085-NLR-NLR-V-60-EDWIN-Appellant-and-DIAS-et-al.-Respondents.pdf
340
WEERASOOR1YA, J.~Edwin v. Dias
1958 Present: Basnayake, 0 J., and Weerasooriya, J.EDWIN, Appellant, and DIAS et al., Respon dents8. C. 416—D. C. Kandy, 1,720/MB
Mortgage—Hypothecary action— Withdrawal of it by plaintiff—Right of mortgageeto sue again—Civil Procedure Code, es. 406,408—Mortgage Ordinance (Cap. 74), e. 16—Mortgage Act, No. 6 of 1949, es. 7, 26.
The previsions of section 7 (1) of the Mortgage Act, Mo. 6 of 1949, must be readsubject to the provisions of section 406 and also section 408 of the Civil ProcedureCode. Accordingly, 'where a hypothecary action instituted against the mort-gagor is dismissed with the consent of the mortgagee and without any permissionapplied for by him or granted by Court to bring a fresh action, the mortgagee isprecluded from bringing a second hypothecary action against either themortgagor or the person to whom the mortgagor has transferred the mortgagedproperty.
A
aaPPEAL from a judgment of the District Court, Kandy.
H+W. Jayewardene, Q.C., with P. Ranasinghe, for the plaintiff-appellant.
P. J. Kurukulasuriya, for the 1st defendant-respondent.
T. B. Dieaanayake, for the 3rd defendant-respondent.
Cur. adv. mlt.
April 24,1956. Wxbbasoobxta, J.—
This is a hypothecary action filed hy the plaintiff-appellant for thereoovery of the principal sum and interest due on a mortgage bondNo. 3071, dated the 23rd December, 1947, granted in his favour byone John Michael Dias who died on the 25th September, 1948, leavingas his hears his widow the 1st defendant-respondent and a daughter.
('tV’BBRAjdSoBlYA, J.~Edmn v. Dias341;
By deed No. 1871, dated the 23rd October, 1948, the property hypotheccated on bond No. 3071 was sold and transferred by the 1st defendantsrespondent to the 2nd defendant, who retained in his hands a certainpart of the purchase price representing the principal and interest thendue on the bond, and soon afterwards he made unsuccessful attempts.to induce the appellant to receive payment on the bond and grant a-discharge of it. The appellant, however, had certain other claimsagainst the deceased mortgagor’s estate, of which the only asset of any-value seems to have been the mortgaged property, and he took up the'.*position that the sale to the 2nd defendant was in fraud of the creditors ,of the estate and refused to recognise it or to accept payment. The -2nd defendant thereupon filed D. C. Kandy Case No. 3,312. against the<appellant on the 30th November, 1948, bringing into Court a sum ofRs. 666 as the principal and interest due on the bond and asking for anorder on the appellant to accept the same and grant a discharge of the-bond. Before the appellant had been served with summons in thatcase he filed on the 11th January, 1949, D. C. Kandy Case No. 1,364 (M.B.)*against the 1st defendant-respondent (personally and also as the*appointed legal representative of the estate of J. M. Dias) for the recoveryof the principal and interest due on bond No. 3071 and for the usualhypothecary decree that in default of payment the property hypothe-cated be sold. It is not clear whether at the date of the filing of that*action the 2nd defendant was a necessary party to it in terms of Section6 (2) of the Mortgage Ordinance (Cap. 74) which was the law governing:the action. In any event he was not made a party to it. That action:seems, however, to have been brought on the basis that-the property'hypothecated still formed part of the (state of the deceased mortgagor:notwithstanding the transfer by deed No. 1871, to which transaction:no reference was made in the plaint. The 1st defendant-respondentfiled answer in due course in which one of the defences pleaded was thesale by her to the 2nd defendant of the land hypothecated on the bondand that the latter had already sued the appellant for a cancellationof the bond having brought into Court the amount due thereon. Thiscase was fixed for trial on the 28th September, 1949, on which date thefollowing order was made by Court: “Of consent action is dismissed.'No costs ”. Decree in the case was accordingly entered in terms of ■this order. This dismissal of the appellant’s action was without any .permission applied for by him or granted by Court to bring a fresh action;in respect of the same subject matter as provided in Section 406 (1)of the Civil Procedure Code.' In a subsequent affidavit (D3) filed by,the appellant in support of an application made by him to the SupremeCourt to have the decree in that case set aside, he explained that hedid not obtain such permission as the arrangement was that he shouldwithdraw the sum deposited in Court in Case No. 3,312 filed againsthim by the 2nd defendant and grant a cancellation of the mortgage *bond. But the 2nd defendant, who was no party to that arrangement^proceeded thereafter to frustrate it by 'obtaining an order of Court in •Case No. 3,312 granting, him permission to withdraw his action withliberty to file a fresh action if so advised, and also permission to with-draw the sum of Rs. 666 being the amount brought into Court. This.
