GOULD v. INNASITAMBY

039-NLR-NLR-V-09-GOULD-v.-INNASITAMBY.pdf


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Present : Mr. Justice Monereiff and Mr. Justice Middleton.GOULD v. INNASITAMBY.
1904.
January 18.
D. C., Kandy, 14,339.
Agreement to purchase land for another—Refusal to reconvey—Fraud—Trustee—Ordinanceof Frauds andPerjuries(Ordinance No. 7
of 1840), s. 2.
The plaintiff employedthe defendanttopurchase a property
for him. It wasunderstoodbetweenthe plaintiff and the
defendant that theplaintifE shouldpay the purchasemoney, and
that the defendantshould get theconveyancein hisown name,
and should subsequently reconveytheproperty to theplaintiff.
The defendant havingrefused toreconveythe property, theplain-
tiff raised this action to compel him to do so. The defendantpleaded section 2 ofOrdinance No. 7of 1840 in bar ofthe plaintiff's
claim.
Held, that theplaintiff wasentitledto maintaintheaction,
notwithstanding the absence ofanynotarialinstrument signed
by the defendant agreeing to reconvey the property.
Middleton J.—TheStatute ofFrauds'should . notbeallowed
to be used to perpetrate and cover fraud.
A
PPEAL hy the plaintiff from a judgment of the District Judgeof Kandy dismissing his action.'
The facts sufficiently appear in the judgments.
The appellant appeared in person.
Bawa, for the respondent.
Cur. adv. vult.
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1904. 18th January, 1904. Moncreiff J.—
January 18.
The plaintiff, being desirous of buying some lands at Paldeniya,did so in the name of his servant Innasitamby, who is defendantin this action. He furnished the purchase money, and the defendantpromised both before and after the purchase to convey the landsto him when called upon. Instead of doing so when called upon,the defendant, having had the Fiscal’s transfers made out in hisown name, claimed the lands as his own property. The plaintiffthen sued for delivery of the bills of sale, plans, and documents;for a declaration that the defendant held the bills of sale in trustfor him (the plaintiff) as his agent and mandatory; and for a transferof the bills of sale and the right, title, and interest passing underthem. The Judge dismissed the action. By our law (OrdinanceNo. 7 of 1840, section 2) no transaction relating to immovableproperty which falls within the section is of any avail in law, unlessembodied in a notarial instrument, and ‘ ‘ signed by the party makingthe same, or by some person lawfully authorized by him or her.”It. would seem that the purchaser may probably appoint a manda-tory to buy for him, because such a proceeding is not one of thetransactions arrived at in the section. The section relates only towhat passes between parties who are dealing with interests in land;the appointment of a mandatory to buy is simply the employmentby the buyer of an agent to do a ministerial act for him. But theproposition of the appellant is something quite different. Possiblyhe might prove by parol evidence an appointment of the defendantto sign his (the defendant’s) name as mandatory of the plaintiff;but is that of any use unless he can also prove that the defendantagreed to reconvey to him (the plaintiff), for the mandatory whobuys in his own name is bound as the purchaser (1).
A verbal promise, however, to reconvey is one of the things whichapparently the section says shall be of no avail in law, and theplaintiff must show how it can be used to establish an obligationon the part of the defendant to convey these lands to the plaintiff.If no such obligation can be proved, the land bought is the property“ Ejus quidarn minimis alienis emit aut ejus nomine empta est.
The purchaser of shares in a public Company S9metimes buysin the name of another person. The nominee’s name is retainedon the register of shareholders—he is by English law trustee for thereal purchaser. The appellant in this case is trying to show on thesame principle that the defendant is trustee to reconvey to him—to do what the Ordinance apparently says he cannot do by parolevidence. Under English law such proof may be made because
(1) Voet 18, 1, 8.
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section 8 of the Statute (29 Car. 2, c. 8) expressly provided that“ when any conveyance shall be made of any lands or tenements, January18-by which a trust or confidence shall or may arise or result by the Mokcbbitvimplication or construction of law, or be transferred or extinguishedJ'
by an act or operation of law, then and in every such case suchtrust or confidence shall be of the like force and effect as the samewould have been if this Statute had not been made.”
