073-NLR-NLR-V-53-SOORANAMMAH-Appellant-and-AMIRNATHAPPILLAI-et-al.-Respondents.pdf
334
Sooranammah v. Amirnathapillui
1950Present : N&galingam J. and Polle J.SOORANAMMAH, Appellant, and AMIRNATHAPILLAI et aX.,
Respondents
S. C. 18—D. C. (Testy.) Jaffna, 730
Company Lata—Allotment of additional shares—Does nut■ always signify profits—
Thesa valamai—Thediathedd am.
Out of the dowry money of a wife who was subject to the Thesavalainai,25 Bhares in a Company were purchased in the name of her husband. Inconsequence of the fact that the nominal capital of the Company was subse-quently raised, an additional number of 45 shares was allotted to the husbandwithout payment of any consideration; but the 45 shares did not representany part of the profits of the Company.
Held, that, in the circumstances, the additional 45 shares were the soleproperty of the wife and were impressed with a trust in her favour.
N. Kwnarasingham, for the administratrix appellant.
Arulambalam, with A. Nagendra, for the 3rd and 18th respondents.
Cur. adv. vttit.
i 8 Ad. and HI. 901 (= 112 E. R. 1080).
PUTjLE J.—Sooranammal o. Amimahapillai
886
October 25, 1950. Pullf. J.—
The appellant in this case is the widow of one Santhiapillai Asseer-vatham who died intestate and issueless on the 4th December, 1946.and the administratrix of his estate. The contest between her and theheirs relates to certain undivided shares in seven allotments of land,numbered 5 to 11 in the inventory of the immovable property, and 46shares held by the deceased in the Valigamam West Omnibus Co., Ltd.In regard to the allotments referred to the widow maintained that theycame within the description of Thediathetam property and as to theshares that the deceased held them in trust for her. The learned DistrictJudge held against her on both points and she appeals from that order.
It is admitted that the seven allotments of land were inventorised inthe administration of the estate of the deceased’s father and that at thetime they devolved they were inherited properties in the hands of thedeceased. The question for decision is whether in the events whichoccurred later their character underwent a change from Muthusom toTheidathetam.
It would appear that in 1925 the deceased transferred the propertiesin question and some others in trust to one Eosairo, widow ofMariampillai Gnanapiragasam. Two mortgages were executed, one in 1928and the other in 1934 by Eosairo, but both were for the benefit of thedeceased. The oral evidence which the learned Judge has acceptedpoints to Eosairo having had nothing more than the bare legal estatewhile the deceased had the beneficial enjoyment thereof. By a con-veyance dated the 7th February, 1941, marked Pi, Eosairo transferredthe properties to '^the deceased and on this document an -argument isbased in support of the contention that either all the allotments or apart of them to the value of Es. 560.35 must be treated as Thediathetam.
On the face of it Pi is a conveyance of the lands in question and othersfor a consideration of Es. 1,000. The conveyance proceeds to recite:“ Out of the said sum of Es. 1,000, I have received the balance sum ofEs. 439 in full from him who paid the same stating that it is a portion ofhis muthusom money after crediting a sum of Es. 560.35 ” on accountof the two mortgages created by Eosairo. If the conveyance by thedeceased to Eosairo was subject to a trust, as the learned Judgewas entitled so to find on the evidence, the transfer of the legal estate by PIwould not alter the character which the properties had at the time of theconveyance to Eosairo. The reference to the muthusom money hasno significance because the evidence is that Eosairo received nomonies on the execution of PI. There is also no evidence from which itcould be inferred that money, expended by the deceased in redeeming themortgages was Thediathetam property. In my opinion the learned Judgewas entitled to find that the lands in question were at all times material-tothe case the property inherited by the deceased from his father.
In order to ascertain whether the 45 shares in the Valigamam WestOmnibus Co., Ltd., were held by the deceased in trust for the widow it isnecessary to go back to the earlier history of the connexion of the deceasedwith the Company. The case for the widow is that the deceased pur-chased an omnibus in 1937 with her dowry money. After the passing ofthe Omnibus Service Licensing Ordinance, No. 47 of 1942, the omnibus27 -N. L. R. Vol.-Liii
336
PULiDE J.—Sooranammal v. Amirnahapillai
was taken over by the Company in return for which the deceased wasallotted 25 shares of Es. 100 each. By document dated 30th August,1942, the deceased gave a writing, P7, by which he admitted that it waspurchased with the dowry money. The learned District Judge wasinclined to doubt the truth of this statement but, with great respect.
I may say that this doubt cannot be justified. In point of fact learnedCounsel for the heirs was content to argue the appeal on the basis thatP7 is a correct record of the transaction relating to the purchase of thebus. After the allotment of the 25 shares the deceased by an assignmentP6 dated the 11th November, 1943, pin-ported to donate these shares tothe widow subject to the condition that after his death the widow duringher lifetime and after her one Arokiasamy “ may recover, receive andenjoy the shares hereby assigned and conveyed as their own Whatever be the true legal effect of this assignment the deceased held the25 shares at the time they were allotted to him as trustee for the widow.
The Company had a nominal capital of Es. 100,000 and thereafter itwas raised to Es. 280,000. Additional shares were, therefore, allottedwithout the payment of any consideration to those already holding sharesin the proportion of 9 to 5 with the result that the deceased was allottedas the registered holder of 25 shares an additional 45 shares. What theadditional nominal capital of Es. 180,000 represented one can onlyconjecture. The evidence on behalf of the Company is that the capitalwas increased in order to raise a loan from the bank and that no moneywas paid by the shareholders for these additional shares. It is, however,not unusual for a company to convert accumulated profits which mightlawfully have been distributed as dividends into shares by increasing thecapital where the Articles of Association permit of such increase.
' The case for the heirs is .that the 45 shares represented the profitsarising, during the subsistence of the marriage, from the 25 shares ofwhich the widow was the beneficial owner. The learned District Judgewas not prepared to regard the 45 shares as representing any part of theprofits of the Company. That is a finding which he was entitled to reachboth on the law and the facts; vide the case of Bouch v. Sproule 1 andthe observation made thereon in the judgment of the Privy Council inHill v. The Permanent Trustee Co. of New South Wales Ltd. 2 and alsothe judgment of the Court of Appeal in In re Doughty. 3 Once the25 shares in the hands of the deceased were impressed with a trust itfollowed necessarily that the 45 shares were also impressed with thesame trust and, if they could not properly have been re_garded as profitsarising from the 25 shares, then the entirety of the 45 shares remained atall material times the sole property of the widow. In this view of thecase the finding that the widow had failed to prove that the 45 shareswere held in trust by the deceased for her cannot be supported. The judg-ment of the learned District Judge will, therefore, be varied to the extentthat there will be a declaration that the deceased held the 45 shares No. 2216-2260 in the Valigamam West Omnibus Co., Ltd., in trust for the widow.
There will be no costs of appeal and the costs of the inquiry in theDistrict Court will be divided.
N ao alin a am J.—I agree.Judgment varied.
■»•(1887) 12 Appeal Cases 386.* {1930) A. C. 720.
* {1947) 1 Oh. 263.