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Present: Mr. Justice Wendt and Mr. Justice Middleton..
PERERA v. KRIEKENBECK et alD.C., Kurunegala, 2,792.
Administrator t transfer by, of property not included in the inventory—
“ Dulystamped ”—Bon&fides—Validity—CivilProcedure Code
(No. 2 of 1889), ss* 539*, 540, and 547—Stamp Ordinance (No. 3 of
1890), ss* 24, 25, and 26.
Where an executor of administrator 1 transfers property belongingto the .deceased's estate to a bona fide purchaser, such transfercannot be invalidated oh the ground that the value of such propertyhas not been included in the amouht on which stamp* duty has-been paid in the administration proceedings, and that therefore theprobate or grant of administration was not " duly stamped " within'the meaning of section 547 of the Civil Procedure Code.
Judgment of the Full Court in Silva v. Weerasuriya (10 N. L* R. 73)’distinguished.
Wendt J.—The expression . '* duly stamped" must be construedwith reference to the date of issue of the probate or letters ofadministration.
Wendt J. and Middleton J.—The penal proviso to section 547of the Civil procedure Code contemplates the transfer of a deceased's*assets3 without the formality of taking out probate or letters of-administration at all, and not a mere 'deficiency in stamp duty.
CTION rei vindicatio. The facts relied on by the plaintiff wereas follows:The late Alfred Payne was the owner of the
property in dispute; he died on or about 25th June, 1897, leavinga last will whereby he appointed his wife, Margaret Agnes Payne,
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1907. his executrix. Margaret Agnes Payne, being out of the Island, sentJanuary 29. a power of attorney to Messrs. Loos & Van Cuylenberg appointingthem her attorneys jointly and severally; Mr. Loos applied for andobtained letters of administration cum testamento annexo to theestate of the said Alfred Payne in testamentary case No. 975 of theDistrict Court of Colombo and, as such administrator, conveyedthe property to the said Margaret Agnes Payne to be held byher in trust for her children according to the provisions of the will.Margaret Agnes Payne obtained the authority of the District Courtof Kurunegala, on 20th October, 1904, under the provisions ofOrdinance No. 11 of 1876, to sell the property, and by deedNo. 19,520, dated 22nd October, 1904, she conveyed the same to theplaintiff.
It appeared from the testamentary case that the property was notincluded in the schedule to the application for letters of administra-tion or in the inventory filed by the administrator. The totalestate, which did not include the property in question, wasvalued at Bs. 70,800 in the schedule, and duty was paid on thatamount.
It was objected* on behalf of the first defendant that the letters ofadministration were not ** duly stamped ” within the meaning ofsection 547 of the Civil Procedure Code owing to the omission of theproperty from the. inventory, and that therefore the transfersfrom Mr. Loos to Margaret Agnes Payne and from the latter to theplaintiff were bad.
The District Judge (Bertram Hill, Esq.) over-ruled the objection.
The first defendant appealed.
'H. Jayewardene (A. St. V. Jayewardene with him), for the appel-lant.—The property having been omitted from the inventory, andits value not having been included' in the amount on which stampduty was calculated, the letters of administration were not “ dulystamped ” within the meaning of section 547 of the Civil ProcedureCode and the Stamp Ordinance. An administrator’s power extendsonly to property on which duty has been paid; as regards propertyon which no duty has been* paid, he is not clothed with the characterof administrator. The decision of the Full Court in Silva v. Weera-suriya (1) is conclusive on this point. Assuming that the letterswere not duly stamped, the transfer is void, as such a transfer is' made the subject of an offence by section 547 of the Civil 'ProcedureCode, and is consequently prohibited by law. A penalty implies aprohibition [Cope v. Rowlands (2); Smith v. Mowhood' (3); Law v.Hodson (4); Taylor v. The Crowland Gas and Coke Go. (5); Re Cork
a) (1906) 10 N. L. R. 73.(3) (1845) 14 M. A Wt 452 p. 464.
(1886) 2 M. A W. 149 p. 157.(4) (1809) 11 East 300.
(5) (1854) 10 Ex. 293.
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and Youghal Railway Go. (1); and MeUisa v Shirley Local Board (2) ].1907*
[Middleton J.—Would the transferee be guilty of an offence under January 2$,section 547 if he took the transfer in good faith, and without know-ledge that the letters were not duly stamped?] It is submitted thatthe transferee would be guilty of an offence. This being an offenceenacted purely for the protection of the revenue, mens tea does notform a constituent element of it, and bona fidea would not be a validdefence to a prosecution: Sherrae v. De Rutzen (3); Reg. v. Prince
; Gundy v. Le Gooq (5). If the administrator himself cannot suefor the recovery of the property, he cannot by transferring it to a. third party enable such third party to do so. He cannot confera greater or better right than he himself has. To hold otherwisewould be to nullify the provisions of section 547 of the Civil Pro-cedure Code.
