050-NLR-NLR-V-25-PALANIAPPA-CHETTY-v.-MORTIMER.pdf

18-xxv
12(60)29
1923.
PcdaniappaOhetty v.Mortimer
( 210 )
At the trial on March 2 and 13, 1923, tne following issues wereframed:—
Is the plaintiff debarred from maintaining the present
action ?
Was the plaintiff bound by his verbal consent to the proposed
compromise, or was he at liberty to withdraw his consent ?
The District Judge (Dr. P. E. Pieris) held in favour of the plaintiffby the following judgment:—
It is admitted that on ah account stated between plaintiff andthe late Tewaraya Pillai on June. 16, 1918, a sum of Rs. 4,000 wasfound to be due to the plaintiff. He has brought this action againstthe official administrator of the debtor’s estate to recover the amountfound so due, with interest. The claim has been met by two lines ofdefence, which will be dealt with separately. The first defence is asfollows : It is admitted to be the fact that the plaintiff has receivedfrom Periyasami Pillai, the son of Tewaraya Pillai, a promissory note forthe amount found to be due from the father, and that this note wasmade as security for the father’s debt. The plaintiff sued on this notein D. C. 29,065 and obtained judgment, but no steps have been takento satisfy the judgment. It is argued that on this state of facts theplaintiff is debarred from maintaining the present action. Reliance-isplaced on section 34 of the Code, under which a plaintiff must in oneaction deal with the whole of his claim in respect ot the cause of action,and an obligation and a collateral security for its performance aredeemed to constitute but one cause of action. This, however, refersto a collateral security given by the debtor himself. In the presentcase it is no doubt the case that the sum of money contemplated byboth Tewaraya Pillai and Periyasami Pillai is the same, namely, whatwas due from the former on certain transactions. But the cause ofaction in respect of the two are very different. Against TewarayaPillai it is that he failed to pay what he agreed was due on an accounting.Against Periyasami Pillai it is that he failed to meet the amount dueoh a promissory note.
The judgment of the Privy Council in Palaniappa v. Saminathan in17 N, L. R. 56, with regard to the scope of section 34, is against thedefendant’s contention.
It is suggested that Periyasami acted as substitute for his father, theoriginal debtor, in making the note. This cannot be conceded. Thereis also a suggestion of novation, but that is hardly pressed, for theexistence of Tewaraya Pillai’s debt was admitted by everyone interestedin his intestate estate. The second line of defence is as follows.
It is admitted that nineteen of Tewaraya Pillai’s creditors, represent-ing a very large claim, and including among them the plaintiff, met thedefendant, and an agreement was come to by which each of the*nineteenagreed to accept a certain share in a land belonging to the estate, infull satisfaction of all his claims. A written agreement was drawn upin confirmation of this arrangement, but by that time the plaintiff hadchanged his mind and withdrew his consent, and refused to sign thewriting. Thereupon application was made to the Court in the testa-mentary case, and authority was obtained to transfer to the eighteenconsenting creditors the shares which they had agreed to accept. Inpursuance of the authority so granted, the deed P 1 was executed byadministrator and the eighteen1 creditors. It is argued that having
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verbally consented, the plaintiff is bound by his promise. That is a 1928.
matter of pure law, but no authority has been quoted in support of this r>iJZ~llnna
contention. There was a suggestion that the plaintiff is estopped on
the ground of part performance by the other side induced by the Mortimer
plaintiffs promise. That, however, is not the case, for the performance
by the others, namely, the execution of the deed P 1, was made with
the full knowledge of the defection of the plaintiff. His promise did
not in any degree influence the execution of the deed.
In the absence of authority on the point, I am not prepared to holdthat the plaintiff is bound by a verbal agreement which was promptlyrepudiated on reconsideration.
Samaratoickreme (with him Hayley), for defendant, appellant.
