1. This second appeal arises out of a suit on a promissory note. The promissory note was executed by the fourth and fifth defendants, the fourth defendant being the mother of defendants 1 to 3 and the fifth defendant their grandmother. The body of the note also mentions defendants 1, 2 and 3, who were all minors at the time, as parties to the note and the fourth defendant signed it on her own behalf and on behalf of the three minors. I may add that the fourth defendant had been appointed executrix of her mother-in-law's will whereby the mother-in-law had bequeathed substantial properties to her grandchildren the present 1 to 3 defendants. Ex. A accordingly recites that the fourth defendant joined in the note in the capacity of 'guardian and mother of and executrix for Nos. 1 to 3'. The purpose of the loan is stated to be 'to meet the Court expenses of getting the probate through Court of the will in favour of the said minors and to meet the expenses of the family'.
2. The plaintiff prayed for a decree directing defendants 4 and 5 to pay the amount due under the promissory note both personally and from out of the estate of the deceased grandmother of defendants 1 to 3 which the fourth defendant was managing as executrix. The fifth defendant remained ex parte throughout. The fourth defendant was ex parte up to a late stage in the trial and then appeared by a Vakil and sought to raise a contention that she had received no consideration under the promissory note and accordingly there should be no decree against her. Defendants 1 to 3 raised the contention that as their father was alive the mother was not their guardian, that the note was therefore not binding upon them, that in fact there was no consideration for the note and that even if money had been borrowed by the fourth defendant and the fifth defendant under the note, it could not be held to be binding upon the properties bequeathed to them under their grandmother's will because it was only a promissory note loan to defendants 4 and 5 on which the creditor was not entitled to direct recourse against the estate of the testatrix.
3. The first issue was raised in rather vague terms, viz., whether the suit promissory note was true, valid and binding on defendants 1 to 3. It was rightly held by the District Munsiff that the fourth defendant was not the guardian of defendants 1 to 3 and these defendants could not accordingly be held to be parties to the promissory note. On the question of consideration, the District Munsiff held against defendants 4 and 5 and granted a personal decree against them; but as regards the claim against the estate in the hands of the third defendant as executrix, the District Munsiff followed the decision in Ammalu Ammal v. Namagiri Ammal : AIR1918Mad300 , Chidambaram Pillai v. Veerappa Chettiar (1917) 6 L.W. 640 and Srishchandra Nandi v. Sudhirkrishna Banerji I.L.R. (1931) 59 Cal. 216 and declined to grant a decree. He added that though the plaintiff might be entitled to be subrogated to the fourth defendant's rights of indemnity if any from the estate, the plaint had not been framed on those lines.
4. On appeal the learned District Judge confirmed the finding of the Court below as to the factum of consideration. He also held that the loan was borrowed for purposes binding on the estate obtained by the minors under the will of their grandmother, because according to the evidence he thought it must have been borrowed for expenses of the probate proceedings. He then referred to Section 321 of the Succession Act and construed it as declaring a charge in favour of the creditor who lends money to an executor for probate expenses. He accordingly passed a decree awarding to the plaintiff a charge upon the estate of the deceased testatrix in the hands of the fourth defendant, the executrix. Hence this appeal by defendants 1 to 3.
5. Before me the earned Counsel for the appellants raised various questions, some of them questions of fact. At one time it seemed to me that there might be some ground for a suspicion that the suit promissory note might have been brought about by the husband of the fourth defendant for an amount due from himself under a prior decree in favour of the plaintiff. Indeed the written statement had gone the length of suggesting that at a time when the fourth defendant's husband was about to be arrested, the suit promissory note must have been brought into existence in substitution of his liability. It is regrettable that without an examination of the records of the suit in which the decree against the fourth defendant's husband had been passed a suggestion of that kind should have been made. An examination of the records relating to that suit has now shown that at or about this time there was in fact no application for the arrest of the fourth defendant's husband at all. That makes one very reluctant to attach any weight to the testimony of the fourth defendant. On the question of fact I see no reason to decline to accept the finding of the learned District Judge that money must have been borrowed under Ex. A as stated in the document.
6. As regards the purpose of the loan, Mr. Narayanaswamy Aiyar laid some stress on the fact that Ex. A itself recites that the money was borrowed not merely for probate expenses but also for the expenses of the family, and he argued that even Section 321 on which the learned District Judge relied would not apply to so much of the money as might have been applied to domestic expenses. In the view that I take of Section 321 it is not necessary for me to deal with this contention; but I must however remark that if really the money had been borrowed under Ex. A, as held by the learned District Judge, the persons who could have placed information before the Court as to the portion thereof spent for purposes other than probate expenses are the fourth and fifth defendants and the father of defendants 1 to 3. If the fourth defendant chooses to speak a falsehood and the other people do not choose to come forward to give evidence, I do not think the appellants can rely merely upon the doctrine of onus and say that the plaintiff has not discharged the onus lying upon him. I therefore deal with the case on the footing that as found by the learned District Judge money had been borrowed on the representation that it was required for expenses in connection with the probate proceedings. But I regret to hold that even on that state of facts, it is not possible to give the plaintiffs a decree against the interests derived by the minors under their grandmother's will.
