MUTTU MENIKA et al. v. FERNANDO et al

124-NLR-NLR-V-15-MUTTU-MENIKA-et-al.-v.-FERNANDO-et-al.pdf


( 429 }
[Full Bench. ]1912.
Present: Lascelles C.J. and Pereira and Ennis JJ.
MUTTU MENIKA et al. v. FERNANDO et ai.
Ill—D. G. Kandy, 21,203.
Action by legatees and executrix against persons to whom executrix hadalienated property—May legatees join as plaintiffs in action torecover propertyt—Civil Procedure Code, ss. 11 and 472.
The executrix and the legatees under the will brought an actionto recover a portion of the estate which had been transferred bythe executrixto thedefendants. Itwasalleged intheplaint that
the executrix was induced by fraud and undue influence of thedefendants to make this transfer.
Held(by Lascelles C.J.and Pereira J.,Ennis J.dissentiente),
that the legatees should not have been joined as plaintiffs in thecircumstances of this case.
Lascelles C.J.—Althoughit wouldbecompetenttothe Court,
as a matterof procedure, to directthelegatees tobemade parties
under section . 472 of the Civil Procedure Code, the question is oneof substantive law rather than one of procedure.
As a general rule, in the absence of collusion or special circum-' stances thelegateescannot sue for the recoveryofassets which
have beenlegallyalienated bytheexecutor..Ifan executor
refuses(to file abill), orif three is sucha relationbetweenthe
executor and thedebtor as to interpose asubstantialdifficultyin
." thewayof the executor callingthe debtor to account,thenthe
rule does .not apply.
T
TTF. first plaintiff (executrix) and the second to ninth plaintiffs(legatees) brought this action torecover fromthedefendants,
a portion of the estate transferred by the executrix.
The learned District Judge (F. B. Dias, Esq.) ordered the secondto ninth plaintiffs to be struck off the record. The facts are setout in the following judgment of the District Judge: —
The plaintiffs in this action are asking for three forms of relief:—
Adeclarationthat acertain conveyanceNo. 347executedby
tbe first plaintiff asexecutrixundertbe willofone Amolis
FernandoonDecember31,1907, in•favour ofthe two
defendantsisfraudulentandvoid, onthe groundthat it
wasobtained by means offraud and collusion onthepart
ofthe defendants, andby misrepresentation^andthe
exercise of undue influence over the first plaintiff;
That the considerationmentioned inthe saidconveyance was
fictitious,andthat itwasexecutedwithout theauthority
of Court and contrary to the express provisions of Fernando'slast will; and
( 430 )
.That the second to ninth plaintiff (the children of "Fernando by firstplaintiff) are entitled to seven-eighths of the lands and houses mentionedin that deed as special legatees under the will.
They also ask for possession and damages. . . .
The main facta of the case are not disputed, and they are these. The
late Arnolis Fernando was a wealthy trader and landowner, who died•in May, 1905. He was married, but had discarded his wife (who isstill alive), move than twenty years ago. and lived with the first plaiptiffby whom ho had ninechildren, viz.,thesecond to ninth plaintiffs and
another who has since died.
All these children are minors, except the second plaintiff.The two
defendants are Arnolis's brothers. In December, 1904, Arnolis executeda lastwill, naming the first plaintiff as his executrix, andby ithe
devised certain specified lands in Dnmbara, to the first plaintiff, gavecertainspecificlegacies in cash tohis. legitimate daughter, to hisfour
sisters,and tohis brother James,and of the residue, whichformedthe
bulk of his estate, he devised seven-eighths to his children by the firstplaintiff and the remaining one.-eight to his brother, the first defendant.
The will was duly proved, and in January, 1906, probate waa grantedto the first plaintiff in case" No.2,435of thisCourt.Shebegan to
administerthe estate,butfinding herself unable to settlecertain large
claimswhichthe two defendantshad. against- the testator,andalso
against herself as executrix, she came to a settlement with them fromtime to time.
During 1906 she executed three deeds in favour of the second defend-ant, conveying certain lands andassigning a mortgagebondto. him,
ami also paid him Bs.5,600 ic< cash inpart satisfaction of hisalleged
claim, and in that same year shealsoexecutedanotherdeedconveying
some landto the firstdefendant in part satisfaction of hisalleged claim.
