G. Narayanaswami Chetty vs C. Ramaswami Chetty and Another

Venkatasubba Rao, J.—The plaintiff files this suit to enforce an equitable mortgage created in his favour by defendant 1 The suit is brought

against the two defendants, who are brothers-in-law, in their capacity as executors, with probate of the will of Andalammal who died in January

1913. Defendant 1 borrowed from plaintiff 4 sums of money, namely Rs. 400, Rs. 1,200, Rs. 1,800 and Rs. 500 on the 26th August, the 18th

October, the 5th December and the 9th March 1918, respectively. In respect of these sums defendant 1 executed a promissory note without

describing himself as the executor of Andalammal. The plaintiff''s case is that defendant 1 represented to him that the moneys were required for the

estate of the testatrix and deposited the title-deeds of the suit house which belonged to her, intending to create an equitable mortgage.

The pleas raised are these: firstly, that no mortgage was created, but the plaintiff, having obtained the title-deeds in another connexion, has

fraudulently put forward this claim; secondly, that the moneys were advanced to defendant 1 personally and not in his capacity as executor; and

thirdly, that the mortgage, having been made by only one of the two executors, is not binding upon the estate. I shall deal with these pleas in the

order I have mentioned. It is impossible to take any serious notice of the first plea. The plaintiff keeps regular books of account and his day-books

for the years 1917 and 1918 have been filed. Not the slightest suspicion attaches to them and each of the four entries relating to the loans

specifically mentions that the advance was made on the security of the property. In the first instance, only the daybooks were produced, but, in

cross-examination of the plaintiff, it was elicited that he maintained also rough chittah books. I thereupon directed him to have them produced and

they were brought to Court after the luncheon interval. They confirmed and corroborated, in every particular, the entries in the regular daybooks,

and I must say that it is difficult to conceive of a more reckless plea than the books were fabricated for the purposes of this case.

Is there any substance in the second plea, that defendant 1 entered into these transactions in his individual capacity? The plaintiff states on oath

that this man represented to him that legacies had to be paid and repairs to the house had to be executed. Defendant 1 made a further

representation at that time that the other executor was dead. The plaintiff then made enquiries of Mr. Vinayaka Mudaliar, a retired Assistant

Commissioner of Police, with whom defendant 1 was associated in the management of a certain temple at Mylapore, and the plaintiff was satisfied

that defendant 1 required moneys and advanced the same to him. In the first place, among the documents deposited with the plaintiff, is the

probate of the will. It is absurd to ask me to believe that the plaintiff, into whose hands was put this probate, could for a moment regard defendant

1 as the owner of the property. Then it is an important circumstance that, under the will, the disbursments to be made, including the sums to be

paid as legacies, amounted to Rs. 3,800, whereas the main item of property left by Andalammal was the suit house valued at Rs. 3,000. It is thus

obvious that the provisions of the will could not be carried out, without the executors either selling the house or raising money upon its security. The

plaintiff deposes that, when the first sum of Rs. 400 and the last sum of Rs. 500 were advanced, it was represented to him that the amounts were

required for repairing and improving the house. When the other two sums were lent, he was told that they were required for paying off the legacies

mentioned in the will. It as admitted that the house was in need of repairs and, as a matter of fact, it is now said that repairs were executed, but it

was defendant 2 who advanced the moneys for the purpose. On the face of the will, there could be also no question that moneys were really

needed for payment of the legacies specified in it. I find no reason for disbelieving the plaintiff''s evidence and I accept it as true. I am satisfied that

he advanced moneys to defendant 1 on the representation made to him that they were required for the purposes of the estate. I am also satisfied

that defendant 1 borrowed these moneys and mortgaged the property in his capacity as executor.

Defendant 2 pretends that the legacies mentioned in the will were paid by himself out of his own funds within a year of Andalammal''s death. I

have not the slightest doubt that this evidence is utterly untrue. I do not believe that he spent a single pie of his money in connexion with this estate.

The defendants say that they were keeping accounts for their management of the estate from Andalammal''s death till 1919, but that those account

books have been lost. This is a palpable falsehood. Defendant 1 has in his evidence made a reckless statement that he handed these account

books to the plaintiff who is said to be suppressing them. In his affidavit of documents, defendant 1 had previously stated that the books had been

lost and he has no explanation to offer in regard to this glaring contradiction. He has deposed further that he mentioned to defendant 2 the fact of

his having handed over the books to the plaintiff. Defendant 2, notwithstanding his anxiety to support his brother-in-law, has not ventured to

confirm the story, as, in his own affidavit of documents, he also previously stated that the account books had been lost. The net result is, that the

account books of Annapurani''s estate have been wilfully withheld by the defendants, and one cannot help making the inference that, if produced,

they would completely destroy the defendants'' case. There is a further circumstance which shows that the case set up is utterly false. Defendant 2

says that he was carrying on a business in yarn and that he found moneys for paying legacies from the profits made in that business. He asks me to

believe that he did not keep any accounts in respect of that business. Yesterday, while he was in the box, he said that he made notes in diaries

showing that he made the payment. Not only were they not produced yesterday, but even to-day they are not forthcoming. Thus, we find that

neither set of accounts is produced, defendant 2''s private accounts, to show that he paid the moneys, nor the estate accounts to show that the

moneys were received. Then, again, why should defendant 2 have paid the moneys at all at that time? I pass over various contradictions, for the

final statement made is that the lagacies were paid before the probate was granted Defendant 2 was certainly not in such a position as to make a

voluntary advance of his own money under no compulsion. There Was no obligation on his part to pay his private moneys before the house was

sold, and it is impossible to believe that he was so generous as to voluntarily disburse moneys from his own pocket. He now produces an account

book which, on his own showing, is worthless and stands thoroughly discredited. If any legacies were repaid, I am sure that in any event it was not

defendant 2''s money that was used in paying them.