7. Here again, 1 must notice a technical objection raised by the appellant's learned Counsel, viz., that the fourth defendant had not been impleaded in the appeal to the District Court nor the other beneficiaries under the will. These are no doubt curious omissions, but if I was otherwise prepared to uphold the plaintiff's claim, I should have even been prepared to take the necessary steps to implead the fourth defendant at least before me so as to represent the estate. It was apparently thought in the lower Court that as it was defendants 1 to 3 who took the objection that the plaintiff was not entitled to a decree against their interests under their grandmother's will it was sufficient to obtain a decree in the appellate Court against them and hence they alone were impleaded as parties to the appeal in the lower appellate Court.
8. Coming now to the main contention that a creditor who lends money on a promissory note executed by an executor is not entitled to direct recourse against the testator's estate, there can be very little doubt that that is the ordinary rule. It is sufficient to refer to the decisions already mentioned as relied on by the trial Court. The same reasoning has been adopted by a single Judge of the Rangoon High Court in Mahanth Singh v. U Aye I.L.R. (1936) 14 Rang. 336. The learned District Judge was apparently prepared to follow the same rule but for the interpretation that he placed upon Section 321 of the Succession Act. No case has been brought to my notice in which Section 321 has been construed in the way the learned District Judge has done. Nor has any decision of the English Courts been shown where moneys borrowed by an executor for items of the kind referred to in Section 319 or Section 320 have been held directly recoverable from the estate of the deceased. On the other hand Mr. Narayanaswami Aiyar contended with some justification that the decision in Corner v. Shew (1838) 3 M.& W. 350 : E.R. 1179 go far as it relates to moneys borrowed by the executor for funeral expenses and the way that that case has been referred to in Farhall v. Farhall (1871) 7 Ch. A. 123 support the contrary conclusion. A reading of Sections 319 to 323 of the Succession Act will show that the purpose of these provisions is not the regulation of the rights of creditors against the estate of the testator but the regulation of claims of priorities inter se among various kinds of creditors. The provisions assume that a certain fund is available in the hands of the executor and then proceed to lay down in what order of priority that fund ought to be disbursed. Section 319 starts with laying down the duty of the executor to collect the assets due to the deceased; Sections 320, 321 and 322 provide what payments should be made out of such assets in the first instance and Section 323 winds up with the provision that save as aforesaid no creditor shall have right of priority over another. It seems to me it will be a misreading of Section 321 to hold that it declares a charge on the estate as between the lender and those interested in the estate. In this view I must hold that the view taken by the learned District Judge that Section 321 justifies a different treatment of this case from the decisions already referred to is not correct.
9. As the plaintiff's suit must fail on the above ground, it is unnecessary to consider the objections raised by Mr. Narayanaswamy Aiyar as to the rate of interest provided for in Ex. A and allowed by the Courts below without any discussion as to whether borrowing at such a high rate was necessary or justified. Nor is it necessary for me to deal with his argument that in the circumstances of the case, the lower Court should have directed the costs of the appellants before it, even if he was entitled to a decree, to come out of the estate and not to be paid by the present appellants personally. Seeing that two at least of the present appellants are minors, it is not unlikely as Mr. Narayanaswami Aiyar suggests that the learned District Judge himself did not intend to give a personal decree but it is unnecessary for me to say more about it.
10. On behalf of the respondent, Mr. Desikan asks that his clients may at least be allowed the benefit of the indemnity to which according to the cases the executrix will be entitled from the estate if it is shown that the money had been applied for purposes necessary for or beneficial to the estate. Whether the pleadings justify the consideration of this question has often been the subject of difference of opinion. Even putting a very liberal construction on the plaint in the present case, I am sorry to find that this aspect of the matter never seems to have occurred to the plaintiff's advisers. Even after the appellants had taken the objection that the plaintiff was not entitled to a decree against the estate and even at a time when the plaintiff did apply for some amendment of the plaint he did not think fit to ask for alternative relief on the footing of his right to avail himself of the right of indemnity. Whether such a right can be availed of by him in other appropriate proceedings it is not for me to say. I regret to say that I am unable to allow this suit to be converted into one in which that claim can be made.
11. The result is that the second appeal must be allowed and the decree of the trial Court restored. On the question of costs, I am not prepared to allow the appellants to take shelter under the usual suggestion that the onus was on the plaintiff and that they were at liberty to put forward any false story as regards consideration. The suggestion that the promissory note was taken under a kind of duress against the appellant's father was absolutely uncalled for. I however do not wish to interfere with the first Court's direction as to costs; but I propose to direct that both in the lower appellate Court and in this Court, the parties should bear their respective costs.
12. Leave granted.