( 235 )
Bequests, Negombo, the present plaintiff had sued the first defend-ant both personally and as administratrix of her husband’s estate ona mortgage and obtained judgment in 1922. In the year 1923, apartition action was brought for the partition of the lands by aperson who had purchased the widow's interests in them. Aninterlocutory decree was entered declaring the plaintiff in that actionentitled to three-fourth share and the children to the balance one-fourth; and final decrees were entered in August, 1923, and January,1924, allotting the lots now in question to the third and fourthdefendants. In October, 1924, the plaintiffs seized these lots whenthey were claimed on behalf of the defendants and their claim wasupheld.The learnedCommissioner of Bequestsdismissedthe
plaintiff’s action.
CroosDa Berera, for plaintiff, appellant.—Theheirs holdthe
propertyin trust for thecreditors. This trust is not wiped out bythe
partitiondecree. Thereis a charge on the property.The mere filing
of a final account does not close the estate. (Gopalsamy v. Rama-samy Pulle,1 Vallipilla v. Ponnusamy,2 Marikar v. Marikar.3)
E. G. P. Jayatilleke, for defendants, respondent.—The partitiondecree creates new title (Bernard v. Fernando *). All previous charges,are extinguished. The title by inheritance has been wiped out. Theestate has been closed. The proper remedy is to ask for a judicialsettlement. The creditor has been guilty of delay.
Cross Da Brera, in reply.
May 13, 1926. Jayewardene A.J.—
This case raises an interesting question with regard to the effect,of section 9 of the Partition Ordinance, that is, whether a block ofland allotted under a partition decree to a party who claimed it byinheritance is liable to be seized and held in execution of a decreeobtained against the estate of the person from whom he inherited it.
Two lands called Ambagahawatte and Siyambalagahawattebelonged to one Mariano Fernando, who died leaving a widow (thefirst defendant) and two minor children (the third and fourth defend-ants), who are represented in this action by their guardian ad litemthe fifth defendant. Under our law, these lands vested in thewidow and the children on the death of the intestate, subject, how-ever, to the right of the personal representatives to deal with theproperty for the purposes of administration. (Silva v. Silva,Gopalasamy v. Ramasamy Pulle (supra), and Horne v. Marikar.*)
FernandoRosa Maria
1 (1911) 14 N. L. R. 238.
* (1913) 11 N. L. R. 126.
3 (1920) 22 N. L. R. 131.
(1913) 16 N. L. R. 438.5 (1901) 10 N. L. R. 234.
(1925) 21 N. L. R. 185.
( 236 )
The estate of Mariano Fernando was administered by the firstJayhwab* defendant who had been appointed administratrix. In casepawsA-J. No. 30,041, Court of Bequests, Negombo, the present plaintiff hadFernando sued the first defendant both personally and as administratrix of herBaso V~Maria ^us^an^ son a mortgage bond and had obtained judgment
in the year 1922. In the year 1923, a partition action had beenbrought for the partition of these lands. It was brought by aperson who had purchased the widow’s interests in them. Aninterlocutory decree was entered declaring the plaintiff in thataction entitled to a three-fourth share, and the children to thebalance one-fourth, and final decrees were entered in August, 1923,and January, 1924 (D1 and D2), allotting the lots now in questionto the third and fourth defendants. In October, 1924, she plaintiffsseized these lots when they were claimed on behalf of the minors,and the claim was upheld.
The plaintiff brings the present action to have it declared thatfshey are liable to be seized and held in execution of his decree. Thedefendants contend that as the lots have been allotted to them underthe partition decree, they are not possessing the property as theheirs of their father but under a new title created in their favour bythe partition decree. The learned District Judge upheld theircontention and dismissed the plaintiff’s action. He said that as theestate had been closed (it had been closed in January, 1924), and the•estate distributed, the property distributed would not be liable forthe payment of debts especially, as in this case, there was somemoney deposited to the credit of the administration suit and theplaintiff had been very lax in setting about to get his money. Healso held that the lands seized had become the property of thedefendants by virtue of the partition decree. I am not prepared togive an unqualified assent to the first ground given by the learnedJudge. If the claim of the creditor is a stale one, which he hadfailed to enforce or to bring to the notice of the administrator while“the estate was being administered, there may be something to besaid for refusing to allow a creditor to seize property belonging to anestate which has been closed and which has been distributed amongthe heirs by a decree in a judicial settlement. But here the plain-tiff had obtained judgment against the administratrix, and she musthave been fully aware of the plaintiff’s claim. She should havebrought that fact to the notice of the Court when the estate wasbeing closed, and asked the Court to allow her- to retain in her handssufficient property or to deposit in Court a sum of money to pay theplaintiff’s claim under section 742 of the Civil Procedure Code.Terhaps the plaintiff himself might have intervened in the adminis-tration action and asked for a judicial settlement of the accounts ofthe estate, and payment of his debt. The mere filing of a finalaccount and “ closing ” of an estate without a judicial settlement,
( 237 )
it has been held, does not prevent a judicial settlement of an estateat the instance of a creditor or other party interested (Vallipflla v.Ponnu8amy (supra) ). Perhaps in the present case the fact that theplaintiff was suing on a mortgage might have led the administratrixto believe that the sale of the mortgaged property would satisfy theplaintiff’s claim. It is unfortunate that the plaintiff did not takesteps in the administration suit; if he had done so, there might havebeen an equitable settlement of his claim instead of some of theheirs only being deprived of their share of the inheritance. Howeverthat may be, the main contention for the respondents in this casewas that the final decree of partition conferred on them a new titleand that they cannot be regarded as holding the property intheir capacity of heirs of their father. As was said in Bernard v.Fernando 1—
“ Partition decrees are conclusive by their own inherent virtue,and do not depend for their final validity upon anythingwhich the parties may or may not afterwards do. Theyare not, like other decrees affecting land, merely declaratoryof the existing rights of the parties inter se. They create anew title in the parties absolutely good against all otherpersons whomsoever. ”
On the other hand, it was argued that the heirs held the propertyin trust and that their character as trustees was not destroyed bya decree under section 9 of the Partition Ordinance (Marikar v.Marikar (supra) ). An administrator or executor may become atrustee for the heirs in certain circumstances, but can an heir besaid to be a trustee for a legal representative in respect of land whichdevolved on him from an intestate ? As stated above, the heirsreceive the property of an intestate subject to the right of the legalrepresentative to deal with such property by sale or otherwise, to paydebts, &c., so that the interest of the heirs is not an absolute,but only a qualified one. A certain interest vests in the legalrepresentative also.