I shall now deal with the third plea which raises a question of law. u/s 307, Succession Act, an executor has power to dispose of the property of

the deceased in such manner as he thinks fit, this power being subject only to any restriction imposed by the will itself. Far from there being such a

restriction in this will, the power to sell is implied, it being impossible to pay off the legacies without selling the house. As a matter of fact, it is

conceded for the defence that, this power is implied. It follows that if the executors could sell the house, they could exercise the lesser power of

mortgaging it. Then we come to Section 311, Succession Act. It says that, where there are several executors, the powers of all may, in the

absence of any direction to the contrary, be exercised by any one of them who has proved the will. Again, not only is there an absence of direction

to the contrary, but there is a clause which says that any one of the two executors may perform all the functions of both. There is no substance,

therefore, in the plea put forward.

Moreover, as a question of fact, it is not disputed that defendant was managing the estate till 1919. There are two rental agreements of the years

1917 and 1918, which show that defendant 1 alone was managing the estate. In the register of the Corporation of Madras, the name of the owner

of the house was very early changed from that of Andalammal to that of defendant 1. There was, therefore, nothing to prevent him from mortgaging

property belonging to the estate.

The law on the point is thus stated by Sterling, J., in In re Venn & Furze''s Contract [1894] 2 Ch. 101.

It appears to me that I have the high authority of Lord Cairns and Lord Cranworth for saying that, where a person who fills the position of an

executor is found selling or mortgaging part of his testator''s estate, he is to be presumed to be acting in the discharging of the duties imposed on

him as executor, unless there is something in the transaction which shows the contrary; and further that the contrary is not made out merely from the

circumstance that the conveyance or mortgage does not purport to be executed by him in that capacity.

This case shows that when an executor deals with a property of the estate, it must be presumed that he was acting in that capacity,

notwithstanding that this fact does not appear on the face of the document. In Colyer v. Finch [1854] 26 L.J. Ch. 65, Lord Carnworth observed

thus:

It does not matter that the mortgage to Mr. Pinch was not made avowedly; that is, on the place of it, for the purpose of raising money to pay

debts; that is not at all necessary, nor could he be affected unless it was apparent on the face of it that it was not, and could not, have been so

intended. I very much incline to think that where a party, the devisee of real estate, charged with the payment of debts, sells, the purchaser has no

need to inquire at all whether the money is applied in payment of debts, or even whether it is a sale for the purpose of enabling debts to be paid.

These observations apply to the facts of the present case, although I have given a finding that the mortgage was made expressly for the purpose

of raising money for the benefit of the estate.

I may mention why and in what circumstances this defence has been raised. It was ah ill-advised act of the plaintiff that suggested this false

defence. Previous to the suit transaction, defendant 1, in his personal capacity, had borrowed from the plaintiff Rs. 3,000 on the mortgage of his

own house, No. 39, Arundale Street. That house, the plaintiff believed, was worth more than the amount due to him. In this belief he filed a suit on

the promissory notes mentioned above, against defendant 1 personally, without making any mention of the equitable mortgage in question; and,

having obtained a personal decree, he went on to attach defendant 1''s equity of redemption in 39, Arundale Street. Next he filed a suit on the

mortgage of that property. In the course of that litigation the plaintiff mentioned the reason for adopting this strange course. He said that he was

advised by some solicitor that the suit mortgage was created only by one of the two executors and that his remedy was to proceed against

defendant 1 personally, as on the face of the promissory notes, he made himself personally liable Having found that he was unable to realize his

moneys by the course he adopted, (39 Arundale Street, did not fetch the amount expected), the plaintiff has now filed the present suit under the

power given to him under Order 31, Rule 14, Civil P.C. This circumstance has led the defendants to put forward the plea that the mortgage was

never created.

I pass a mortgage decree for Rs. 7,255-8-5 with interest on Rs. 3,900 at 12 per cent per annum from the date of the plaint to the date fixed

for sale and with further interest on the aggregate amount at 6 per cent. thereafter. Time for redemption is one month. The defendants shall pay

personally the costs of the suit.

On behalf of defendant 2, I was asked to adjourn the case on the ground that some of his witnesses had not come. This is a most frivolous

application. The ex-parte decree against defendant 2 was set aside by consent of the plaintiff, and one of the conditions on which the order was

made in his favour was that the case was to be peremptorily taken up yesterday. It was done, and the hearing was prolonged till to-day, and I have

not the slightest doubt that the adjournment is asked for to ''gain time. No subpoenas have been taken out for these witnesses and it is impossible

to accede to this request.

In the course of the trial, defendant 1 impressed me as such a liar that I intended at the time to take proceedings against him under the Criminal

Procedure Code, at least in regard to one palpably false statement; but, on reflection, I have decided not to take any such action.