106-NLR-NLR-V-15-FONSEKA-et-al.-v.-NARAYANAN-CHETTY.pdf
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Present: Lascelles C.J. and De Sampayo A.J.
FONSEKA et al. v. -NARAYANAN CHETTY.
67—D. C. Negombo, 8,256.
Evidence—Mortgagebond—Variation of terms of bond by subsequent
non-notarial document.
In 1903 A executed a mortgage bond (hypothecating land) where-by he bound himself to pay B on demand the sum of Bs. 1,500with interest.
In 1906the parties came toa new agreement—which was
embodied in writing,butnotnotariallyattested—the purportof
which was, not only to change the method of payment, but also toincrease the burden ofthedebt,and thusto make the securityto
bear a larger debt.
Held, that the non-notarial – agreement was inadmissible inevidence for proving the variation of the terms of the original bond.
The – document (non-notarial) constitutes one entire promise,which ie partly within and partly – without section 2 of OrdinanceNo. 7 of 1840, and is therefore not enforceable in any respect.
Kiri Bartda v. Ukkii Banda,1 and Lushington. v. Carolis.? distinguished.
T
HE facts are set out in the following judgment of the DistrictJudge (John Scott, Esq.,): —
Plaintiff and hiswifein December,1903,borrowedBs. 1,500 on
mortgage bond B (filed) from four Chetties, of whom defendant is one,In terms . of thebondthe principalwasrepayable without interest
within four months; in failure thereof interest was payable at 13 percent, per annum every four months; in failure thereof the principalwith interestat 20 percent, perannum from dateof failure till date of
payment on demand legally.
Plaintiff paid interest at 13 per cent, per annum every four monthsfrom date of bond upio April,1906. From thatdateonwards he paid
eighteen bi-monthly instalments of Bs. 90 up to June, 1909. By hisown calculation onthatdate he owedonlyBs. 250.38on the bond.
This sum he . tendered formally to his creditors, but they refused toaccept it. Plaintiffnowbrings thisactionto compeldefendant to
accept that sum in fall satisfaction of the debt, and for the cancellationand return of the bond.
Defendant produces awritingA, which purports tobe an agreement
entered into by the plaintiff and two of the four Chetties above referredto. It is dated in October. 1907. It refers expressly to the bond B,and states that plaintiff agrees to settle the debt due on that bond bypayment oftwenty-fivebi-monthly instalments ofBs.90 starting from
April, .1906. It is reckoned therein that such payments would by .Tune,
i (1911) 14 N. L. R. 181.
2 (1911) 14 N. L. R. 489.
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1910, cover. the principalBe. 1,500andinterest thereon at 12 percent.1912,
per annum, Bs. 750.In defaultof payment of these instalments,'~
plaintiff agrees that theprincipalsum, with interestat 20 per cent,per ^^^yanan
annum as from April, 1906 Cess the amount of any instalments already Chettypaid), shall be recovered from him by -process of law. The writing
purports to confirm a verbal agreement made in April, 1906
I hold, then, on thesecondissue framed thatplaintiffenteredinto
and signed agreement A.
[The following is the agreement A: —
October 13, 1907.
The agreement entered into between me, M. M. Fonaeka of Dummala-deniya, and Sena AnaBoonaSeena NarayananChettyand Theyna
Moona Bavenna ManaBamanadan Chetty, bothof Negombo,’ is as.
follows:With regard to the bondNo. 9,144 dated December 7,1903,
attested by Mr. lames, Notary Public, for the sum of 160 pounds,there was due on the said sum interest calculated on April 7, 1906, atthe rate of 12 per cent, for fifty months from the above date up to June6, 1910,Bs. 750, and principal Bs.1,500, both aggregating the sumof
Bs. 2,250, which was payable by twenty-five instalments of Bs. 90 eachonce in every . two months. Out of these instalments, nine instalments,ending up to the 6th instant, amounting to Bs. 810, having been alreadypaid, 1agreeto pay theresidueBum of144 pounds, equivalentto
Bs. 1,440, by sixteen instalmentsof -Bs. 90 each inmanneraforesaidand
obtain receipts therefor.After allthesaid twenty-five instalmentsshall
have been fully paid and settled, I shall get back the said bond No. 9,144for 1.50po indsduly cancelled and discharged.Should I make defaultto
pay in*nanneraforesaid, the balanceamountthat may be found tobe
due on calculation of the principal and interest thereon – at the rate of20 per cent, from April 7, 1906, on which the verbal agreement waBmade, after deducting the amount that shall have already been paidby me, shall be recovered from me by process of law.
