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Hirachand Amersey Vs. Jayagopal Gangabishan - Court Judgment

LegalCrystal Citation
Decided On
Case NumberO.C.J. Appeal No. 25 of 1924, Suit No. 3047 of 1920
Reported inAIR1925Bom69; (1924)26BOMLR1049
AppellantHirachand Amersey
RespondentJayagopal Gangabishan
DispositionAppeal allowed
contract agreement, it sell--marketable title--requisitions on title--mortgage to a firm--reconveyance single if by one partner of the jinn--vendor bound to disclose the other partners of the firm, and acceptance by them of the reconveyance.;in january 1920 the plaintiff agreed to purchase a, building in bombay from the defendant. three months previously the defendant had agreed to purchase it from its owner. the sale was to he completed within six months and the vendor undertook to make out a marketable title free from all reasonable doubts.;the owner had in may 1918 effected an equitable mortgage of the building in favour of a firm of bankers; and six months later, he had executed a legal mortgage to another firm of bankers. both mortgages were redeemed in december of the same year......marten, j.1. [his lordship after dealing with the facts of the case proceeded.] now the arguments before us have been interesting and able, and have covered a wide field. in the first place i think it clear that the two mortgages, though taken in the names of the two firms, operated as if they had been taken in the names of the individual partners of those firms. a partnership firm is not a legal entity like a limited liability company. consequently a conveyance to the firm operates as a conveyance to the individual partners. authority for this will be found in ragoonathdas gopaldas v. morarji jutha i.l.r. (1892) 16 bom. 568 in our high court, and in wray v. wray [1905] 2 ch. 349. and in re smith: johnson v. bright-smith [1914] 1 ch. 937, in england. in the present case this construction.....

Marten, J.

1. [His lordship after dealing with the facts of the case proceeded.] Now the arguments before us have been interesting and able, and have covered a wide field. In the first place I think it clear that the two mortgages, though taken in the names of the two firms, operated as if they had been taken in the names of the individual partners of those firms. A partnership firm is not a legal entity like a limited liability company. Consequently a conveyance to the firm operates as a conveyance to the individual partners. Authority for this will be found in Ragoonathdas Gopaldas v. Morarji Jutha I.L.R. (1892) 16 Bom. 568 in our High Court, and in Wray v. Wray [1905] 2 Ch. 349. and In re Smith: Johnson v. Bright-Smith [1914] 1 Ch. 937, in England. In the present case this construction is quite consistent with the actual definitions used in the various documents Exs. E to H, viz., 'the creditors,' and 'the mortgagees' and 'the releasors' as there defined.

2. That being so, four questions at least arise, viz. (1) as to whether the vendor had properly shown who the individual partners of the two firms actually were; (2) if so, whether the alleged partners Harilal and Venilal were expressly authorised by their respective firms to execute the releases in question;(3) if not, were they competent to execute such releases; and (4) what is the effect if any in India of a bare outstanding interest being left, in a paid-off mortgagee. In considering these points, one has also to consider whether the purchaser was reasonably protected against any possible fraud by Harilal or Venilal either in collusion with the mortgagor or by deceiving him. For instance if the other partners had brought a suit and proved that Harilal or Venilal was only a munim and had no power to sign on behalf of the firm and had wrongfully abstracted the deeds and received payment, would the purchaser have had a good defence, and if so on what grounds?

3. Now as regards the first point, the vendor in effect asked the purchaser to accept the bare statements of Venilal and Harilal as to the several individuals constituting the two firms, and that they themselves were partners in the two firms respectively, and were duly authorised by their copartners to receive the mortgage moneys, No independent evidence, either from bankers or merchants or by production of the partnership books on the partnership deed, was forthcoming. There was not even any statement from the other alleged partners, nor from the mortgagor. It may be that the mortgagor honestly thought he was paying the right person. But his means of knowledge are not before us. He is described in the registration endorsements as a merchant and Bania. Accordingly he may have been content to rely on his knowledge as a Bania derived it may be from his past transactions and supported by his books as to who this partnership firm consisted of, and who generally acted for them and signed on the firm's behalf. If so, a statutory declaration or its Indian equivalent might have ' been most useful. But in fact none such was shown to or put in evidence, although I notice from the defendant's affidavit of documents that the mortgagor appears to have made a declaration on the same day as Exs. I and J.