Now section 96 of the Trusts Ordinance, 1917, declaresthat—
“ In any case not coming within the scope of any of the precedingsections where there is no trust, but the person havingpossession of property has not the whole beneficial interesttherein, he must hold the property for the benefit of thepersons having such interest, or the residue thereof (as thecase may be), to the extent necessary to satisfy their justdemands. ”
Jayewab-DENE A.J.
Rosa Marta
1 {1913) 1$ N. L. R. 438.
( 238 )
Jayewab-DBNE At J»
' Rosa Maria
This section deals with constructive trusts not expressly providedfor in the other sections of Chapter IX. of the Trusts Ordinance.The first illustration to section 96 runs as follows: —
“A, an executor, distributes the assets of his testator, B, to thelegatees without having paid the whole of B’s debts. Thelegatees hold for the benefit of B’s creditors, to the extentnecessary to satisfy their just demands, the assets sodistributed. ”
This illustration would cover the case of an administrator whenthere is an intestacy. Therefore, where an administrator distributesthe estate of his intestate to the heirs without having paid the wholeof the intestate’s debts, the heirs would hold for the benefit of thecreditors to the extent necessary to satisfy their just demands, theassets so distributed. There is then a form of constructive trustbetween legatees or heirs and the creditors. According to thisprinciple, where the heirs take possession of the estate of a deceasedas they are entitled to do under our law, they would, in my opinion,hold the property of the estate in trust for the legal representative,as representing the creditors, to the extent necessary to satisfy thedebts of the estate. The legal representative, in such a case, standsin the same position as a creditor, or the general body of creditors.In such cases, a creditor or the legal representative may be said tohave an equitable interest in the property of the intestate while thelegal estate is in the legatees or heirs. As Shaw J. said in Marikar v.Marikar (supra) in discussing section 9 of the Partition Ordinance: —
Section 9 of the Partition Ordinance, 1863, does not and was notintended to extinguish equitable interests. The provisionthat the decree shall be good and sufficient evidence of thetitles of the parties to such shares or interests as have beenthereby awarded in severalty, refers to legal titles only,and cannot properly be stretched to extinguish a trustattaching to the property. The provision in section 9, inso far as it takes away previously existing rights, must,under the ordinary rules of construction of statutes, beconstrued striotly, and not be extended to interfere withsuch rights further than the wording of the enactmentnecessitated. Had it been intended to extinguish equit-able interests in the land partitioned, or in the proceeds ifthe land is directed by the decree to be sold, it should andwould have said so. The decree is good and conclusiveagainst all persons whatever, including a cestui que trust,as to the partition or sale and as to the specific lot or sumof money to which the trust relates, but the effect, so faras the cestui que trust is concerned, is merely to set apart aspecific portion of the common estate to which his rightsattach in severalty. ”
( 239 )
Bertram C.J. expressly agreed with this view, and de Sampayo J.came to the same conclusion. This is a judgment of a Bench ofthree Judges and is binding on me.
In view of section 94 of the Trusts Ordinance, the heirs in this caseheld the property in trust for the creditors, and that trust has notbeen destroyed by the partition decree but attaches to the share inseveralty allotted to them.
In the present case it has to be considered whether the plaintiffshould be allowed to seize and sell the lands of the minors leavinguntouched the share inherited by the widow. In view of what thelearned Judge has said in his judgment, I think the plaintiff shouldseek satisfaction of his decree in the testamentary case, where allthe heirs could be called upon to contribute their shares to pay theplaintiff's claim. The plaintiff can still apply for a judicial settle-ment of the estate. See also section 222 of the Civil ProcedureCode.
In the circumstances, I would uphold the dismissal of the plaintiff'saction, and dismiss the appeal also with costs.
Rosa Maria
Appeal dismissed.