All thesedeeds arealsoimpeached as fraudulent, butwe are not
concernedwith theminthe present action. Eventually,on December
31, 1907, the deed No.347, which isnowin question, was signedby the
first plaintiff in favour of both the defendants, conveying to them ahouseinCastieHillStreet, Kandy, valued a-t Bs. 20,000, aDd threesmall
landsinGalleand -in Udapalata. This does not purport to be asale
of the properties to the defendants by the executrix, but is a conveyancemade inpursuance of anarrangement come to betweenthe executrix
and these two creditorsof the estate,oneof whom was himself alegatee
in respect of one-eighth of the residue.
The consideration for it, as expresslyrecitedin thedeedwas the
final settlement of allbalances dueto the 'defendants from theestate,
including the onoeighth share of the residue due to the first defendant,and the defendants also signed the deed releasing the estate from . alltheir claims against it—past, present, or future.
On the footing of this conveyance the defendants entered intopossession of the several lands, and, as I find from an endorsement onthe deed,theyhaveeveni sold off the lands in' Udapalata to a thidparty
morethan fouryears ago. That, perhaps, is the reason why the plaintiffs
have confined their present action" to a vindication of "their right to a"seven-eighths share in the Kandy house only, and incidentally asked fora cancellation of the deed in defendants’ favour.
1912.
MuttuMenika v.Fernando
( 431 )
This being thestete of affairs, theplaintiffs’nowjoin together in
comingforward, four yearsafterthedeed was executed, antask that
it besetasideonthe ground of fraud andmisrepresentation. Their
complaint is that during the minority ' of the children the defendantstook advantage ofthe helplessness of their mother,whois an uneducated
woman,and defrauded herandthemby gettingherto execute these
several deeds in respect of claims which never existed. It is said thatthe defendantsfrom timeto time madethefirstplaintiff believe that
her testator owed the first defendant Rs. 60,000 on a promissory notedated September 14,1903,andRe.16,001.17 totheseconddefendant
cn an acconnt stated between him and the testator, which representa-tions were false infact, as the only sumsdue to them were the Rs. 2,0(0
and Rs. 4,000 respectively.
The defendants have taken preliminary objection that the secondto ninth plaintiffshaveno causeof actionagainst them, because they
are allrepresented by thefirstplaintiff, who issuing in thecapacity
of executrix, fullyclothed with power tovindicateanyproperty of. the
estatethatmaybein the wrongful possessionof others. They also
complain of amisjoinder of parties, plaintiffs,andof causes of action,
and allege thatif in thecircumstances ofthecasethe second to ninth
plaintiffs have anycauseof actionat all itis against the first plaintiff
and not against ’hem
But it seems to me that the causes of action of the two sets of plaintiffsbeing so distinct andunconnected witheach otherexcept inaremote
andindirectway,they shouldnotbepermitted to bejoinedtogether.
Mr.Pereira felt the reasonableness of the defendants’ objection to
be drawn into abattlewith thetwo setsof plaintiffs allied together,
and invitedthe Courtto use the powersgiven to itby section18of the
Code, and order the name of the first plaintiff to be struck out from itspresentplace and added afterthe namesofthedefendants if theCourt
thoughtthat thatwas herproper place.Butthe provisionsofthis
section are permissive only, and not imperative, and the Court must becareful not-to exercise its discretionarypowers ina mannercalculated
to prejudice or embarrass the other parties to the suit
She mayindeed be'properly joined asa defendant, but onlyifshe ia
charged withthesame fraudasthe two defendants.Butthe other
plaintiffs refuse tochargeher withfrand orcollusion with the defendants
to devastate the estate committed to her charge
Solong asthisconveyance standsin.the way, no heiror creditor can
maintain an action againstthese defendantsforthevindication of any of
the lands mentioned in it.