4. Nor I think was the identification before the Registrar sufficient proof of these matters. The solicitors' clerk who was examined in each case as to identity might have known the individual actually executing the particular document but yet have been deceived or mistaken as to the executant being a partner and duly authorized to sign. At any rate the means of knowledge of this clerk, viz., Waman Sitaram, as regards Harilal, and H, E. Kapadia, as regards Venilal, are not shown. Nor I think does the attestation by Mr. Minocheher solicitor and his clerk Narandas, of the two releases, and by Narandas of the two declarations Exs. I and J, satisfactorily conclude the matter. What was wanted was something from the other alleged partners which would bind them, such as the letters from them contemplated in Exs. I and J.

5. To avoid misconception, I should state that in argument before us the vendor's counsel did not refer to any of these points about the mortgagor or the attestations or registrations. Nor can I find that they were raised at the trial. But I mention them to show that they have not been overlooked.

6. It was, however, argued that normally in a title where there is a conveyance by A to B, and then another by B to C and so on, a purchaser does not call for evidence of identity unless there is some alteration in the description or some other circumstances to raise a doubt. I quite agree. But here the mortgages were each in favour of a named firm, and the purchaser was only asking for evidence to show who that named firm was, and that the person executing the document was a partner in the firm and was acting with the authority of his co-partners.

7. In my judgment this was prima facie a reasonable demand, particularly having regard to the large amount of the two mortgages, viz., Rs. 70,000 and Rs. 30,000 respectively. Further both firms were Hindu firms, and one knows from experience on the Original Side that great difficulty is often experienced in finding out exactly who the partners in any particular firm are. In some markets the ramifications of Indian firms are such as would startle an English practitioner, particularly as the complication of the joint Hindu family often comes into operation. No doubt the firms here were shroffs, and accordingly Part of their business would normally consist in lending, money on securities. But even in ordinary commercial transactions there may be circumstances which entitle one to be satisfied that what purports to be the signature of a firm has in fact been made by some duly authorised person. Thus in a series of cases which I heard on the Original Side, a Mahotnedan firm as part of a compromise with several banks had agreed to give some bills of exchange maturing at long dates. When the bills were handed over, the bank objected that they were not signed by the partner who usually signed for the firm, but by an alleged son and partner. The bills were accordingly returned or re-execution. It was afterwards alleged that on the reexecution it was the son who signed his father's name, and not the father himself. On maturity all the bills were repudiated, and amongst a variety of defences it was alleged that the double execution was an infringement of the local Stamp laws. Eventually the bank succeeded in all the cases except one where the bank manager unfortunately had pasted over the original bill of exchange so that nobody could see what the original document contained, and had then had a new document typed out and executed, but had used no new stamp, with the result that the new document sued on was held to be unstamped and inadmissible. I only mention this as an instance where the banks guarded themselves against possible trickery by refusing to accept the signature of the firm merely because somebody alleged he was a partner, and where subsequent events justified their business precautions.

8. I, however, wish to emphasize that in the present case there was in fact no fraud or any wrongful application of the moneys. But that did not transpire till the trial. As I have said, to ascertain the legal rights of the parties, we must look closely at what was before the purchaser in September 1920. At that time there was no proof of payment beyond what I have already indicated. Therefore, with great respect to the learned Judge, I do not think that that issue is affected by the admission made by the plaintiff's counsel at the trial, viz., that he did not dispute that the moneys were repaid by the mortgagor to the respective mortgagees Jayantilal Motilal & Co. and Venilal Bhai-chandbhai and Co. as stated in their respective release and reconveyance. For instance, even if the defendant had gone further and had produced at the trial a further release and re-conveyance signed by all the partners, that would I think have made no difference. It would then have been too late. The proper time to agree to produce this was in September or October 1920, and not at the trial in December 1923.

9. Nor with all respect do I agree with the learned Judge when he says: 'It is also clear from the correspondence that at no time was it suggested that the moneys borrowed from these two firms were not paid back to those respective firms by the defendant.' Assuming that the learned Judge is there referring to the mortgagor Jesingbhai and not to the defendant, the requisitions and correspondence asked first for proof that the actual recipient of the moneys was a duly authorised agent, and, secondly, that his co-partners should be shown, and that all partners should execute releases. In my opinion these demands involved a demand for proof that the moneys had reached the right quarter. The releases for instance would not be given unless the firms had received the moneys. And in the view I take it is sufficient for a purchaser to make a requisition calling for a release from certain people without detailing all the incidental matters which that release will prove or effect.

