012-NLR-NLR-V-29-NARAYANAN-CHETTY-v.-JAMES-FINLAY-&-Co..pdf
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Present : Garvin J. and Dalton J.
1027,
NARAYANAN CHETTY i>. JAMES FINLAY & Co.
466—D* 0. Matara, 2t133*
Trusts—Equitableinterest inland—Assignment—Trustscreated by
operation of lato—Ordinance No* 9 of 1917.
There is nothing in section 2 of Ordinance No. 7 of 1840 repug-nant to the proof, by parol evidence, of the transfer of equitableinterests in land arising out of a truBt created by operation of law.
When the agent of a Chetty firm takes a deed in his name, withthe vilasam or initials of the firm attached, the legal title is vestedin the person whose name the deed bears.
Arunasalam Chetty v. Somasunderam Chetty 1 followed.
PPEAL from a judgment of the District Judge of Matara.
** The facts are stated in his judgment as follows: "This isa section 247 action. In D. C. Colombo, 16,531, the present defend-ant sued four sons of Somasunderam Chetty and obtained judg-ment on June 27, 1925, for Bs. 96,332 and seized the land now indispute, which is a rubber estate at Warakapitiya. Plaintiff olaimedthe land. His claim was dismissed, and he has brought the presentaction to establish his title. The plaintiff admits that he was theattorney at Galle for A. B. A. B. S; M. Somasunderam Chetty,and in the course of his business lent on a mortgage of this landin 1915 a sum of Bs. 20,000. The bond was put in suit, the landsold, and the plaintiff became the purchaser, the amount due onthe decree being set off against the purchase money, and a convey-ance was executed in favour of A. B. A. B. S. M. Narayanan Chetty.The plaintiff’s position is that the conveyance vested title in theplaintiff himself, subject to a trust to convey the property toSomasunderam Chetty …. This being so, the plaintiffalleges that by an agreement in India recorded upon an ola in 1920Somasunderam Chetty divested himself of his beneficial title tothis estate and to all other assets of his business in Galle and MataraDistricts for a sum of Bs. 51,000, of which the plaintiff has upto date paid Bs. 48,000. Somasunderam Chetty died in 1923. Hissons carried on his business, and the firm was adjudicated insolventin the High Court of Madras and in the District Court of Colombo.Plaintiff now seeks to lead oral evidence of the agreement trans-ferring to him the beneficial interest of Somasunderam Chetty in,thin land, of which he now claims to be the absolute owner. Thedefendant’s position is that the conveyance vested absolute title in
1 21 N. L. B. 389.
A
S
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1927. the firm of Somasunderam Chetty without need of any furtherXarayanan conveyance." The learned District Judge, holding that the oralChetty v. agreement alleged by the plaintiff could not, in view of the termsJtntMJjHnlay 0f section 2 of Ordinance No. 7 of 1840, be proved, dismissed theplaintiff’s action.
Hayley (with Tisseverasinghe and H. V. Perera), for plaintiff,appellant.—It may now be taken as settled law that legal title toland vests in the person whose name the deed bears. Legal title,therefore, in this case vests in the plaintiff without prejudice to theequities in favour of Somasunderam Chetty and his legal represen-tatives, who may ask for a conveyance on conditions and subject tothe provisions of the Trusts Ordinance, 1917. Arunasalam Chetty v.Somasunderam Chettytl Suppramaniam Chetty v. Kanmi Wappu.-Soma8underam Chetty v. Annacham Chetty,3 Sultan v. Sivanadian*section 58 of Ordinance No. 9 of 1917.
Somasunderam Chetty’s interests in the land are equitable.Parol evidence is admissible to prove the transfer of those interests.Section 2 of Ordinance No. 7 of 1840 does not affect what is knownin English law as " equitable estate.” Ibrahim Saibo v. OrientalBank Corporation,6 Bouchfoucold v. Boustead.6
In England, before the Statute of Frauds (29 Car. 11. c. 3) parolassignment of such interests could be proved. Lewin on Trusts,869, 908.
