025-NLR-NLR-V-36-SOCKALINGAM-CHETTIYAR-et-al-v.-WIJEGUNEWARDENE.pdf
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AKBAR J.—Sockalingam Chettiar v. Wijeygunawardene.
1934Present: Drieberg and Akbar JJ.
SOCKALINGAM CHETTIAR et al. v. WIJEYGUNAWARDENE.
325—D. C. Colombo, 40,805.
Mortgage action—Agreement to assign rights—Must be notarially executed—Ordinance No. 7 of 1840, s. 2.
An agreement to take an assignment of the rights in a mortgage actionis not valid unless it is notarially executed.
^^PPEAL from a judgment of the District Judge of Colombo.
F. A. Hayley, K.C. (with him Van Geyzel), for plaintiff, appellant.
H. V. Perera (with him Athulathmudali and Kariapper), for defendant,respondent.
Cur. adv. vult
January 29, 1934. Akbar J.—
This appeal is from a judgment of the District Court dismissing theplaintiff’s action with costs as the agreement by the defendant to take anassignment of the plaintiff’s rights in a mortgage action (D. C Colombo,No, 34,919) was a verbal agreement and not executed in terms of section2 of Ordinance No. 7 of 1840. One Don Martin owed plaintiff Rs. 6,000 'on a mortgage bond executed by Don Martin and hypothecating a rubberland. Plaintiff sued Don Martin on this bond in case No. 34,919 on.October 8, 1929. On October 26, 1929, during the pendency of thisaction defendant agreed to take an assignment of the plaintiff's rights inthe action and to pay Rs. 6,000 and interest to the plaintiff. In pursuanceof this agreement the defendant gave the plaintiff two promissory notes
Ill
AKBAB J».—Sockalingam Chettiar v. Wijeygunawardene.
for Es. 6,000. The agreement, however, was not notarially executed, andit was on the ground that ‘such an agreement was invalid under section 2of Ordinance No. 7 of 1840 that the action was dismissed.
Appellant’s counsel argued that under the Roman-Dutch law a mort-gage of immovable property was movable property. That seems to beso according to Voet (bk. I., tit. 8, s. 27—Buchanan’s translation,p. 145 and p. 141 ; 2 Maas dorp p. 6; 1 Van L. Kotze’s translation, p. 146).But this does not conclude the question, and it will be necessary toexamine section 2 of Ordinance No. 7 of 1840 to see whether the agreementhere was an agreement which came within that section. Mr. Hayleyargued that section 2 of Ordinance No. 7 of '1840 did not cover theagreement in this case, and he even went so far as to contend that atransfer of a mortgage bond of immovable property need not be nota-rially executed. In this latter connection I may refer to the obiterdicta of Wood Renton J., and de Sampayo J. in Muttiah v. Marcanden1,where the first named Judge referred to the English case of Driver v.Broad *, in which it was held that a contract for the sale of debenturescharging a company’s properties movable and immovable was a contractfor an interest in land within the meaning of the fourth section of theStatute of Frauds. The second named Judge stated as follows : —** Itis a serious question whether any interest in the bond, containing as itdoes a mortgage of immovable property can be validly transferredexcept by means of a notarial instrument so far as the security at allevents is concerned, I should say it could not. But it is unnecessaryto decide this point, because I think the plaintiff must fail on theevidence ”.
In my opinion a transfer of a mortgage bond hypothecating immovableproperty or an agreement to transfer such a bond comes within the termsof section 2 and is of no force or avail in law unless it is notarially executed.Such a transfer or agreement will fall within the words “ No promise…. contract or agreement …. for establishing any
interest or incumbrance affecting land or other immovable
property . . . . ” in section 2 of Ordinance No. 7 of 1840.
It is significant that in section 16 of Ordinance No. 14 of 1891 andsection 8 of Ordinance No. 23 of 1927 the words “ or transferringhave been added after the words “for establishingn. These words werereally unnecessary because the word “ establish ” in my opinion clearlyindicates that what were required under section 2 were (a) an interestaffecting land and (b) a nexus connecting a person with that interest.A mortgage of immovable property by A in favour of B is in myopinion an “ interest or incumbrance affecting land or other immovableproperty ”, and if a third party C wishes to “ establish ” an interest inthat mortgage bond whether under a transfer by B of his rights or byan agreement to transfer by B his interest in that bond, he can only do soby producing a notarial transfer or agreement to transfer.
In Sande's Cession of Actions, s. 11, I find the following: “ Meanwhilewe must note particularly that though cessions are effected by mereintention, even by persons absent from each other, yet the formalities1 4 Ceylon Weekly Reports 301.2 (1893) 1 Q. B. 744.
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AKBAR J.—SockalingaAn CJlettiar v. Wijeygunawardene.
prescribed by the common lay/ or. by Statute for the transfer or alienationof any property must be observed in regard to the cession of actionavailable in respect of the same kind of thing
Sections 12-16 give instances where the special formalities had to beobserved. Section 16 is as follows:—** In the same way where accord-ing to the rules of the Saxon Court and certain Belgian provinces thealienation of immovable property is ineffectual without a formal cession inthe presence of the Judge of the place where the property is situated, itseems that also the transfer of actions relating to immovables requiresthe same ceremony and judicial cession
In the South African case Le Roux v. de Villiers, reference was made toa Dutch Placaat requiring a cession of a bond to be made in the same wayas the mortgage was made, coram lege loci, but it was held in that casethat cession may be made “ underhand ” as “ by the uniform practice ofthe Colony during the last fifty years cessions had been underhand andthe matter had never been called in question till now ”.
The practice here has been to insist on transfers and agreements totransfer mortgage bonds affecting land being executed by notarialdocuments. A mortgage action on a bond hypothecating immovableproperty is in my opinion in the same position as the mortgage bonditself, and a plaintiff’s right in such an action is an interest affectingimmovable property. This being my opinion, I think the order of theDistrict Judge was right and I would dismiss the appeal with costs.
Drieberg J.—I agree.
Appeal dismissed.
♦ 1
1 (1869) Buchanan'* Reports 90.