If the. allegationsmade inthe plaintagainstthe defendantsbetrue,
it seems to me that the only person who is competent to ask the Courtto set aside the deed is the first plaintiff, who has been defrauded andled astray by these men. The presence of the second to ninth plaintiffsin theaction will be quite unnecessary. Thefact that theyaresome
of theresiduary legatees, having asubstantialinterestin resettingthis
residue,makes nodifference.They areinnobetter positionthan a
hundredother unpaid creditors, if anysuch exist, and itwouldbe absurd
to expect the Court to permit them also to intervene in thig action iftheytry to do so. Whether itwasbythe active fraud of theexecutrix,
or by her stupidity and negligence, that this deed was executed, there«n beno question that- a devastavit has beencommitted, ifit betrue
1912.
MuttuMentha v.Fernanda
1912.
MuttuMeniha v.Fernando
(' 432 )
that valuable properties have ' been conveyed away to the defendantsin consideration of debts which did not exist. In either. case theexecutrix would “be liable for the damage done, and all parties injuredby the devastavit are only simple contract creditors of the executrix.(8ee Dunne v. Doran.1 *) It would appear thus that the proper remedyavailable to the second to ninth plaintiffs is a personal action againstthe executrix for the alleged loss sustained by them, through her default,or they must move in the testamentary case for a judicial settlementof her accounts, When the validityofthe alleged claims of the defendants
against the estate could be fully gone into. When such simple remediesare availabletothese plaintiffs,Ido notsee why an extraordinary
remedy should be invented for the purpose of enabling them under coverof an actionforland to attackthevalidityof a deed execnted by the
executrix in due course of administration. All .the lands mentioned in thisdeed form part of the residue, and whether the devise of the residue tothe second to ninth plaintiffs and' the first defendant is to be regardedas specific or not, there can be no question that they were all vestedin the executrix for purposes ofadministration, andas Clarence3.
observed in Fernando v. Muncherjee? “ no rule is clearer than that theexecutor fortheperformance ofhisduty ofpaying the testator’s debts
has anabsolute powerovertheassets,'whether speciallybequeathedor
otherwise.” He may sell, mortgage,orlease them forthe purpose,of
raising funds, and they cannot be followed by creditors, much' less bylegatees, either general or specific,intothe hands ofthe. alienee.. The
principle is that the executor or administrator in many instances mustsell, in order to perform his duty in paying debts, &c., and “ it wouldbe monstrous ” if he had no such power (aj observed by Lord Mansfieldin Whale «, Booth;3 note to Farr v. Newman) “ for then no one woulddeal with an executor,1” if he is liable afterwards to be called to account.
Here, then, is a conveyance by the executrix, which on the face of itappearstobe quite regular.Wemust,therefore,assumethat it isa
valid instrument which passed titletothe defendants,until it isset
aside by a competent Court, at the instance of parties who are lawfullyentitledtodemand it.It seemsto methat theonly person who,for
the reasons specified in the plaint, is entitled to ask for a rescission ofthis deed is the executrix, and no one else. If she was defrauded by thedefendants, I do not see what possible objection she can have to cominghere by herself and asking for the Court's interference to set mattersright. Theonly objectwith which thesecond toninthplaintiffshave
been associated with her seems tobeto embarrass the defendantsas
much as possible, and to deprive them of defences which may be availableto them as against the executrix personally, but not as against the otherplaintiffs.
For one thing, by reason of what the executrix did in 1907, the defendantshave given up the claims which they then had against the estate. If this deedis now to be set aside at the instance of the second to ninth plaintiffs, thedefendants will be left without a remedy, for their claims have now been longprescribed.If the first plaintiff proceeds against them by herself, they can
at least counterclaim against her personally for their old claiins which sheinduced them to surrender.
1 13 Ir. Eg. R. 545.
* 4 T. B. 625.
* 5 S. C. C. 141.
( 433 )
If, as18 now proposed byMr.Pereira,I amto strikeout thefirst
plaintiff's name and add her as a party defendant, the case will boconvertedinto a simple actionby someheirs for the recovery of property
whichhadwrongly gone into thehands ofthird parties owing to some
mistakeor indiscretion on thepartof theexecutrix^ or wemay putthe
case in this way.
It is admitted in paragraph7 of the• plaint thatsome Bs. 6,000 were
reallydueto thetwodefendants,butit isalleged that in paymentof
that debt the executrix conveyed to them property worth considerablymore. In otherwords,thedefendantsare creditorswhohavebeen
overpaid,and some of the residuary heirswantthat overpayment tobe
restored to theestate.Butan actionof thatsortmustbe brought
againstthe executrix, andnotagainsttheoverpaidcreditors.(See
Williams, vol //., 10th, ed., p. 1650.) ….