Thiswas signed bymeafter the samehaving been readand under-
stood by me.-
(Signedona 5-cent postage stamp)M. M.Fonseka.
(Signed)S.A.B. S.PalanjahpaChbtty,byhis
attomey S. A. B. Nabayanan Chetty.
(Signed)T.M.B.M.MotturamenChetty,byhis
attorney T. M. B. M. Bamanadan Chetty.]
It is now necessary to decide what is the effect of that document.
It is non-notarial, whereasthe bond' B isnotarial.But onthis point
the case quoted in 14 N. L. R. 181 seems to be quite clear, namely,that a notarial document can be varied or modified by a subsequentnon-notarial document, provided that the latter does not itself requireto be notarially executed under Ordinance No. 7 of 1840.Now, the
notarial document B isamortgagebond,but thenon-notarialdocument
A refers purely to money payments connected with the money debtpart of the mortgage bond. Documents dealing purely with paymentsof money are not required byOrdinance No. 7of1340 tobenotarially
executed. Therefore, the agreement A is clearly capable of modifyinga notarial document. As towhether it iscapable ofmodifying a
mortgage bond the case quotedin 14 N.' L. R.489seems tobein point,
where the divisibility of thepromise involvedina mortgagebond is
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1912.clearly indicated, viz., first, the promise to repay money lent; and
—~secondly, -the giving of security for the repayment. A non-notarial
Warayanan****^*6 0411 ^MkV® no e®ect on the' second part of the promise,' but it can
Ghettycertainly affect the first part of the promise. Thus, the agreement A
can modify that part of the bond B which refers purely to the repaymentof the loan; made by defendant to plaintiff, and4 plaintiff must be heldto be bound by the terms of that agreement which- he has himselfvoluntarily entered into and signed. As to the equity or inequity ofthe terms of that agreement I am not called upon to express an opinion.Plaintiff is a man who is accustomed to deal with Chetties, and ispresumably thoroughly conversant with their methods of business.He has entered into this agreement with open eyes, and must take theconsequence of his action.
On the first issue framed, then, I hold that the sum due to defendantby plaintiff after the payment of the last instalment in June, 1909, wasnot Bs. 260.38 ascalculated byplaintiff on the basis of the terms of
the bond B,butwas a sumofBs. 630 payable in seven bi-monthly
instalments ofBs.90 accordingtothe terms of agreement A. Further,
since plaintiffhasmade defaultinpayment of those instalments, he is
bound by – the same agreement to pay to defendant the principal sum,with interestat 20 per cent,per annum asfrom April 7,1906,to date
of payment,less the amountalready paidin instalmentsbyplaintiff.
That amountis calculated tobe 'Bs. 1,177.50 up to dateof defendant’s
claim in reconvention (August 3, 1910).
I dismiss, plaintiff’s action with costs, and give judgment for defendanttor Bs. 1,177.50, with interest thereon at 9 per emit, per annum fromAugust 3,1910, till dateof payment.Defendant cannothave a
mortgage decree.
The plaintiff appealed.
Bawa, K.C. (with him Morgan), for appellant.
H. A. Jayewardene (with him Samar awickreme), for respondent.
Cur. adv. vult.
May 22, 1912. De Sampayo A.J.—
On December 7, 1903, the plaintiff and his wife executed amortgage bond, whereby they bound themselves jointly andseverally to pay to the defendant and three other Chetties, or toone or more of them, on demand a sum of Bs. 1,500, with interestthereon at 13 per cent-, every four months, and in default thereofto pay interest at the rate of 20 per cent.; and as security forsuch payment they mortgaged certain immovable property. Theplaintiff from time to time made certain payments in liquidation ofthe debt, and he says that" atTthe date of this action there was dueon the bond only a sum of Bs. 285, which was tendered to defendant,but was not accepted. He accordingly brought this sum of moneyinto Court, and prayed that the mortgage bond be cancelled andreturned to him. The defendant pleaded that by a subsequentwritten agreement the terms of payment were varied, and: that on
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the footing of that agreement the balance due on the bond was 1912.
Es. 1,177.50, and he accordingly claimed this sum in reconvention Db sampayqand prayed for a mortgage decree, and for sale of the mortgaged A.J.property.Fonaeka v.
