Manamathi Munisami Mudali vs Perumal Mudaly

An interesting question was argued by Mr. K. Rajah Aiyar relating to the appropriation of payments. The plaintiff had a mortgage from

defendants 1 and 2. There was also a debt due to him from them on a promissory note. Defendants 1 and 2 requested the plaintiff to collect some

money due to them from a third party. This was done on the 16th August 1915. Prior to that, the plaintiff sued on his pro-note, and obtained a

decree. In his earlier execution application, he could not have asked that the money collected by him should be credited in partial discharge of the

decree. On the 11th November, 1915, under another money decree against defendants 1 and 2, the 3rd defendant purchased the equity of

redemption in the properties mortgaged. Five days after this plaintiff entered up satisfaction of his money decree to the extent of the money

collected by him. He then sued for the full amount due on the mortgage. The 3rd defendant contended that the plaintiff should have appropriated

the money to the mortgage debt and that his liability protanto should be discharged. The Lower Appellate Court refused to accept this contention.

We think the District Judge was right.

It is now well settled that the plaintiff''s right of appropriation is preserved to him until the moment of filing the plaint in court (See Lord

Macnaghten in Cory Brothers and Co. v. The Owners of the Turkish Steamship ''Mecca'' (1897) A.C. 266. In Seymour v. Pickett (1905) 1 K.B.

715 Lord Justice Romer pointed out that, provided it will not be inequitable to do so, the plaintiff should not be deprived of this right. Mr. K.

Rajah Aiyar contends that when the rights of third parties are likely to be prejudiced, it must be taken that it would be inequitable on the part of the

plaintiff to make the appropriation in a particular way. Our reading of the learned Lord Justice''s judgment is that there must be something

unconscionable, something which would operate as an estoppel, before this right of the plaintiff is taken away. It was held in Simson v. Ingham

(1823) 2 B&C 65 that a creditor can cancel an appropriation entered in the accounts if the same was not communicated to the defendant. This

authority shows that the question of inequity has to be looked at not only from the point of view of the third party, but also from the point of view

whether the creditor should not endeavour to put himself in an advantageous position so long as there is nothing which makes it unconscionable on

his part to do so. viewed in this light, we think the District Judge has applied the proper test in giving his decision.

We may say that the decision in Kundan Lal v. Jagannath ILR (1915) All. 649 which seeks to go back to the principle enunciated in Clayton''s

case (1816) 1 Mer. 572 namely, that the creditor should elect as soon as the payment is made is opposed to the language of the Indian Contract

Act and to Gory Brothers and Co. v. The owners of the Turkish Steamship ""Mecca"" (1897) A.C. 266 and to Seymour v. Pickett (1905) 1 K.B.

715.

The Second Appeals dismissed with costs.