**—J. N. B 1452 (4/59)
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AVEEBASOORIYA, J.—Edwin v. Dias
order was made ex parte on the 15th December, 1949, summons evenon that date not having been served on the appellant. There can beno doubt that had the appellant displayed even ordinary diligencelie had ample opportunity after the date of the order entered of consentin Case No. 1,364 (M.B.) of having himself represented in Case No. 3,312prior to the granting of the 2nd defendant’s application to withdrawthat action as well as the money brought into Court. This step he didnot, however, take till the 20th December, 1949, when a proctor filedhis proxy and stated that his client consented to accept the moneyand cancel the bond and moved for an order of payment of that money(which had not yet been withdrawn in terms of the permission grantedon the 15th December, 1949) in his favour. This application appearsto have been objected to by the 2nd defendant, and after inquiry intothe matter the Court made order dismissing it on the ground that onthe date on which the Court had granted the 2nd defendant’s applicationto withdraw his action the appellant was “ out of Court ”. The attitudeof the 2nd defendant in objecting to this application, though in strangecontrast to his previous insistence that the appellant should acceptthe money and grant a discharge of the mortgage bond, seems to haveBeen justified if one regards the order made by the Court on this occasionas a correct one. The question of the correctness of that order, however,or of the earlier ex parte order dated the 15th December, 1949, does notarise in this appeal. But with regard to the order made on the 15thDecember, 1949, it seems to me that generally speaking a Court shouldnot grant a plaintiff permission in terms of S. 406 (1) of the Civil ProcedureCode without notice to all the persons whose names appear on the recordas parties to the action even though summons may not vet hove beenserved on some or all of them. If this precaution had been taken bythe Court in this particular instance the appellant would, without doubt,not have found himself in the predicament which has given rise to theaction now' under appeal.
After the dismissal of the appellant's application in Case No. 3,312the amount in deposit was paid out to the 2nd defendant less a sumdue to his proctor as taxed costs.
Having been thus foiled in his attempt to realise the monej's due tohim on the mortgage bond, the appellant resorted to various othersteps to obtain relief. On the 7th February, 1950, he filed a motionthrough his proctor in Case No. 1,364 (M.B.) praying that the orderdated the 28th September, 1949, entered of consent dismissing thataction be vacated, but soon after he seems to have apprehended thefutility of that application and he consented to it being dismissed. Hethen made an application by way of restitutio in integrum to this Courtand it w'as in that connection that he filed the affidavit D3 to which Ihave already referred. This application met with the same fate as hisprevious efforts and was refused on the 20th November, 1950.
A little over a year later the present action was filed. To this actionthe' 2nd defendant was made a party as a puisne encumbrancer byreason of the transfer of the mortgaged propert y to him by deed No. 1871 .
WEERASOORIYA, J.—-Edwin v. Dias
343
and so was the 3rd defendant-respondent (a son of the 2nd defendant)on the ground that the title to the land under mortgage had passed tohim by virtue of a deed of gift No. 3422 dated the 20th August, 194S,executed in his favour by the 2nd defendant subject, however, to themortgage. The 1st defendant has been joined in the action only asthe duly appointed legal representative of the estate of the deceasedmortgagor, and not in her personal capacity also (unlike in the previousmortgage bond action No. 1364). In the answer of the 1st defendant-respondent and the joint answer of the 2nd defendant and the 3rddefendant-respondent the substantial defence put forward was that thedecree entered in the previous mortgage bond action operated as resjudicata between the plaintiff and the defendants and that the presentaction is, therefore, not maintainable. After filing answer but beforethe trial the 2nd defendant died and the case went to trial as againstthe other two defendants on certain issues including issues based on theplea of res judicata taken in the answers. The learned District Judge,while holding that the sums claimed were due on the bond, dismissedthe appellant’s action with costs, one of the grounds for his order beingthat the bond was not enforceable in the view taken by him that section406 of the Civil Procedure Code precluded the appellant from maintainingthis action. This appeal has been filed by the appellant against thedismissal of his action.