Mr. Berwick sees no significance in the fact that our Ordinancecontains no such exception from the operation of section 2; landhe considers that that section refers to interest created by theparties, but not to those arising by operation of latv, Ibrahim Saibov. The Oriental Bank Corporation (I).
He refers to the fact that Lewin (7th Edn., 178) considers thatthe 7th section of 29 Car. .2, c. 3, was not meant to refer to trustsarising by operation of law, and that the 8th section was onlyinserted ex majore cautela. The reason given by Lewin is that theobject of the Statute was to put an end to the perjury by means ofwhich men sought to establish trusts, whereas trusts arising fromoperation of law are not dependent upon parol evidence and perjury.
They arise from an ascertained series of facts and if the 7th sectionof the English Statute does not refer to them, may it not be saidthat the second section of our Ordinance has no more relation tothem?
This is a question for the Full Court.
The plaintiff cited the familiar cases on this subject from ourreports, but I do not think they give him much help.
There are some fugitive references to fraud in those cases. TheDistrict Judge does not interfere here on the ground of fraud,because he says there was no fraud in the inception. For example,if the defendant had dishonestly induced the plaintiff to buy theland in the defendant’s name, the plaintiff would have been inducedby fraud to part with his money. But the plaintiff parted with hismoney of his own free will, trusting not to any legal obligation butto the defendant’s honour. The defendant knew that, and thereis nothing to show that he had any fraudulent intention Until afterthe purchase. ,Until then he intended to reconvev. But he turnedthe whole transaction into a fraud by taking the transfer in his ownname and refusing to reconvey. The question is not one of enforcingan agreement which is not according to law, but whether a defendantis to be allowed to plead the Statute of Frauds in order that he maydishonestly keep the property of- another man -of which he gotpossession by engaging to' return it when required. Even after(1) (1874) 3 N. L. R. 148.
16-
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tlje land was bought the defendant seems to have acknowledgedJanuary 18. -the plaintiff as the real purchaser, to have taken his wages broughtMonobeiff him the produce, and allowed him to lay out money upon it.
If English law applied, this case would be subject to the principleacted upon in Davis v. Whitehead (1), following the judgment of Jlamesand Mellish L. JJ. in Haigh v. Kaye (2). In the former case tfhequestion was whether the Duchess of Marlborough was not entitledto return of a leasehold house which she had assigned for a limitedpurpose to her husband. It was held that the Statute of Fraudscould not be used against her claim to cover what would amountto a fraud. There was no suggestion that the assignment wasobtained by fraud. So in the latter case it was held that the Statuteof. Frauds ‘ ‘ was never intended to prevent the Court of Equity fromgiving relief in a case of plain clear, and deliberate fraud.” Haigh,expecting an- adverse decision in a pending suit, conveyed an estateto Kaye for a sum which was never paid, and on the understandingthat—if other arrangements were not made—Kaye should reconvey..Kaye pleaded the Statute of Frauds. No fraud in the inceptionwas suggested, but the Court ordered Kaye to reconvey the estate.These decisions are quite independent of section 8 of the Statuteof Charles the Second.
It may be said that the principle followed in these cases receivesno sanction from the Boman-Dutch Law. Then I say that thecase may be put in another way. The land was bought on the 16t&of November, 1898; the Fiscal’s transfer was given to the defendanton the 6th of March, 1899. Between the purchase and the transferthe defendant constantly acknowledged that the plaintiff was theowner of the land, and induced him to lay out money on it (see hisletter of the 12th December, 1898). He is clearly estopped fromasserting the contrary now.
The Judge makes some reference to the plaintiff’s expedients” nicely balanced for defeating creditors.” The plaintiff appearsto be replete with expedients—he has too many; and I havestrong suspicions as to his proceedings in this case. His own witness,D. Gould, says “ plaintiff, and defendant, and Williams were all one.at that time.” But I think there is. not enough in the case to provethat the plaintiff’s object was to defeat his creditors, and that heand the defendant were in pari delicto.