H. J. £7. Pereira, for the plaintiff, respondent.—It cannot be saidthat the letters of administration were not " duly stamped. " Theywere " duly stamped ” as at the date of stamping. The StampOrdinance contemplates that the value should be only approximate;it is impossible to give the exact value of the estate. It is not opento a third party to impeach the validity of the letters on the groundthat some property has been excluded from the inventory, providedthe letters are “ duly stamped M on the face of them. It would beunreasonable to expect a purchaser from an administrator to findout whether the administrator has included all the assets of thedeceased in the. inventory, and whether' stamp duty has been paidon them* Such a course would unnecessarily hamper an administra-tor in the performance of his duty. Under section 540 of the CivilProcedure Code, where- administration is once granted, the adminis-trator’s powers extend to every property which the deceased diedpossessed of. The Court ought to presume that everything wasproperly done; and it is not competent for a Court other than theone that granted’administration to go into the question whether theletters were “ duly stamped " or not. The case of Silva v. Weera-suriya (6) is distinguishable. There the administrator himselfsued for the recovery of a debt not included in the inventory, and onwhich no stamp duty was paid. There he was fixed with knowledgeof the deficiency. In the present instance the suit is by a purchaserwho bought the property bona fide and without any notice of anydefect in5 the letters of administration. Even if there happen to be»a defect, such a purchaser will be protected, and will not be amenableto the penal provisions of section 547 of the Civil Procedure Code-
a) (1869) L. R. 4 ch. 748.
(1885) 16 Q. B. D. 453.
(1895) 1 Q. B. 918.
(1875) 13 Cox. 138.
(1884) 13 Q. B. D. 207.
(1906) 10 N. L. R. 73.
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1907, Besides, the sale was with the sanction and knowledge of the Court,January 2%. although such sanction was obtained under the provisions of theTrustees' Ordinance (No. 11 of 1876). The policy of the law isalways to protect such purchasers. If the appellant’s contention.be upheld, several titles, hitherto considered valid, will be upset.
Koch, for the 2nd defendant, respondent.
W. Jayewardene, for the added-defendant, respondent.
:29th January, 1907. Wendt J.—
Cur. adv. vult.
The facts material to this appeal have been fully set out by mybrother Middleton, whose, judgment I have had the advantage ofperusing, and I need not therefore recapitulate them. I agree withmy learned brother, in thinking that the order of the District Judgeshould be affirmed. I desire to put my judgment on the 'broadground that a purchaser in good faith from an executor or adminis-trator of an asset of the deceased is entitled in law to rely upon hisvendor’s possession of probate or letters issued by a competent Courtand regular on the face of- them, and is not bound to inquire (in theabsence of special circumstances calculated to arouse inquiry) as tothe regularity of the steps by which such probate or letters were, obtained. If the purchaser, before buying, were bound to satisfy■himself that all the assets of the testator had been duly inventorizedand truly valued and duty paid upon such true value, it wouldmost seriously hamper executors and* administrators in the dis-charge of their duties. It may be said here, as Lord Thurlow saidin Scott v. Tyler (1), upon the suggested obligation of the'purchaser. to see to the due application by the executor of the proceeds sale,that it is of great consequence that no rule should be laid down. which may impede executors in their administration, or rendertheir dispositions of the testator’s effects unsafe or uncertain to apurchaser. His title is complete by sale and delivery. "
In the case before us the plaintiff purchased 'from Mrs. Paynewho held a conveyance from the administrator cum testamentoannexe of her husband’s estate. Assuming he is in the same positionas his vendor, all he had to satisfy himself about was first the testa-tor’s title, next the terms of the will, and lastly that the will hadbeen admitted to probate. On this last head it is not denied thatMr. Loos held letters issued by a competent Court authenticating the, will, that such letters ex facie were duly stamped by «the Com-missioner of Stamps, as required by the Stamp Ordinance. The lawthrows upon the Court the duty of seeing that the probate or letters■are duly stamped, and the fact of the issue of the instrument is proofthat the Court had been satisfied. The law is that an executor, before
(1) (1788) 2 Dickens’ reports,, p. 725.
