105-NLR-NLR-V-15-HANIFFA-et-al.-v.-SILVA.pdf
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191%Present : Lascelles C.J. and Wood Benton J.
HANIFFA et al. v. SILVA39—D. 6. Colombo, 29,611
Registration—Priority—Land sold on writ against judgment-debtor by Fiscal—Subsequent sale by judgment-debtor after he was adjudicated insolvent—Compensation—Bona fide possessor—Discharge of mortgage debt—Adjudica-tion of insolvency not registrable under the Registration Ordinance.
A’s property was purchased by B at a Fiscal's sale held under a writissued against A. Subsequently A was adjudicated insolvent, and thereafterA sold the same premises to C. The purchase money paid by C was appliedin discharge of a mortgage decree against A with respect to the same land.
Held, (1) that no. question of priority by registration arose in this case,as the deed in favour of C was invalid, having been granted by A after A’aestate had vested in the assignee; (2) that the adjudication of-insolvencyand the appointment of assignee were not registrable under " The LandRegistration Ordinance, 1891 ”; (3) that C was. entitled to a jus retentionistill the purchase amount was paid to him.
“It is true that the present case is somewhat different from that of abona, fide possessor who discharges an encumbrance sfter entering intopossession, for here the mortgage was discharged by means of the purchasemoney which the defendant (C) paid in order to obtain tbe property. Bntas between the plaintiff (B) and the defendant (C) this difference isimmaterial."
r^HE facts are stated in the judgment.
Bawa, K.C., for the defendant, appellant.—The Fiscal’s transferon which the plaintiff relies is registered in the wrong folio. Theregistration is therefore invalid. Paaris v. Perera, 1 MohammaduAli v. Isa Natchia. 2 The defendant’s deed, therefore, thoughsubsequently registered, is the only valid registration.
Moreover, the fact that the vendor to defendant was adjudicatedan insolvent at the date of his transfer to the defendant does notaffect this case, as neither the adjudication of insolvency nor theappointment of assignee was registered. The order appointing anassignee is an order affecting land, as in the case of probate, andhas to be registered under sections 16 and 17 of the RegistrationOrdinance of 1891.
The property in question did not vest in the assignee, as the'property was sold on writ against Don David before the adjudica-tion.The competition is therefore between two deeds of Don
David. The question of insolvency does not arise, as the property
i (1912) 15 N. L. R. 148.
(1911) lb N. L. R. 157.
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would in no case rest in the assignee. Counsel cited Punchirala v.Appuhamy.1
The defendant is entitled to a jus retentionia, as his purchasemoney was paid to discharge a mortgage debt of the insolvent inrespect of this land.
Van Langenberg, K.C., for the plaintiffs, respondents.—The deedin favour of the defendant is bad, not because it is subsequent inpoint of time to the Fiscal’s conveyance, on which the plaintiff relies,but because it was executed by Don David after his insolvency andafter the appointment of an assignee. Whatever property DonDavid had at the date of the adjudication vested in the assignee.Don David had therefore no title to convey. The assignee is theonly person who represents the insolvent as he stood at the dateof the adjudication. See judgment of Bonser C.J. in Punchirala v.Appukamy,2 Jansz v. Idroos Letibe Marikar.*
The order of adjudication of insolvency is never registered. Theorder of Cojjrt referred to in section 17 is an order directly affectingland. The defendant had not paid the mortgage debt, and is notentitled to a jus retentionia.
Bawa, K.C., in reply.
Cur. adv. vuli.
June 27, 1912. Lascelles C.J.—
This is an action with regard to certain house property atMaligakanda in Colombo. The plaintiffs aud the defendant bothderive title from one Don David. The plaintiffs derive title undera Fiscal’s sale and conveyance in 1901, the premises being thensubject to a • lease for five years. The Fiscal’s conveyance wasregistered on October 18, 1901, but the defendant contends that thisregistration, inasmuch as it was registered in the wrong book and inthe wrong' folio, was ineffective in law. After the date of the Fiscal’ssale, namely, in 1902, Don David was adjudicated insolvent, andan assignee of his estate was appointed. Subsequently, io 1906,notwithstanding his insolvency, and without having obtained acertificate, Don David conveyed the premises to the defendant.This conveyance was effected by -two deeds, dated respectivelyJuly 20, 1906, and August 26, 1906, the latter deed being registeredon August 29 of the same year. The first question is whether thebetter title was conveyed by the plaintiffs’ Fiscal’s conveyance of1901 or by Don David’s transfer of August 26, 1906. The defendantputs his case in this way. The Fiscal’s conveyance, he says, beingwrongly registered, has no more validity than an unregistered deed.That being so, the case, according to the defendant’s argument, isanalogous to the common one of a double sale, where the owner,having already sold to A, sells to B, and B registers his deed and so
1 {1901) 7 N. L. R. 102.2 (1902) 7 N. L. D. 108.
3 (1891) 1 C. L. R. 63.
1912.
Hwniffav. Silva
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1912.
Lasoewbs
C.J.
