051-NLR-NLR-V-28-PERIS-v.-VIEYRA.pdf
( 278 )
11926.
Present : Dalton and Lyall Grant JJ.
PERIS t>. VIEYRA172—D. C. Negombo, 623.
Agreement to by land—Part payment of purchase price—Deposit—
Forfeiture—Conditions of agreement.
Where a person paid money in part payment of the purchaseprice of property he had agreed to buy, and then made default incarrying out the terms of the agreement.
Held, that he was entitled to recover the money so paid.
Money paid by way of deposit is forfeited on the repudiation ofthe contract by the p£yer.
The question whether the payment is on account of the purchaseprice or by way of deposit depends upon the terms of theagreement.
^^PPEAL from a judgment of the District Judge of Negombo.
The plaintiff sued the defendant to recover a sum of Rs. 1,200paid by him as part payment of the purchase price of a propertybelonging to the defendant. The defendant admitted the receiptof the money, but pleaded that the transaction fell through owingto the fault of the plaintiff, and therefore the plaintiff was not entitledto claim back the advances. The learned District Judge held thatas the plaintiff notified to the defendant that he could not completethe transaction before the date agreed upon, and as the defendanthad sold the property to another for Rs. 3,750, there was no defaultby the plaintiff. As plaintiff conceded that the defendant wasentitled to retain Rs. 250 out of the advances to bring the Rs. 3,750up to the original sum of Rs. 4,000, which was the purchase price,•the District Judge accordingly entered judgment for the plaintifffor the sum of Rs. 950.
*
Keuncman, for defendant, appellant.
H. Y. Perera, for plaintiff, respondent.
December 21, 1926. Dalton J.—
Plaintiff in this action sought to recover from the defendant thesum of Rs. 1,200 paid by him to the defendant as part payment ofthe purchase price of a property belonging to the defendant, thepurchase price being Rs. 4,000. Defendant admitted the receipt•of the money and that the transaction fell through, buti he pleaded
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that it fell through owing to the fault and neglect of the plaintiff,and therefore the plaintiff was not entitled to claim back anyadvances made on account of the transaction. The plaintiffproduced a receipt (PI) for Rs. 1,000, which was in the-followingterms: —
December 11, 1024.
4K
Received fromJ. M. T. A. Periesof Kalleliyathesumof-Rupees
One thousand' (Rs. 1,000)as a partpayment inadvance
of theconsideration duefromthesaid J.'M.T. A.Peries
on the intended purchase of myland Bt Bingiriya in the
District of Kurnncgala, owned and possessed by me underdeed No. 10,132, attestedby B. N. X Jayasekeru.Notary
Public.
The entire consideration on the intended deed of transfer of Bingiriyaestate being Rupees Four thousand (Rs. 4,000). Theintendeddeed of transfertobeexecuted onorbefore the
22nd day of December, One thousand Nine hundred and.Twenty-four.
(Signed)' VievfiA. .
Witnesses:
P. .T. Loos
F. Fernando.
It has been called, in the course of the argument before us, the” informal agreement.” It is admitted that shortly prior to-December 11 defendant also received Rs. 200.
The learned District Judge held that as plaintiff notified defend-ant he could not complete the transaction before December 22'as set out in the receipt, and as defendant thereupon sold theproperty at once to another party for Rs. 3,750, there was no •default by the plaintiff, the latter conceding that defendant wasentitled to retain Rs. 250 of the advances to bring the Rs. 3,750 upto the original Rs. 4,000. He accordingly entered judgment forthe plaintiff for the sum of Rs. 950. From that decision defendantappeals urging the plaintiff is entitled to nothing.’.
There was no issue in the lower Court as to the nature of thesepayments made by the plaintiff, but it is now urged on. appeal thatthey were merely a deposit or earnest money to bind the transaction,and as such irrecoverable and were not instalments of the purchasemoney.
Tlie first question that arises is as to the nature of the agreement-between the parties, and whether it was enforceable or of any effectwhatsoever. On (Ins point we have been referred to the decision’of this Court in Nui/ur Pitvhi u. l.'sunf.' In spite of the essentialdifference between the provisions of Ordinance Xo. 7 of 1840 and the'Statute of Frauds, tin- Court held that so far as the point under’consideration is concerned the Ordinance and the Stntute are ini
1986.
DALTON J,-
Peris v.Vieyra <
>t> V. T.. K .1 .
( 280 )
1928.
DaijTON J.
.Beriav.
Vieyra
essence in line with one another, and that it may be said here, asin England, that the contract exists as a {act which the Court cantake cognizance of for o.ther purposes than those stated in theOrdinance. I must admit I have the greatest difficulty in agreeingwith that conclusion, but under the circumstances as 'the decisionof a Court of three judges it is binding upon this Court. The Courtthen went on to hold that a party who advances money on an informalagreement is entitled to a refund only if the other party refuses oris incapable of completing the transaction, and the considerationfor the advance therefore fails. It does not, however, appear fromthe report of that case whether the Court was prepared to drawany distinction between a deposit made on the transaction beingcompleted in order to bind the contract, and a payment or instalmentof the purchase money made in advance. The word used is" deposit," and incidentally it might be noted that the trial judgefound as a fact that, according to the terms of the contract, it wasagreed that if the plaintiff failed to carry out the contract on hispart the deposit should be forfeited.