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he has obtained probate, is as fully entitled to alien his testator’sassets as after issue of probate, subject to the qualification that if itis necessary in any proceeding in Court to support his act by showingthat he filled the character of executor, the only proof admissible isthe probate. I cannot imagine that the proof would be initiated byevidence that some asset existed which had' not been inventorized andhad not paid duty. It may be different ^if the executor is himselfseeking to recover such an asset, and indeed I concurred with somehesitation in holding in Silva v. Weerasuriya (1), that in such a .casehis title might be defeated. The present is not such a case.
1 agree with respondent's contention that the Expression “ dulystamped ” must be construed with reference to the date of issue ofthe instrument. At the time when the Court determines the amountpayable as probate duty it has only before it the affidavit requiredby section 24 of " The Stamp Ordinance, 1890, ” to the effect “ thatthe movable and immovable property and estate of the deceased
in this Island are of the value of a certain sum, to be therein
specified to the best of the defendant’s knowledge, information, andbelief in order that the proper and frill stamp duty may be paid.”'Upon that sum (without at all knowing how it is made up) the Courtassesses the duty, the executor pays if into Court, and the Courtsends it, together with the probate, to the Commissioner of Stamps,“who shall cause such instrument to be duly stamped.” That is theprocess the letters of administration went through in this case, andin my opinion they were “ duly stamped ” when issued to Mr. Loos.This finding disposes of thE contention that Mr. Loos’s conveyancewas void by reason of the provision in section 547 of the Code; butI also agree with my brother in holding that the event which the*Legislature contemplated in that section was the transfer of adeceased’s assets without the formality of taking out probate or lettersat all. The penalty exigible, viz., the value of the stamps “ whichwould by law have been necessary to be affixed to any such probate*or letters of administration, ” supports this view.
The appeal will be dismissed with costs.
This is an action claiming that the plaintiff be declared entitledto a certain land called Kandehena, for damages, and ejectment.
The fqjlowing facts were admitted. The plaintiff had purchasedthe land in> question from Mrs. Payne, the executrix of her husband,Alfred Payne. Mrs. Payne being absent from the Island, sent apower of attorney to Messrs. Loos & Van Cuylenberg, who there-upon applied fdr and obtained letters of administration with the willannexed in District Court, Colombo, No. 975.
(1) (1906) 10 N. L: R. 73.
January 29.Wendt J.
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Mr. Loos, as administrator, conveyed the property in dispute,amongst other.,property, to be held by Mrs. Payne in trust accordingto the provisions of the will. Mrs. Payne subsequently applied tothe Court under Ordinance No. 11 of 1876 for authority to sell theproperty in question, and the District Court gave authority by itsorder dated 20th October, 1904. Thereupon Mrs. Payne sold theproperty to the present plaintiff and conveyed it to him by deed.The property in question was not inserted in the schedule to theapplication for administration with the will annexed. Mr. Loosdid not mention the property in question, nor is it mentioned in theinventory.
The estate was valued at Bs. 70,800 in the schedule, and the stampduty for letters of administration has been calculated on that value.
It was agreed by the parties that the Court should look into thetestamentary case, District Court, Colombo, No. 975, and that case isnow in the record before me. From the diary I gather that dutywas paid to the amount of Rs. 1,062 on or before 30th December,1897, and that the inventory was sworn to on the 26th April, 1898.There is no suggestion of any fraud or chicanery on the part of anyof the parties or the administrator, and the paintiff is a bona fidepurchaser for value.
The first defendant and added defendant pleaded that Mrs. Paynehad no right to sell the property in dispute to the plaintiff, and deniedthat he had any title thereto.
Several issues were settled, but the seventh issue:Had
Margaret Payne any right to convey the property in the plaint tothe plaintiff? was first discussed, and the District Judge held thatshe had such a right, and thereupon this appeal.*
The question is, Would the fact that the administrator had failedto pay the necessary probate duty render the transfer by Mrs. Payneto the plaintiff void and of no effect? In my opinion it would not.
The point decided in Silva v. Weerasuriya (1) was that an adminis-trator was not entitled to maintain an action for a debt alleged toform part of his intestate's estate where it was1 evident that theinventory did not include the debt, and so prima facie no duty havingbeen paid on it no action could be maintained under section 547of the Civil Procedure Code to recover the debt by the adminis-trator.
The question was one of revenue for the Crown, as my brotherWendt put it, and a stamp objection which was good without< .evidence in rebuttal was upheld and the* administratrix® debarred-from bringing her action until she had complied with the law. Inthat casetthe administratrix herself was plaintiff, but in the presentcase it is a bona fide purchaser from the executrix who is suing on atransfer from the executrix.
