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Present: De Sampayo J. and Loos A.J.
PALANIAPPA CHETTY v. MATCHADO et al.
208—D. C. Kurunegala, 6,953
Surety—Sale of mortgaged, lands by debtors with consent of mortgagee andacquiescence of surety—Is surety discharged?
A, B, and C executed a mortgage bond in favour of D. C wasonly a surety. A and B, with the consent of the mortgagee, soldthe lands mortgaged by them, and paid the proceeds to the mort-gagee in part satisfaction. C knew and acquiesced in the sales.
Held, that C wub not discharged.
facts appear from the judgment. ,
Hayley (with G. Koch), for plaintiff, appellant.
Bawa, K.G., for second defendant,'respondent.
E. W. Jayawardene (with E. G. P. Jayatilleke), for fourthdefendant, respondent.
De Fonseka, for third defendant, respondent.
October 27, 1919. De Sampayo J-.—
This is an action on a mortgage bond executed by the first defend-ant and the second defendant as debtors and the third defendant assurety. The amount of the bond was Bs. 5,000 payable with certaininterest. There were .three lands mortgaged, the first land belongingto the first defendant, the second land to the second defendant, andthe third land to the third defendant. There are four otherdefendants in the case, and their presence is explained by thesecircumstances. In 1907 the first defendant, with the consent of themortgagee, sold the first land to one Samuel de Silva, who in turnsold it to the fourth defendant. The second land was sold by thesecond defendant under similar circumstances to the fifth, sixth, andseventh defendants. It appears that on the sale of these lands tothese defendants the purchase sum was paid to the mortgagee, whonot only received it, but consented to the sales of the first and secondlands. The District Judge has dismissed the case as regards thefourth to the seventh defendants. Mr. Hayley’ for the plaintiffappellant, rightly concedes that in the circumstances he cannotpress the appeal so far as these defendants are concerned. Theappeal is, however, pressed as regards the third defendant, for the
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, evidence is that the third defendant, at all events, knew andacquiesced in the sales.. The question in these circumstances iswhether the third defendant as surety was discharged from hisobligation on the bond. Counsel for the third defendant cites well-known authorities, which show that when .the principal obligationis discharged, the accessory obligation of the. surety is likewisedischarged, but in any case where it can be shown that in respectof a partial discharge of a debtor the surety acquiesced and agreedin the transaction, the law does not declare that the surety is dis-charged. In a local case reported at page 193 of Morgan's Digest,it has been laid down that a surety who after notice does not objectto the sale of the mortgaged lands is not thereby discharged. In thepresent Case, not only did the third defendant not object, but hisconduct was such that it must be presumed that he really consentedto the sales of the lands. I think the judgment appealed from, sofar as it does not give any decree • against the third defendant, iserroneous.
I would dismiss the appeal as regards the. fourth to the seventhdefendants, with costs, but would modify the decree, so far asthe third defendant is concerned, by declaring that the third landmortgaged by him be held bound and executable for the judgmententered against the first and second defendants. The plaintiff is,I think, entitled to the costs of this appeal.
District Judge entered a money decree against the first and seconddefendants for the balance due on the mortgage, but no judgmentwas given against the third defendant. The question as regards thevthird defendant depends on the circumstances under which the twolands were sold by the first and second defendants, and the thirddefendant’s connection with those transactions. There is, to mymind, good evidence that the third defendant was not only awareof the intended ,sales to the fourth to the seventh defendants, butapproved and acquiesced in it in the case of the second land. Heis proved to have been present in the office when the deed wasexecuted by the second defendant. Even as regards the sale of thefirst land, I gather he was present at the execution of the deed oftransfer, but even otherwise there is sufficient material in the caseto show that the third defendant knew and' approved of the sale,for the plaintiff received the proceeds sale in part payment of themoney due on the bond and gave a written acknowledgment, whichis signed at the back by the third -defendant and also one of theother parties to the bond. The District Judge says that he was noconsenting party to the sale of these two lands to the other defend-ants. I can only interpret that passage in the judgment as meaningthat he did not give express consent, for the inevitable result of the
Loos A. J.—I. agree.
PALANIAPPA CHETTY v. MATCHADO et al