Haniffav. Silva
secures priority under section 17 of the Land Begistration Ordinanceof 1891- Assuming for the purpose of argument that the regis-tration of the plaintiffs’ Fiscal’s conveyance is ineffective, thedefendant’s argument is plainly fallacious. There is nothing in theBegistration Ordinance of 1891 which can be construed so as togive validity to a deed granted by an insolvent after his estate hasvested in the assignee, or to any other instrument which, apartfrom any question of priority, is per se invalid. The Ordinancedeals with the question of the priority between competing deeds.
It is true that its effect is sometimes to lend validity to a' deedexecuted after the grantor has by a previous conveyance divestedhimself of the property comprised in that deed; but this is nomore than the inevitable result of giving priority to the registeredinstrument. Where the grantor is subject to the personal dis-ability of insolvency the case is essentially different. The deedexecuted by the grantor is bad, not because it is subsequent in dateto another instrument, but by reason of the incapacity of thegrantor to dispose of his property; in other words, because theright to deal with the property has by the operation of the InsolvencyOrdinance been withdrawn from the insolvent and vested in theassignee. As was well pointed out by Mr. van Langenberg, if thedefendant’s argument on this point were accepted, the result wouldbe that insolvents would be able to dispose of the property of theestate by deeds which could successfully compete with those of theassignee. I am, therefore, of opinion that whether or not thelearned District Judge, in the first judgment, was right in holdingthat the Fiscal’s transfer was duly registered (and on this I. expressno opinion), the defendant’s deed, executed by Don David whilsthe was insolvent, passed no title to the defendant. Then it waBargued by Mr. Bawa that the defendant was protected by the factthat neither the insolvency of Don David nor the appointment ofhis assignee had been registered. But these are instruments whichhave never been regarded as registrable under the Land BegistrationOrdinance of 1891; and in view of the practice that has hithertoobtained, and of the. terms of section 16 of the Ordinance, I am notprepared to hold that they are registrable. The defendant alsocontends that, inasmuch as the consideration for which he purchasedthe property was applied in discharge of a mortgage decree againstDon David, he, the defendant, is entitled to this amount as utilesimpensa. Issues were framed on this point (page 27 of the record);and in the first judgment (page 34) the learned District Judgefound “ that the money paid by the defendant was taken' in andtowards the payment of the amount due on mortgage No. 6,994, andthe decree entered on the said mortgage in D.C. Colombo, No. 15,628.The payment has been certified in that case. I accept the evidenceof Mr. Weerasooriya on this point. ” Though the Judge has foundon the issues of fact framed on May .30, 1910, he has left unanswered
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the 9th issue, which raised the question of the defendant’s right toclaim the benefit of so much of the purchase money as was appliedin discharge of the mortgage on the premises. On this finding thequestion arises whether we should not now deal with the defendant’sclaim for compensation, or whether it is necessary to protract thistrial by further reference to the District Court. The plaintiff’sobjection on the point of compensation may be summarizedas follows.* No claim for compensation was formally made inreconvention in the issues suggested by the defendant on January21, 1910; and in those agreed upon on May 27 the question ofcompensation was not raised, and the plaintiffs’ counsel does not■ appear from the record to have pressed this point. It is, therefore,urged that the plaintiffs have not had an opportunity of attackingthe mortgage. On the other hand, the question of compensationwas distinctly raised in both paragraph 5 of the defendant’s answerand in the additional issues No. 8 and No. 9 framed on May 30. Inthese circumstances, I think the plaintiffs have had full opportunityof meeting this claim, and that they will not be prejudiced by thisquestion being now decided on the findings of the District Judge.The plaintiff indisputably was in the position of a bona fide possessorwhen he entered the premises; and it has been held that the moneywhich a bona fide possessor of property pays in discharge of amortgage which encumbered the property when it came into hishands may be treated as a utiles impensa. De Silva v. Shaik Ali;*vide also Ukhu Banda v. Bodia.2 It is true that the present case issomewhat different from that of a bona fide possessor who dis-charges an encumbrance after entering into possession, for here themortgage was discharged by means of the purchase money whichthe defendant paid in order to obtain the property. But as betweenthe plaintiffs and the defendant this difference is immaterial. Itmattered not to the plaintiffs whether the mortgage was dischargedout of the purchase money paid by the defendant or whether themortgage was paid off by him at a later date. The plaintiffs havegot the benefit of a payment which the defendant has made in thehonest belief that the property was his own. For the above reasonsI would confirm the judgment of the District Judge so far a6 it gives theplaintiffs judgment as. prayed for, but I would add thereto adeclaration that the defendant is entitled to retain possession of theproperties until the sum of Bs. 4,050, being the amount certified to-have been paid in satisfaction of the plaintiffs’ claim in D. C.Colombo, No. 15,628, has been paid to him by the plaintiffs. Withregard to the costs of the appeal, I think that each side shouldpay their own costs, as the appellant has succeeded in obtaininga substantial modification of the judgment.
Wood Renton J.:—I entirely agree, and have nothing to add.
Varied.
» (1902) 6 N L. H. 45.
1912,
LaSOEIiLKS
O.J.
Haniffav. Silva
i (1895) 1 N. L. R. 25*8.