Bhagwat Narain vs Ganga Prasad and Another

Ross, J.—This is an appeal by the plaintiff, and the respondent is defendant No. 4. Defendant No. 1, who was the owner of certain house property, was indebted to the plaintiff for Rs. 450. A. bond was executed in plaintiff''s favour for Rs. 400 and a hand-note for Rs. 50. Thereafter the defendant No. 1 sold the house property to defendant No. 4 without the knowledge of the plaintiff, but subsequently gave the plaintiff a letter directing defendant No. 4 to pay to him Rs. 300. This payment was not made. The plaintiff has got a decree against defendant No. 1, but his suit has been dismissed against defendant No. 4 by both the Courts below.

The defense of defendant No. 4 was that although the defendant No. 1 had, under the terms of the deed of sale of the house property, left Rs. 300 in deposit with defendant No. 4 with the object of making payment to the plaintiff, he had subsequently given defendant No. 4 notice to pay that sum to him and the same had been paid and a receipt had been taken. It has been found by both the Courts in favour of the defendant that the payment was actually made to defendant No. 1 and the receipt taken in good faith.

A preliminary objection was taken that defendant No. 1 should have been made a party to the appeal, because otherwise, in the event of the plaintiff succeeding, there is a danger of the existence of two decrees for the same sum which may be separately executed. In my opinion there is no substance in this objection because if the plaintiff succeeds the decree can be drawn in such terms as will provide against any such danger.

Plaintiff contends that on the terms of the contract between defendant No. 1 and defendant No. 4 he is entitled to demand Rs. 300 from defendant No. 4. Ordinarily a stranger to the consideration of a contract cannot sue on the contract. That is the Common Law rule. That rule, however, is subject to modification in cases which are true cases of trust. In Touche v. Metropolitan Railway Warehousing Company (1871) 6 Ch. App. 67 : at p. 677 Lord Hatherley, said: "The case comes within the authority that where a sum is payable by A, B. for the benefit of C.D., CD. can claim under the contract as if it had been made with himself."

In Empress Engineering Co., In re (1881) 16 Ch. D. 125 : 43 L.T. 742 : 29 W.R. 342. Jessel, M.R., referring to that case, in the course of argument, said: In that case the Lord Chancellor finds, as a fact, that Walker was to receive the money as a trustee for the plaintiffs. If you can make out that Jones and Pride are cestui que trust, that alters the case. It appears to me that they are not.... A being liable to B, C agrees with A to pay B. That does not make B a cestui que trust" In his judgment his Lordship said:

it is then contended that a mere contract between two parties that one of them shall pay a certain sum to a third person not a party to the contract, will make that third person a cestui que trust. As a general rule that will not be so. A mere agreement between A and B that B shall pay C (an agreement to which C is not a party either directly or indirectly) will not prevent A and B from Coming to a new agreement the next day relsasing the old one. If C were a cestui que trust it would have that effect." Both these cases were referred to in Gandy v. Gandy (1885) 30 Ch. D. 57 : 54 L.J. Ch. 1154 : 53 L.T. 306 : 33 W.R. 803 Cotton, L.J., referring to the observations of the Master of the Rills said: "This shows that the general terms used by Lord Hatherley must be taken with some qualification as laying down the general law" His Lordship lays down the rule thus: ''''As a general rule a contract cannot be enforced except by a party to the contract, and either of the two persons contracting together can sue the other if the other is guilty of a breach or of does not perform the obligations of that contract; but a third person, a parson who is not a party to the contract, cannot do so. That rule, however, is subject to this exception. If the contract, although in form it is with A, is intended to secure a benefit to B, so that B is entitled to say he has a beneficial right as cestui que trust under that contract, then B would in a Court of Equity be allowed to insist upon and enforce the contract, That, in my opinion, is the way in which the law may be stated." Similarly Bowen, L.J., says: "But whatever may have been the common law doctrine, if the true intent and the true effect of this deed was to give to the children a beneficial right under it, that is to say, to give them a right to have these covenants performed and to call upon the trustees to protect their rights and interests under it, then the children would be outside the Common Law doctrine, and would, in a Court of Equity, be allowed to enforce their rights under the deed. But the whole application of that doctrine, of course, depends upon its being made out that upon the true construction of this deed it was a deed which gave the children such a beneficial right.

The result of these authorities is that the question in this case is one of construction of that clause in the deed of sale executed by defendant No. 1 in favour of defendant No. 4 which refers to the sum of Rs. 300. The words used are these: "Wa mubligh 300 waste adai zar-i-yaftani Bhagwat Narayan mazkurus sadar ke nizd mushtarian amanat chhora wa rahne dia." These words mean: ''''and Rs. 300 for payment of money due to Bhagwat Narayan I have left in deposit with the said vendee and have allowed to remain with him." This is plainly a provision for the benefit, not of Bhagwat Narayan the plaintiff, but of the vendee himself. A bond had been executed in favour of Bhagwat Narayan and although it had not been registered, the vendee naturally wanted to protect himself as long as it was outstanding. This money was, therefore, left in deposit with him to safeguard his purchase. I cannot read these words as creating any trust in favour of Bhagwat Narayan, nor as vesting this money in defendant No. 4 to the use of Bhagwat Narayan. That is not the natural meaning of the words and the court will not imply a trust unless it appears from the tenor of the instrument as a whole that trust is intended to be created. I can see no declaration of trust in these words. This finding differentiates the present case from the decisions in Deb Narain Dutt v. Ram Sadhan Mandal 20 Ind. Cas. 630 : 17 C.W. 1143 : 41 C. 137 : 18 C.L.J. 603, where the terms of the deed of sale are entirely different from those in the present deed, and in Dwarka Nath Ash v. Priya Nath 36 Ind. Cas. 792 : 22 C.W.N. 279. 27 C.L.J. 483, where there was an express undertaking by the vendee to pay the plaintiff his dues out of the considaration money retained in his hands. There is no such undertaking in the present case and no declaration of trust in the plaintiff''s favour. The fact that a letter was subsequently sent by the defendant No. 1 to defendant No. 4 authorizing him to pay the money to the plaintiff cannot convert the instrument into a deed of trust and makes no difference to the result.

I, therefore, hold that the decisions of the lower Courts are right and dismiss the appeal with costs.