10. Nor can I see that the purchaser ever abandoned his demands to be satisfied on these points, and particularly that Harilal and Venilal should be shown to be partners, although the actual language used in the correspondence extending over several months may, as was only natural, have varied from time to time.

11. Then, as regards the question of practical risk, it may be that the practical risk that Harilal or Venilal was not a partner, or was practising a fraud on his co-partners was not great, but nevertheless it existed. The varieties of fraud are numerous, and I do not propose to discuss many possible methods or instances. I have already indicated some. Marchant v. Morton, Down & Co. [1901] 2 K.B. 829 is an illustration of a case where each of two partners had assigned to a different person a debt due to the partnership by a third party. The first assignment was a fraud by one of the partners, and the subsequent contest between the two assignees for priority raised difficult points of law which I will mention later. No doubt in the present case the possession of the deeds by the mortgagor would be a considerable safeguard, but their possession does not entirely negative fraud on a master or co-partner. Further, as regards the legal mortgage, the deeds were with the equitable mortgagee, and so a fraudulent person would only have the mortgage deed itself to account for.

12. Moreover, besides the risk of actual attack by third parties alleging they had been defrauded, there is also to be considered the trouble and possible loss which the purchaser might be put to if he desired to re-sell or to mortgage. A special condition of sale guarding against the present requisitions would be difficult to frame, and might be depreciatory. And no proposed mortgagee could be barred in this way from raising this objection. It is extremely probable therefore that, unless many years had elapsed, he would require similar evidence to what the purchaser actually requited, or else would refuse to advance his money.

13. In this connection the case of Shrinivasdas Bavri v. Meherbai (1916) L.R. 44 I.A. 36; 19 Bom. L.R. 151, though distinguishable on the facts, is useful to refer to. In that case the vendors had to show in 1913 that an agreement of charge made in favour of Damodardas Sunderdas and Gordhandas Sunderdas jointly in 1892 had been effectively discharged by a purported release of September 1902 made by Gordhandas alone. This release recited the death of Damodardas in July 1902 leaving Gordhandas as his only heir and legal representative, and that the mortgage had been paid oft', and that accordingly Gordhandas thereby released the property from the charge created by the agreement of 1892. Mr. Justice Macleod took the view, which was confirmed on appeal by Sir Basil Scott and Mr. Justice Davar, that the vendor had deduced a marketable title free from all reasonable doubts as provided by the contract. But on appeal to the Privy Council, it was held by their Lordships in a judgment delivered by Lord Parker that the purchaser was justified in requiring evidence that Gordhandas was the sole heir and legal representative of Damodardas, and that the vendors, having refused to supply such evidence, had not deduced the marketable title which they were bound to deduce. They also held that the mere recital of this alleged fact in the release of September 1902 was not sufficient; that the registration of the document made no difference in this respect; and that a condition making those recitals evidence of the facts recited would have been depreciatory. Consequently the purchaser's appeal was allowed, and his deposit was ordered to be returned. It will be noticed from the, facts stated at p. 37 that in that case eleven years had elapsed shade one of the two joint tenants had released the mortgage and had claimed to be the survivor and the heir of his co-tenant. In the present case the releases were only a little over a year before the suit contract. Further it does not appear to have even been argued that if Damodardas was still alive in 1902, Gordhandas could give a good discharge for the debt as one of two joint creditors, or that if on the other hand Damodardas was then dead, Gordhandas could' give a good discharge as the survivor of two joint creditors.

14. Another test of the reasonableness of the purchaser's demands is to see what the mortgagor himself asked for when he paid off the mortgage moneys. In each case he stipulated for a letter to be signed by all the partners stating that the moneys were credited to the partnership account. That comes very near what the purchaser was asking for here, but which the vendor flatly refused to give him. In fact the vendor produced nothing whatever signed by the other partners. Nor is there any material distinction in the fact that the mortgagor was content to pay his money in reliance on a promise to furnish this proof, whereas the purchaser wanted the actual proof first.