It appears that on April 7, 1906, the plaintiff and the Chettiescame to a new agreement as to the payment of the amount of thedebt. They made a calculation of the interest that would be dueon the principal sum of Bs. 1,500 from that date till June 6, 1910,at 12 per cent., and adding the same to the principal they arrivedat the total sum of Bs. 2,250. It was then agreed that this sumshould be paid by twenty-five instalments of Bs. 90 each payablebi-monthly; that after'all the instalments have been fully paid themortgage bond should be cancelled and discharged; and that indefault of payment of 'She'lnslalments as agreed, interest should bepayable on any unpaid balance at" the rate of 20 per cent, as fromApril 7, 1906. This agreement was subsequently embodied in awriting dated October 18, 1907.
The point for consideration is whether the writing, which is non-nntario.1 in admissible in evidence, and is available for the purposeof defendant's claim in reconvention. It will be noticed that thedocument itself is not depended upon as an independent agreement,but is bought to be engrafted on the original mortgage bond, andthat the defendant’s claim is on the mortgage bond as so modified.
The District Judge has admitted the document in evidence on theauthority of Kiri Banda v. VIchu Banda.1 That case decided thatsince the enactment of the Evidence Ordinance a notarial agreementmight be varied by a subsequent non-notarial writing, providedthat the latter writing was not itself of such a nature as to requireuotarial execution under Ordinance No. 7 of 1840. The documentin that case was a receipt for .interest, which also contained anagseement that no further interest should be payable on themortgage bond, and was held to be admissible so as to relieve thedebtor from its date of his obligation to pay interest. The reasonfor its admissibility, notwithstanding the Ordinance No. 7 of 1840,was thus put by Lascelles C.J.:“It was not given for establishing
any security, interest, or incumbrance affecting land and Middle-ton J. said:“ It does not modify the original agreement in any
respect as regards its effect on land or immovable property. ”
Herein lies, to my mind, the distinction between that case and this.
The writing in question not only changes the mode of payment ofthe debt, but increases its burden, with the result that now theplaintiff owes Bs. 1,177.50 instead of a smaller sum. The furthereffect of this is to make the security bear a larger debt, and conse-quently, I think! the agreement does affect the lands or immovableproperty mortgaged by plaintiff. The defendant himself under-stood the agreement in this sense, because, as I said before, he
1 (1911) U W- R- 181.
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1912, declared upon the mortgage bond as modified by the subsequentDe Sampayo writing and not on the writing itself, and I think myself this is theA J~ effect of the writing, which stipulated that the plaintiff was not toFonaeka v. be entitled to redeem the mortgage until he had paid all the instal-men*s UI*der the agreement. The District Judge himself felt thisdifficulty, since he refused to give 'defendant a mortgage decree.If the case of Kiri Banda v. Ukku Banda1 relied on applied, I donot see why the defendant should not have a mortgage decree aswell. In dealing with the difficulty, the District Judge referred tothe case of Luahington v. Carolis,z which was relied on before us also,and held that in the writing the promise to pay the money on theterms agreed was separable from the agreement relating to themortgage, and that therefore the writing could, and did, modifythe personal obligation on the bond, though not the mortgagesecurity. Now, the above case is quite different from this. Therethe action was on a non-notarial bond, which was of itself a singleand complete document, and was not one modifying any priornotarial mortgage bond. This Court, held, and if I may say so,rightly held, that the document could be sued on so far only as thepersonal obligation was concerned. Moreover, I do not think thatthe present writing can be split up in the same way. It constitutesone entire promise, which is partly v-ithin and partly withoutsection 2 of Ordinance • No. 7 of 1840, and, therefore, according tothat very decision, is not enforceable in any respect.
In my opinion the judgment appealed against cannot be sustained..I think it should be set aside, and the case sent back for ascertain-ment of the amount now due from the plaintiff on the basis of theoriginal bond. It is desirable that the parties should, if possible,agree as to the amount, but otherwise the District Judge will ascertainthe amount by further inquiry, and on payment by plaintiff of theamount so agreed or ascertained judgment should be entered forplaintiff in terms of the second prayer of the plaint. The plaintiffwill have the costs of this appeal. But as regards the costs of theDistrict Court, the plaintiff’s denial of the execution of the . writingnecessitated a long trial on the issue- of fact, and I think each partyshould bear his own costs in the District Court. The costs of thefurther proceedings, if any, will be at the discretion of the DistrictJudge.
Lascellbs C.J.—I entirely agree.
Sent back.
• (1911) 14 N. L. R. 181.
* (1911) 14 N. L. R. 489.