OLIVE HUGHES ,Appellant,and PERERA et al, Respondents

037-NLR-NLR-V-54-OLIVE-HUGHES-Appellantand-PERERA-et-al-Respondents.pdf

HAGALINGrAM A.C.J.—Hughes v. Perera
169
Present : Nagalingam A.C.J. and H. A. de Silva J.
OLIVE HUGHES, Appellant, and PERERA et al.,Respondents
S. G. 169—D.C. Colombo, 5,481
Insolvency—Fidei commissum created by last will—Sale by assignee of spes successionis— Vendee ’a right to institute partition action in respect of the fideicommissaryproperty—Insolvency Ordinance (Cap. 82), s. 71—Different categories ofproperty that vest in assignee—Exceptio rei venditae et traditae—Applicabilityto forced sales.-
One of the fideicommissarii in a fideicommissum created by last will wasadjudicated insolvent and the assignee in insolvency sold to A. with leave ofCourt and by public auction the insolvent’s spes successionis. Subsequently,after the death of the fiduciarius, the uncertificated insolvent sold his fidei-commissary interests to B. In an action instituted thereafter by a successor-in-title of A. for the partition of the fideicommissary property—
Held, that the partition action was not maintainable as the assignee’s saleof the spes successionis could not be said to have conveyed to the purchaser A.any title to the fideicommissary property. Proof that the insolvent wasentitled to a spes successionis in respect of the land in question did not establishthat the insolvent was entitled to the land itself within the meaning of section71 of the Insolvency Ordinance.
Held further, that the acquisition of title by the insolvent after the death ofthe fiduciarius did not enure to the benefit of A., the purchaser from the assignee.The principle of exceptio rei venditae et traditae cannot apply to forced sales asdistinct from private alienations.
Obiter : An uncertificated insolvent cannot deal with any immovable propertythat may have belonged to him prior to adjudication or even subsequentthereto but prior to the grant of a certificate of conformity.
Ap:
PEAL from a judgment of the District Court, Colombo.
H. V. Perera, Q.C., with H. W. Jayewardene and D. R. P. Goonetileke,for the sixteenth defendant appellant.
E. G. Wikramanayake, Q.C., with Kingsley Herath, for the plaintiffrespondent.
Cur. adv. vult.
April 24, 1952. JSTagat.tngam A.C.J.—
The sixteenth defendant in this action, which is one under the PartitionOrdinance, appeals from the interlocutory decree entered by the learnedAdditional District Judge of Colombo directing a partition of the land,the subject-matter of the action, among the-plaintiff and defendants,first to fourteenth, to the exclusion inter alios of the sixteenth defendanthimself. The sixteenth defendant claims the share that has been allottedto the plaintiff and the sixth to the fourteenth defendants, and thecontest in this case is between the sixteenth defendant on the one handand the plaintiff and the sixth to the fourteenth defendants on the other.
8LIV.
23. N. B 20708-1,592 <10752}
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NAGAJLENGAM A.C.Ji—Hughes v. Perera
All these parties derive their title from the same source, and the questionfor decision is who has, if any, the superior title—the sixteenth defendant,or the plaintiff and the sixth to the fourteenth defendants.
Eor the purpose of this appeal it is only necessary to consider thefollowing facts : One Johannes Pieris by last will P15 of 1919 devisedthe land in question to his wife Mary, “ subject to the condition thatshe shall not be entitled to sell or mortgage the same or any part thereofduring her lifetime and after her death the same shall devolve on herand my seven children …. (the names are set out) ….in equal shares.”^
Johannes Pieris died in 1933, leaving him surviving bis wife and sixchildren, one child having predeceased the testator.
The contest relates to the interests of Wilfred, one of the survivingchildren. Wilfred was adjudicated insolvent on April 11, 1938, duringhis mother’s lifetime. With leave of Court obtained the assigneeappointed in his insolvency proceedings caused the interests of theinsolvent to be sold by public auction and at that sale one Edwardbecame the purchaser, and conveyance P20 of 1943 was duly executedin his favour. Edward’s interests under this deed have devolved on theplaintiff and the sixth to fourteenth defendants. The widow died onDecember 3, 1946, and two days after her death Wilfred by deed 16 D1conveyed a share of the land to the second defendant, who by deed16 D2 of May 18, 1948, conveyed that interest to the sixteenth defendant-appellant. Wilfred was refused a certificate and is an uncertificatedinsolvent or, to use the English phraseology, an undischarged bankrupt.
While the sixteenth defendant impugns the validity of the conveyanceP20 of 1943 executed by the assignee, the plaintiff in turn challengesthe validity of the conveyance 16 D1 executed by the insolvent. Theassignee’s deed is attacked on the footing that the assignee being acreature of the Statute cannot exercise powers that are not vested inhim by the Ordinance and that the power to sell immovable propertythat is conferred on an assignee by the Ordinance is limited to suchproperty as could be said to have vested in the assignee prior to the saleby him and that as both at the date of the sale and the execution of theconveyance by him no right, title or interest of the insolvent had vestedin him, the deed was inoperative to convey any title to the purchaser.The insolvent’s deed 16 Dl is said to be ineffective to pass title for thereason that the insolvent having been an undischarged bankrupt at thedate the conveyance was executed by him his title, if any, to the propertywould have vested by operation of law on his assignee and he wouldhave been incompetent to execute a transfer of that title.
