060-NLR-NLR-V-27-MUTTIAH-CHETTY-v.-UKKURALA-KORALA.pdf
1925.
( 336 )
Present: Jayewardene A.J. and Akbar A.J.
MUTTIAH CHETTY v. UKKURALA KORALA.
159—D. C. Kegalla, 6,903.
Administration—Sale by heirs—Payment of debts—Claim by creditor.
Sale of property by the heirs of an intestate estate is valid if thepurchase money has been expended for purposes of administration.But where part only of the consideration has been so utilized, theproperty transferred may be sold in execution, at the instance of acreditor, for the realization of the balance.
Gopalsamy v. Ramasamypulle1 followed.
A PPEAL from an order by the District Judge of Kegalla. Theplaintiff asked for a declaration that a leasehold interestwhich the defendant had purchased from the heirs of one DingiriBanda be declared liable to be sold in execution of a decree he hadi (j91l) 14 N. L. R. 238.
( 337 )
obtained against the administrator of Dingiri Banda’s estate. Thedefendant pleaded that when the said interest was seized undera writ issued at the instance of another oreditor of Dingiri Bandahe had paid a sum of Rs. 400 and had it released from seizure, andthat if the said interest was liable to be seized and spld he claimedto be entitled to be paid the sum of Rs. 400. The learned DistrictJudge held that it was open to the plaintiff to sell the leaseholdonly on payment of the said sum to the defendant. The plaintiffappealed.
Keuneman, for plaintiff, appellant.
Zoysa (with him Banawake), for added defendant, respondent.November 30, 1925. Jayewabdene A.J.t-
This appeal raises a question with regard to the effect of a saleby the heirs of an intestate, estate as against the administrator orthe execution creditors of the estate. It was argued before us as a .case of the first impression, but there are decisions which, if theydo not cover it, provide a principle for its solution.^
The plaintiff asks for a declaration that a leasehold interestwhich the defendant has purchased from the heirs of Dingiri Bandais liable to be sold in execution of a decree he has obtainedagainst the administrator of Dingiri Banda’s estate. The defendantdenies that the leasehold interest is liable/to be sold under theplaintiff’s decree, as, when the same interest was seized under awrit issued at the instance of another creditor of Dingiri Banda,he had paid a sum of Rs. 400 and had it released from seizure.If, however, the interest is liable to be seized and sold, he claimsthat he is entitled to be paid the Rs. 400 before it is sold in execution.The learned District Judge has taken the latter view, and hasdeclared that it is open to the plaintiff to seize and sell the leaseholdonly on payment of Rs. 400 to the defendant. The plaintiffappeals, and it is contended for bim that his right to sell the interestin question is absolute and unqualified. In Oopalsamy v. Rama-samypulle (supra) the position of a purchaser from heirs wasdiscussed, and Van Langenberg A. J. said :—
“ A conveyance by the heirs is undoubtedly valid (vide Silva v.Silva1). But, as observed by Hutchinson C. J., the personalrepresentative still retains power to sell the land conveyedfor the purposes of administration, and this includes theright of a creditor to follow the property for the paymentof his debt, and it is not competent for the heirs todispose of the assets of an estate to the detriment of thecreditors (vide Ekanayalce v. Appua).”
’ (149.9) 3 N. L. if. 350.* (1907) 10 N. L. R. 234-
12(01)29
1926.
MultiahChetty t>.UkkuralaKorala
( 338 )
1925.
J A YE WAR-DENS A.J.,
Mutt&ah
Chetlj^v,
Ukkurala
Korala
The plaintiff is, therefore, entitled to seize and sell the leaseholdinterest under his decree. But what is the effect of the paymentof Rs. 400 by the defendant to a creditor of the estate who seizedthis same interest ? In Fernando v. Perera1—a decision of theFull Bench—a plaintiff, as administrator, claimed to sell certainproperty which had already been sold by the heirs. It wasadmitted that the sale had been for the purpose of paying off twomortgages on the land. It was held that as with the moneyrealized by the sale the • mortgagee had been paid off, it was notopen to the administrator to overturn the title of the purchaser.