15. In the result, therefore, I am of opinion and so hold that the first question which I have raised should be answered in the negative. Accordingly in my judgment, it was not properly shown who the individual partners of the two firms actually were, nor that Harilal and Venilal were partners in the firms in question.

16. In the view then which I take that finding is sufficient to dispose of this appeal. But as the matter was fully argued before us, I will deal with the remaining points on the supposition that contrary to the view which I hold, Harilal and Venilal were proved to be partners in the respective firms named in the two mortgages, whether or no all their actual co-partners were also proved.

17. That being so, I think the second question must be answered in the negative, as the materials before the purchaser were insufficient to show that Harilal and Venilal were expressly authorised by their co-partners to execute the release in question.

18. The third question raises the point whether the mere fact of being a partner impliedly authorized the executing partner to receive the mortgage moneys and execute these releases. This raises an interesting point of law. Under Section 251 of the Indian Contract Act each partner who does any act necessary for or usually done in carrying on the business of such a partnership as that of which he is a member binds his co-partner to the same extent as if he were their agent duly appointed for that purpose. But the defendant called no evidence as to whether it was necessary or usual for merely one member of a firm of Hindu shroffs and bankers to execute releases and reconveyances in the name of the firm. And in the absence of such evidence I am not prepared to hold the affirmative. Further, the powers of any individual partner in this respect might be regulated or restricted by the partnership articles, but no such articles were produced. And if it be said that under the exception to Section 251, notice of an usual restriction on the partner's powers would have to be proved, it may be answered that the purchase would be quite in the dark as to what notice the other partners might be able to prove that they in fact gave to the mortgagor. In this connection I may refer to Nottingham Patent Brick and Tile Company v. Butler (1886) 16 Q.B.D. 778, where the Court of Appeal refused to bind a purchaser where the vendor's title depended on proof of his allegation that he had bought the property without notice of certain restrictive covenants, and so was not bound by them, and could sell free from them.

10. It was next argued by counsel for the defendant that in India, unlike in England, one partner has the right to execute deeds either of mortgage or reconveyance so as to bind the firm, and that the English rule to the contrary as regards any deeds other than a release of the debt is based on the local technicality that an agent can only execute a deed if authorised by a deed so to do. But it is by no means clear that this proposition is one which a purchaser can safely accept as the settled law of India. The case of Juggeewun-das Keeka Shah v. Ramdas Brijbookun-das (1841) 2 M.I.A. 487 was cited in support of it, but there the respondent was claiming the benefit of the mortgage deed because he was a partner in the firm, though he did not actually join in the deed (see p. 494). So this was really a case of a claim between partners inter se, where one partner claimed that the others could not appropriate to themselves the benefits of a particular transaction which had been entered into on behalf of the partnership. So it does not really meet the exact point before me.

11. In Ragoonathdas Gopaldas v. Morarji Jutha I.L.R. (1892) 16 Bom. 508 Mr. Justice Farran held that where one partner takes a lease of premises in his own name, though on behalf of the partnership, and with the assent of the other partners, the latter are not liable to be sued by the lessor for the rent reserved by the lease. On the other hand, this decision has been dissented from in Chinna-ramanuja Ayyangar v. Padmanabha Pillaiyan I.L.R. (1896) Mad. 471. And in Asan Kani Ravuttar v. Sumasmidaram Chettiar (I.L.R. 1908) Mad. 206, Mr. Justice Wallace was of opinion that a partner could mortgage partnership property either by deposit of title deeds or by legal mortgage.

12. But in Harrison v. The Delhi and London Bank I.L.R. (1882) 4 All. 437 Mr. Justice Straight thought that the presumption was against the existence of such a power. The learned Judge said at p. 459 as follows:--

It is a proposition of law which I do not think will be controverted that one partner cannot alone create a charge upon partnership real estate without the consent of all his partners, for he by himself cannot give a valid title. According to English law, one person cannot execute a deed under seal for another, unless specifically and in terms authorized by power of attorney or by deed to do so. In India, however, we do not have deeds under seal, nor is written authority absolutely essential, and the question becomes one of fact, namely, aye or no is express or implied authority established from the relations between the parties and the general circumstances of the case. A conclusion in the affirmative should not be drawn except upon cogent and clear evidence, and until so made out the presumption should be in the contrary direction. With regard to the matter before me, I find it impossible to hold that either Burnett or Williamson expressly or impliedly authorized Thelwall to create a charge upon the partnership real estate.

