 which allows a three year period in cases not.expressly provided for. (Dodwell & Co., Ltd. v. John1.)
The Trusts Ordinance enacted that in the case of any claim to recovertrust property, or the proceeds thereof still retained by a trustee, orpreviously received by the trustee and converted to his use, the claimshall not be held to be barred or prejudiced by any provision of OrdinanceNo. 22 of 1871 (section 111). Sub-section (5) of section 111 provides thatthis section shall not apply to constructive trusts in so far as such trusts-are treated as express trusts by the law of England.
It is no easy matter to decide when an agent is in fact a trustee of hisprincipal.
The leading cases on the subject are Burdick v. Garrick *; Soar v.Ashweil *; Friend v. Young*; and North American Land & Timber Co. v.Watkir.s *.
Soar v. Ashweil was a cash in which a stranger to a trust, received partof a it rst property which he knew had been handed to him in breach ofthe trust. It does not help in the present case.
.In Burdick v. Garrick much was made to depend upon the specialnature of the deed under which monies were to be received or invested-See Hall V.C. in Watson v. Woodsman °.
In Friend v. Young it was held that the existence of a fiduciary relation-ship between the parties did not prevent the defence of the Statute ofLimitations being set up.. This case was explained and distinguished inNorth American Land & Timber Co. v. Watkins which followed Burdick v.Garrick.' The result appears to be that (a) where property is handed toan agent for investment, sale, custody, &c., he is a trustee of that pro-perty ; but (b) where he merely collects rents or debts he is not a trusteeunless his agency is of an exceptionally fiduciary character—-Underhill onTrusts (7th ed.),p. 183.
In the former cas&, therefore, the claim to recover would not be barredby any provisions of Ordinance No. 22 of 1871 and interest would be• chargeable in accordance with the Trusts Ordinance ; in the second caseunless the proviso operates (in which event the position would. be the sameas in the former case) the provisions of Ordinance No. 22 of 1871, wouldhave application and in the absence of an agreement no interest would be 1 * 3
chargeable.
1 (191.3) 20 N. L. R. 200 at p. 212.
* {1370 )L.R.S Ch. 233.
3 (1S93) 2 Q. B. D. 390.
•(1397) 2Ch. *■»/.
* (1904) 1 Ch 242.•L.R. 20 Eg. 721. 731.
494
HfiARNE J —Raj asuritm v. Rajasiiriar.
It would appear that the application made by the plaintiff to prohibitthe defendant from disposing of any movable or immovable propertybelonging to him until the decision of the case was misconceived. At the .most an order for sequestration adequate to the plaintiff’s claim couldhave been asked for by the plaintiff. The Judge, like the plaintiff, waswrong in regard to the particular remedy open to the plaintiff assumingthat the conditions requisite for either remedy existed. But in regard tothe claim in reconvention, the Judge at the retrial (and of course theremust be a new Judge) may award assessed damages, not on the basis ofthe fact that the plaintiff had misconceived his remedy (if any) but if heis satisfied that the material on which the injunction was issued werewrong and false to the knowledge of the plaintiff.
Fernando A.J.—I agree.
Sent back.