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MATTHES APPUHAMY v. RAYMOND et al.
D. C., Colombo, 5,861.
Specific performance—Agreement to sell land—Stipvdation for damages—.Alternative obligation—Conveyance of land to person other than theone to whom owner is under agreement to sell.
An agreement between plaintiff and first defendant for sale of aparcel of land by first-defendant to plaintiff contained the stipula-tion that if first defendant failed, refused, declined, or in anymanner objected to sell the land as agreed, he should pay plaintiffRs. 500 as liquidated damages and return to him the part of thepurchase money advanced by him to defendant. It also containeda covenant on the part of plaintiff not to lease, encumber, oralienate his interest in the premises until the deed of transfer wasexecuted by first defendant, and a mortgage of the premises byfirst defendant to plaintiff to secure return of the part purchasemoney and -payment of the damages aforesaid—
Held, that in the circumstances of this agreement, the penal,stipulation was intended to be an alternative to the principcdobligation on the part of first defendant, and not merely accessoryto it, and plaintiff was not entitled to claim specific performance ofdefendant’s agreement to sell.
First defendant, before action, had sold and conveyed the parcelof land aforesaid to second defendant, who was alleged to. have,at the time, had notice of first defendant’s agreement with plain-tiff—semble, per Bonser, C.J., and Withers, J., that in conse-quence of such sale and conveyance first defendant had put it outof his power to specifically perform his agreement to sell the land toplaintiff, and plaintiff could not therefore claim specific performanceof such agreement.
HE plaintiff and the first defendant entered into an agreement,dated the 14th April, 1894, whereof the following were the
portions material to the issues in the case :—
“ That the vendor, in consideration of the sum of Rs. 3,500 agreed“ to be paid to him by the vendee as hereinafter mentioned, doth“ hereby for himself, his heirs, executors, and administrators“ covenant and agree to and with the vendee and his heirs,“ executors, administrators, and assigns that he, the vendor, shall“ and will immediately at and after the expiration of fourteen“ days from the date hereof, upon a good, valid, and marketable“ deed of transfer, giving a good, valid, and marketable title to be“ approved by counsel learned in the law, sell, assign, transfer, and“ set over, free from encnmt^rance, unto the vendee and his afore-“ written or to any person or persons whom he or they shall or may“ nominate; the aforesaid landand premises in the schedule hereto“ particularly described.
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“ That in consideration of the premises the said vendee doth“ hereby for himself, his heirs,, executors, and administrators“ covenant and agree to and with the vendor and his aforewritten“ that he, the vendee, shall and will, immediately after the expira-“ tion of fourteen days from the date hereof, purohase the said“ land and premises, and pay unto the said vendor the said sum of“ Rs. 3,500. That if the vendor shall fail, refuse, decline, or in any“ manner object to sell, assign, transfer, and assure the said land“ and premises, free from encumbrance, unto the vendor or his“ aforewritten immediately after the expiration of fourteen days“ from the date hereof, then and in any such cases the vendor“ shall and will pay unto the vendee or his aforewritten, as liquidated“ damages, and not by way of penalty, the sum of Rs. 500, in“ addition to other damages and expenses that may be recoverable.“ That if the vendee shall object to purchase immediately after the“ expiration of fourteen days from the date hereof the said land and“ premises, and fail, refuse, or decline to pay the said sum of“ Rs. 3,500 unto the vendor as aforesaid, then and in any such“ cases the vendor shall and will take and appropriate to himself“ as liquidated damages, but not by way of penalty, the sum of“ Rs. 250 that the vendee has paid to the vendor in part paymentof the said price, the receipt whereof the vendor doth hereby“ acknowledge, and that further a sum of Rs. 250 from and out of“ the said sum of Rs. 3,500 shall be retained by the vendee until“ the vendee is put in possession of the said premises.
“ That the vendor doth hereby covenant and promise with thevendee that he, the said vendor, shall not nor will at' any time“ hereafter make a lease, demise, sale, mortgage, assignment, '“ encumbrance, or alienation of his interest until the deed of“ transfer shall be executed in favour of the vendee as hereinbefore“ agreed ; and such lease, demise, mortgage, sale, or gift as will be“ executed hereafter shall be considered as null and of no effect“ whatever against the interest hereby accruing or accrued to the“ vendee.
“ That for securing the amount hereby advanced and the“ liquidated damages herein agreed, the vendor doth hereby“ mortgage his interest in the said premises in the schedule hereto“ particularly described.”
On the 12th May, 1894, the first defendant sold and conveyedthe premises—subject of the agreement—to the second defendant.The plaintiff thereupon instituted this action for a cancellation ofthe conveyance by the first defendant in favour of the second andfor specific performance by the first defendant of his agreement
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aforesaid with the plaintiff! The District Judge held that as theagreement contained a stipulation that the first defendant shouldpay damages in default of performance of his part of the agreementthe plaintiff could not compel specifio performance, and dismissedthe action.
The plaintiff appealed.
Domhorst and Sampayo, for plaintiff, appellant.
Layard, A. G., and Pereira, for first defendant, respondent.
Morgan, for second defendant, respondent.
Cur. adv. vuU.
