FERNANDO v. ATUKORALE

055-NLR-NLR-V-28-FERNANDO-v.-ATUKORALE.pdf


( 292 )
1926*
Present: Lyall Grant J. and Maartensz A. J.
FERNANDO v. ATUKORALE.391—D. C. Colombo, 13,530.
Partition action—Sale of interest after interlocutory decree—Agreement'
to seU—Seizure in execution after final decree.
In a partition action, after interlocutory decree bad been entered,a party sold “the shares of the premises which will be decreed*tome in the scheme of partition ” to the seconddefendant.
Afterfinal decree had been entered, thedivided portionofthe
land which had been allotted to the party in question was seized inexecution of a decree against him obtained by the plaintiff. Thesecond defendant thereupon claimed the property and his claim was-upheld.
Held (in an action under section 247 of the Civil Procedure Code-by the plaintiff)* that the deed of transfer, pending the action, didnot convey any interest in the land to the second defendant andamounted only to an agreement to sell; and that the property wasexecutable in satisfaction of the plaintiff’s decree.
A
PPEAL from a judgment of the District Judge of Colombo.
This was an action under section 247 of the Civil Procedure
Codeinwhichthe plaintiff sought to have deedNo. 156 of July27,
3923,executedby the first defendant in favourof the seconddefen-
dant set aside and the land claimed by the second defendant underthe deed declared liable to seizure and sale under a decree obtainedsy the plaintiff against the first defendant on October 30, 1922. Theplaintiff instituted an action in the District Court of Colombo, againstthe first defendant for the partition of the land. On July 6, 1923,the interlocutory decree was entered declaring the plaintiff and thefirst defendant entitled to two-thirds and one-third of the land. OnJuly 27, 1923, the first defendant executed the deed No. 156 in
( 293 )
question by which he conveyed “ the share of the premises herein-after described which will be decreed to me in the scheme of partitionin partition case No. 6,694 of the District 'Court .pf. Colombo.”On April 6, 1924, final decree was entered in the partition suit. OnFebruary 4, 1924, plaintiff took out. writ in execution of a decreeobtained by him against the first defendant, and on August 14, 1924,seized lot A which had been allotted .to . first defendant in the finaldecree in the partition action. The second defendant claimed byvirtue by deed No. 156 and his claim was upheld. The plaintiffthereupon instituted the present action under section 247 of the CivilProcedure Code. The learned District Judge gave judgment forplaintiff.
Hayley, for second defendant, appellant.
H. V. Perera (with Ameresekere), for plaintiff, respondent.
September 3, 1926. Lyall Grant J.—
This is an appeal from the District Court of Colombo. Theplaintiff and the first defendant were co-owners of a land.which waspartitioned in an action instituted on October 30, 1922.
Interlocutory decree was entered on July 6, 1923, and final decree .on April 6, 1924. The first defendant had been in possession of thewhole of the land since 1921. The plaintiff sued him for mesneprofits and obtained judgment for Es. 190 and costs. On February4, 1924, the plaintiff took out writ, and on August 14, 1924, seizedlot A which had been allotted to' the first defendant in:.the partitioncase.: )
The second defendant claimed to be the owner of the lot by virtue .of a deed of transfer in his favour dated July 27, 1923. ■ That claimwas upheld and the plaintiff brought an action under section 247 ofthe Civil Procedure Code for a declaration of title that the land wasliable to be seized and sold under the decree, and that the transfer infavour of the second defendant was void as it had been executedduring the pendency of the partition action and alternatively on theground that the transfer was in fraud of creditors.
The learned District Judge held that the deed of transfer was aconveyance by the first defendant in favour of the second, defendantand was one to which section 17 of the Partition Ordinance appliedand it was therefore void.
He held further that the deed was executed in fraud of creditors,and entered judgment for the plaintiff as prayed for.
