068-NLR-NLR-V-51-PUNCHIMAHATMAYA-Appellant-and-MEDAGAMA-Respondent.pdf
Func.himafuitm.wja v. Mcdagimui
270
1949Present: Canekeratne 3. and Basnayake J.
PUNCHIMAHATMAYA, Appellant, and MEDACAMA,Respondent
S. 0. 420—D. C. Kandy, 1,133
Partition—Transfer of undivided shares—Option to re-purchase—Action forpartition by vendee—Divided block—Sale (<> third party—Trust—Isthird party bound by condition 9
Plaintiff and her son by PI transferred an undivided share of land tothe first and second defendants. Pi reserved a right for re-pure hasoand was duly registered. First and second defendants brought anaction for partition of the land and wore iu the final decree allotted aspecific lot in lieu of their undivided shares. By 3D1 they sold this lotto the third defendant, a brother of the first defendant.
Held, that the third defendant held the lot subject to the conditionfor re-transfer.
1 {1011) 1 King's Bench 08S-
OAN’KKKRATN.K J.—Pnuchiiu/iliattn'tya v. Mcdagnma
211
^LpPEAL from a judgment of the District Judge, Kandy.
Cyril ]■}. S. Per era, with M. P. Spencer, for plaintiff appellant.
N.E. Weerasooria, K.C., with T. 11. Dmanayake and W. D. Gunasekera,for first, second and third defendants respondents.
Cur. adv. milt.
April 8, 1940. Canekeratne J.—
This is an appeal by the plaintiff from a judgment dismissing heraction.
The plaintiff and her son the fourth defendant transferred a halfshare of certain premises to the first and second defendants, husband andwife, by PI, dated April 1, 1935, which was executed before a Proctor-Notary at whose office the first defendant was working as a clerk. PIwas not signed by the transferees, but a right of re*purchase was reservedto the vendors. These defendants brought an action for partitioningthe premises and by the final decree dated July 15, 1938, they becameentitled to a specific lot, i.e., the lot descrilwxl in Schedule B to the plaintin the present action. By deed 3J>1, dated September 20, 1943, thesetwo defendants sold the lot to the third defendant, a brother of thefirst defendant. The learned Judge took the view that PI created notrust between the parties, but only a contractual relationship whichwas wiped out by the final decree.
Since the decision in Jonga v. Nanduwa it must be accepted that thegrantee who takes possession of land under a grant coupled with a condi-tion reserving a right of re-purchase to the vendor is bound by the condi-tion. The legal reason for giving that judgment or the judicial motivewhich caused the case to be so decided has to be ascertained ; it muststand as authority for the principle of law abstracted from the facts ofthe case. It decided that the grantee received the beneficial interestburdened with this condition, and that such a case falls within thescope of Section 96 of the Trust Ordinance (Chapter 72 of the Ceylonlegislative Enactments). The case could not have been decided as itwas without the recognition and application of the principle or rule,that the transferee was a constructive trustee for the transferor; this isbrought out in page 132 of the Report.
In the case of an express trust2 the ccstuique trust can sue the trusteefor any of the many breaches of trust which he may possibly commit,or for performance of the trust. The trustee generally has the fulllegal property or ownership in the whole of the trust property and thebeneficiary has not. All that the latter can do is to claim the assistanceof a Court to enforce the trust and to compel the trustee to discharge it.Sometimes he may have no contingent interest in the property given tothe trusteo (e.g. where a property is settled on him, the balance afterpayment of debts to be divided among the ccstuis-que-trust); sometimeshe may have a contingent interest in the property. He may, then, have1 (1944) 45 N. L. R. 128.
8 Some of the rights referred to in tiiis paragraph are amilahle tea beneficiaryunder a constructive trust.
278I'ANKKKKATNK J.—1 'nnchimaluiluuiya Muluyunut
a right against the trustee arising in respect of the trust property. Thecestui-que trust has also rights enforceable against the trustee, againstall who claim through or under him as volunteers, against his creditors,and against those who acquire the trust property with notice, actual orconstructive of the trust.
Section 9 of the Partition Ordinance is divisible into two parts, thefirst part states the effect of the decree, the second relates to theevidontiary value of it. The decree shall be good and conclusive againstall persons whomsoever, whatever right or title they have or claim tohave in the said property. Four classes of persons are referred to—one having a right in the property, one claiming to have a right in it, onehaving a title in the property, one claiming to have a title in it; thus adefendant may withhold the possession of the share of the plaintiff fromthe plaintiff, or be may be disputing the plaintiff's right to a share onvalid grounds or unreasonably.
The object of partition proceedings is to convert co-ownership intosole ownership for the purpose of separating the oo-owners. This isdone by dividing the property into several parts and awarding to eachof the previous co-owncrs sole ownership in one of the divided lots ; thequestion of a sale is not considered. The transfer of the lots is accom-plished by the judgment of the Judge, the adjudication which operates tochange ownership without a transfer executed by the parties whetherevery other co-owner was made a party to the action or not. Thejudicial award in a partition action transfers the co-ownership, of anumber of litigants to one, in a particular lot. The result being that Awho was only co-owner before, is now converted into a sole owner, Agets rights which he had not before, namely the co-ownership of hisadversaries and others, the effect being to divest the co-owners of theirrights in a particular lot and to invest one person in the entirety of onelot.
