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Present : Mr. Justice Wendt and Mr. Justice Grenier.OHLMUS v. OHLMUB.
D. G., Colombo, 21,828.
Purchase of land in another’s name—Parol evidence—Implied or cons-tructivetrust—Fraud—Statuteof Frauds (Ordinance No. 7of
The plaintiff’stestator bought aland' from the Crownand
obtained thegrantin the name of the defendant(hismother), who
was to hold in trust for the plaintiff’s testator, and was to reconveyit to him at his request. The defendant having refused to reconveythe property,theplaintiff instituted this actiontovindicateit.
It was objected on behalf of the defendant that a trust relatingto immovable property could not be proved by parol evidence.
Held(over-ruling the objection), that theplaintiff was entitled-
to prove the trust by parol evidence.
Gould v. Innasitamhy (9 N. L. R. 177) followed.
flamjrmA.J.—-Parol evidence is atall times admissibleto-
establish aresulting or constructive trust whereatransactionis
intended to effect a fraud. It is not necessary that there .should be-fraud at theveryinception of the transaction; itissufficient ifit
PPEAL Jrom a judgment of the Acting District Judge ofColombo (J. R. Weinman, Esq.)
The facts and arguments sufficiently appear in the judgment ofGrenier A-J-
Walter Pereira, K.C., and Bawa, for the defendant, appellant.
Dornhorst, K.G., and H. J. G. Pereira, for the plaintiff, res-pondent.
Cur. adv. vult.
10th March, 1908. Grenier A.J,—
This is an action by the plaintiff as the executor of the will ofOscar Oswald Ohlmus to vindicate a house called “ St. Cuthbert’sas property belonging to his testator. The defendant is the motherof the testator, and asserted title to the house on a grant dated the119th November, 1892, which she held from the Crown. The casefor the plaintiff was that, the land on which the house Was subse-quently erected was purchased by the testator for his own benefitand with moneys belonging to himself, and that the grant wasobtained by him in the name of the defendant, who was to hold thesaid land in trust for the testator and reconvey the same to him at
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1906. his request. It was also alleged by the plaintiff that his testatorMarch 10. entered into possession of the land and improved the same by erect*■Grenier ing thereon at his own cost and expense a substantial dwelling-houseA.J. now standing on it and known as “St. Cuthbert’s. ’’ The plaintifffurther averred that his testator had obtained a title by prescriptionto the said house and land.
The substantial issues which were tried in the Court below were: —
Was the land in question bought by the plaintiff’s testa-
tor in the name of the defendant to be held by her in trust
for him ?
Did plaintiff’s testator acquire a prescriptive title to the
Did the defendant acquire a prescriptive title to the land ?
These were the issues that arose on the pleading, and which wereagreed to by counsel on Both sides. After plaintiff’s counsel hadopened his case and was about to call his first witness the defendant’scounsel proposed the following issue: —
Can the plaintiff, not having a notarial instrument, prove a
trust by parol evidence ?
Counsel for the plaintiff rightly objected to this issue as it did notarise on the pleadings, but the learned District Judge accepted itand has adjudicated upon it, although all that the defendant averredin her answer was that her son, being desirous of making a gift to herand provision for her, purchased the land and caused the grant to bemade in her favour, and having erected the house thereon placedher in possession of it to be held by her as her own property and notin trust for him. There was no indication in the answer of any desireon the part of the defendant to raise any question of law, such as wassuggested by her counsel at the trial, but as the issue has beenaccepted and dealt with by the District Judge, I think it right thatwe should deal with it in appeal.
The facts have been clearly found by the District Judge in alengthy and well considered judgment, and it is needless for me torecapitulate them here. It is enough to say that the evidenceplaces it beyond all question that the land was purchased withmoneys belonging to the plaintiff’s testator, and that it was he whoerected the house now standing thereon, and let it out to a largenumber of tenants from time to time. I think that the evidence isfairly conclusive on these points, although some parts of it wereobjected to as hearsay. The defendant admitted that her son washer mainstay and support for several years, and that in February,1904, she received a letter from him asking her to transfer the house
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to him, and that the defendant spoke to Mr. John Ohlmus, a brotherof the plaintiff’s testator and the head of the family, on the subjectof transferring the property to the testator. The District Judge, inview of the high character 'which the defendant herself gave Mr.John Ohlmus, has expressly believed his evidence in every particular.Such then being the case, it follows that the plaintiff has establishedall that was necessary for him to prove in regard to the relation inwhich the defendant stood to the plaintiff’s testator at the time,and after the date of the grant in her favour by the Crown. So far,as the real ownership of the property was concerned, she was simplya trustee for the plaintiff’s testator, and the reason why the grantwas made in her favour appears clear from the evidence. Plaintiff’stestator was employed under Government as a surveyor, and wasinterdicted from purchasing Crown property for obvious reasons,and therefore the grant was made out in her name. She only lenther name, and judging from her own evidence and that of the wit-nesses called by her, as well as from the evidence called by the plaintiffshe has apparently fallen a victim to the evil influence brought to bearon her by her son James in setting up her present defence. I thinkMr. Domhorst’s strictures on the part that James has played in thismatter were fully deserved; and a perusal of his cross-examinationhas satisfied me that he may well be looked upon as the instigatorof what I do not hesitate to characterize as a false defence on themerits. Mr. Walter Pereira for the defendant argued this point ofthe case faintly, and indeed, if I am not mistaken, he did not attackthe judgment of the District Judge on the facts, but relied on thelegal objections that were raised by the additional issue which wassuggested after the trial had commenced. I shall now address my-self to that issue, as also to the question of prescription, which wasargued before us.