It was argued on appeal that the transfer was not one which wasrendered void under section 17 of the Partition Ordinance, and it wasalso argued that the evidence did not support the finding that thedeed was executed in fraud of creditors.
1928.
Fernando «.Aiukoralv
1926.
.Ltaxx.Grant J.
Fernando v.Atukorale
( 294 )
Section 17 of the Partition Ordinance provides that: —
" Whenever any legal proceedings shall have been instituted forobtaining a partition or sale of any property as aforesaid,it shall not be lawful for any of the owners to alienate orhypothecate his undivided share or interest therein, unlessand until the Court before which the same were institutedshall, by its decree in the matter, have refused to grant theapplication for such partition or sale, as the case may be;and*any such alienation or hypothecation shall be void."
In the present case the first defendant did not purport to conveyin the deed under review his undivided share. What he purportedto convey was " the share of the premises which will be decreed tome in the scheme of partition in partition action No. 6,694 of theDistrict Court of Colombo," and it proceeds to define the premises.
In the deed there follows the usual provision to warrant and defendtitle and to do and execute any other act, assurance, &c., for moreperfectly assuring the said premises sold.
The deed is in the ordinary form of a conveyance, and the onlydifficulty arises from the fact which is apparent on the face of thedeed that the property did not at the time of the execution of thedeed belong to the vendor.
All that belonged to the vendor at that date was an undividedshare of the property.
I cannot see how this deed could operate as a conveyance. Totake an example of what might have happened:If the lands
denominated in the deed had been awarded in a final decree toanother co-owner, it is obvious that the deed would have been of no
effect as a conveyance since the partition decree would have vestedthe land in another person, and at no time would it have been theproperty of the vendor.
If the deed is to have any effect it must operate not as a convey-ance but as an agreement to convey. The question whether such anagreement is in contravention of the provisions of section 17 is moredifficult. There is a series of decisions to the effect that section 17of the Partition Ordinance does not prevent a party dealing byanticipation with whatever divided interest he may ultimatelyobtain.
In the Pull Bench case of Pieris v. Plena,1 the full Bench answeredthe question as to the point up to which the prohibition in section 17endured where the application for partition or sale was granted, andit came to the opinion that the prohibition must be deemed to •continue so long as the common bond of co-ownership exists andpersons desiring of disposing their property, subject to a partition
1 {J924) 6 Ce, L. Bee. 1.
( 295 )
suit, can only do so bydisposing ofthe interests to be ultimately^
allotted to them in theaction. Theeffect of this decision appearst.wtt.
to me to be that a partyto an actioncan enter into a binding agree-Qraht J.
ment to dispose of theshare whichmay ultimately be allotted toFernandov.
him. He confers upon the purchaser a personal right against AtukomUhimself. He does not however transfer any real right as at the timeno real right had vested in him.
In Subaseris v. Porolis,1 Wood Renton C.J., iii a single judgeappeal, held that a sale or mortgage of a share to be ultimatelyassigned was valid as against a judgment- creditor.
In the subsequent case however of Appuhamy v. Babun Appu,2Tennis A.C.J. and Garvin A.J. held that a sale of a definite landwhich was afterwards allotted to the vendor by a partition decreewas void inasmuch as the partition decree.- itself operated as ajudgment in rem. Ennis J. reconciled this with the decision inSubaseris v. Porolis (supra.) by pointing out that an agreement by aco-owner to sell the share to be. allotted to, him might be valid as anagreement, though it could not operate as a sale.
The authorities therefore support the view' which seems consistentwith the logic of the case, viz., that any . transaction entered intoduring the pendency of a partition action which purports to conveya defined piece of land can only be read as an agreement to convey.
Such an agreement cannot prevail against the rights of a third partywho has obtained a real right in the property by process of law.
If the purchaser’s rights are defeated, he has only a personal claimagainst his vendor.
For this reason I think that the appeal should be dismissed. Itis unnecessary on this view of the matter to consider whether thedeed was in fraud of creditors.