11th January, 1897. Bonser, C.J.—
I agree in dismissing this appeal. The Acting District Judgewas in my opinion right in holding that the stipulation as to damageswas in the circumstances of this case intended to he a substitutefor specific performance.
That being so it is unnecessary to decide the question whichwas argued before us, whether specific performance can be grantedin' a case like the present, where the vendor has before actionbrought by an actual sale and conveyance to a third person of thething contracted to be sold put it out of his power specifically toperform the contract. No trace, however, of any such action is tobe found so far as we have been able to ascertain in the writingsof any of the recognized authorities on Roman-Dutch Law orin-the records of this Court. For my own part I feel some difficultyin understanding on what principle a stranger to the contractcould be sued in the actio empli, which is the only action competentto the purchaser for enforcing his rights under the contract.
Were it necessary to decide that question, I should be preparedto answer it in the negative, for I hold a strong opinion as to the.inexpediency of introducing into this Island the doctrines andpractice of the English Courts of Chancery with respect to specificperformance, with all the subtleties and refinements as to noticewhich have been evolved by the ingenuity of successive generationsof Judges of that Court.
I agree With my brother Withers that the Acting District Judgetook a right view of this action, and that the decree dismissing itmust be affirmed.
I entertain no doubt as to the competency of an action to compelspecific performance of a notarial agreement to sell land in Ceylon.
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I am not impressed with the difficulty of making the presentsecond defendant a party. It is alleged that he is a privy in estateto the first defendant, that he took the conveyance from himwith notice and knowledge of the contract between the plaintiffand the first defendant; and if the contract had been suoh as to givethe plaintiff the right to compel specific performance by the firstdefendant, I see no reason why the second defendant as a privyof the first should not be compelled fio join in the conveyance.However, in my opinion these questions are not before us, becauseI agree with my brother Withers that the meaning of the contractis that if the first defendant “ failed, refused, declined, or in any“ manner objected to sell, &c., the land,” then the only remedycompetent to the plaintiff under the contract was to' exact paymentof Rs. 500 as liquidated damages in addition to any special damagewhich he might be entitled to from circumstances unforeseen atthe date of the contract. On the other hand, if the plaintiff“ failed or refused ” to pay the balance, the contract provided thathe was not to be liable in the full sum of Rs. 3,500, but he shouldforfeit only the Rs. 250 already paid to the defendant; so I readthe contract.
If it had been possible to have dismissed the action against,both defendants, so far as it prayed for specific performance, andto have then considered and adjudicated on the evidence whetherthe first defendant failed, refused, declined, or in any mannerobjected to sell, so as to render him liable in the payment of theRs. 500 damages, I should have been glad to have given judgmentfinally disposing of the question between the parties. But it isimpossible to do this in this action as it is framed, being one of. .specific performance only.
I agree to affirm.
Of the two most important questions argued before us the firstwas : If A, for good consideration, agrees to sell a certain land to.B, and in breach of bis agreement conveys the same land for valueto C with knowledge of the agreement between B and A, can Bcompel C to transfer and deliver up the land to him ? No such casewas cited to us as having occurred in our Courts, and on this pointI think it sufficient to say that it would be an imprudent precedentto extend the remedy of specific? performance, to a case like thepresent. Here the intending vendor did not covenant for his
January J],Bonseb, C.J,
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January 11.Withers® J.
The other question was, Can the intending buyer compel theintending seller specifically to perform an agreement to sell aparticular land if that agreement contains an express stipulationto pay damages generally, or a certain sum by way of damages inthe event of the seller not conveying the land in terms of theagreement. The answer to this question seems to me to dependon the wording of the agreement and the intention of the partiesas indicated by their contract.
If the penal stipulation is intended to be merely accessory tothe principal obligation, then it is surely open to the seller to exactspecific performance.
If, on the other hand, the penal, stipulation is an alternativeobligation, and it is intended that the party making it may breakthe principal obligationi, but shall pay the consequent damages,then the other party is restricted to his right of action to recoverthose damages. He cannot enforce specific performance. A partywho breaks a binding contract is responsible in damages, whetherhe specially engages to pay those damages or not.
To add a stipulation to pay damages may be of advantage to theparty for whose benefit it is made, especially when a definite sumis agreed to as a measure of damages, and that sum is secured bya mortgage or otherwise.
The mere fact of such a stipulation being inserted in a contractdoes not necessarily imply that it was put in as an alternativeobligation for the exclusive benefit of the stipulator. Rather, Ithink, that if such a stipulation intended to be alternative and notaccessory, the intention should be clearly expressed or indicated.This inartistic document, which is a disgrace to the draftsman, isa compound of type and pen, where strange expressions are used,words- left out, and one word is put for another. But the factthat a penalty in addition to damages was stipulated for, that theintending vendor covenanted not to lease, encumber, or alienatehis interest in the premises until the deed of transfer was executedby him, and that the intending vendor mortgaged the premisesto secure the return of the part of the price already advancedand the liquidated damages (which really mean the penalty ofRs. 500), and not the damages and expenses as well, indicatesto my mind that the penal stipulation was intended to be alternativeand not merely accessory. If I' am right in this view then the. action for specific performance was rightly dismissed, and I wouldaffirm the decree with costs.
MATTHES APPUHAMY v. RAYMOND et al