It was submitted by the appellant’s counsel that to create a trustthere must have been an agreement, and that there must be fraudat the inception of the transaction. Now, the District Judge hasheld, and as I think rightly, that there was an implied understandingor agreement (which in certain circumstances is just as strong as anexpress understanding or agreement, and such circumstances are- tobe found in this case) between the plaintiff’s testator and the defen-dant that the defendant should hold the property in trust for him andconvey it to him at some future time. So long as the plaintiff’s testa-tor was in the service of Government, he could not ask his mother totransfer the property to him, but after he had retired from the publicservice, the defendant sent for Mr. John Ohlmus and told him thatshe was not in very good health, and expressed a desire to give the
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property back to her son as it was nominally in her name, and shewished that the deed should be in her son's name. We have there-fore evidence from the lips of the defendant herself which throwsinto strong relief the fiduciary relation in which the mother stood tothe son both at the date of the Crown grant and prter. Such arelation may be brought about either by express agreement or bythe conduct of parties, and our law makes very J^le distinction, ifany, as I understand it, between an expre*® and an implied trust.Certainly in order to establish an impl^d or resulting or con-structive trust parol evidence is adr‘18sdde> and the admission ofsuch evidence does not violate tb<- provision of our local Ordinanceof Frauds; and as was held 5* ^e case of Ibrahim Saibo v. TheOriental Bank Corporation (!)* Parhl evidence is at all timesadmissible to establish a resulting or constructive trust where atransaction is intended 40 effect a fraud- The question therefore is,whether it is essent**! t^at the fraud must be at the very inceptionof a transaction. or whether in cases where the fraud arises subse-quently, it » open to the person who is defrauded to lead parolevidence " establish the trust. For my own part, I do not see whyany (Junction should be drawn between a case of fraud at thejn^-ption and fraud committed subsequently. Equity alwaysrelieves in cases of fraud, and7 it seems to me a monstrous propositionthat an Ordinance which was intended to prevent frauds should beinvoked in order that a fraud may be perpetrated under its shelter.The opinion that I have^ expressed has often been expressed fromthis Bench, and I therefore think that it is wrong and illogical to holdthat there must be fraud only at the inception of a transaction. Thepresent case is a typical, one. It was readily granted by the counselfor the respondent that there was no [fraud at the inception of the•transaction between the defendant and the plaintiff’s testator, butthat the fraud dated from the time when the defendant with full
knowledge of the. fact that she was only a trustee for the plaintiff’stestator, and that the property had been purchased with his money,refused to convey the property to him, although it was tacitly under-stood between them that the real owner was the plaintiff’s testator,and it was only for a temporary purpose that the grant was madeout in favour of the defendant. It is clear that according to section2 of Ordinance No. 7 of 1840 oral evidence is inadmissible in casesrelating to land, Nachiar v. Fernendo (2). But where there is fraudthe proposition may be stated broadly that oral evidence is admissible.Now, on closely considering the provisions of Ordinance No. 7 of1840, ^section 2, it will be seen that they were intended to prevent
(2) (1900) 5 N. L. R. 56.
(1) 3 N. L. R. 148.
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fraud and perjury in respect of the ownership of land, and thereforesection 2 required that all transactions referring to land should bein writing notarially executed; section 2 made it impossible for A tocome forward and say “ I am the owner of this land, the same havingbeen sold to me by B on a certain day,” and to lead evidence of averbal sale or transfer or assignment to him. That is quite a differentthing from A coming forward and saying “I gave B money to buythe land for me and he has had the deed made out in his own name,”or, as in the present case, where the defendant knew very well thatshe was only the nominal purchaser, and knowing that she refusesto transfer the land to the real purchaser, whose money was paidfor the land. Once the distinction, which does not seem tome to be founded on reason or good sense, between fraud at theinception and fraud subsequently is brushed aside as mere sophistry,the ground is made clear for the admission of parol evidence inrespect of both classes of cases.