H. V. Perera, for plaintiff, respondent.
October 18, 1923. Jayewabdene A.J.—
In this .case the plaintff has obtained judgment against theadministrator of the estate of one Thewaraya Pillai for a sum ofRs. 4,000 due on an account stated. Thewaraya Pillai’s son,
Perias&my Pillai, had given a promissory note for Rs. 4,000 tosecure the amount due from his father. The plaintiff had sued themaker of the note and obtained judgment against him in caseNo. 29,065. Thewaraya Pillai died leaving an insolvent estateof which the Secretary of the Court has been appointed adminis-trator. Subsequently a meeting of the intestate’s creditorsexceeding six-sevenths in number was held, at which the plaintiffwas also present, when an agreement was come to with the consentof all the parties concerned, by which the creditors agreed to takea transfer of “ Kelvin estate ” belonging to the intestate’s estatein shares proportionate to their claims in discharge thereof. Theplaintiff afterwards withdrew from this agreement and arrangement,and the estate was transferred to the other creditors, leaving outthe share which the plaintiff had undertaken to accept. There-after the plaintiff brought the present action to recover a sum ofRs. 4,000 due on the account stated. Several objections wereraised to this claim, but the learned District Judge has decidedthem in plaintiff’s favour. The defendant appeals, and the sameobjections have been pressed before us. In the first place, it iscontended that the giving of the note by the son was an extinguish-ment of the debt of the father, and that there had been a novation.
I am strongly inclined to think that the note extinguished thefather’s debt, and that the intention of the parties was to createa novation, but no issue has been raised on the point and no evidencehas been led by the defendant, and the admissions of the partieson which the case was decided fail to show the creation of a novation.
An issue was framed on the admission of the plaintiff that heobtained the note merely as a security, and not in discharge of theamount due by the father, and the issue framed on this admission
1923.
( 212 )
Jayewjlr-BENB A.J.
PalaniappaChetiy v.Mortimer
was “ On the above admission is the plaintiff debarred frommaintaining the present action ? ” The defendant did not ask foran opportunity to lead evidence to prove that the note was givenin payment of the father’s debt, nor does the defendant ask forsuch an opportunity in his petition of appeal, nor does he complainthat he has been prejudiced by the case being decided on admissions.The learned District Judge has decided this issue in the negative,and I think that on the.admissions recorded his decision is right.It is also contended that the judgment in the promissory note caseis res judicata by virtue of section 34 of the Civil Procedure Code,which enacts that, for purpose of this section, “ an obligationand a collateral security for its performance shall be deemed toconstitute one cause of action,’’and that, therefore, the present actioncannot be maintained, as the present claim ought to have beenincluded in the action on the note. 1 do not think this objectionis sound. I think that section 34 refers to cases where an obligationis incurred and the collateral security is given by the same personor persons. I do not think it applies to cases where the obligationis incurred by one person and the security is given by another.“ As to section 34,” said Bertram C.J. in Moraes v. Nallan Chetiy}“ the remedies there referred to seem to me to be remedies whichmight be sought against the same defendant.” It may be thatwhen the person liable on the security is sued, he is entitled to askfor a stay of the action until the principal debtor is first sued andhis assets discussed, as happened in Wijewardene v. Jayawardene,2or, this being a security created by a promissory note, the makerof the note may be sued before the excussion of the principaldebtor. Palaniappa Chetiy v. De Mel?
Next, it was argued that the plaintiff was estopped by his conductin agreeing with the other creditors to the arrangement to takea share of “ Kelvin estate ” in satisfaction of the debts due by theintestate. The plaintiff withdrew from this arrangement whilematters were still in negotiation, and the defendant and the othercreditors were fully aware of the plaintiff’s withdrawal before thedeed of transfer was signed and the agreement concluded. Inthe circumstances it cannot be said that the plaintiff by his acts ordeclarations induced the other creditors and the defendant toenter into the agreement. There can, therefore, be no estoppel.His original agreement to accept the arrangement cannot beenforced, as it involved an interest in land and was non-notarial.
Finally, it is contended that the debt due to the plaintiff must beregarded as payment of the purchase money for a share of “ Kelvinestate,” and as the sale has gone off owing to the default of theplaintiff, the prospective vendee, the. defendant, as vendor, isentitled to retain the money on the same principle as the forfeiture
1 (1923) 24 N. L. B: 297, at p. 302.* (1919) 19 N. L. B..