It was section 8 of the Statute of Frauds which required a writingfor such assignment. Section 8 as well as section 7, 9, and 10of the Statute have not been embodied in Ordinance No. 7 of .1840,which has taken over and adopted with certain modifications theother sections of that Statute. The exclusion was intentionalas " equitable estate ” as that term was used prior to the JudicatureAct, 1873, was unknown to the Roman-Dutch law. Berwick D.J.in his judgment in 3 N. L. R. 148 relies mainly on this omissionin our Ordinance.v
Under section 5 of Ordinance No. 9 of 1917 notarial writing isnow necessary for the creation of a trust in respect of land,but not for its extinction.
Rescission of contract even if the contract was one comiugwithin the Statute of Frauds can, as in the case of performance, beproved by oral evidence. 27 Hals. 64, ss. 10S, 109.
A lease, for instance, though required to be notarially executedcan be orally surrendered. Isohamy v. Appuhamy,T Soysa v. Soysa,sEquitable rights are exempt from section 92 of the Evidence Act.Nadarajah v. Ramalingam.•
1 21N. L. R. 389 P. C.
8 1 C. W. R. 155.
17 N. L. R. 257.
15 N. L. R. 135 at 137.
* 5 C.
6 3 N. L. R. 148.
(1897) 1 Ch. 196 at 203.8 7 C.W. R. 290.
26 N. L. R. 106.
W. R. 304 at 307.
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The judgment debtors in 16,531, D. C. Colombo, are not the 1927.successors in title or interest, whatever it was, of Somasunderam NarayananChetty or to the firm of A. R. A. R. S. M. They are only throe of Chettyv.hi^ heirs, of whom there are several, including his widow. Even if atT^Co!they were, they can only ask in appropriate proceedings for a con-veyance subject to the settlement and payment of all amountsdue to the plaintiff, and the defendants here cannot ask for more.
K&ultan v, Vivanadian (supra), section 71 of Ordinance No. 9 of 1917,
Crcwendish v. Geaves.1
V
Bartholomeusz (with H. E. Garvin), for defendants, respondents—
The deed in question conveys title to the firm of A. R. A. R. S. M.
Pettachie Chetty v. Mohamadu Yusuf,2 Arunasalam Chetty v.Somasunderam Chetty (supra).
' A mortgage bond in the same terms as the deed in question washeld to be in favour of the firm whose initials were prefixed, as inthis case, to that of the mortgagee in 31,865, D. C. Kandy, S. G. M.,
March 3, 1926.
Plaintiff admits he held the land in trust for SomasunderamChetty. It is fraud on his part to claim a release from the trustand the land itself. Gould v. Inasitamby.3
Plaintiff cannot adduce oral evidence to prove a release from thetrusts, as such releave affects an interest in land, see section 2 ofOrdinance No. 7 of 1840. If the Court holds with us on this point,the action fails, and should be dismissed.
There is an alternative prayer in the answer for a declarationthat the right, title, and interests of the judgment debtors, what-ever they are, are liable to seizure and sale.
Hayley, in reply.
?
June 8, 1927. Garvin J.—
IV ”
This is an appeal by the plaintiff in an action under section 247of the Civil Procedure Code. The subject-matter of the action,is a rubber estate called Warakapitiya. The defendants obtaineda judgment against the partners of a Chetty firm doing businessas A. R. A. R. S. M. for the sum of Rs. 196,332 in case No. 16,531of the District Court of Colombo, and in execution caused thisrubber estate to be seized. The plaintiff claimed it as his property,but his claim was disallowed, and he was thus compelled to bringthe present action to establish the right he claims to the propertywith a view to a declaration that it was not liable to seizure andsale in execution of the decree in D. C. Colombo, No. 16,531.,
1 24 Beav. 163.a 4 Bat. 146.
3 9 A L. R. 177 at 183.