(1) (1906) 10 N. L. R. 73.
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It is contended that the plaintiff, as transferee from an executrix l®07,of an estate on which probate duty has been insufficiently paid, «7anuory 29.has committed an offence under section 547, and that, inasmuch as the Middletontransfer involves the commission of an offence, it is void.at law, and **•the plaintiff has therefore no title, on the authority of Cope u. Row-lands (1); Melliss v. Shirley Local Board (2); and In re Cork andYoughal Railway Co. (3).
It is not possible for this Court in these proceedings to determineif probate duty has been paid which will cover the property sold,but it is not unlikely from an examination of Mr. Loos's final accountthat it might be found in the testamentary proceedings that theduty paid was in fact sufficient to cover the property in question. >
Sections 24, 25, and 26 of the Stamp Ordinance, No. 5 of 1890,contemplate that letters will not be granted except on an affidavitof approximate value of the estate and also the possibility of over-payment and underpayment of probate duty on that affidavit andits proper adjustment. Sections 29 and 32 penalize the payment oftoo little duty if it is not paid within six months of the discovery ofthe mistake or misapprehension. Section 30 further contemplatesa conditional rebate of stamp duty upon proof of payment of debtscertified to by the District Judge which reduces the value of theestate below that sum on which duty has been paid.
Under section 538 of the Civil Procedure Code, according to theterms of Form 86, the inventory has to be sworn to apparently afterthe grant of letters, and in the present case the letters are dated 30thDecember, 1897, the duty was paid before that date, and the affidavitsupporting the inventory being dated 26th April, 1898. Undersection 539 of the Civil Procedure Code limited probate or adminis-tration may be granted, and . section 540 enacts, if no limitation isexpressed, that the powers of administration, which is authenticatedby issue of probate, extends to every portion of the deceased's pro-perty.
In the present case the letters did not issue until the stamp dutywas paid, and the stamp "duty was certainly paid before the inventorywas sworn to.
All these sections of the Stump Ordinance in my opinion pointto the conclusion that the law contemplates the difficulty of anabsolutely accurate estimation of a deceased's estate when the dutyis first paid, and provides for further payment or return in the casesof over and underpayment, only making the latter an offence inthe executor or administrator under certain circumstances laid (down in sections 29 and 32. It must be borne in mind also thatthe Stamp Ordinance is subsequent in date to the Civil ProcedureCode.
*;i) (1836) 2 M. & W. p. 157.. (2) (1885) 16 Q. B. D. p. 44G.
(3) (1869) L. H. 4 Ch. 748.
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1907. We then come to section 547, upon the construction of which byJanuary 29. the Full Court-the appellant mainly bases his case. Looking at thatMiddleton section in conjunction with those I have referred to, my view is thatits scope and object may reasonably be deemed to be aimed at anabsolute evasion of the law by the entire omission to take out probateor letters of administration on the part of those whose duty it was toobtain probate or letters of administration. It is argued, however,that the use of the words “ duly stamped M and “ such probate andadministration ” necessarily imply that an offence would be com-mitted if the letters were not fully stamped. I cannot accede to this,as stamping to an approximate value is contemplated by the StampOrdinance, and the reductio ad absurdum would be committed and anotherwise perfectly valid transfer invalidated if the letters on anestate valued at Rs. 1,000,000 were stamped on a sum Rs. 5 below theright value, for which the offender might be fined Rs. 1,000. Theoffence contemplated, in my opinion, is the transfer without probateor administration being taken out, and this view is, I think, furtherconfirmed by the provision that the Crown is entitled to recoverfrom the transferor and the transferee such sum as would have beenpayable to defray the cost of such stamp as would by law have beennecessary to be affixed to any such probate or letters of administration.This part of the section, like the preceding part, does not seemto consider the case of a deficiency in stamp duty, but rather anabsolute omission to pay any duty whatever.
If, then, it is not an offence under this section to have paid leasprobate duty than the law enjoins, the contract of sale by the execu-trix to the plaintiff is not void on the strength of the authoritiesquoted by the appellant's counsel. If the contract of sale by theexecutrix to the plaintiff is good, then the plaintiS is entitled tomaintain this action for the recovery of property which does notbelong to nor is included in the estate of the deceased.
In the Full Court case relied upon the debt sought to be recovered .clearly belonged to or was included in the estate of the deceased.
I think, therefore, that the judgment of the' learned DistrictJudge should be affirmed and the appeal dismissed with costs.
PERERA v. KRIEKENBECK et al