At the date of the institution of the present action the MortgageOrdinance (Cap. 74) had been repealed by the Mortgage Act, No. 6 of1949. In deciding the questions arising in this appeal certain provisionsof these tvsro enactments have to be considered, particularly section 16of the repealed Ordinance and the corresponding section 7 of theMortgage Act.
It was held in Slema Lebbe v. Banded that in the circumstances whichexisted at the time of the filing of Case No. 1,364 (M.B.) the only remedyavailable to a mortgagee against the mortgagor is the personal actionfor the recovery of the money and not the hypothecary remedy. Thatdecision, which was prior to the Mortgage Ordinance (Cap. 74) wouldstill appear to be good law and in my opinion neither section 16 of theMortgage Ordinance nor section 7 of the Mortgage Act would enable amortgagee to bring a hypothecary action against a mortgagor whohas parted with his interests in the mortgaged property. It was, of■course, open to the appellant to have filed one action against the 1stdefendant-respondent and'the 2nd defendant praying for a decreeagainst the former for the payment of the money and for a decree againstthe latter declaring the mortgaged property bound and executable indefault of payment of the money. But this he did not do. The appel-lant in his evidence at the trial said that when he filed the earlier actionhe was aware of the transfer of the mortgaged property to the 2nddefendant on deed No. 1871, but he refrained from making him a partyto that action. Notwithstanding the omission to do so, he could, undereither of the two sections referred to, have brought a separate subsequent 1
1 (1898) 1 A. 0. R. 72.
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WEERASOOBIYA, J.—Edwin v. Dias
action against the 2nd defendant in respect of the hypothecary remedyhad he succeeded in the earlier action in obtaining a decree against the1st defendant-respondent as the legal representative of the deceasedmortgagor’s estate for the payment of the money due on the mortgage.The question is whether having consented to the dismissal of the earlieraction he can now maintain the present action.
The learned trial Judge, in dismissing the appellant’s present action,was principally influenced by the fact that the appellant’s earlier actionhad been dismissed without any permission obtained by him undersection 406 (1) of the Civil Procedure Code to bring a fresh action “ forthe subject matter ” of that action and he held that, therefore, section406 (2) was a bar to the present action. In considering this aspect ofthe case, however, the trial Judge seems to have travelled outside theissues of res judicata since the bar contained in section 406 (2) is, strictlyspeaking, not based on the principle of res judicata though somewhatanalogous to it. No issue was raised at the trial whether section 406 (2)operated as a bar to the present action, but despite this omission it cannotbe said that the learned Judge should not have considered that question,being a pure question of law, and especially as it was the subject ofargument in the addresses of counsel after the leading of evidence hadbeen concluded. At the hearing of the appeal too the argument revolvedchiefly on this point, and the issues of res judicata were not touched upon.
It will be seen that although section 16 (1) of the repealed ordinanceand section 7 (1) of the Mortgage Act expressly refer to section 34 of theCivil Procedure Code, they are silent in regard to the operation of anyother bar to the maintainability of an action for the bringing of whichprovision is made under those sections. It was held in the case ofSavarimuttu v. Annamah1 that section 16 (1) docs not entitle a plaintiffto succeed in an action which has already ceased to bo maintainableunder the Prescription Ordinance (Cap. 55). In Kumarappa Chettiaret al. v. Gunawathie et al} the question arose only incidentally whetherwhere a previous hypothecary action had been dismissed it was open tothe mortgagee, under the provisions of section 16 of the MortgageOrdinance, to bring a second hypothecary action in respect of the samematter, and Nagalingam J. refrained from expressing an opinion thathe could. In the case of Muheyadin v. Thambiappah3 the same Judgetook the view that section 16 (1) of that ordinance allows a mortgageeto bring a second action in respect of the same remedy and cited asauthority for this view the earlier case of Savarimuttu v. Annamah(supra), but it is to be observed that in both those cases the previoushypothecary actions had not resulted in their dismissal and, instead,a hypothecary decree had been entered for the sale of the mortgagedland.