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1927. The premises in question were sold in pursuance o£ a hypothecaryGabvin J. d®cree entered in case No. 16,534 of the District Court of Galle-— and were conveyed by the Commissioner appointed to carry out^Chutyvn the sale to the plaintiff in this action, who is described in the deedJameaFintoy as A. R. A. R. S. M. Narayanan Chetty. The plaintiff claims that* Co’ the legal title is in him. He admits that the purchase was madewith the moneys of the firm of Somasunderam Chetty, for whomhe acted as attorney in Galle, but alleges that at the expiry of hisengagement as agent of A. R. A. R. S. M. Somasunderam Chetty,and at the final settlement of accounts between him and his principalin 1920, when the Galle branch was closed, this estate and certainother property of the firm valued at Rs. 51,000 were taken overby him, and that he has from time to time paid to Somasunderamand his successors in the firm of A. R. A. R. S. M. various sums inliquidation of his debt, amounting in the aggregate to Rs. 48,000.By reason of these circumstances he claims to be the legal ownerof ,this estate to the exclusion of Somasunderam and all others.
The defendants pleaded that the legal title passed by the deedreferred to vested in A. R. A, R. S. M. Somasunderam Chetty.They denied several material averments made in the plaint, andprayed that the plaintiff's action be dismissed, or alternativelyfor a declaration that the plaintiff held the land in trpst for thejudgment debtors in D. C. Colombo, No. 16,531, and that the right,title, and interest of those judgment debtors be declared liableto seizure.
For the purposes of this appeal there is no need to considercertain other objections advanced by plaintiff to the seizure andsale of the premises.
At 'the trial certain of the issues proposed were rejected. Thisappeal relates partly to the order rejecting those issues.
The trial, however, proceeded. When the plaintiff sought tolead evidence to establish the settlement pleaded by hjm, and whichby anticipation constituted his substantial defence to the defend-ant's prayer for a declaration that the premises were being heldin trust for the judgment debtors, an objection was raised to thereception of evidence to establish this defence.
The grounds upon which this evidence was objected to were:first, that a note of the alleged settlement having admittedly beenrecorded in writing, parol evidence was not admissible; and secondly,that no evidence other than a notarially attested writing wasadmissible to pass what it is contended was in substance an assign-ment of Somasunderam's interests to the plaintiff.
The learned District Judge upheld the second of these objections,and assented to the submission of counsel for the defendants thata finding adverse to the plaintiff on this point concluded the caseand dismissed the plaintiff's action.
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The contention that the conveyance to A. R. A. R. S. M. Nara- 192T.yanan Chetty is in law a conveyance to A. R. A. R. 8. M. Soma- Oarvik J..
sunderam Chetty is untenable. It was the plaintiff, Narayanan
Chetty, who purchased the premises at the sale, and the conveyance * ckSh-v.is in terms a conveyance to him. Having regard to the well known Jatwwijdaypractice,* whereby an agent of a Chetty finn signifies that he isacting as agent of the firm by affixing the " vilasam ” or initialof his principal to his name, it may be inferred that when NarayananChetty purchased these premises he did so in a fiduciary capacity.
But this is an inference which may be rebutted. In this case theplaintiff does not deny that he purchased the premises' as agentof A. R. A. R. S. M. That he purchased' with the moneys of
R. A. R. S. M., or rather by virtue of credit allowed to him for theamount of the judgzx^nt entered in D. C. Galle, No. 16,534, inwhich he sued to recover the moneys of Somasunderam lent byhim as agent, is also admitted. The plaintiff does not suggest thatSomasunderam Chetty intended that these moneys should beapplied in a purchase of this land to be held by him (the plaintiff)as both legal and beneficial owner. These facts raise a resultingtrust in favour of A. R. A. R. S. M. Somasunderam. It would bea constructive trust within the meaning of section 82 of the TrustsOrdinance, No. 9 of 1917, which does not perpetuate the distinctiondrawn in the law of England between constructive trusts andresulting trusts, and includes without discrimination all trustsraised by operation of law.