I think that the plaintiff is entitled to a declaration that thepurchase in the defendant’s name should enure to his (the plaintiff’s)benefit, and to a conveyance to him of the right, title, and interest -passing under the Fiscal’s transfer of March, 1899. I agree with
(1894) 2 Ch. D. 133.(2) (1872) L. R. 7 Ch. App. 469.
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my brother Middleton that the plaintiff should have his costs of I90i.appeal, but that each party should pay his own costs in the Court January 181
below.Mokobeit*
J.
Middleton J.—
The question in this case is whether the defendant, who actedfor the plaintiff in the purchase of an estate, and at the plaintiff’srequest obtained the conveyance in his (defendant’s) name payingfor it with the plaintiff’s money on an understanding that the estatewas subsequently to be reconveyed, to the plaintiff, shall be allowedto get up the Statute of Frauds (Ordinance No. 7 of 1840, section 2)to evade that obligation.
To allow him to do to would be to use the Statute of Frauds toperpetrate and cover a fraud which is contrary to the principleenunciated by Lord Justice Turner in Lincoln v. Wright (1), andwhich the Court of Chancery in England has followed in manyinstances Haigh v. Kaye (2); In re the Duke of Marlborough, Davisv. Whitehead (3).
The cases quoted to us, Godinho v. Perera (4), D. 0., Kandy,55,940 (5), and Simon v. Saibo (6), are not on all fours with thecase before us, as in those cases the fraud consisted in ignoring theinstructions of the mandator and taking a conveyance in the man-datory’s name, while in the case before us the defendant obeyedhis mandator’s instructions in taking a conveyance in his own name,but now fraudulently refuses to reconvev. There the question ofa parol agreement to reconvey did not arise, but the mandatoryacted in fraud of his mandator in obtaining the transfers in his ownname, and the Court set them on one side on that ground. In thecase before us all the evidence points to the conclusion that theplaintiff was the person who carried out the negotiations and pro-vided the money and the legal adviser, and that the defendant actedas his agent aqd servant in possession of the property after thetransfer to him. There is no evidence to point to the conclusionthat the plaintiff intended to donate the property in question tothe defendant, and the only reasonable inference is that it wasunderstood that the defendant should hold in trust to reconveyto the plaintiff.
In this position of affairs the defendant says:“You cannot
compel me to do so because you cannot prove a valid agreement
a) (1859) 4 De G. and J. 16.(4) Ram. (1860) 6.
(1872) L. R. 7 Gh. 4pp. 469.(5) (1873) 2 Grenier 39.
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1904.
January 18.Middlwton
J.
to reconvey the land under section 2 of Ordinance No. 7 of 1840,which I have failed to carry out.”
The answer to this is, " Equity will not allow you to set up aStatute passed for the purpose of preventing frauds in order thatyou may perpetrate and cover a fraud.” Although the proceedingsof the plaintiff in reference to the purchase of this property were ofa singularly occult nature, I do not think that there is sufficientevidence to indicate that their object was fraud, otherwise 1 wouldleave the plaintiff as he now is. on the principle in pari delicto meliorcst conditio possidentis.
The English enactment as to frauds having been engrafted onthe Itoman-Dutoh Law with respect to immovable property, I cansee no impropriety in deciding this case on the principle laid downand adopted in the English Courts in similar instances.
In the cases of Silva v. Banmenika (1), Andrewewe v. Bala Ettena(2), and Natchiar v. Fernando (3) there was no fraud alleged or proved;and the case of Ibrahim Saibo v. Oriental Banking Corporation (4)does not appear to me to be in point here.
In my opinion therefore■ the judgment of the District Court shouldbe set aside and the judgment entered for the plaintiff. As theseproceedings have entirely arisen from the tortuous and mysteriousconduct of the plaintiff, I would order that each party pay his owncosts in the District Court, the plaintiff being only entitled to hiscosts of this appeal.
♦
(1)(1889) 1 Browne, 268.
(2)(1884) 1 Browne. 269.
(1900) 5 N. L. R. 66.
(1874) 3 N. L. B. 148.