While these authorities deal with the construction of section 16 (1)of the repealed Mortgage Ordinance, the somewhat different languageadopted in the corresponding section 7 (1) of the Mortgage Act does not 1
1 (1937) 39 N. L. R. SO.* (1946) 4S N. L. R. 34.
* (194S) 51 N. L. R. 392.
WEBRASOOBIYA, J.—Edwin v. Dias
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seem -to justify the view that the same ratio decidendi would not beapplicable where the question that arises is as regards the rights of amortgagee under the latter provision. Having considered theseauthorities I Eave come to the conclusion that the provisions of section7 (1) of the Mortgage Act must be read subject to the provisions of section. 406 and also section 408-of the Civil Procedure Code. In my opinion,whether one regards the dismissal of the previous action brought by theappellant as a withdrawal of it under section 406 or an adjustmentunder section 408, the effect of the decree passed in that action is topreclude the appellant from bringing the same action again, notwith-standing the provisions of section 7 (1) of the Mortgage Act.
Under section 406 (2) of the Civil Procedure Code a plaintiff whowithdraws from an action is denied the right to bring a fresh action“ for the same matter ” unless, prior to the withdrawal, he obtains thepermission of Court to do so. Section 408 provides that an adjustmentof an action by any lawful agreement or compromise shall be notifiedto the Corut which is then required to enter a decree in accordancetherewith and the decree shall be final so far as it relates to the subjectmatter of the action as dealt with by the agreement or compromise.
In the previous mortgage action brought by the appellant he joineda money claim on the bond against the 1st defendant, in her personalcapacity and also as the legal representative of the estate of the deceasedmortgagor, to the claim that in default of payment the mortgagedproperty be held bound and executable. It is clear, therefore, thathis present action in so far, at least, as it is sought to obtain a decreeagainst the 1st defendant in her representative capacity (and thereforebinding on the deceased mortgagor’s estate) for the payment of themoney due on the bond is an action “ for the same matter ” as theprevious one and is barred by section 406 (2) of the Civil ProcedureCode. It is also barred by section 408.
Even if the appellant cannot succeed in his present action as againstthe deceased mortgagor’s estate for the payment of the money dueon the bond, is he entitled to maintain it for the limited purpose ofobtaining a decree binding on the 3rd defendant-respondent declaringthe mortgaged land bound and executable ? In my opinion the answerto this must also be in the negative. “ Since a mortgage is only accessoryto the original obligation or debt, it follows that when that is dischargedthe mortgage is ipso jure extinguishedWille on Mortgage and Pledge
in South Africa1. The same result must necessarily follow, I think,where in consequence of a decree of a Court the right to sue for thedebt is lost. All that the appellant could have enforced against the3rd defendant-respondent was the sale of the mortgaged property solong as the obligation to pay the amount due on the bond remainedundischarged and actionable. The appellant has no claim againstthe 3rd defendant-respondent for the payment of the mortgage debt,which remains the liability of the deceased mortgagor’s estate; nor,once that liability has been discharged or extinguished by reason of the 1
1 (1920 ed.) p. 265.
346
Luinona v. Qunasekara
operation of a previous decree of a Court, has he any independent remedyagainst the 3rd defendant-respondent to have ' the mortgaged landdeclared bound and executable or to have it sold for the debt.
Learned counsel for the appellant in seeking to justify the presentaction against the 1st defendant-respondent also invoked the provisionsof sections 7 (1) and 26 of the Mortgage Act, No. 6 of 1949. Section 7 (1)provides, inter alia, that in every hypothecary action the mortgagorshall be sued as a defendant, and section 26 contains provision for alegal representative being appointed to represent the estate of a deceasedmortgagor. The provisions of section 7 (1) would be satisfied if themortgagor is sued as a defendant but no relief is claimed against himand, in my opinion, they do not enable a second claim for the paymentof the money due on a mortgage being successfully maintained againstthe mortgagor or against the estate of a deceased mortgagor where aprevious action in respect of the same claim has been dismissed in thecircumstances in which Case No. 1,364 (M.B.) camo to be dismissed.
In view of the conclusions which I have reached it is not necessaryto consider to what extent, if any, the decree in Case No. 1.364 (M.B.)-operates as res judicata in respect of the present action.
The appeal is dismissed with costs.
Basxayake, C.J.—I agree.
Appeal distuissed.