1. It has been properly admitted on behalf of the defendants ia this case that Khalphanbhoy probably intended to settle a sum of Us. 5,000 upon the plaintiff Hirbai.
2. He did settle Rs. 5,000 upon his other daughter Mulbai, and there is nothing to make the statement of Rahimbhoy incredible when he says that Khalphanbhoy repeatedly told him that he intended to bestow an equal bounty on each of his daughters.
3. Rahimbhoy adds that, about a fortnight before his death, Khalphanbhoy said that he had bought a house for one daughter and a loan note for. Rs. 5,000 for the other. This is the most important piece of evidence, as being that of a disinterested witness, adduced for the plaintiff. It goes to show an intention to benefit the plaintiff entertained by Khalphanbhoy; but the question remains whether the benefit had actually been conferred, or whether the speaker, by the words deposed to, intended to confer it by declaring himself a trustee for his daughter, so that the equitable interest passed at that moment from him to her, supposing it had not passed before.
4. Now a declaration in the sense necessary to constitute an obligatory relation, as in the case of a trust, must be something more than a statement or narration of facts. As a narrative it may afford grounds for inference as to a relation subsisting, but cannot create it. That arises from an expression of will, and I 'cannot construe what Khalphanbhoy said to Rahimbhoy as such an expression, an embodiment of his volition by which he intended Rahimbhoy, then, and there, to understand that he thenceforth hell for another what he had before held for himself. His gift to Mulbai had been made effectual by a legal transfer to trustees for her. As a Mahomedan, or as a Hindu, he would probably think such a transfer necessary to complete a gift; and, if we are to be influenced by analogy, that would guide us to the conclusion that he intended in Hirbai's case, as in Mulbai's, to part at all with his dominion over the intended donation only when he parted with it altogether. He had not, it appears, paid Hirbai any interest on the note bought by him two years previously, and his words are as consistent with an intention to transfer the note as with his holding it in trust for his daughter.
5. It is not unlikely that a trust, in the equitable sense, was an idea that had never presented itself distinctly to his mind; but at any rate, so far as the evidence of Rahimbhoy goes, no; declaration of trust was made to him; and if what was intended was a gift, that gift was never completed, and cannot be completed by the Court: Jones v. Lock L.R. 1 Ch. Ap. 25; Bichards v. Delbridge L.R. 18 Eq. 11.
6. The other evidence of the trust is that of the plaintiff Hirbai, of her husband Gagan Nensey, and of her son Mahomed. It is curious that no one of these witnesses deposes to any actual and unequivocal declaration of trust by Khalphanbhoy. Mahomed says, 'Khalphanbhoy came to my mother and said she might come for the note and get it whenever she liked.' Hirbai herself says: 'My father said I might take it when I liked. I said to my father I will take it when my sons grow up and do business.' Her husband says, 'Khalphanbhoy said I will keep this, but you may take the interest whenever it is received.-You are poor, I will keep the note; it is bought at 3 per cent, premium. That will be deducted from the interest. When that is done you may take away the interest whenever you wish.'
7. This last statement would establish no more than a promise to pay Hirbai the interest on the note. The other statements, if accurate, would prove a promise to hand it to Hirbai when she should demand it. The mere handing of the note would be ineffectual to transfer it; and had Khalphanbhoy even gone so far as to place the note in Hirbai's hands, that would but have amounted to an imperfect gift: Jones v. Lock L.R. 1 Ch. Ap. 25. To have constituted himself a trustee, he must have manifested his will to become a trustee in some way which would necessarily, or properly, convey that precise impression to his hearers. To promise a thing is not to hold it on trust: Dipple v. Corles 11 H 183; to promise the interest is not even to promise the thing which produces the interest; and it would require some straining of the words reported to make them mean more than the promise of a gift when Hirbai should desire it.