13. I may also refer to Sheik Ibrahim Tharagan v. Rama Aiyar I.L.R. (1911) Mad. 685, where it was held that a payment to one member of an undivided Hindu family or to one of several joint creditors will not operate as a payment to all the members or creditors if the payment is fraudulently made to one and not for the benefit of all.

14. In this state of the Indian authorities, I do not think the purchaser could be blamed for desiring to be on the safe side. It must be remembered that he wished to buy the suit property, and not a law suit. Further in the present case under Clause 3 of Ex. B, as incorporated in the suit contract Ex. A, it was for his attorneys to say who were the persons who were necessary parties to the conveyance, and under Section 4 the vendor was to deduce a marketable title free from all reasonable doubts, and should at his own coats do all such things and take such actions and proceedings as might be necessary in clearing up any defect in such title. Then, too, under Section 60 of the Transfer of Property Act, the mortgagees on payment would have been ' obliged to execute an effective transfer or acknowledgment, and I think it was not unreasonable for the purchaser's attorneys to require this to be done. The mortgagees were several persons, and not merely Harilal or Venilal. And whether this transfer was to be effected by a separate document or by joining the mortgagees in the conveyance itself aw contemplated by Clause 3 of Ex. B was a mere matter of detail. The effect would be the same.

15. Then it was said that at most this was a defect of conveyance and not of title, and that consequently Clause 4 did not apply, and we were referred to Sands to Thompson (1883) 22 Ch. D. 614 as to the legal position of a paid off mortgagee in English law. It is not always easy to say whether a particular objection is one of title or of conveyance, and in the view I take it is unnecessary to determine that point in the present case. In my judgment having regard to the definite and final refusal of the vendor to procure any release or reconveyance from the other partners, it would only have been a waste of time on the part of the purchaser to submit a draft conveyance including their name. Further, it may be that having regard to Clause 3 of Ex. B such a conveyance ought to have been drawn and prepared by Payne & Co. themselves. In my opinion the vendor had definitely refused to perform his promise in its entirety, and consequently the purchaser was justified in putting an end to the contract under Section 39 of the Indian Contract Act, and was not obliged to tender the conveyance or the purchase money.

16. In this connection I may refer to Nott v. Riccard (1856) 22 Beav. 307. In that case by the conditions of sale the vendors were bound to furnish a certain declaration as to seisin free from incumbrances. They furnished an insufficient declaration, and on May 30 they positively refused to furnish any other. Completion was fixed by the contract for June 22. On July 23 the purchaser gave notice that unless the requisite declaration was furnished within a fortnight, he would rescind the contract, which he accordingly did on August 10, as default was made by the vendors. It was held that the purchaser was entitled to rescind the contract. There the learned Judge laid stress on the fact that the vendors had positively refused to furnish any further evidence, and he doubted whether any further time was necessary to be given, but that at all events fourteen days wore sufficient, for it gave the plaintiffs sufficient time to consider whether they would or would not insist that they had shown a good title The judgment then proceeds (pp. 311-12): ' For if they did so insist, then the purchaser says, 'you have not and I will put an end to the contract' It is not, therefore, a question whether the vendors should have more time, but whether they had shown a good title at this 'time or not; that is the real issue between the parties.'

17. Turning next to English law, it may be conceded that at law a payment to one of two joint creditors is a good discharge of the joint debt. There is also some authority to show that in law a partner may releaso a debt by deed. On the other hand the general rule is that a partner has no authority to execute deeds in the name of his co-partner. Accordingly it has been held that he cannot at law assign a partnership debt to a stranger by deed, but that in equity the assignment may be good as an equitable assignment. See Marchant v. Morton, Down Co. [1901] 2 K.B. 829 and In Re: Briggs & Co., Ex parte Wright [1906] 2 K.B. 209. But although a joint debt may be released at law by a payment to one of two joint creditors, it does not follow from this that in equity the property would be discharged from the mortgage debt. The mortgagee for instance might have incurred costs for permanent improvements which in the absence of any express covenant he could not recover at law, but which in equity the mortgagor would be forced to pay as a condition of being allowed to redeem. The distinction is well illustrated in two cases of Matson v. Dennis (1864) 4 D.J. & S. 345 and Powell v. Brodhurst [1901] 2 Ch. 160, which do not appear to have been cited in the Court below.