The conveyance of this land was made by a deed executed bythe Commissioner appointed by the Court to sell and convey theproperty affected by the hypothecary decree in D. C. Galle,
No. 16,534. It is impossible to ascribe to him any intention ofcreating or declaring a trust. The obvious explanation of the factthat the name of the transferee is set out in the deed as A. R. A. R.
S. M. Narayanan Chetty is that the purchaser at the sale gavethat as his name. In the sense that the deed aff'rds some evidencein writing that the purchase was made in a fiduciary capacity thismay possibly be refered to as an express trust. But the transferorpresumably had no intention to create a trust, nor is this adeclaration of trust in a writing signed by the trustee.
A resulting trust of immovable property may be established byparol, since the local Statute of Frauds—section 2 of Ordinance 7of 1840—is concerned with interests in land created by the acts ofparties, and not with obligations in the nature of trusts raised byoperation of law. Ibrahim Saibo v. Oriental Bank Corporation (supra).
The creation of express trusts of immovable property, at least inso far as a conveyance of property was involved, presumably hadto be evidenced by a notarially attested document. Whether n. declaration of trust mad© prior to Ordinance No. 9 of 1917 also
I«fc7.
Oarvibt J.
XnrauanimChetty v.
JtimesFinlay
A Co,
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needed to be evidenced by such a writing is a question which hasnever come up for consideration before our Courts. The wholesubject of trusts as known to the English law is foreign to ourCommon law, and Ordinance No. 0 of 1917 may be said to havefirst introduced the law of trusts into our legal system. The dearthof judicial decisions on this subject is not therefore surprising.We are not, however, directly concerned with the question of thecreation of trusts by act of parties or the proof of such trust. Thesematters are now regulated by Ordinance No. 9 of 1917. What wehave to consider is whether the extinction or termination of theinterests of the cestui qui trust or the waiver or assignment ofhis interests may not be proved otherwise than by a notariallyattested writing where the trust relates to immovable property.It is said in effect that the interest of the cestui qui trust is aninterest in land, and that no assignment of such an interest andno agreement or arrangement which has the effect of divestinghim of that interest may be proved except by a notarially attesteddocument. The provision of the law pleaded in support of thiscontention is section 2 of Ordinance No. 7 of 1840, which is asfollows: —
. “No sale, purchase, transfer, assignment, or mortgage of landor other immovable property, and no promise, bargain,contract,or agreementfor effectinganysuch object,
or for establishing any security, interest, or incumbranceaffecting land or other immovable property (other thana lease at will, or for any period not exceeding one month),nor any contract or agreement for the future sale orpurchase of any land or other immovable property,shall be of force or avail in law unless the same shall bein writing ami signed by the party making the same, orby someperson lawfullyauthorized byhimor her in the
presenceof a licensednotary publicandtwo or more
witnessespresent at the same time, and unless the execution
of such writing, deed, or instrument be duly attested bysuch notary and witnesses, ”
A comparison of our Ordinance with the English Statute ofErauds (£9 Oar. II c. 3) indicates that section 2 of our Ordinanceembodies, with the necessary adaptations and modifications, thefirst four sections of the Statute referred to in so far as they relateto land. If this examination be pursued, it will be observed thatthe other provisions of that Statute have been similarly embodiedin the local Ordinance, with the exception of sections, 7, 8, 9, and10, which relate to trusts. It is impossible to resist the conclusionthat the exclusion of every provision of the English Act whichrelated to trusts was intentional. Indeed, it is to be expectedthat a draftsman engaged in preparing au Ordinance for the
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prevention of frauds and perjuries would, in taking over andadapting the provisions of a Statute of another country, exclude Garvin J.all such provisions as related to conceptions foreign to the systemof law with which he is dealing. The law of trusts and the conception * Chcuy v.of an equitable estate as apart from the legal estate, so peculiarlya development of English equity, found no place in the law thenin force in Ceylon. There is therefore every indication thatsection 2 of Ordinance No., 7 of 1840 was intended to deal with legaland not with equitable interests in land.