The validity of the insolvent’s deed may be disposed of at once. Itwas said that it was unnecessary on this appeal to go into the questionof its validity, for if it were shewn that the plaintiff had-no interestin the land, then the action would have to be dismissed, and it wouldbe futile in that event to enter upon a consideration of the sufficiencyof the deed to pass title. This, no doubt, is a proper view, but I cannotrefrain from making the observation quantum valeat that it is too wellestablished a proposition of law that an unoertificated insolvent cannot
NAGALINGASI A.C.J.—Hughes v. Perera
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deal with any immovable property that may either have belonged tohim prior to adjudication or even subsequent thereto but prior to thegrant of a certificate of conformity, that it could be contended withany degree of success that 16 D1 is an effective deed of transfer.
I now turn to address myself to the problem whether the assignee’sdeed can be said to have conveyed a good title to the purchaser. Thisquestion involves a consideration of the terms of section 71 of theInsolvency Ordinance which deals with the different categories of pro-perty that can be said to vest in an assignee upon the adjudication of aninsolvent.
The section in the first place draws a broad distinction between (a)property that may belong to the insolvent at the date of the adjudication,and (6) property that the insolvent may become entitled to subsequentto the date of the adjudication but prior to the grant of the certificateof conformity. The nature, character and quality of the property of aninsolvent that vests in the assignee at the date of adjudication of theinsolvent is described by this section as “ all lands in this Island to whichany insolvent is entitled and all interest to which such insolvent isentitled in any such lands and of which he might according to the lawsof the Island have disposed”. The clause, “and all interest to whichsuch insolvent is entitled to in any such lands ”, refers to an interest inthe land short of full dominium such as a usufruct or a leasehold, and asany discussion relating to the dominium of a land would apply to thelesser interest, no further notice need be taken of this clause, particularlyas such a course would conduce to greater clarity of thought.
The question then narrows down to a determination of what the sectionrefers to as “ all lands to which any insolvent is entitled and of whichhe might according to the laws of the Island have disposed ”. Twoessentials are postulated before a property could be said to vest in theassignee. The first is that it should be property to which any insolventis entitled ; the second is that the property must be capable of beingdisposed of by the insolvent according to the laws of the Island. It isneedless to emphasise that proof of the existence of one of the essentialswithout proof of the other would be wholly inadequate. It is to benoted that in regard to the first essential there must be proof that theinsolvent is entitled to the land. The words, “ is entitled ”, are perfectlyplain in their meaning and shew that the property should belong to theinsolvent in praesenti, that is, at the date of the adjudication, not that theproperty could become vested in the insolvent at a future date. It maybe useful to contrast at this stage the language used in respect of thefirst essential with the language used to describe the second broadcategory, to which reference has already been made, relating to propertythat the insolvent may acquire after his adjudication but prior to hisobtaining a certificate. The words there are, “ all such lands in thisIsland as he shall purchase, or as shall descend, be devised, revert to orcome to such insolvent before he shall have obtained his certificateIt will be seen that into this category fall all property that the insolventmay become possessed of after the date of his adjudication but prior tohis obtaining the certificate, so that while in regard to the first category
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XA0AXJ370AM A.C.J.—B-ughes v. Perera
emphasis is laid on property that is already vested and in possession ofthe insolvent, the feature accentuated in regard to the second categoryis that it is property to which the insolvent is not entitled to and not inpossession of at the date of adjudication hut becomes entitled to oracquires after his adjudication.
Now, what was the nature of the right or title of the insolvent to theland in question at the date of his adjudication ? He had a fideicom-missary interest in the land under the last will of his father. It hasbeen settled by a long series of decisions of this Court, and the contraryhas not been contended for, that the interests of a fideicommissary undera last will as distinct frdm those under a deed inter vivos is merely aspes successions and one which on his death does not devolve on hisheirs. But it is said on behalf of the plaintiff that even a spes successionisis a species of property which can be disposed of and can be effectivelytransferred. This contention, there can be little doubt, is in itself asound one. Nathan 1 enumerates various kinds of property that arecapable of being sold and bought :
“ The first requirement of sale, then, is merx, a thing capable of beingsold and bought freely. The thing may be movable or immov-able, corporate or incorporate, existent or non-existent, certain. or uncertain.”
And under this definition he includes the sale of a spes, and he explainsthe point thus :—
“ If there is an agreement for the sale of certain produce, in otherwords, the hope or expectation (spes) of produce, the salewill hold good, for it is quite allowable to sell an expectation(spes) as for instance of a catch of fish, the spes taking theplace of the thing.”
