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Walker and Co. Vs. G. Abdul Aziz Saheb and Co. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai
Decided On
Reported inAIR1926Mad720; (1926)51MLJ373
AppellantWalker and Co.
RespondentG. Abdul Aziz Saheb and Co.
Cases ReferredHarland v. Binks
Excerpt:
.....acceded to a deed of this sort within the true meaning of that expression, who has not put himself in precisely the same situation with regard to the debtors as if he has executed it; relied on two acts of the creditor, (1) he accepted payment for timber supplied to the trustee, and, (2) he attempted to obtain a sum of money which he could obtain effectively only under the deed, i. as the trust fund was not identifiable the double claim failed, but because of this double claim, the intention cannot be imputed to the plaintiff in the absence of clear and unambiguous words or acts amounting to abandonment of the ist defendant. there the creditor applied to the trustee for an explanation and when he received the trustee's reply expressed himself that 'he was satisfied 'and lord campbell..........walker & co. was filed on 2nd october, 1922. by that time, messrs. walker & co. had executed a trust-deed in favour of the creditors with the firm of messrs. fraser & ross as trustees. in the list of creditors at the end of the deed, the plaintiff's name does not occur. we are informed that the written statement of messrs. walker & co. was signed by mr, fraser under clause (2) of the deed authorising him to defend suits against messrs. walker & co. in december 1922 the plaintiff having heard of the assignment, applied by judge's summons to make messrs. fraser & ross parties to the suit and their firm was impleaded as 2nd defendant.2. the plaintiffs' contention that the 2nd defendant was liable on the ground that the consigned goods were held by messrs. walker & co. as trustees for.....
Judgment:

1. This is an appeal from the Original Side. The suit was brought to recover the value of certain goods consigned by the plaintiffs with the Ist defendant firm of Messrs. Walker & Co. as a free consignment. The suit Was filed on 24th August, 1922, and the written statement of Messrs. Walker & Co. was filed on 2nd October, 1922. By that time, Messrs. Walker & Co. had executed a trust-deed In favour of the creditors with the firm of Messrs. Fraser & Ross as trustees. In the list of creditors at the end of the deed, the plaintiff's name does not occur. We are informed that the written statement of Messrs. Walker & Co. was signed by Mr, Fraser under Clause (2) of the deed authorising him to defend suits against Messrs. Walker & Co. In December 1922 the plaintiff having heard of the assignment, applied by Judge's summons to make Messrs. Fraser & Ross parties to the suit and their firm was impleaded as 2nd defendant.

2. The plaintiffs' contention that the 2nd defendant was liable on the ground that the consigned goods were held by Messrs. Walker & Co. as trustees for the plaintiffs and that the plaintiffs can follow the goods or their proceeds into the hands of the assignees, was disallowed by the learned Chief Justice on the ground that the trust fund was not identifiable. He relied on In re Hallett and Co. : Ex parte Blane (1894) 2 Q.B. 237. He also held that the plaintiffs did not give up their right of action against the 1st defendant by impleading the 2nd defendant. The 1st defendant appeals and the contention before the learned Judge has been repeated before us.

3. The principle has been stated thus by Lord Cranworth in Forbes v. Limond (1854) 4 De. G.M. & G. 298:

But this, I think, is perfectly certain that no person can be considered to have impliedly acceded to a deed of this sort within the true meaning of that expression, who has not put himself in precisely the same situation with regard to the debtors as if he has executed it; the principle of the rule being that, if you put yourself in the situation of having the benefit of a deed you must bear its obligations although you have not literally executed the deed

4. In the case of In re Brindley : Ex parte Taylor, Sons and Co. (1906) 1 K.B. 377 it was held that the creditor could not file the bankruptcy petition as he assented to the deed of assignment. Vaughan Williams, L.J. relied on two acts of the creditor, (1) he accepted payment for timber supplied to the trustee, and, (2) he attempted to obtain a sum of money which he could obtain effectively only under the deed, i. e., under the last clause of the deed which provided that, in the discretion of the trustee, or, if a majority of the Committee of Inspectors directs, it shall be lawful for the trustee to pay in full or otherwise than by dividends under these presents, any creditor or creditors who shall decline to execute or assent to these presents. Stirling, L.J. expressly mentioned the first reason and not the second. But, towards the end of his judgment he stated : ' For these reasons and other reasons stated by the Lord Justice, I think the appeal ought to be allowed. ' Cozens-Hardy, L.J. said : 'I am of the same opinion and for the same reasons. ' He then pointed out that the last clause of the deed was a most improper clause as it offers a bribe to non-assenting creditors. I doubt if a mere attempt to obtain a payment larger than the dividend under such a clause, not agreed to by the trustee, and not coupled with any other conduct on the part of the creditor (as is the case just cited) will amount to an acquiescence in the deed of assignment and if it does not, there is nothing in the present case to show that the plaintiffs have ' put himself in the situation of having the bene-fit' of the deed to use Lord Cranworth's language. But 1 will assume that a mere attempt to obtain payment from a trustee under a clause of the kind may amount to an acquiescence. In the present case, there is such a clause (cl. 8).