Reference to Halsbury’s Laws (Vol. 25, p. 402) upon which Ennis-J. relied and Leake on Opntract (5th Ed., p. 67) which De SampayoJ. cited with approval, shows that the quotations made in the respec-tive judgments are based upon the decision in Gwbell v. Archer*1'Reference to that case shows that the money was paid “ asr adeposit and in part payment ” of the purchase price. The meaningof those words will appear from an authority I cite below. It isfurther laid down in Leake, with numerous authorities to supportthe conclusion, that the fact of the payment of money "as adeposit " impliedly means that it is a security for completion bythe purchaser, which is forfeited if he repudiates the contract, .but/which goes towards payment of the purchase money if the contract"is completed. That implication is of course subject to any specialterms of the contract.
In the case before us, however, it is impossible on the verbalevidence to come to any other conclusion than that the two paymentswere instalments on account of the purchase price. What then isthe plaintiff's position as regards recovery of them ? According tothe evidence he paid the sum of Rs. 1,000 on December 11. andthe Rs. 200 about two days before. He agreed to pay the balanceof the Rs. 4,000 on or before December 22. Before that datearrived he informed the defendant he could not complete thetransaction; there can be no doubt as to the plaintiff's default,and the defendant appears to have accepted this position, and heat once sold, as he was entitled to do, the property to anotherparty for Rs. 3,750. That latter transaction itself was completedbefore December 22.
1 2 A. <b E. 500.
( 281 )
1986.
Dai/tow j i
Peris v.Vieym:
Although, apart from the express evidence here of both plaintiffand defendant, it might have been possible to argue that the firstpayment of Es. 200 appeared on the face of it to be a payment to-bind the contract, it is quite impossible to say the same of thesecond payment of Es. 1,000. In fact I am satisfied neither paymentwas meant to be a deposit, and therefore there is here, in the absenceof express terms, no such implication as would exist in the paymentof a deposit by the purchaser as a guarantee to bind the contract.Howe v. Smith (supra) was approved and applied in Mayson v.Clouet,2 an appeal from the Straits Settlements to the Privy Council-
In Mayson v. Clouet (supra) the purchaser paid a deposit and twoinstalments of the purchase price, but failed to pay the balancewithin the stipulated time. He was therefore in default and ,thevendor rescinded the contract-. The purchaser thereupon sued to-recover the instalments paid. The Privy Council held, reversing-the decision of the Colonial Courts, that he was entitled to succeed.The contract between the parties provided that the deposit wasto be forfeited if the purchaser was in default. It did not includethe instalments. One must turn to the contract to ascertain whatis the solution in a question of this kind.
As pointed out by Lord Dunedin, who delivered the judgment ofthe. Board, all the elaborate argument in Howe v. Smith (supra) wasquite unnecessary if the case could have been solved by the simpleproposition sought to be applied in Mayson v. Clouet (supra) (whichsimple proposition was put forward in this case by the defendantin the lower Court), namely, “ you are in default as to the contract, •
In Howe v. Smith 1 also a case of a purchaser’s failure to completean agreement, the words used are that the payment was made as“ a deposit and in part payment of the purchase money,” and onthe facts of the case the conclusion come to was that the paymentmade was in the nature of an earnest or arrha. The question asto the right of the purchaser to recover it must in each case be aquestion of the conditions of the agreement. Fry L.J. puts it inthe following way: —
“ Money paid as a deposit must, I conceive, be paid on some termsimplied or expressed. In this case no terms are expressed.The terms most naturally to be implied appear to me inthe case of money paid on the signing of a contract to bethat in the event of the contract being performed it shall bebrought into account, but if the contract is not performedby the payer it shall remain the property of the payee.It is not merely a part payment, but it is then also anearnest to bind the bargain so entered into and creates bythe fear of its forfeiture a motive in the payer to performthe rest of the contract.”
1 27 Ch. Div. 89.
(1924) A. C. 980.
( 282 )
1920.
jDalton J.
Peris v*Vieyra
and: the party not in default may keep anything he has got fromthe partial fulfilment of the contract/* He also points out that inHowe v. Smith (supra) it is clear that if the learned judges had heldthat the deposit was only part payment and not a deposit proper,
. they would have ordered its return.
On the footing, as laid down in Nagur Pitchi v. Usoof (supra),that one can take cognizance of the terms of the contract in such acase as this, I can find nothing therein to debar the plaintiff fromsucceeding in his claim. No doubt on his default, the defendanthad his remedy, but he is not necessarily entitled to retain theinstalments of purchase money paid. As in Mayson v. Clouet(supra) so here there has been some suggestion for the defendant‘that inasmuch as he had suffered damage as a result of plaintiff'sdefault he was entitled to retain the instalments on account of the
-damages suffered, as liquidated damages. That he is not entitledto do. In any event plaintiff has conceded to him the sum ofUs. 260, the difference between Rs. 4,000 and Rs. 3,750, whichwould seem to be the measure of the damages he suffered, had he
sought and had he been entitled to damages.
Ror the reasons I have given the decision of the lower Court must"be affirmed, and the appeal be dismissed with costs.
' Lyall Grant J.—
I agree that there is nothing here to show that either the Rs. 200
or the Rs. 1,000 was paid with the intention that the money shouldbe forfeited in the event of the purchaser failing to complete his
■^contract.
On the failure which took place the vendor had the option of"treating the contract as still existing and suing for the balance of theprice, or of treating the contract as at an end and selling to someone else, and claiming damages for breach. He chose the latter•.alternative and sold before the time allowed to the original vendeefor payment had expired.
The plaintiff has agreed to pay as damages the difference between
the price actually obtained and the price he had agreed to pay.That seems to me to be a fair measure of the damages suffered bythe defendant. He cannot claim more except by proving an•express agreement that moneys paid should be retained by him,
-.and this, in my opinion, he had failed to do.
I agree that the appeal should be dismissed with costs.
Appeal dismissed.