Nathan bases his statement of the law upon Voet 3. Berwick in histranslation appends a note to section 13 :—
“ The word res (which he uses as the equivalent of merx) includesthings non-existing as well as things existing and all res may besold which are commercible. And in the case of future fruitsthe sale is considered as made iam tunc when they come intoexistence. There may even be a sale sine re as when a chanceis sold, for example, the chance of a take of fish or game orlargess thrown to the crowd, even though nothing should becaught or secured.”
But where an expectation or chance is sold, it must be rememberedthat what is sold is not the subject of expectation or chance as, in theillustrations already referred to, not the fish or game or largess, but theexpectation or chance of a taking of fish, game or largess. In otherwords, the spes, chance or expectation is the subject of the sale, but on asale of the spes, where there is in fact a take of fish, game or largess, the1 1st ed. Vol. 2 p. 698 sec. 851.* XVII. I. Secs. 13 to 21.
NAGr-AXINGAil A.C.J".—Hughes v. Per era
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property in the fish, game or largess is transferred. I think, therefore,the distinction is clear that on a sale of a spes what is sold is the mereexpectation or chance and not the article which is the content of theexpectation or chance ; so that by establishing that a spes can be thesubject of a sale, one does not establish the proposition that the contentof the spes is something in existence.
It would therefore follow that the proof that the insolvent was entitledto a spes successionis in respect of the land in question does not establishthat the insolvent was entitled to or possessed of the land itself. If,therefore, proof of the right to sell the spes successionis is insufficient toestablish that the insolvent was entitled to the land, what then is thetest that could be applied to determine whether a person “ is entitled ”to a property ? The test suggested at the argument was whether theproperty would pass on his death to his heirs. This would appear tobe a fairly satisfactory test, although I am not prepared to say that asat present advised it must apply to all cases without exception. Itcertainly would cover a large multitude of cases that one can readilythink of and would include even the case of fideicommissary interestscreated by deed inter vivos. Judged hy this test, the case of a spes wouldfail.
The conclusion I reach, therefore, is that when the assignee purportedto sell the interests of the insolvent he sold no right or title of the insolventto the land, for the insolvent was not entitled to any at the date of hisadjudication and the deed of conveyance executed by the assigneeconveyed no title to the purchaser.
On the mother predeceasing the insolvent, there can be little doubthe became entitled to a ^ share in the land, and this would have vestedin the assignee, and if the assignee thereafter sold and conveyed theproperty such a conveyance would pass good title to the purchaser.Even now, there is nothing to prevent an assignee appointed in theinsolvency proceedings from selling the insolvent’s share for the benefitof creditors, for what would then be sold would not be merely a spesbut the share of the land itself..
Mr. Wickremenayake advanced another contention in the alternative,relying upon the Roman-Dutch Law plea of exceptio rei venditae et traditaethat the acquisition of title by the insolvent after the death of his motherenured to the benefit of the purchaser from the assignee, and reliedupon the well known cases of JRajapakse v. Fernando 1 and Gunatilleke v.Fernando 2. Both these are cases of private alienation and not sales inexecution or forced sales. In the case of Gunatilleke v. Fernando 2 LordPhilimore expressed the view that under the Roman-Dutch Law, unlikein the case of the English Law, the doctrine of the subsequent acquisitionof title enuring to the benefit of the earlier purchaser was not basedupon estoppel, but that the question under the Roman-Dutch Law waswhat was the property purported to be conveyed, and that on allprinciples of construction the recitals could only be looked at for thepurpose of assisting the Court to arrive at the determination of theactual effect of the conveyance.
1 (1920) 21 N. L. R. 495.2 (1921) 22 N. L. R. 385.
2*J. N. B 20709 <10/52)
174
Mohaideen v. Maricair
Ordinarily, in a private alienation there is almost invariably a covenantto warrant and defend the title conveyed, and even if there be no expresscovenant, the law implies one, and the vendor is under an obligation towarrant and defend the title conveyed by him ; and if he had conveyedthe property without title, then if he acquires title subsequently byvirtue of the implied or express warranty, he is bound to make good thetitle. In the case of an execution sale, there is no such warranty. It isonly necessary to illustrate this point by reference to the two deeds inquestion. In the deed 16 D1 of the insolvent there are clauses under-taking to warrant and defend the title conveyed, but in the assignee’sdeed P20 there is a, total absen.ee of any warranty clause.
In sales held under execution, the principle is the same in regard tosales under the Insolvency Ordinance, all of which sales come under thecategory of forced sales, no warranty of title can be even implied thoughthere be no express clause negativing an undertaking to warrant anddefend the title ; so that the Fiscal or assignee cannot be called uponto implement or perfect the title conveyed, which would appear to be thebasis of the exception under the Roman-Dutch Daw. The • principle,therefore, of the exceptio rei venditae et traditae cannot apply to suchsales. The case of Sttiart v. Senanayake1 also supports this view.
For the foregoing reasons I hold that no title passed on the assignee’sconveyance P20. The plaintiff has no interest in the land and is notcompetent to institute this action.
I therefore set aside the judgment of the learned District Judge anddismiss the action with costs both of appeal and of the lower Court.
H. A. de Silva J.—I agree.
Appeal allowed.