Nor is there in the language of section 2 of Ordinance No. 7 of 1840any words which import a meaning inconsistent with this conclusion.
What it does enact is that no conveyance of land or other immovableproperty and no contract or agreement whereby the legal estatein land is affected or intended to be affected shall be of any forceor avqil unless it shall be in writing and notarially attested.
It is interesting to note in this connection that under the Englishlaw it has been held that the Statute of Frauds does not requirethat a trust of land shall be created in writing. What is requiredby section 7 of the Statute—a section which has not been incor-porated into the local Ordinance—is that a trust of land shall bemanifested and proved by writing. Foster v. Hale 1 and Smith v.MatthewsBut for section 7, a trust might have been bothcreated and proved by parol presumably for the reason thatthe creation of a trust does not necessarily affect the legal estate,with which alone section 4 of the Act is concerned.
The interest of a cestui qui trust varies with the terms of thetrust. In the case of a simple trust such as this it consists of therigh to call for the legal estate and in the event of refusal to compela conveyance by action. But in every case it consists in the rightto compel the trustee by action to carry out the terms of thetrust. In equity a trust gradually came to be treated on thefooting of an actual estate, and as such was admitted to beassignable.
Prior to the Statute of Frauds the assignment of an equitableinterest in land might have been made by parol. But section 0of that Act requires that such assignments should be in writingsigned by the party granting the same. It is evident that section 4of that Act did not, and was not, intended to deal with equitableinterests.
These considerations confirm me in the view I have alreadyexpressed that Ordinance No. 7 of 1840 must be read as limited toacts of parties which are directed to affect the legal estate; it is notconcerned with equitable interests in regard to which it has made
no provision.
1 3 Ves. $95.
29/98 (mi) 30 L. J. Ck. 445.
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'lti87. I am therefore of the opinion that even if the evidence which
'GA&vix J. has been excluded in this case can only be regarded as evidence of
——the assignment by t a cestui qui trust of his equitable interests
there is nothing in section 2 of Ordinance No. 7 of 1840 which
JameoFinloy excludes such evidence.
<6 Co.
The judgment under appeal must in this view of the law be setaside and the case sent back for hearing. The argument beforeus was directed almost entirely to the point discussed in this judg-ment, and little or no attention was paid to the order rejectingcertain issues. In view, however, of the fact that this case hasalready been partly heard by two Judges, I think it is in the bestinterests of the parties that there should be a trial de novo uponissues to be determined by the trial Judge. I trust that all thoseengaged in the new trial of this case will, in order to facilitate thedecision of the many difficult points which arise in this case, availthemselves of this apportunity to place all the material facts onrecord. All proceedings taken on and after September 10, 1925,are set aside and the case sent back for a new trial.
The appellant is entitled to the costs of this appeal and of theproceedings in the Court below on October 29, 1926.
Dalton J.—
The plaintiff, Narayanan Chetty, instituted this action undersection 247 of the Civil Procedure Code for a declaration of titleto a rubber estate at Warakapitiya and that it be declared notliable to be sold in execution of a writ in case D. C. Colombo,No. 16,531. The defendant in this present action had obtaineda decree on July 27, 1925, aganist the firm of A. It. A. R. S. M., theprincipal of which was Somasunderam Chetty in case No. 16,531for a sum of Rs. 196,332 and interest and had caused the Fiscalto seize the property now claimed. Plaintiff preferred a claim,which had been dismissed, and so he brought this action undersection 247.
In his plaint he set up that the property in question was conveyedto him by deed of transfer No. 2,198 of December 20, 1919, dujyattested (exhibit P 4). That deed was granted by the Com-missioner appointed to sell in case No. 16,534, D. C. Galle, whichhad been instituted by the present plaintiff to enforce a right ofsale under a mortgage. Plaintiff had been the agent and attorneyof the firm A. R. A. R. M. at Galle for a considerable time up tothe closing of the busines in 1920, and when the deed P 4 was*drawn up the property was conveyed to “ A. R. A. R. S. M.Narayanan Chetty.”