This principleappliestothe casebefore usineverydetail*The
defendants were admittedly creditors, but they are said to have beenoverpaid. There is no suggestion that the executrix is insolvent, andshe has at least the Ihimbara lands all to herself free of any liability.Her co-plaintiffsdeclineto accuse herof fraudorcollusion withthe
creditors.It therefore followsthat thedefendantsshould not be made
co-defendants with the executrix in the present action.
Noonedeniesthatunder ourlaw,asnow inteipreted, an heircan
ippintftiq an acv.'on to vindicate his title to land independently of anexecutoror administrator, butif thatbe all thatthe second to ninth
plaintiffsare now seeking todo, thenas I saidbefore, they have no
case ?o long as the conveyance by the executrix bars their way.
Ontheissuethatis now beforemeI must decide againstthe
plaintiffs, and the order I make is that the second to ninth plaintiffs bostruck out of the case, and the first plaintiff allowed to proceed on withthe other issues that have been framed, which go to the root of thewhole dispute.
The defendants' costs of this contention must be paid by all theplaintiffs.
Let the case be re-fixed for further'hearing on August 19 next.
The second to ninth plaintiffs appealed.
Bawat K.C., (with him H. A. Jayewardene), for the second tonifith plaintiffs, appellants.—The first plaintff (the executrix andthe appellants are seeking to set aside the deed, on the groundthat it was obtained by the defendants by fraud and undueinfluence. All persons may be joined as plaintiffs in whom theright to any relief claimed is alleged to exist, whether jointly,severally, or in the alternative, in respect- of the same cause ofaction (Civil Procedure Code, section 11).
[Pereira J.—The appellants are not parties to the contract?]We have suffered a wrong in common with the plaintiff. The heirshave a vested interest in the property. The mere fact that theappellants have a remedy against the first plaintiff does not debarthem from proceeding against the actual perpetrator of the fraud.The executrix might have been acting perfectly honestly. The
1912.
MtfUuMenika v.Fernando
( 434 )
1912.
MuttuMenika v.Fernando
appellants are the persons who have been womged in the result.Section 472 o£ the Civil Procedure Code enacts that though it maynot be ordinarily necessary to make the persons beneficially interestedparties to the action, the Court may, if it think fit, order them orany of them to be made such parties. This is a case in which theCourt may very properly make an order under section 472 forjoining the legatees. If any inconvenience or hardship arises fromthe fact that the legatees are co-plaintiffs, the Court may strike theirnames off; but no inconvenience arises from their being parties;on the other hand, it would be in the interests of justice to keep themon the record.
Counsel cited Williams on Executors 703, Sami v. Ammal,1Mohamad v. Krishnan," Appuhamy v. MaHhelis Rosa,3 BholaPershad v. Ram Lall et al.,* Balasingham’s Civil Procedure Code58, Rampini’s Civil Procedure Code 111, De Kroes v. DonJohannes Cassim v. Marikar.•
Sandrasagara, for the first defendant, respondent.—There is noallegation of fraud against the executrix in the pleadings. This is aninstance of overpayment to creditors; in such a case, unless specialcircumstances like fraud, collusion, &c., are alleged, the heirs cannotsue the creditors. Williams on Executors 700, Alsager v. Rowley.7
TambyaJi, for second, defendant respondent.
Bawa, K.C., in reply.
'Cur. adv. vult.
September 30, 1912. Lascelles C.J.—
In substance this is an action where an executrix joins withspecific legatees in. a claim to recover from the defendants a portionof . the estate transferred by the executrix to them in 1907. It ispleaded that the executrix was induced by the fraud and undueinfluence of the defendants to make this transfer; that the defendantsfalsely represented that the testator owed Rs. 60,000 to the firstdefendant and Rs. 16,001.17 to the second defendant, and that onthe strength of these false representations the executrix conveyedthe property in question in settlement of the alleged debts. The-learned District Judge has made order striking the legatees (the secondto the ninth plaintiffs) off the record and leaving the executrix (thefirst plaintiff) to continue the action. From this order the plaintiffsnow appeal.