The appeal is dismissed with costs.
Maartensz A.J.—
This was an action under section 247 of the Civil ProcedureCode, 1889, in which the plaintiff sued the second defendant,appellant, to have deed No. 156 dated July 27, 1923, executed bythe first defendant in favour of the second defendant, declared void,and the laud claimed by the second defendant under the said deeddeclared liable to seizure and sale under a decree obtained by theplaintiff against the first defendant in case-No. 13,453 of the Courtof Requests of Colombo.
t
The land claimed by the second defendant formed part of aland called Gonnagahawatta. On October 30, 1922, the plaintiffinstituted an action in the District Court of Colombo,, numbered6,694, against the first defendant for the partition of this land
1 (1913) 16 N. L. B. 393.
* (1923) 25 N. L. B. 370.
( 296 )
4986.
Maartensz
AJ.
•Fernando v.Atukyrale
On July 6t 1928, an interlocutory decree was entered declaringthe plaintiff and first defendant entitled to two-thirds and one-thirdof the land respectively.
On July 27, 1923, the first defendant executed deed No. 15;6 bywhich in consideration of a sum of Rs. 150 he conveyed “ theshare of the premises hereinafter described which will be decreedto me in the scheme of partition in partition case No. 6,694 of theDistrict Court of Colombo, the premises being all that allotment ofland called Gonnagahawatta, with the house standing thereon.”The situation and boundaries follow.
At the end of the deed there is a covenant for further assurance.
The plaintiff on February 4, 1924, filed action No. 13,453 in theCourt of Requests of Colombo against first defendant averring thathe was the owner of two-thirds of the land Gonnagahawatta andlessee of the remaining one-third, and that the first defendant hadbeen in wrongful possession of the land from February 21, 1921, andclaimed a sum of Rs. 257.50 as damages.
Decree was entered for plaintiff for Rs. 190, and costs. It is thisdecree that plaintiff is seeking to execute by a sale of the definedportion of Gonnagahawatta which was allotted to first defendant bythe final decree entered in the partition suit, namely, lot A in theplan No. 2,345 dated March 5, 1924, made by Mr. J. M. H. Smith.
The action was tried on the following issues: —
Was deed No. 156 of July 27, 1923, a conveyance by the first
defendant in favour of second defendant of his interests in
Gonnagahawatta, or was the same an agreement to. convey
first defendant’s interest to the second defendant ?
If it was a conveyance was the said conveyance valid ?
Was such conveyance valid as it was executed during the
pendency of case No. 6,694 ?
If it is an agreement to convey then had the second defendant
title at the date of seizure ?
Was deed No. 156 executed in fraud of creditors ?
In any event, is the plaintiff entitled to have* the land .declared
liable to be seized under his writ in view of the existence of' deed, No. 156 ?
The learned District Judge held on the authority of the case ofAppuhamy v. Babun Appu (supra) that deed No. 156 was void. Healso held that the deed was executed in fraud of creditors andentered judgment for plaintiff. From this judgment the seconddefendant appeals.
In the case.relied on by the District Judge, Abdulla, the owner ofan undivided share of the land in dispute, mortgaged his interests to«*ne Marikar. Abdulla was in a partition suit subsequently filed by
( 297 )
him allotted a divided share of the land marked “ A " in the plan 1928,subject to the mortgage. The final decree did not mention themortgage but it was subsequently amended.AJ.
The mortgagee was a party to this partition action. After the •Fernando v.final decree was entered the bond was put in suit and the dividedshare allotted to Abdulla was sold and purchased by Bafee, wholeased to plaintiff.
After thn interlocutory decree and before final decree Abdullasold to the defendant’s predecessor in title the lot A, which was theshare to be allotted to him according to the scheme of partitionproposed.