The trustee is the person who can institute an action for partition forhe is vested with title; a beneficiary cannot l. The trustee can also bemade a defendant. It was, however, held at one time that a beneficiarywas entitled to intervene in the action 2—the grounds of the decisionbeing that if the person who claimed to be a beneficiary under the trustwas not allowed to intervene and the partition proceedings went on, hewould no longer have been able to dispute the right of the parties towhom lots were allotted after final decree had been entered (P. 109), butthis question was set at rest by a Divisional Court in Marilcar v. Marikarwhich decided that a trust, express or constructive, is not extinguishedby a decree for partition.
The learned Judge has relied on that part of the decision in Galqamuxcav. Weera&ekera*, which states that a beneficiary would lose his rights onthe entering of a final decree unless he intervened. But, that part hasbeen whittled away by the case of Marikar v, Marikar (supra). Perhapsthe law may now enable a beneficiary to make an application to intervene
’ Daniel v, Saranelis Appu, (1903) 7 N. L. II. 163.
Silva v. Silva, (.19If,) 19 ,Y. /,. R. 47.
* GalgamUVKi t Weeraseb'ra. (1919) 21 N. L. R. 108.
» (1920) n A L. R. 137.
1 (1919) 21 iV. L. R. 108.
CANEK ERATNE J .—Punchimahatmoya v. Medagama
in a partition action, and if the trustee consents to the share claimed byhim being allotted to the beneficiary, a Judge may allot it; it is clearnow that the persons who as owners are entitled to invoke the assistanceof a Court in an action for partition, whether as plaintiffs or as defendants,are persons in whom a legal title is vested. It is necessary that a personshould have a jus in re. The plaintiff had no right in the land at thetime of the action. What contest could arise between her and the twodefendants, if she was made a party ? If she was not entitled to be aparty, the fact that she sent a petition to Court stating that she wouldnot be responsible to pay any of the costs of the action when she cameto settle the sum of Rs. 500 due under PI is not relevant. The Courtinformed her that if she claims a share she should take steps to intervene.It is worth pointing out that the beneficiary in Marikar v. Marikar{supra) though himself otherwise a party to the action did not assert aclaim to his equitable right in it. It can hardly be contended that therights under an agreement to sell are extinguished by a partition decreefor only contractual obligations are created thereby though they maybo with regard to property. Mr. Wcerasooria expressly stated thathe does not challenge this.
The main point urged by Counsel for the respondent was that thepresent case does not come within the scope of Section 93 of the TrustOrdinance, he contended that there roust be an existing contract betweenthe first and second defendants and the plaintiff before the remedialprovisions of the section can be availed of. Mr. Weerasooria’s argumentis that there must be a valid contract, i.e., executed in accordance with theStatute of Frauds, and containing a promise by the promisor to sell. PIis the only writing which the appellant ever obtained. It contains nopromise by the first and second defendants to transfer the property. Thesubstantial case of the appellant is that the property was held by thetransferees as trustees for her. There is a clear distinction between theduty imposed by a trust and the liability created by a personal contractbetween parties. The obligation of a trustee towards his beneficiaryis not conceived by English Law as contractual, though it would not havecome into existence but for the agreement which resulted in making onea constructive trustee and the other a beneficiary. A purchaser from aconstructive trustee is amply protected, Section 98 of Chapter 72. Thethird defendant was aware of the partition proceedings and he admitsthat he used to talk to his brother about the action. The property wasat the time of the action in the possession of the first defendant, but thethird defendant who is himself a cultivator asserts that his brothercultivates it for him. He told the Notary, the same person who attestedPI, not to search for encumbrances. He knew that the first and seconddefendants bought the land from the plaintiff and her son. PI was dulyregistered and in the remarks column is the statement—reserving theright to re-purchase the same within ten yearn for Rs. 550 (31)2). Aprudent Notary looking after the interests of his client should have, ifsearch was not dispensed with, examined the register and an examinationwould have revealed the existence of this condition. The first andsecond defendants were constructive trustees and there was an obligationimposed on them which everyone entering into a contract relating to a
‘280 NAGALINGAM J.—Hinniappuka/ny v. Commissioner of Motor Transport
land with them was bound to know, for it stood open and patent on theregister. The third defendant did not want a search made as he had asuspicion that there was something wrong and refrained from askingquestions of his brother; he did not wish to make further inquiry osregards the previous obligations imposed on his brother and Hister-in-law.It would hardly be possible in the circumstances of this case for him toassert that he acted honestly in obtaining a transfer of the property.There is no evidence to show that he was a transferee in good faith andfor consideration. There is his evidence that he paid at the executionof the deed a sum of Us. 1,000 for this lot, although it and five otherlands were then subject to a mortgage of Rs. 6,000. The burden wason him to prove that he was a transferee in good faith. He did not evenplead that he was such a transferee nor was there an issue framed onthis point—The issue was did he purchase the land from the first andsecond defendants with notice of the trust. If he was a purchaser froman express trustee he must show that he acquired the property withoutnotice; he would have found greater difficulty in proving that he wassuch a purchaser. The defendant, a purchaser from constructivetrustees is in the same position as his transferors, be holds the lotsubject to the condition for retransfer.
The learned Judge has unfortunately not been referred to the principlesapplicable to a case of this kind, and has completely gone astray. Thejudgment of the lower court is set aside and judgment should be enteredin favour of the plaintiff in terms of prayer one of the plaint. Thedefendants will pay half the costs of the trial and the costs of appeal tothe appellant.
Basnayake J.—T agree.
Appeal allowed.