Clarence J. said :—
“ It is undoubtedly good law that purchasers who take from theheirs and not from a properly appointed legal representa-tive, take subject to the risk of having to defend theirpurchase, should the administrator show primd faciecause entitling him to follow the assets in their hands—certainly so in the case of merely voluntary conveyances.In the present case, it is admitted on the pleadings thatthe intestate heirs sold this land to pay off two incum-brances and that the incumbrances were in fact paid off.Yet plaintiff seeks to eject the purchaser, and to sell theland to another purchaser freed from the incumbrances.
••In my opinion, plaintiff’s action clearly fails, and should bedismissed with costs. Ahamat v. Cassini is an authority.”
Dias J. said :—
“Before plaintiff took out administration to Nikulas, the commonestate of Nikulas and his wife vested in their heirs, andthey had a perfect right.to convey as they did the land in.question to the defendants ; and the plaintiff cannot beallowed, by a subsequent administration, to overturnthat title, except under special circumstances, which do not.exist in this case. The conveyance to the defendant issupported by a very good consideration, i.e.y the paymentof a mortgage debt secured on the property.”
Burnside C.J. disagreed, and expressed the view that theadministrator was not in any way bound by the sale by the heirs.
Now, in Gopalsamy v. Ramasamypulle (supra) a similar pointcame up for decision. The administrator of the estate of oneErawady, the second defendant in the case, conveyed the lands. of the estate to the heirs for the purpose of closing the estate.The heirs sold the land for Rs. 2,500 to the first defendant, who paidRs. 1,414*49 out of the consideration to the plaintiff in the action,
* (187S) 1 S. C. R. 36.
l(1887) 8 S. C. 0. 54.
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who had seized the lands in question in execution of a mortgagedecree he had obtained. The balance Rs. 1,085*51 was paidto the heirs, and was used by them for their own benefit and not forpaying any debts of the estate. It was held by this Court that,as the first defendant had failed to prove, as he was bound to do,if he was to keep the lands he had purchased, that the whole of thepurchase amount was expended for the purposes of administration,the plaintiff was entitled to levy execution for the balance sum only,and that if the plaintiff’s debt exceeded the balance, he could notproceed for the excess against the lands seized.
Van Langenberg A. J. said :—
“ In the case of Fernando v. Perera (supra) the contest wasbetween the administrator as plaintiff and the purchasersfrom the heirs. The latter succeeded on the groundthat the consideration for the purchase was whollyapplied for the benefit of the estate. In my opinion theonus lay on the first defendant to show that the whole ofthe purchase money was expended for the purposes ofadministration, and as he has failed to discharge this burdenas regards the sum of Rs. 1,085*51, the plaintiff, I think, isentitled to levy execution to this amount. I am unawarewhat the exact sum is, which is due to the plaintiff, but,if it exceeds this sum, he cannot proceed for the excessagainst the shares seized.”
These cases are, therefore, an authority for the proposition thatwhere the heirs of an estate sell property belonging to the estate,such sale is valid if the consideration has been utilized for payingdebts of the estate. But if only a part of the consideration hasbeen utilized, the sale will be subject to the payment of the balance,and the property transferred can be sold in execution for therealization of the balance only. Such a sale becomes in effecta sale by the administrator, or a transaction by which he has raisedmoney on property belonging to the estate. Applying that principlehere, we find that Rs. 400 has been expended by the purchaser,the defendant, in payment of debts due from the estate. He must,therefore, get credit for the sum so spent if the property purchasedby him is to be sold for payment of other debts of the estate. Theleasehold interest would have to be valued, and the plaintiff wouldbe entitled to levy execution for the difference between the value*of the leasehold interest and the Rs. 400 paid- by the defendant.It is not easy to value a leasehold interest, and the leasehold interestin question has but three years to run, and its value decreases every
1926.
JAYEW AU-DENS A.J_
MuttiahOhetty v.UkkuralaKorala
( 340 )
1025.
Jayewar-DENE A.J.
MuttiahChetty v.XJkkuralaKorala
month. In the special circumstances of the case, the order made bythe learned District Judge is a fair one, and if the leasehold interestrealizes more than Rs. 400 at the execution sale, the plaintiff wouldbe able to recoup himself.
I would, therefore, ujphold the order of the District Judge, anddismiss the appeal, with costs
Akbau A.J.—I agree.
Appeal dismissed.