18. In Matson v. Dennin, the head-note runs: 'Where an equitable charge is vested in two persons even as joint tenants, the money cannot be paid to one without special authority from the other, so as to discharge the estate which forms the security.' There by a deed of May 1832 certain property had been mortgaged by way of demise for a term of 600 years to three mortgagees named Waller, Chapman and Roddam to secure a sum of 3751 and interest. In 1845 this mortgage was alleged to have been paid off. By that time all the original mortgagees were dead, but their respective personal representatives were parties to the release which the mortgagor took. Two persons named M'Leay and Dykes were also made parties to the release, which recited that a sum of 3000, part of the whole 3751, had 'not been the money of Waller, Chapman and Roddam, but had been advanced by M'Leay and Dykes out of moneys belonging to them jointly and upon a joint account, and was still due to them upon that account, and that the remaining 751 had been the moneys of Roddam and was then due to his personal representatives. The deed then witnessed that in consideration of .3000 paid to' M'Leay and Dykes and of 751 paid to the executors of Roddam, the respective personal representatives of Waller, Chapman and Roddam assigned the aforesaid term of years, and the representatives of Waller, Chapman and Roddam, and also M'Leay and Dykes, released the mortgaged property and the mortgagor from the debt of 3751 and every part thereof. All parties executed the deed except M'Leay. Receipts were endorsed upon the deed, but as regards the receipt for 3000 which was expressed to be paid 'to us' this was signed by Dykes only. There Knight-Bruce L.J. said at p. 350:--

The question is, whether when an equitable charge is vested in two persons--and as I will assume as joint tenants--the money can be paid to one without any special authority from the other so as to discharge the estate. I am not speaking of an action. I am speaking of discharging an equitable burden upon an estate, and so discharging the estate.

In my judgment, and in the absence of special circumstances such as are not shown to exist in the present case, that cannot be done. The purchaser is entitled to have it taken here, that Mr. M'Leay was alive at the time, and that some money has, without any consent on his part, been paid to the other joint tenant or tenant in common. That, I repeat, in my judgment, does not discharge the estate in equity. Kspecially in the case of vendor and purchaser i think the purchaser has a right to say that the whole 8,000?. was not shown to be discharged, but that it is consistent with the evidence to suppose that it may be still an available charge in equity. It is very likely that there is no serious ground of danger to the estate on this point. There in this however:--that it may in prudence necessitate special conditions when the present purchaser shall sell again, if he shall do so, which special conditions may alarm some purchaser or intended purchaser; and I think therefore that the Appellant is entitled to have more proof than at present he has, that the charge of 3,000/. no longer exists.

19. It will be noticed that there the Court thought that the purchaser was entitled to consider the most adverse contingencies in the absence of evidence to the contrary. And as appears from the report in 12 W.R. 596 of the case in the Court below, they were reversing the decision of Stuart V.C. who had held that Dykes' receipt would discharge not only the debt at law, but the estate in equity.

In Powell v. Brodhurst, [1901] 2 Ch. 160 the head-note runs:--

Where mortgagees have advanced money on a joint account, payment to one of them during the others' lifetime, though a good discharge of the debt at law, only discharges the security to the extent of the payee's beneficial interest (if any), even though the payee ultimately becomes the survivor in the joint account.

There the question was which of two innocent parties was to suffer by the fraud of a solicitor named Cartmell Harrison, who was a partner in a firm of Ingram, Harrison & Ingram. The mortgage was made in 1872 in favour of two mortgagees for 6000, and in each of the years 1875 and 1886 the mortgagor had paid the above firm of solicitors E1000 which was duly applied towards reduction of the debt. In 1892 the mortgagor sent a further 1,000 to this firm, which was misappropriated by Harrison. Meanwhile the mortgage had been transferred in 1890 to one J.C. Ingram and Baron de Paravicini, who in fact were co-trustees although this fact was kept off the title in the usual way. Ingram was a partner in the above firm. At the trial it appeared that Ingram did not attend to any business after 1891, and that neither he nor his co-trustee had expressly authorised the firm to receive the 1,000 paid in 1892, and that it was very possible that neither of them knew of the payment. Ingram survived his co-trustee and died in 1897. 'I he question then arose whether the new trustees could claim 4,000 or only 3,000 under the mortgage.