Ennis A.C.J. held that the argument that What Abdulla sold wasnot an undivided share but a divided whole, and therefore notobnoxious to section 17 of the Partition Ordinance was unsound, asat the date of the sale Abdulla was not the owner of lot A but only ofundivided shares of land—shares the alienation of which is prohibitedand declared void by section i7. He added that apart from theprovisions of section 17 the plaintiff was entitled to succeed as thepartition decree was one in rent and declared to the world thatAbdulla was the owner of lot A which influenced Abdul Cader insuing on the bond and Bafee in purchasing lot A.
Beferring to the case of Subaseris v. Porolis (supra) he said-—
“The decision in'that case was influenced by the considerationthat a party to a partition action 4 should be able to deal byanticipation with whatever divided interests he mayultimately obtain. ’ With that consideration I am inentire accord. It is possible that a co-owner in landsubject to a partition suit may sell his interests in the landand agree to convey whatever he may receive under thefinal decree. It is possible that such an agreement wouldnot be obnoxious to section 17 of the Partition Ordinance.
But it remains merely an agreement to convey, and wouldnot operate as a conveyance or alienation."
The appellant contends that the deed which was the subject of theaction in Appuhamy v. Babun Appu (supra) is of an entirely differentcharacter to the deed No. 156 on which title is claimed in the presentaction, and that his deed is in form very similar to the deed whichwas held to be valid in the case of Subaseris v. Porolis (supra).
That case was an action under section 247 of the Civil ProcedureCode, 1889. The plaintiff was the unsuccessful claimant. Heclaimed the land under a deed of sale executed-by a co-owner afterthe interlocutory decree and before the final decree in a partitionsuit by which the vendor transferred to the plaintiff “ all the advan-tages or disadvantages, such as costs, Ac., and also the share whichhe would be entitled to either in common or partition." The
( 298 )
1926.
Maajvtensz
A.J.
Fernando v.Atukorale
learned Commissioner held that the deed "was invalid. -WoodEenton A.C.J. before whom the appeal was argued said :'—
M It must be remembered that section 17 of the PartitionOrdinance imposes a fetter on the free alienation of property,and the Courts ought- to see that that fetter is not mademore comprehensive than the language and the intentionof the section Require. The section itself prohibits onb,in terms, the alienation of undivided shares or interests inproperty which is the subject of partition proceedings whilethese proceedings are still pending, and the clear object ofthe enactmment was to prevent the trial of partition actionfrom being delayed by the intervention of fresh partieswhose interests had' been created since the proceedingsbegan. Such a: transfer as we-have to deal with in thepresent case -is not -touched either by the language or. bythe spirit of section 17 of the Ordinance No. 10 of 1863/’
He then . observed’ that he t had so far considered the questionsolely as one of the ii^terpretation o°f the meaning of the Legislature,but that the point was not devoid of authority and referred to thedictum of Sir. Charles Layard'in the case of Louis Appuhamy v.Punchi Baba1 to the effect that a sale or mortgage executed duringthe pendency of a partition suit, in respect of a share or interest iowhich a person may become entitled after the termination of suchsuit, is valid, and is not. affected by the section in question, and tothe case of Abdul Ally.’u. Kelaart2 where a conveyance, pending apartition action, of the proceeds of the sale of property which thetransferor might be decreed in that action was expressly held tobe valid.t
,V
The principle that a party to a partition action can deal by anti-cipation with whatever interest ■ he may ultimately obtain wasapproved of by a Full Court (five Judges) in the case of Kahan Bhaiv. Perera et rt/..3 Bertram C.J., who delivered the judgment of the£ourt, said: —
“ The question under reference is a question as to the true inter-pretation of the prohibition against alienation or hypothe-cation of the undivided shares or interests in propertysubject to a partition action contained in section 17 of thePartition Ordinance, No. 10 of 1863/*
He then proceeded to deal with the question as to the point up towhich the prohibition endures, and- concluded as follows: —
' ■“ Persons desiring to charge or dispose of their interests in aproperty subject to a partition suit can only do so byexpressly charging or disposing of the interest to beultimately allotted to them in the action.’*
1 (1904) 10 N. L. R. 196.2 {1904) 1 BaU 40.