8. If, Indeed, we could regard the different accounts given by the three witnesses as complementary to each other, and conclude that Khalphanbhoy said all that they collectively assign to him, we might, by comparing this with the alleged undertaking of Khalphanbhoy to make an assignment of Rs. 5,000 to each daughter, arrive almost at an acknowledgment of a trust, though still there would be an absence of any precise declaration of the character in which Khalphanbhoy retained the note. But, then, there are irreconcilable, discrepancies in the statements of the mother, father, and son. They disagree wholly as to the part played by one Mahomed Dama, an intimate, as they say, of Khalphanbhoy. The accounts they give of an endeavour to buy a house, and the abandonment of that design, are inconsistent and improbable, and the witness called to support that part of their story does so by recounting actual impossibilities. Gagan Nensey was certain that his son was not even present when the note was brought by Khalphanbhoy and the trust declared by him. Afterwards, Gagan wavered, and could depose to nothing firmly and distinctly. His son, Mahomed, says he mentioned the transaction at the time to persons whom he names, but no one is called to confirm the statement. The neighbours who advised Hirbai against taking a house are unfortunately dead.
9. It is plain that, even if these witnesses are in any degree morally honest ones, their recollection of the purchase and exhibition of the note, and of what Khalphanbhoy said about it seventeen years ago, is too misty and uncertain to deserve any groat confidence. It has been held in many cases that it is unsafe to build up a trust upon mere conversations, loosely remembered, and inaccurately related. In the course of time people, whose perceptions of the importance of this or that small distinction in what took place, were never really awakened, blend their own thoughts and wishes imperceptibly with the first simple suggestions of the memory. This may occur without positive dishonesty; and resentment at unkind usage, for which there appear to be grounds in this case, helps a halting conscience over many stumbling blocks. It was urged very reasonably by Mr. Budrudin, that precise agreement is not to be expected after (he lapse of so long a time; but what is the proper conclusion from that Not that a fact is proved which the deponents cannot clearly recollect, but that the infirmity of the human memory is a necessary evil to those who have no better reliance. We must not, because the memory is defective, supply its defects by conjecture. To create a trust there must be a clear acknowledgment of holding as a party subject to account to the beneficiary. A mere declaration that property, or the proceeds of property, will be given, is insufficient: Dipple v. Corles 11 Hare 183. I cannot say that any such definite declaration is established in the present instance.
10. The accounts of the defendants' firm which have been put in evidence might very well be held to corroborate testimony of a trust which was itself of a satisfactory description. But they nowhere distinctly state that the loan note was held in trust for Hirbai. All that can really be said with confidence is that they are in a great degree consistent with such a trust; while, to give them the necessary weight for the purposes of this suit, they ought not only to be consistent with the hypothesis advanced by the plaintiff, but not consistent, or not at all so consistent, with any other. When Khalphanbhoy bought the note in January, 1864, he opened an account headed 'Promissory note for Rs. 5,000.' To this ho debited the cost of the note at a premium, and with certain additions, amounting to Rs. 5,238 odd. On the Rs. 238 he charged in that account interest at 9 per cent.: on the dividends he received on the note he allowed interest at 6 per cent. The small balance of interest in his favour, or rather against the note transaction of Rs. 9 odd he credited as a gain to himself in his general interest account. The account of the note debited with the excess of Rs. 9 1/4 15 for difference of interest was made up at the end of the current year with a debit balance of Rs. 5,005 2/4 44.
11. In 1921 this is brought forward. The dividends are again credited, and interest being allowed on them at 6 per cent., and charged on 52/4 44 at 9 per cent., a balance on the interest of Rs. 3 1/2 28 is credited to the account of the note. The result at the end of the year was a balance against the note account of Rs. 4,75 6/2 72. This was struck on the 19th October, 1865, and in the January following Khalphanbhoy died. No interest, as Hirbai admits, was paid by him to her, though some was due after the premium on the note had been defrayed.
12. She and her family went, just before Khalphanbhoy's death, to Zanzibar. One would have thought that people of humble means would on such an occasion have obtained payment of: the interest received by the trustee, if they did not demand the note itself; but nothing of the kind was done. Khalphanbhoy was ill, but not unable to attend to business. One would have expected that some memorandum would be got from him, in order to make Hirbai's position secure; but nothing of this kind took place. Something must, of course, be allowed for the delicacy a daughter might feel in asking her father for direct indicia of the right he had vested in her. But the indicia were not obtained; and we have to consider the account as it stands.