In the cases that were cited before us in argument dating downfrom Ramanathan 1860-1862, namely 3 S.G.G. 103, 3 N. L. R. 148,
6 N. L. R. 188 and 56, 1N. L. R. $28, and 2 N. L. R. 255, the point thatI have hitherto been dealing with does not appear to have arisen,and therefore it was not discussed. In a recent case, however,which has unfortunately not been reported, Gould v. Innaaitamby (1),which was argued before Monbreiff and Middleton J.J., and whichis practically on all fours with the present case, the matter was wellput by Mr. Justice Moncreiff when he said that “ the question is notone of enforcing an agreement which is not according to law, butwhether a defendant is to be allowed to plead the Statute of Fraudsin order that He may dishonestly keep the property of another manof which he got possession by engaging to return it when required.
Mr. Justice Middleton in the course of his judgment made thefollowing observation, with which I entirely agree. After stating,the case for the plaintiff and the'defendant he said:—'“In thisposition of – affairs the defendant says:‘ Tou cannot compel me
to do so because you cannot prove a valid 'agreement to reconvevthe land under section 2 of Ordinance No. 7 of 1840, which I havefailed to carry out. ’ The answer jfco this is Equity will not allowyou to set up a "statute passed for ^he purpose of preventing fraudsin order that you may perpetrate anijl cover a fraud. ” Earlier in hisjudgment Mr. Justice Middleton m|i3e the following observation: —“ To allow him to do so would be (6o use tEe Statute of Frauds to-perpetrate and cover a fraud, whph is contrary to the principleenunciated by Lord Justice Turner imLincoln v. Wright (2), and which.
a) (1904) 9 N. L. R. 177.(2) 4 De G. and J. 16.
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the Court of Chancery in England has followed in many instancesHaigh v. Kaye (1), In re the Duke of Marlborough, Davis v. White-head (2). ” Counsel for the appellant sought to draw a fine distinctionbetween section 2 of Ordinance No. 7 of 1840 and section 7 of theEnglish Statute of Frauds. I The point has been exhaustively dis-cussed by Mr. Berwick, district Judge of Colombo, in Saibov. The Oriental Bank Corporation (3), and I have nothing to add tohis judgment. The judgment was affirmed in appeal by a FullBench consisting of Morgan A.C. J. and Stewart and Cayley J.J.
On thje question of prescription, it was argued for the appellantthat, assuming the plaintiff's testator had possession of the premisesin question from the date of the grant in favour of the defendant,there was an acknowledgment by him of his mother’s title when heallowed her to mortgage the land in June, 1899, for Rs. 6,000. Mr.Alwis’s evidence throws the true light on this transaction; and fromhis evidence it would appear that it Was the plaintiff’s testator whomade the application for the loan, although the mortgage bond wassigned by the -defendant, and that it was he who paid the intereston the loan with his own ^cheques till about the beginning of 1904.It is clear, therefore, that /plaintiff’s testa-tor and the defendant bothlooked! upon “ St. Cuthbett’s ” as the property of the former, andthere |vas no' interruption of the plaintiff’s testator s possession atany time..
It was a submitted by the defendant’s counsel that the defendanthad paid off the mortgage created by her on this property for thebenefit of the plaintiff’s testator, and that sh-e was entitled to berepaid the amount as in the nature of an improvement to the pro-perty. I can'find no distinct evidence on the point beyond a state-ment made by the defendant in her examination in chief that sheraised a loan and paid off Mr. Alwis’si mortgage in /December, 1904,after her son’s death. It does not appear clear whether or not themortgage was paid off by the property being mortgaged again, butI find that in the last will of the plaintiff’s testator he has made ex-press provision that the mortgage amount, namely, Rs. 6,000, shouldbe repaid out of his estate. No application was made to the Courtbelow in respect of this sum, nor is aniy. mention made of it in thepetition of appeal, and I cannot see my way to make any definite-order on the subject.,,
For the reasons I have given, I would (Bsmiss the appeal with costs.
Wendt, J.—I am of the same opinion both on the question underthe Ordinance of Frauds and Perjuries, and on the question of .pres-cription, and .1 agree that the defendants appeal should be dismissed.
(1) L. R. TCh. App. 469.(2) L. R. (1894) 2 Ch. 133.
(3) N. L. R. 14!3.
OHLMUS v. OHLMUS