When the case came on for trial it was admitted on behalf of theplaintiff that by the deed P 4 the property was vested in him
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as trustee for the firm that is, that it was a document whiobconveyed the property as trust property although it declared no Daiton OL.trust. He sought, however, in this action to prove that the trusthad been extinguished subsequent to the deed by a settlement * ofuSyZtbetween him and Somasunderam Chetty. He pleaded that in1920 accounts were gone into between them and it was arrangedthat he (plaintiff) retain the property in question and other pro-perties at Galle at a valuation of Es. 51,000. Of that sum, Es. 48.000he pleaded had been paid, although this is denied by the defendants,and that in terms of the settlement he now possessed the propertiesfree of the trust, having taken the income from them and havingexpended money on their upkeep. The agreement is alleged tohave been written on an ola and kept by the principal, who hassince died.
Other questions arose between the parties, but it does not seemnecessary to refer to them. The issues, accepted by the trialJudge, were as follows:—
(For plaintiff)—
Was the plaintiff entitled to the lands described in the
plaint under deed No. 2,198 of December 20, 1919 ?
Did the plaintiff acquire title to the said lands and hold the
same in trust for Somasunderam Chetty ?
If so, were the 6aid lands in 1920 or at any time before seizure
under writ in case No. 16,531, D. C., Colombo, releasedfrom the said trust and did they become the absoluteproperty of the plaintiff ….
(For defendant)—
Did deed No. 2,198 dated December 20, 1919, convey title
to the lands in question to plaintiff, or was the said deeda conveyance to the firm of A. E. A. E. S. M. or to the-plaintiff as agent of the said firm and for and on behalfof the said firm ?
Did A. E. A. E. S. M. Somasunderam Chetty transfer the
said lands to the plaintiff ?
When the matter came on for trial evidence was led, and theposition was accepted on behalf of the plaintiff that by P 4 theproperty was conveyed to him in trust for the firm. It was thensought to show by oral evidence that there had been an assignmentof the beneficial interests of the firm and that the rights of thefirm under the deed had now passed to plaintiff. Objection wastaken to the admission of this evidence, and after the argumentthe District Judge reserved his order on this objection. Thereafter
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1927. he held the evidence was inadmissible, and, without hearingDahonJ, further evidence, dismissed plaintiff’s – claim. The 'latter now——appeals.
^Ohcttyv** The two points to be decided on the objection taken the learnedJames Fintoy .Judge sets out as follows: —
Did the conveyance of December 20, 1919, vest legal title
in plaintiff himself or in the firm of SomasunderaniChetty?
If the conveyance vested title in plaintiff subject to the
beneficial interest in Somasunderam Chetty, is it opento plaintiff to prove an oral agreement by which Soma-sunderam Chetty divested himself of his interest ?
Upon the first point it seems to me that the conveyance P 4vested the legal title in the plaintiff. Although the facts inArunasalam Chetty v. Somasunderam Chetty (supra) are not exactlyon all fours with the facts here, it is a definite authority by thePrivy Council for the proposition that when an agent for a Chettyfirm takes a deed in his name with the vilasam or initials of thefirm attached, the legal title is vested in the person whose namethe deed bears. This, as de Sampayo J. points out in Suppera-maniam Chetty v. Kannu Wappu (supra), was for some time anagitated question, and there are authorities on both sides, but theauthoritative view now supported by the above-mentioned decisionof the Privy Council appears to be as I have denoted.
The second question then has to be answered, and the learnedJudge has answered it in the negative, that it is not open to plaintiffto lead oral evidence of an agreement by Somasunderam Chettyto divest himself of his beneficial interest. This decision is basedupon the terms of section 2 of Ordinance No. 7 of 1840.