13. The opening of a separate account for the note of Rs. 5,000 might, by itself, be merely a means for determining the gain or loss on a speculative purchase. But, in that case, we should expect to find interest charged on the Rs. 5,000, and not merely on the premium of Rs. 238, whereas no interest is charged on the former sum. Again, if the account represented a mere adventure, we should expect the interest on both sides to be reckoned at the same rate': as it is, we find 9 per cent, charged, and 6 per cent, allowed. These circumstances, and the credit taken by Khalphanbhoy in his general interest account for the difference of Rs. 9 1/2, indicate that he looked on the note account as not representing a mere adventure, or an interest identical with his own. The same conclusion is suggested by his having allowed Mahomed Gagan to take a copy of the account. Mahomed may not deserve unreserved credence, but, oft the whole, I think it probable that on this point he is so far true that the copy was really made by him at the time he states. Had the purchase been a mere adventure the natural way to deal with it Would have been to place on the debit side simply the total purchase-money and interest thereon at the current rate; and on the credit side dividends realized with similar interest; and at last the sale proceeds actually realized; the balance shown being carried to profit and loss.
14. On the other hand, the Rs. 5,000; if Khalphanbhoy thought, he had definitely parted with the beneficial ownership of the note, ought to have been carried to profit and loss, or to capital account, supposing he kept one. If he had parted with Rs. 5,000 'to his daughter, he was in one form or another Rs. 5,000 the poorer and his accounts ought to have shown it; while, if he retained his ownership, coupled or not with any positive purpose as to his use of it, his accounts would properly show the note as answerable for the sums, not otherwise dealt with, standing to its debit. Yet in the case of his daughter Mulbai, when Rs. 5,000 were invested for her, the sum was not debited apparently to any account except to that of her trust. It appeared as a permanent debt and asset in the books, though not to be recovered,--in fact, irrecoverable. The inferences to be gathered from unsystematic book-keeping being so uncertain, it would not be safe to build up a case, either for or against a trust, except from some expression in the accounts distinctly supporting the one or the other hypothesis of the parties.
15. Again, had he regarded the note as already Hirbai's, or finally appropriated to her, why should Khalphanbhoy not have headed the account with her name If, as she says, she parted with him on affectionate terms when she was going to Zanzibar, he would naturally be moved on such an occasion to pay to her the interest then due. It seems that on this point the truth has not bean told, or else Khalphanbhoy regarded, and was allowed to regard, the note as still his own.
16. The most likely account of the matter appears to be this; that Khalphanbhoy having resolved to bestow Rs. 5,000 on Hirbai, bought a note which he intended to present to her when the dividends received on it, plus interest, should have discharged his expenditure in excess of the Rs. 5,000, plus interest on such excess. He would fulfil his purpose, and his promise, by giving the Rs. 5,000 eventually, without any charge for his bounty, but without the sacrifice of one pie more. Before the transfer of the note to Hirbai, or to trustees for her, she had gone to Zanzibar, and her father had died from the account, coupled with the oral testimony, I can gather with much confidence that Khalphanbhoy intended Hirbai to have the benefit of the note, but they contain nothing to charge him as an accounting party responsible to another.
17. After Khalphanbhoy's death his son Khalakdina sold the note in October, 1866, at a premium and appropriated the sum realized. This would, of course, have been a breach of trust had he regarded the note as Hirbai's property, and one which he would probably not have committed, as he then, and afterwards, was on affectionate terms with her. Even if he had sold as her agent, and for her benefit, he ought, on that supposition, to have credited her with the whole amount of the premium realized.
18. He had already, on the 10th April, 1866, debited the note account with Rs. 243 1/4 28 to bring the apparent charge against the note to exactly Rs. 5,000, and at the same time credited Rs. 243 1/4 28 in an account of interest on the note. He now cleared the former account by crediting Rs. 5,000; the surplus proceeds he took for himself, which, if a trustee, he would have been bound to pay or credit to Hirbai.