5. But what are the facts of the case before us? The plaintiffs never agreed to accept a payment pro rata. It is stated by the earned Counsel for the appellant that Messrs. Fraser & Ross were and are willing to pay the plaintiff pro rata. The plaintiffs would not have it but insisted on a decree for the full amount claimed and because of this, the suit was dismissed in toto against the 2nd defendant. Nor did the plaintiff make any reference to Clause (8) of the deed either in the affidavit or in the plaint. In paragraph 4 of the affidavit, in stating the contents of the deed, they referred to the power of the trustee to pay either pro rata or the whole amount if the creditor is a secured creditor or if there are trust moneys due, but there is no reference to the power of the trustee to pay a larger amount to a non-assenting creditor in his discretion. In paragraph 5 they wind up by saying:

Leave should be granted to the plaintiff to make the necessary amendments to the plaint alleging cause, of action against the trustees also, as it is necessary that any adjudication that may be made should bind Messrs. Fraser and Ross not merely as Agents of Messrs. Walker and Co., but also as trustees.

6. Leave was granted and paragraphs 10(a) and 10(b) added to the plaint paragraph 10(2) stated the summary of the contents of the deed of assignment. In paragraph 10(b) the plaintiffs say:

The moneys realized by the Ist defendant are plaintiff's moneys in the hands of the Ist defendant firm or in other words trust moneys payable to plaintiffs specifically. The plaintiffs therefore submit that they are entitled to be paid even 'by the 2nd defendant firm preferentially and in full.

7. They did not refer to Clause (8) of the deed but alleged as the ground for 2nd defendant's liability that the proceeds of the goods were trust moneys. This is the only ground given for 2nd defendant's liability. The use of the word 'preferentially' in paragraph 10(b) without referring to Clause (8) of the deed cannot amount to more than is implied by the use of the words 'in full' following it and this is all what the learned Chief Justice must have meant in the last sentence of the paragraph in his judgment dealing with this question.

8. Not only was Ist defendant not given up but it is also expressly stated that the 2nd defendant's liability was to be in addition to the Ist defendant's by the use of the word 'even' in paragraph 10(b) of the plaint and 'also' in the affidavit.

9. If the trust fund was identifiable or the goods could be traced to the trustee's hands both the defendants would be fully liable and it is not a case where only one or the other can be liable. The claim in paragraph 10(b) is thus one founded on a legal basis and not on the terms of the trust-deed. As the trust fund was not identifiable the double claim failed, but because of this double claim, the intention cannot be imputed to the plaintiff in the absence of clear and unambiguous words or acts amounting to abandonment of the Ist defendant. So long as the claim against the 2nd defendant is attributable to the ground that there were trust moneys and is coupled with the claim against Ist defendant there can be no election to give up Ist defendant nor acquiescence in the deed. Nor does the case of Harland v. Binks (1850) 15 Q.B. 713 help the appellant. There the creditor applied to the trustee for an explanation and when he received the trustee's reply expressed himself that ' he was satisfied ' and Lord Campbell held that this amounted to acquiescence. In the present case we have neither negotiations nor any act outside the Court and all that can be relied on by the appellant is contained in paragraphs 10(b) of the plaint and (5) of the affidavit both making it clear that the Ist defendant was not to be given up. Though it turned out that plaintiff cannot make the 2nd defendant liable in the Way he wished, it is clear that he never wished to make them liable on a footing which involved the giving up of the Ist defendant. The appeal fails and is dismissed with costs.

10. If we had come to the conclusion that the plaintiff accepted the deed, it would involve a miscarriage of justice to dismiss the suit in toto. The plaintiff could be then entitled to a decree pro rata against the and defendant. But this can be given under Order 41, Rule 33 only after adding them as parties in the interests of justice a course to which the appellants' counsel has no objection. But on the view we take, it is unnecessary.


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