We may start, so far as this appeal is concerned, with the deedP 4 conveying the property to A. R., A. R. S. M. Narayanan Chetty.Upon the face of the deed no trust is expressed, nor is there anythingto show that Narayanan Chetty may not in fact be the fiim. I11evidence, however, he admits that he is not the firm, but only anagent for the firm, and that the money lent on the original mortgagewas Somasunderam’s money. He further admits that he purchasedthe property aganist the amount of the judgment for which hewas given credit. These facts, it seems to me, go to show thata resulting trust is created in favour of Somasunderam Chetty byoperation of law under the provisions of Chapter IX. of the TrustsOrdinance. It is settled law that parol evidence may be led toprove such facts whence such trust would arise; might it nottherefore reasonably be argued that it is equally open to the plaintiffto show that one of the essential elements of the constructive trustwas based upon a condition which has lapsed, or which arose from
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a set of circumstances which by act or conduct of the partiesimmediately concerned no longer exists ? It seem to me difficultto answer that question in the negative.
On the facts as set out therefore the dominium, or as'we maynow say, the legal estate, is vested in Narayanan Chetty to holdthe property for Somasunderam Chetty. This position creates nodifficulty even in the hybrid condition, if I may use that termwithout any offence, of the law in Ceylon. As Innes C.J. haspointed out in Estata Kemp and Others v. Me. Donald’s Trustee,1it is quite possible under Roman-Dutch law to separate the legalownership of property from the right to its beneficial enjoyment,and he cites a passage from the Digest (33t 2, 16), which he describesas a perfect example of what in English law is called a trust. Onethen can ask oneself what was the nature of the right of Soma-sunderam Chetty under these circumstances, which right it isargued was either extinguished or passed to plaintiff on the agree-ment alleged to have been made in 1920.|
I>4I<TON, J«
Voroy<msnCHetty.v,James FinlayCo.
Having due regard to the fact that one must guard agonist thedanger of using the expression “ fiduciary ” and 11 fidei commissaryin too wide a sense for the purpose of this case, it may be notedthat Innes C.J. in the case I have cited above, whilst not definingthe nature of the rights of heirs in the case of a fidei commissarybequest conferring vested rights upon the remainderman, trans-missible to his heirs, points out that where the dominium of thesubject-matter of the bequest is in the fiduciary, it would seemthat there could only be personal rights against the latter to enforcethe discharge of the testamentary trust, but that upon a certainevent happening the fidei commissmn might become purged ofits condition and the right to enjoyment would vest. In sucha case, of course, no question of any transfer or conveyance of theright arises.
It is not necessary, however, in my opinion to consider whetherthere has been any such extinguishment of the trust or purgingof the condition upon which it is based, which is a difficult questionas its arises in Ceylon, for this appeal can in my opinion be moreeasily determined from another aspect of the law. To ascertainthe law in force in Ceylon at the present time, one must bear inmind that the Common law has been amplified by statutes basedupon the principles of English law, and it is necessary to examinehow far that amplification has gone. Prior to the. Statute ofFrauds an equitable interest in land in England could be trans-ferred by parol, although the devise of an equitable interest inland, under the Statute of Wills (32 H. VIII c. 16), was held to bea devise .of land (Lewin on Trusts, 869t 908). The sections of
1 (2915) A. D. 491.
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1927 tlie Statute of Frauds which deal with the subject of trusts are theDalton" J. following:—
All declarations or creations of trusts or confidences of anylands, tenements, or hereditaments shall be manifestedand proved by writing signed by the party who is by lawentitled to, declare such trust, or by his last will in writing,or else they shall be utterly void and of none effect.
All grants and assignments of any trust or confidence shalllikewise be in writing signed by the party granting orassigning the same or by such last will or divise.
Where any conveyance shall be made of any lands or tene-ments by which a trust or confidence shall or may ariseor result by the implication or construction of law or betransferred or. extinguished by an act or operation of law,then and in every such case such trust or confidenceshall be of the like force and effect as the same would havebeen if this Act had not been made.