19. The interest account, however, was still kept open as on a debt of Rs. 5,000, and Rs. 125 credited each half-year, as though the 5 per cent. note had still been producing dividends. Prom this we should gather that Khalakdina thought some one was entitled to the interest on Rs. 5,000; and, in fact, Hirbai's name was placed over that account in 1868. His letters of the 28th and 31st January, 1868, show unmistakably that he thought she was entitled to the interest on Rs. 5,000, and it was regularly credited, and occasionally drawn upon, for several years.
20. In 1928 (1871-72) the rate of interest is raised to 6 per cent., and the amount due for fourteen months is credited in one sum at the end of the year. The same rate is afterwards continued, until, in 1876-77, no interest is credited, and from that time forth there is no regularity. Even before that time, viz., in 1874, the plaintiff says she had been unduly debited Rs. 885 1/4 40, improperly transferred from her husband's account, and the warrant for such a transfer seems certainly to be Insufficient.
21. Now on this state of facts it cannot be doubted that Khalakdina, the plaintiff's brother, thought she was, at least morally, if not legally, entitled to the interest on Rs. 5,000. But this is consistent with his thinking her not entitled to the principal sum; he may have thought she was to have the interest absolutely, the principal subject to some term or condition, or not at all. But the case of the plaintiff is not placed upon any trust created by Khalakdina; and even if he thought there was a trust, that would no more create a trust than the opposite supposition would destroy a trust really existing. He never, so far as appears, said that he held the Rs. 5,000 note in trust for Hirbai, or even Rs. 5,000 out of the proceeds of it when it was sold. What may be inferred is that he knew his father intended Hirbai to have Rs. 5,000, and that he adopted that intention as a pious duty, and in the meantime recognized her moral right to the interest, but without doing, or saying, anything conclusive as to a trust of the principal. If there was a trust at all, it was a trust of the loan note, created by Khalphanbhoy himself, and subsisting at his death.
22. I cannot find that such a trust has, in fact, been established, and I must, therefore, find for the defendants, and adjudge that the plaintiff is not entitled to any part of the relief claimed by her.
23. The defendants were, I think, under a moral obligation to carry out the purposes which the grandfather expressed and their father in part at least fulfilled. Their conduct, and especially that of Jan Mahomed, deserves moral reprobation; for, even if their means have become straitened, they could have at least rendered some assistance to their aunt. But I cannot unfortunately say, upon the evidence, that they are subject, towards the plaintiff, to a duty which this Court can compel them to perform.
24. The parties respectively are to bear their own costs of the suit. The plaintiffs appealed.
25. The appeal was heard on the 16th and 20th March, 1883, before Sir, Charles Sargent, C.J. and Bayley, J.
26. Budrudin and Telang for the appellants urged the same arguments as in the Court below. They Sited Reeves v. Capper 5 Bing. N.C. 136; Flory v. Denny 7 Ex: 581.
27. Latham (Inverarity with him) for the respondents.--Reeves v. Capper 5 Bing. N.C. 136 and Flory v. Denny 7 Ex: 581 are not in point here. Both are cases of valuable consideration, and only decide that a personal chattel may be mortgaged without a deed. The learned Counsel relied on the same arguments as were relied on for the defendants in the Court below, and cited the following additional authorities:Antrobus v. Smith 12 Ves. 39; Milroy v. Lord 4 De G.F. & J. 264; Vandenberg v. Palmer 4 K. & J. 204; In re Kahandas Narrandas I.L.R. 5 Bom. 154; Be Glover 2 J. & H. 186.
Cur. adv. vult.
Charles Sargent, Kt., C.J.