3 (1926) 26 N. L. R. 204.
( 299 )
The precise question before the Court in Kalian Bhai v. Perera et al.(supra) was whether, where a Court decrees a sale under the PartitionOrdinance, the prohibition against alienation contained in section 17of the Ordinance applies during the interval between the decree andits execution, and Sir Anton Bertram’s statement of the law regard-ing persons desiring to charge or dispose of their interests during thependency of a partition was obiter to the question at issue.
1928.
MXabxxrsz
AJ.
Fernando v.Atukorale
In the case of Mohamed Bhoy v. Maria Dias et al.,1 in which theplaintiff sued on an agreement by the defendants to sell the dividedshare which might be decreed to the first defendant in the event ofthe final decree being one for the partition of the land, or theproceeds of sale if the final decree was one for the sale of the property,the validity of the agreement was not contested. The only questiondecided was whether the agreement was a bill of sale which had tobe registered under Ordinance No. 8 of 1781. In Fernando v.Fernando 2 an agreement entered into during the pendency of apartition suit to convey the share of the land that may ultimatelybe allotted in the decree was held to be valid.
The only case in which a disposal of the interest to be ultimatelyallotted was held to be a valid sale is Subaseris v. Porolis (supra),which being the decision of a single judge is not binding on us but ithas been considered to be the law for nearly thirteen years, and Iwould hesitate to express any dissent from the opinion expressed byWood Benton J. I do not, however, think it necessary to examinethe soundness of Sir Alexander Wood Benton’s opinion regarding,the construction to be placed on the provisions of section 17. Foreven if the conveyance with which we have to deal in the presentcase is not obnoxious to the provisions of section 17 it does not,in my opinion, in view of section 9 of the Partition Ordinance^No. 10. of 1868, vest the second defendant with a title as againsta third party.
Whether deed No. 156 is looked upon as an out and out sale as inthe case of Subaseris v. Porolis (supra) or as an agreement to sell,which is the view taken by Ennis J., in Appuhamy v. Babun Appu(supra) it is possible that it invests the transferee with rights whichthe transferor may not be entitled to deny.
But other considerations arise where the contest is between athird party and the transferee.
If deed No. 156 is no more than an agreement to convey, thesecond defendant, has no title to the land, and the plaintiff asjudgment creditor of the first defendant is entitled to discuss theproperty for the purpose of satisfying his decree.
If it operates as a sale the effect of section 9 of the Ordinance hasto be considered. This section was not referred to either by counselor Wood Benton J., in the case of Subaseris v. Porolis (supra).
1 (1908) 2 S. C. Decis. 7.
2 (1917) 4 C. IK. B. 47.
a boo )
Section 9 enacts as follows: —. i.
“ The decree for partition or sale given as hereinbefore providedshall’ be good and conclusive against all persons whomso-ever, whatever right or title they have or claim to have inthe said property, although all persons concerned are hot-named in any of the said proceedings, nor the title of theowners nor of any of them truly set forth, and shall be goodand sufficient evidence, of such partition and sale and of thetitles of the parties to such shares or interests as have beenthereby awarded in: severalty:Provided that nothing
'herein contained shall -Effect', the right of any party pre-judiced by such! partition or sale to recover damages fromthe* parties by whose act-, whether of commission oromission; sudh damages had accrued.”