In England thereafter by section 8 the transfer of an equitable
interest was required to be in writing. When, however, OrdinanceNo.- 7 of 1840 was enacted in Ceylon no equivalent provisions such .as those set out above were introduced and presumably for a verygood reason, for there was no need to provide for any such interestin land as an “equitable estate/* as that term was used prior bothe Judicature Act, 1873, since the terms ‘‘legal estate” and*‘equitable estate” and all they connotate were unknown to theCommon law. The provisions of that Ordinance cannot be takento have any reference to an estate unknown to the law at thetime it was enacted, whilst it does not seem unreasonable to presumefrom these circumstances that these provisions were intentionally■omitted. Since 1871, however, there has been local legislation^bringing the law more into conformity with the English law of trusts,‘culminating in 1917 in Ordinance No. 9 of 1917, which speciallyprovides in section 118, after a long series of provisions basedentirely on English law, for the application of English law in amatter for which no specific provision is made. Ordinance No. 7 of1871 (the Property and Trustees Ordinance), Ordinance No. 22 of1871 (Prescription Ordinance), and Ordinance No. 11 of 1876 (Entailand Settlement Ordinance) appear to be the first statutory enact-ments which imported into Ceylon the ideas and terms of Englishlaw. Section 5 of Ordinance No. 9 of 1917 may now be said to bemore or less the equivalent of section 7 of the Statute of Frauds, butthere has been no legislation, so far as I have been able to ascertain,on the lines of section 8 introducing the provisions of the Statute of/Frauds with respect to the transfer of equitable interests in land.Tt would therefore appear that they are in the same' position asthey were in England prior to the Statute of Frauds.
XaraypnanChatty, v*'JameaFinlay<£ Co.
( 77 )
The development of the law of trusts is referred to by Berwick 1927.
J. in Ibrahim Saibo and Others v. The Oriental Bank Corporation jjamow J.
(supra), a case decided in 1874. The same development took
place in South Africa, and is specially dealt with by Sir William
Solomon in Estata Kemp and Others v. Me. Donald’s Trustee (supra). JamesFirUay
No such statutory enactments, however, have been introduced *
there as we have them to-day in Ceylon. In the first mentioned
case it was strongly urged that the doctrine of resulting trusts was
no part of the law of Ceylon. The question was whether the
English doctrine of resulting and constructive trust was contrary
to the provisions of Ordinance No. 7 of 1840, which provided in effect
that no interest in land can be created by sale, purchase, transfer,
or agreement otherwi.se than in writing notarially executed. After
referring to the distinction between “ resulting '* and *' constructive M
trusts, which, however, are both created by operation of law and
not by parties, Berwick D.J. comes to the conclusion that section 2
of the Ordinance provides for trusts creating an interest in land only
in so far as they are included in interests which are created by
parties. He adds: “ The very nature of the language used in the
Ordinance requiring the contract to be signed by the party making
the same shows this to have been the true intention, and that
interests not made nor created by parties but by operation of law
are not in its purview. ”
This decision, that implied or resulting or .constructive trustsmay be established by parol evidence, goes beyond what it isnecessary to decide in the case now under consideration, whilstthe real difficulty as it presented itself to the trial Judge therewhether an implied trust of land in English law does by Roman-Dutch law create an obligation in respect of land, also does notarise here. That difficulty is doubtless in great part now removedby the provisions of the Trust Ordinance of 1917. This decisiondoes show, however, how the provisions of section 2 of OrdinanceNo 7 of 1840 are limited, and, only has reference so far as thequestion raised in this case is concerned to trusts that create interestsin land that are created by parties, and not to trusts created byoperation of law. For the reasons I have set out I am also ofopinion that there is nothing in section 2 repugnant to the proof ofthe transfer of equitable interests arising out of a trust created byoperation of law by parol evidence.
The appeal is therefore allowed, with* costs, and the judgmentof the trial Judge set aside. I concur in the order proposed by mybrother.
Appeal allowed.