The question at issue is whether, in the circumstances of this case,the legatees are entitled to follow the assets of the estate into the
> 7 Mad. R. C. R. 260.* (1896) 24 Cal. 34.
11 Mad. 106.« (.1S05) 9 N. L. R. 7.
(1906) 9 N. L. R. «8.• 1 S. C. R. 80.
7 (1802) 6 Vet. Jr. 748.
( 435 )
hands to whom the executrix has transferred them by notarial deed.It is conceded that the rights of the legatees in this respect areregulated by the law of England on the subject. Although it wouldbe competent to the Court, as a matter of procedure, to direct thelegatees to be made parties, under section 472 of the Civil ProcedureCode, I am satisfied, on an examination of the English authorities,that the question is one of substantive law rather than one ofprocedure. There is no question as to the general rule that, in theabsence of collusion or special circumstances, the legatees cannotsue for the recovery of assets which have been legally alienated bythe executor. The rule is based on broad considerations of publicpolicy, for the position of the purchaser from an executor would beintolerable if he were liable to be sued with respect to the assetsby each of the legatees. For this reason, even if the rule shouldappear to operate harshly in any particular case, it is imperativeon us to apply it strictly, and to allow no exceptions which are notrecognized by the law of England. As there is no suggestion ofcollusion here, the only question is whether in this case there aresuch special circumstances as will entitle the legatees to maintainthe action. I do not think that any better definition can be givenoi the special circumstances that constitute an exception to thegeneral rule than that given by Vice-Chancellor Kindersley inSaunders v. Drucc':“If an executor refuses ” (to file a bill), said
the Vice-Chancellor, “ or there is such a relation between theexecutor and the debtor as to interpose a substantial difficulty inthe way of the executor calling the debtor to account, then the ruledoes not apply.'1 In all the cases in which legatees have beenallowed to bring actions directly for the recovery of the property,, itwill. I think, be found that there was something in the relationshipbetween the executor and the defendant, or in the conduct of theexecutor himself,' which was considered to amount to a substantialdifficulty in the way of the executor calling the defendant toaccount. In the case I have cited, the refusal of the executor totake action, coupled with other circumstances, was consideredto constitute such a difficulty. In Hill v: Simpson 3 a transferby an executor of assets to secur his own debt was allowedto be set aside by general legatees, on the ground that the circum-stances disclosed gross negligence -not amounting to fraud on thepart of the executor. In Wilson v. Moore 3 the executor was thecommercial correspondent of the defendants, and the latter appliedfunds which they knew were a part of the testator’s assests to relievethe embarrassments of the executor. On the same principle residuarylegatees have been allowed to maintain a bill for an account against
the executor and the surviving partners of the testator (Bowsher
r._ Watkins 4).
1912.
Lascelles
C.J.
MuttuMentha v.Fernando
1 3 Dietary 140.
7 7 Ves. Jut. 162.
33
9 1 Mylne and Keen 337.4 1 Russ and Mylne 277.
1M2.
LuonUM
OJ.
MuttwMenika V.
Fernando
( 480 )
In the present case, as there is no suggestion of collusion betweenthe executrix and the defendants, the question remains whether thepleadings and admissions of oounsel disclosed any substantial impedi-ment in the way of the executrix maintaining the action. The caseset up is that the executrix was the victim of a fraud practised onher by the defendants. It is difficult to see how the fact that theexecutrix was deceived by the defendants disables her from main-taining an action to obtain redress for the fraud, or makes it difficultfor her to do so. An innocent person on whom a fraud has beenpractised would, generally speaking, be the most appropriate personto take steps to recover the property of which he has been deprived.It is true that the plaint alleges “ undue influence ” on the part ofthe defendants, but there is nothing which suggests that the plaintiffis so completely under the dominion of the defendants that, shecannot be trusted to maintain this action. On the principles andauthorities to which I have referred, I am satisfied that there is inthis case no special circumstance which constitutes an exceptionto the general rule that a legatee cannot follow assets into thehands of the transferee. The Indian authorities cited by Mr. Bawado not appear to me to have any bearing on the special branchof law undert consideration. If the second to the ninth plaintiff,
. as I hold, could not have maintained this action alone, it followsthat they cannot do so when joined with the first plaintiff. And thejoinder of the second to the ninth plaintiffs with the first plaintiff,who is their representative in the administration of the estate, givesrise to further difficulties, which I need not discuss. For the fore-going reasons, I think that the learned District Judge was right inremoving the second to the ninth plaintiffs fom the record, andI would dismiss the appeal with costs.