20. There Mr. Justice Farwell said at p 164: 'In my opinion, the old rule of common law, that payment to one of two joint creditors is a good discharge of the joint debt, still remains good.' The learned Judge then held that thin proposition was not affected by Steeds v. Steeds (1889) 22 Q.B.D. 537. Next, after pointing out that the joint debt in that case was not paid to either of the joint creditors, but to the firm of which one of them was a member, but that he did not propose to base his judgment solely on that ground, the learned Judge proceeded to say at p. 1.65 as follows:--

The real contest between the parties has been as to the extent to which the property is charged. The plaintiffs argued that, even assuming that the 1,000/ has been paid off, so that 3,000/. only could be recovered under the oovenant at law, nevertheless the defendant can only redeem on payment of the full 4,000/. The defendant argued that the mortgage is merely a security for the debt covenanted to be paid, and that if, and so far as, the debt is gone, the mortgage must be diminished to the same extent, and, indeed, Stuart V.C. decided the case of Matson v. Denis (1864) 12 W.R. 596 on this very ground.

21. Then, after dealing with Matson v. Dennis, the judgment went on at p. 167:--

The falacy of the defendant's argument consists in the assumption that' the question whether the money covenanted to be paid is recoverable at law is the only relevant consideration in foreclosure or redemption proceedings and in a disrfgard of the principles of equity that underlie foreclosure and re-demptun. The mortgagee's estate is absolute at law on breach of the covenant to pay on the appointed day, but the Court interferes for the benefit of the mortgagor on the terms that he does equity. The mere payment of the principal and interest legally recoverable is not necessarily sufficient. For example, money laid out in permanent improvements may have to be paid, although there is no covenant under which it could be recovered at law...If a mortgagor chooses to pay otherwise than in strict accordance with the terms of his contract he does so at his own risk. The proviso for redemption in a mortgage to several is never expressed to take effect on payment to the mortgagees or either of them, but to the mortgagees or the survivor of them; and if a mortgagor pays to one, although such payment may be a good discharge in law, yet the matter is at large when he comes into equity, and the Court takes into consideration all the facts of the caso, and ascertains whether the payee was beneficially entitled to the whole or to a part only, or whether he was a trustee with the other mortgagee, and treats the payment as good in whole, or in part, or altogether bad accordingly. It is not a question of fixing the mortgagor with notice of a trust, but it is the inquiry that the Court makes to satisfy itself that it is just and equitable under all the circumstances to deprive the mortgagee of his legal title to the property comprised in the mortgage. This is an answer to the argument of the defendant--that James Ingram was the actua' survivor, and therefore could have received the money and given a valid receipt at a later date. The mortgagor did not, in fact, pay to the survivor, but to one of two. He can rely only on the receipt as at the time when it was given, and he has only himself to thank because he chose to pay otherwise than in acoordance with the contract. Indeed, on his own evidence he trusted to the firm of Ingram, Harrison & Ingram to do what was right with the money, and to indorse a receipt for the 1,000/. on the mortgage.

22. The Court, accordingly held that the loss of the X 1,000 fell on the mertgagor and that he had to pay it over again.

23. I recognise that that was a case of payment to one of two joint tenants, and not to one of several alleged partners as here. But in the ordinary course in England the mortgage would be to all the partners by name or perhaps to some of them, and the reconveyance or release would be by the same persons So the exact point which we have hero would be unlikely to arise. At any rate no English authority precisely in point was cited to us. Marchant v. Morton, Down & Co. [1901] 2 K.B. 829, which I have already referred to, was not a case between mortgagor and mortgagee, but between rival assignees' of the same debt. There Mr. Justice Channel held that one partner had no power at law to assign a debt by deed, but that the assignment could operate as a mere contract to assign, and so be valid as an equitable assignment, and accordingly that as the second assignee in point of date was the first to give notice to the debtor, he was entitled to priority, In Re: Briggs & Co.: Ex parle Wright [1906] 2 K.B. 209 was also a case of assignment of book debts, and not a case, as here, between mortgagor and mortgagee. Wilkinson v. Lindo (1840) 7 M. & W. 81 and Hawkshaw v. Parkins (1818) 2 Swa. 539 are difficult to follow apart from the head notes, the one case depending on the technicalities of Common Law pleadings long since obsolete, where the only order was that one party should have liberty to amend; and the other being a case before Lord Eldon who, as was his wont, gave his judgment or reasoning in different portions extending over many months. The actual decision in that case at p. 545 seems to have left it open whether a release by one partner would be good at law, although it might be good in equity as an enforceable agreement or equitable assignment.