8 (1913) 16 N. L. R. 242.
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of a deposit on an informal agreement to sell. In support of thiscontention reliance is placed on Nagur Pitche v. Usoof >l I do notthink the principle of this case has any application here. Therethis Court adopted the principle derived from certain Englishcases and stated in HaUbury's Law of England (vol. XXV., p. 402)thus :—
1023
Javewab-
SXNJC •
PalanioppaChetty v.Mortimer
" Where a deposit has been paid under a verbal contract for thesale of land, a vendor who resists the purchaser’s actionon the contract by the plea of the Statute of Frauds, isliable to return the deposit as money had and receivedto the use of the purchaser; but it seems that if thepurchaser sets up the statute in order to escape from hiscontract he cannot recover the deposit.”
In that case the Court found that the plaintiff deposited a sumof money on condition that if he failed to take the lease the depositshould be forfeited. The same principle was held applicable to rentdeposited in advance to be set off against the last month’s rentof a tenancy created by a non-notarial agreement. Vil Mohamedv. Chogla.2 But no case can be cited to support the contentionthat where the purchase money is in the hands of the vendor whois the debtor of the vendee, the amount so due can be treated asa deposit liable to be forfeited. It may be otherwise .if there .hadbeen an express agreement that the debt due should be held as adeposit with the express or implied liability to forfeiture in casethe sale goes off owing to the fault of the purchaser.
There are certain special rules which apply to deposits made onan agreement to sell. Fry L.J. in How v. Smith3 points out thata deposit of this nature is the same as the 41 arraha ” or “ earnest ”of the Roman law.
“From the Roman law,” he says <l the principles relating tothe earnest appeared to have passed to the early juris-prudence in England.”
Then citing a passage from Bracton> he cont nues :—
“ Though the liability of the vendor to return to the purchasertwice the amount of the deposit has long since departedfrom our law, the passage in question seems an authorityfor the proposition that the earnest is lost by the partywho fails to perform the contract …. Takingthese early authorities into consideration* I think we mayconclude that the deposit in the present case is the earnestor ‘ arraha ’ of our earlier writers.”
1 (1917) 20 N. L. R. h» (1920) 2 L. R. R. 260.
* (1884) 27 Ch. Div. 89, at p. 102.
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1S23.
Jaybwab-DTOTB A. J.
Palani&ppaCketty v.Mortimer
See the recent ease of Chittingworth v. Esche} The Roman-Dutchlaw adopted the Roman law with regard to “ arraha.” As Voet(18,1, 25) says :—
“ An 1 arraha ’ is often what has been given as a token of apiprchase contracted and completed and to be imple-mented afterwards on both sides, in order that it maybe the more clearly proved that the price had been agreedupon, but sometimes, however, as proof of an inchoatepurchase to be further perfected in writing or otherwiseaccording to the intention of the parties. In the lattercase, the inchoate purchase may be receded from at theloss to the one party of the ‘ arraha9 he has given* oion restitution by the other of double the amount whichhe has received.”
Money of the purchaser lying in the hands of the vendor andnot given, as a deposit or agreed to be treated as a deposit cannotbe regarded as a deposit, " earnest,” or “ arraha ” given on theoccasion of an agreement to purchase being entered into. In thecircumstances the principle laid down in Nagur, Pitche v. Usoof(supra) can have no application to the case. The appeal fails onall points, and must be dismissed, with costs.
At the same time one cannot help feeling that the case has beendecided on unsatisfactory material. It would have been betterif the defendant had suggested the issues which from his point ofview raise the real questions in dispute between the parties andhad asked for an opportunity to lead evidence in support of hisdefence. He was content to go to trial on the two issues framedand must take the consequences. The plaintiff is, however, notentitled to execute his judgment in the previous action, No. 29,065,until he has discussed the property of the intestate in the presentaction, and then only for any balance still remaining due. TheDistrict Judge might see that an entry to this affect is made in
C. No. 29,065. The appeal is dismissed, with costs.
Schneider J.—I agree.
Appeal dismissed.
1 (1923) I Ch. 5761 see (1924) I Ch. 97.