The effect of a partition decree was. fully considered in the case cf
Bernard v. Fernandp [et al.1 In this case the plaintiff had purchasedin 1912 the "divided lots , allotted to, two of the parties to a partitionsuit by a decree under section 9 dated January, 30, 1905. Thedefendants had purchased -from the : same parties undivided sharesin 1907 and11909, registered in the sAxhe years. The partition decreewas registered after the sale" to plaintiff. The defendants claimedthe benefit-of the prior registration of their deeds. De Sampayo J.said:—: ■
” I do no$;; think , that ; sections .16 . and 17 of the RegistrationOrdinance apply to partition decrees to the same extent asto qther judgments or orders of Court. Partition decrees areconclusive by thpir own inherent virtue, and do not dependfor their final;; validity, upon anything which the partiesmay* or may ; not afterwards dp. They are not,. like, otherdecrees affecting land, merely declaratory' of the existingrights of the parties inter se. They create a new titlein'‘the parties absolutely good against all other personswhomsoever:** ’ ^v’“
• ; . .
I venture .to express my entire agreement with the opinion of1 de Sampayo J. regarding the effect of a decree under section 9 ofthe Ordinance.
On the principle laid down in the case, of Bernard v: Fernando et al..(supra) the final decree in the partition suit No. 6,694, D. C.Colombo, created:new title in the first defendant to lot A absolute^-good against the second defendant. ,
Appellant’s counsel contended, however, that the title of the firstdefendant under the partition decree enured to the benefit of- thesecond defendant. • 1 am not. prepared-to accede to this argument.No doubt it is settled law that ordinarily a person who had got
,1086.
MaabtenszA. J.
Fernando v.Atukorale
1 {1913) 16 N. L. R. 438.
( 301 )
possession from a vendor who at the time had no title could rely on1 a title subsequently obtained by the vendor not only against thevendor but against anyone claiming under the vendor. SeeBajapakse v. Fernando 1 and Gunatileke v. Fernando.2 But I am of■ opinion that that principle would not apply where the vendorsubsequently acquires title under a partition decree. In th3 casewhere a vendor acquires title other than under a partition decree heacquires a title good against all the world but the person to whom hehas sold the property. In the case of a title acquired under apartition decree the title is good and conclusive against all personswhomsoever, whatever right or title they have or claim to have inthe said property.
A most anomalous state of things would otherwise arise. If A•owning undivided shares in a land sells them to B but none the lessthe shares are decreed to be the property of A, B's title is extin-guished, but if A having* no title sells certain undivided shares to Band A is decreed the owner of the shares if the principle of the*exceptio rei venditae is applied A’s title would enure to B. Thus aperson who buys from a vendor who has no title would be in a betterposition than a purchaser from a vendor with title.
I accordingly hold that the sale to second defendant was extinguishedby the partition decree.
The appellant next founded an argument on section 93 of the‘Trusts Ordinance, 1917, which enacts that—
“ Where a person acquires property with notice that another hasentered into an existing contract affecting that property,•of which specific performance could be enforced, the formermust hold the property for the benefit of the latter to theextent necessary to give effect to the contract. Providedthat in the case of a contract affecting immovable property,such contract shall have been duly registered before suchacquisition.1 ’
He contended that the first defendant was a trustee for the second•defendant and that a purchaser at the sale in execution would holdthe property for the benefit of the second defendant to theextent necessary to give effect to the contract created by deed No. 156.The respondent replied that section 93 only came into operation.where there were three parties, namely, the party directly concernedAnd the person who took with notice of the contract.
I am not prepared to adjudicate on this question until the issuearises. Various questions might arise which should be properlyformulated and argued, one of them being the applicability ofsection 93 to a forced sale in execution of a'decree, another wouldbe whether an instrument in form an outright sale can be ’treatedias air agreement to sell.
1986.
Maabtbnss
A.J.
Fernando v,Atukorale
1 (1920) 21 N. L. R. 495. •
* (1921) 22 27. L. B. 385.
( 302 )
1926.
Maaktbnsz
A.J.
Fernando v.Atukorale
In the view I take that the title, if any, created by deed No. 15(>has been extinguished I need not consider the question whether itwas executed in fraud of creditors.
I dismiss the appeal with costs.
Appeal dismissed,-