24. Further in the present case, as regards the legal mortgage, I think it would be quite clear that under English law the purchaser would be entitled to a reconveyance from all the partners, as otherwise some portion of the legal estate would be left outstanding. On proof of payment of the mortgage debt, no doubt this outstanding estate would be only a bare legal estate, but it would be one which the purchaser would nevertheless be entitled to have got in.

25. Nor do I see that requisitions like those in the present case need necessarily cause any practical trouble in either Indian or English business dealings. If one partner is to be authorized to receive all the mortgage moneys and to execute reconveyances in the names of himself and hid co-partners, a clause to that effect can easily be inserted in the mortgage: or else a power of attorney executed. Then the mortgagor will be quite safe in paying to one partner only. As Lord Justice Farwell pointed out in Powell v. Brodhurst [1901] 2 Ch. 160 in the passage I have already cited, the usual proviso for redemption stipulates for payment to all the mortgagees or the survivors of them, and not to the mortgagees or some or one of them. In other words it stipulates for a payment to all, and not merely to one.

26. Accordingly on the whole I think the English authorities are not of much assistance to the vendor in the present case, but rather the reverse.

27. In the result, therefore, as regards the third question, I am of opinion that on the facts before the purchaser, the powers of the alleged individual partner under Indian law were sufficiently doubtful to justify the purchaser in refusing to accept a release or reconveyance executed by that one partner only.

28. Lastly, on the fourth question, I come to the interesting point as to what is the effect in India of obtaining a reconveyance by only one of say two joint mortgagees, where the original mortgage was a legal mortgage. I need not repeat what I have already said about the English law on that point. Further it is clear in England that as regards a mere equitable mortgage, a receipt for the mortgage moneys would be an effective discharge to the mortgagor without any reconveyance of the land. Accordingly Mr. Vakeel for the vendor advanced the interesting argument that as in India legal and equitable estates are not known as such to the law, so also there is no difference between legal and equitable mortgages and that consequently in the present case a mere receipt for the mortgage moneys would be a sufficient discharge to the mortgagor without any reconveyance at all, just as would be the case in England as regards an equitable mortgage.

29. The learned counsel proceeded to support his proposition by a detailed reference to the Transfer of Property Act, and various text books and to a few authorities. I confess I am sorely tempted to deal fully with this interesting topic which Mr. Vakeel has raised, more especially as the actual authorities cited did not deal with the precise point which was before me. But I feel that, having regard to my conclusions on the other points, it is unnecessary for me to decide that point. I will only say that if reconveyances are wholly unnecessary, and that a mere receipt does all that is requisite, it is a pity that the Code did not state so specifically, and also define more clearly the precise interest which at most a mortgagee can take in the land. I may also point out that a reconveyance shows on the face of it whether all or what exact portion of the mortgaged property is retransferred to the mortgagor, and that it also contains a covenant by the mortgagees that they have done no act to incumber the property so retransferred. A mere receipt has neither of these advantages.

30. Upon a consideration then of the whole case, I find myself unable to adopt the findings which the learned trial Judge arrived at. In my judgment the purchaser was substantially right in the requisitions and demands which he made, and the vendor was wrong in refusing to comply with them and consequently in cancelling the contract.

31. Accordingly I would allow the appeal, and would decree that the defendant do pay to the plaintiff the sum of Rs. 20,000 together with interest at 6 per cent. per annum from January 22, 1920, to judgment Costs and interest on judgment at 6 per cent. Costs to include costs throughout including costs of this appeal. The purchaser's claim for damages appears from the learned Judge's judgment at p. 45 to have been abandoned at the trial, so I need say nothing further as to that.

Kincaid, J.

32. I concur.

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