Pereira J.—
I agree. There is no question that the executrix, by herself,can maintain this action. Indeed, she is the proper and onlyperson to do so; and I do not think that a case to justify an orderunder section 472 of the Civil Procedure Code that the legatees orany of them should be made parties to this action has been made out.
Ennis J.—
This is an appeal from an order of the District Judge strikingout the names of eight plaintiffs in the case. The action was by anexecutrix and beneficiaries to set aside certain deeds on the groundof fraud and undue influence, and the names of the beneficiarieshave been struck out. Section 472 of the Civil Procedure Code laysdown the general rule:“In all actions concerning property vested
in a trustee, executor, or administrator, when the contention isbetween the persons beneficially interested in such property and a
< 487 )
third person, the trustee, executor, or administrator shall representpersons . so interested, and it shall not ordinarily be necessary tomake them parties to the action. But the Court may, if it think fit,order them to be made such parties.
The order appealed from is an interlocutory order, the case hasnot been heard or the facts proved, so the only point for determina-tion is whether there is anything in the averments which wouldjustify the order. Section 11 of the Civil Procedure Code providesthat all persons may be joined as plaintiffs in whom the right toany relief claimed is alleged to exist in respct of the same cause ofaction.~
In this case the second to ninth plaintiffs allege a right to reliefagainst the defendants in respect of the same cause of action, and thequestion is whether the executrix sufficiently represents them undersection 472 of the Code, not whether they have a right of action, asunder section 11 the allegation of the right is sufficient. To decidethis question, reference has been made to the rules of English law.It is clear from the English decisions that fraud and collusionbetween an executor and a third party justified the joining of thebeneficiaries in an action. It is to be observed, however, that nocase has been cited exactly similar to the present one, and that allthe cases cited were decided prior to the Judicature Acts.
In this case the third parties are the brothers of the deceased;the widow, the executrix, has no interest in the residue of the estate,and the counsel for the appellant states that she has not sufficientproperty to satisfy any decree that might be passed against her inan action by the beneficiaries should they take action and succeed.The beneficiaries do not set up fraud or collusion between the execu-trix and the defendants; they allege fraud by the defendants, andundue influence over the executrix by the defendants, her brothers-in-law. The combination of all these allegations is, in my opinion,a sufficient averment that the executrix does not adequatelyrepresent the beneficiaries, and that it is desirable to allow thebeneficiaries to come in to protect their interests. This opinion isstrengthened by the concluding words of section 11, by whichjudgment may be given for such one or more of the plaintiffs as maybe found to be entitled to relief, for such relief as he or they may beentitled to without any amendment of the plaint for that purpose.It may be that the facts when proved will show that the beneficiariesshould not have been joined, but in that case the Court could makeorder accordingly both as to costs and in the case.
In a note in the English Annual Practice, under Order 16, Buie 8,it is stated : “ If the questions which render the joining of beneficiariesnecessary or proper are questions which require to be dealt with atthe trial, they should be joined in the writ or added before trial.'*In this case the beneficiaries were joined as plaintiffs in the plaint;the question of undue influence is one which requires to be dealt
1912.
EnnibJ.
Mvtou
Menikav.
Fernando
1912.
Ennis J.
MuttuMenilca v.Fernando
with, at the trial, and this question, with the very substantialinterest which the beneficiaries have in the result, seeing that theexecutrix is alleged to be a person of no great means, would, I consider,be a good ground for not striking out their| names at the instance ofthe defendants, in favour of whom, seeing that fraud is alleged,there is no object in extending the protection of the rule applicablein ordinary cases which prevents innocent persons dealing withexecutors from being called upon to defend innumerable actions atthe instance of beneficiaries who may consider themselves aggrieved.X would allow the second to ninth plaintigs to be joined in theaction, but my opinion in this respect differs from that of mylearned brothers of the Bench in this appeal.
Appeal dismissed.