28. This is a suit by the daughter of one Khalphanbhoy, a Khoja merchant, who died in the year 1866, to compel the defendants, who are the grandsons and representatives of the said Khalphanbhoy, to deliver up to her a promissory note for Rs. 5,000.of the 5 per cent. Government loan, on the ground that, although purchased by her father in his own name, it had been set apart by him, before his death, as a provision for her. The difficulty of correctly appreciating the evidence, which is inherent in all cases of this description, is enhanced on the present occasion by the circumstance that, with the exception of one witness, Rahimbhoy, the only material witnesses are the parties themselves; and further by the fact, that the events and conversations to which they refer, occurred sixteen or seventeen years ago. However, it is not disputed by the defendants that Khalphanbhoy did contemplate settling Rs. 5, 000 on each of his two daughters, Mulbai, and the plaintiff Hirbai; and we see no reason to doubt the evidence of Rahimbhoy, who would appear to be a disinterested witness, that such was the case; and, further,. that Khalphanbhoy told him shortly; before his death that he had purchased the 5,000 rupee note wish the object of giving effect to that, intention on behalf of Hirbai.
29. The difficult question, however, remains, whether Khalphanbhoy gave effect to that intention before his death in such a complete manner that this Court can regard the property in the note as having been transferred to Hirbai.
30. Now the plaintiff's case is that, although there was no 'Complete transfer of the legal ownership in the note, Khalphanbhoy constituted himself a trustee of the note for the benefit of Hirbai, and that the Court will enforce the trust, although a voluntary one. A. long series of authorities in the Courts Of Equity in England have established that, although the Court will not assist an incomplete gift, it will give effect to a declaration of trust by the donor when clearly and satisfactorily established. The application of this doctrine to particular cases has, doubtless given rise to much divergence of opinion; but we think that, having regard to the weight of authority, the law may now be taken to be as stated by Sir G. Jessel in Richards v. Delbridge L.R. 18 Eq. 14
The principle is a very simple one. A man may transfer his property, without valuable consideration, in one of two ways: he may either do such acts as amount in law to a conveyance or assignment of the property, and thus completely divest himself of the legal ownership, in which case the person who by those acts acquires the property takes it beneficially, or on trust, as the case may be; or the legal owner of the property may, by one or other of the modes recognized as amounting to a valid declaration of trust, constitute himself a trustee, and, without an actual transfer of the legal title, may so deal with the property as to deprive himself of its beneficial ownership, and declare that he will hold it from that time forward on trust for the other person. It is true he need not use the words, 'I declare myself a trustee, but he must do something which is equivalent to it, and use expressions which have that meaning; for, however anxious the Court may be to carry out a man's intention, it is not at liberty to construe words otherwise than according to their proper meaning.
31. Now the direct evidence in this case consists of the statements made by Hirbai and her husband as to what they say passed between themselves and Khalphanbhoy when the note was purchased. Hirbai's statement is that Khalphanbhoy came to ask her whether he should buy a house or a note; that she said, 'If you can buy a good house buy it.' That the day the note was, shown her, her father came and asked Mahomed to go with him to buy the note, and afterwards they returned with it. She said to her father 'I will take the note when my sons grow up and do business', and in answer to the Court she said, 'When my father came about the note he said' This is your note; take it when you; want it.'' Hirbai's husband's statement is that he saw the note the day it was purchased, that Khalphanbhoy said, 'I will keep this, but you may take the interest whenever it is received', and that he further said, 'You are poor; I keep the note; it is bought at 3 per cent, premium; that will be deducted from the interest; when that is done you may take away the interest whenever 'you.like. That is all.' In re-examination he stated that Khalphanbhoy said, 'You may take the interest, or you may take away the note if you like.' On being pressed to explain why he had not stated this in examination-in-chief he said, 'He did not properly understand the question, and that, when he said he had told all, he did not mean that as the end of the conversation.'
32. Now the learned Judge who tried this case in the Court below, whilst admitting that this evidence, if accepted as reliable, might, 'when taken in conjunction with Rahimbhoy's testimony, be deemed to establish the acknowledgment of a trust by Khalphanbhoy, was of opinion that it was of such an unsatisfactory description, owing to the discrepancies in it, and its generally misty and uncertain character, that it ought not to be accepted, unless corroborated by undisputed facts in the case incapable of being explained except on the hypothesis advanced by the plaintiff, and we substantially agree in that view.
33. The equitable doctrine of the transfer of ownership by acknowledgment of trust, when it is sought to establish it by oral evidence, requires to be applied in this country with the greatest caution; and we cannot doubt that to allow an acknowledgment of trust to be established by the evidence of interested parties, speaking as to conversations which took place seventeen years ago, without the corroboration derived from other evidence pointing irresistibly in the same direction, would be to introduce a most dangerous mode of appreciating evidence in this country, and would offer a direct encouragement to perjury.
34. Now it is contended for the plaintiff that Khalphanbhoy's books, coupled with Rahimbhoy's evidence, afford that corroboration. It is not in dispute that Khalphanbhoy, after the purchase of the note, opened an account in his books headed 'The account of one promissory note, bearing 5 per cent, interest'; and the nature of that account, assisted as it is by Rahimbhoy's evidence as to what Khalphanbhoy said to him on the subject, can leave no doubt, we think, that Khalphanbhoy regarded the note at that time as purchased for the purpose of making a provision for Hirbai; and, further, that the immediate object of opening the account was to enable an account to be kept of the interest on the note after deducting the premium from it. The former conclusion is made highly probable by the circumstance of no interest being charged on the 5,000 rupees, and a different rate of interest being debited to the note on the premium from what is credited to it on the dividends payable on the note. The account of interest on the note explained by the account in a book called 'Avro' entered only three months after Khalphanbhoy's death, supports the latter conclusion as to the immediate object of opening the account. But these inferences, although pointing to the intention and object which Khalphanbhoy had in regard to the note, are quite consistent with Khalphanbhoy's regarding himself as under no obligation to account to any one for the note. Had he treated the note at that time as appropriated to Hirbai, in the sense of his being a, mere trustee of it on her behalf and liable to account to her, we should have expected to find the note placed to the credit of an account opened in the name of Hirbai, as was done in the case of his daughter Mulbai, or, at any rate, some statement in the account which he did open that the note belonged to Hirbai; and, further, that it would have been entered in the account of gifts as the 5,000 rupees were which were given to Mulbai. Lastly, as Hirbai and her husband were persons of slender means, it is worthy of remark that no interest on the note, although there was a balance of Rs. 243 to the credit of the interest account after paying the premium, was paid to them when they left for Zanzibar at the end of 1865,--a circumstance which lends colour to the statement of Jan Mahomed that Hirbai and her husband were at that time on bad terms with Khalphanbhoy, because he refused to give them the 5,000 rupees in cash. It is true that Khalphanbhoy's son, Khalakdina, ultimately carried the balance of interest on the note to the credit of the account of Hirbai in 1924 (1867-68),--a circumstance which doubtless shows that he was aware that his father had purchased the note as a provision for Hirbai and recognized the pious obligation to carry his father's intention into execution; but the fact of his selling the note ia October, 1866, and crediting 300 rupees to, the premium account, shows that he nevertheless regarded himself as entitled to deal with the note without consulting Hirbai; and it would certainly be impossible in this country to conclude that the mere opening of an account in a man's books in the name of another person constituted the former a trustee for the latter of the balance of the account.
35. Upon the whole of the evidence we agree with the Court below in regarding it as leaving no doubt as to what was the intention of Khalphanbhoy with respect to the note, but, on the other hand, as not being of such a character as to justify the conclusion that Khalphanbhoy had constituted himself a trustee of it for Hirbai before he died. The more probable conclusion is that he died before he carried his intention into effect by some instrument declaring distinctly the manner in which it was to be appropriated to the benefit of Hirbai and her family, as he had done with respect to the house purchased for Mulbai. We would, therefore, repeat the advice given by the Court below to the defendants to carry out the intention of their grandfather, and so fulfil the moral obligation which rests on them of, at least, applying the income of the Rs. 5,000 to the support of the plaintiff and her family. But as we do not think a declaration of trust by Khalphanbhoy is satisfactorily established, we must dismiss the appeal, but without costs.