1. It is clear in my opinion that when the plaintiff purchased the cultivable lands by his sale-deed, Exhibit F, on 9th May 1901, he took them subject to all the incidental liabilities which attached to them by reason of their having been previously mortgaged under the simple mortgage (Exhibit A) of 3rd February 1900 along with the house and house site of defendants No. 1 and 2. In fact the sale-deed expressly stated that the debt secured by the simple mortgage was to stand, thus bringing the case within the first exception to Section 101 of the Transfer of Property Act. I am unable to read into these words an implied meaning that they referred to the simple mortgage standing not on the lands described in the sale deed, but on other property not therein specified. If the parties intended to convey a different meaning by the words used by them, then I can only say that they did not express their meaning properly. There are no words in the document stating expressly or by implication that the sale was free of encumbrances. In other words, the plaintiff took whatever rights over the cultivable lands the mortgagors had to sell, viz., the equity of redemption, while the mortgagors retained all the rights they hitherto possessed in the house and house site. Again, when on 22nd December 1908, the 5th defendant purchased from defendants Nos. 1 and 2 the house and house site, he succeeded to all the rights and benefits which the mortgagors then possessed in that property. Among such rights was the right conferred by Section 82 of the Transfer of Property Act of making the lands mortgaged along with the house and site contribute rateably to the debt secured by the simple mortgage of 3rd February 1900.
2. It is argued, first, that by providing in the sale-deed (Exhibit F) for the discharge of the principal of his own usufructuary mortgage of 1st October 1896, the plaintiff impliedly cast all the burden to which the property was then subject on the house and site: and fseconrily, that the 5th defendant's undertaking to discharge plaintiff's simple mortgage when he took a private conveyance of the house and site was equivalent to a renunciation of his right to make the other lands bear any portion of the debt.
3. But the usufructuary mortgage does not really affect the question, as it had been cleared off before the 5th defendant purchased the house and site and thus plaintiff's liability to contribute out of the value of the lands purchased by him to the discharge of his own simple mortgage arose, not by reason of his position as usufructuary mortgagee of the lands but by his purchase of the mortgagors' equity of redemption.
4. Again, the 5th defendant's agreement (Exhibit G) was an agreement with one of the mortgagors (1st defendant) and could not be taken as the foundation of any rights in favour of any other owners of property burdened by the plaintiff's simple mortgage, such for instance as the plaintiff.
5. Lastly, as regards the plea of res judicata, the admission of 5th defendant, who was plaintiff in Original Suit No. 236 of 1907, was an admission of priority, not an admission that he surrendered his right to claim contribution at any future date, nor was the right to contribution directly and substantially in issue in that suit. I hold that the view taken by the lower Courts was correct and that this second appeal must be dismissed with costs.
6. Napier, J.--This is an appeal from a judgment of the District Judge of North Arcot in Appeal Suit No. 496 of 1912, from Original Suit No. 103 of 1912 on the file of the District Munsif of Tiruvannamalai. The Suit asked for a mortgage decree in respect of an amount of Rs. 460, alleged to be due from the defendants on a simple mortgage deed, Exhibit A, executed by defendants Nos. 1 and 2 on 3rd February 1980. The properties covered by this mortgage were certain lands which had already been mortgaged by the 1st defendant and another to the plaintiff by Exhibit E on the 1st October 1896, together with a house and house site charged for the first time by Exhibit A. The plaintiff, by Exhibit F of the 9th May 1901, purchased the lands covered by Exhibit E, and the present suit is to recover the whole amount due on the mortgage Exhibit A by the sale of the house and house site charged therein. The District Munsif held that the plaintiff must abate a portion of his claim in the proportion which the value of the properties purchased by him bears to the whole properties mortgaged, and gave a decree with respect to two-thirds of the claim only.
7. The District Judge, on appeal, holds that under the purchase-deed, Exhibit F, the mortgagors sold to the mortgage the equity of redemption and that the document could not be construed as a sale of the mortgagors' entire interest free of the mortgage charge. He, therefore, held that, just as a stranger would be bound to contribute under Section 82, so the mortgagee in his capacity of owner of the equity of redemption of one of the properties must contribute also, and, that on making allowance for what he was bound to contribute, the District Munsif was right in only allowing the sale for two-thirds of the value of the mortgaged property.
8. The point argued before us on appeal is that Exhibit F is not a sale of the equity of redemption keeping the mortgage alive, but a sale of the whole property free of the mortgage charge. Reliance is placed by the appellant on the case of Mir Esuff Ali Haji v. Panchanan Chatterjee 6 Ind. Cas. 842 : 11 C.L.J. 639 15 C.W.N. 800 where the distinction between these two classes of transactions is pointed out, and the test laid down by Mr. Justice Mookerjee is 'whether the mortgagee purchaser applied the purchase-money towards the satisfaction of the mortgage debt, and he then expressed the view that it was not fair, if he had done that, to make him give credit, when proceeding against the other property, for a further sum representing the difference between the mortgage value and the settled price. The appellant appears to have sought in the first Court to adduce oral evidence as to the intention of the parties at the time of Exhibit F, obviously for the purpose of explaining the apportionment of the purchase-money. But the District Munsif refused to admit it, holding that the language of Exhibit F was clear that the mortgage was kept alive. In his appeal memorandum to the lower Appellate Court he pressed that this evidence should not have been shut out, and renews this plea here and desires to show how the purchase-money of Rs. 950 was applied. Exhibit F purports to be a deed of absolute sale of the property with full right to alienate by sale, gift, etc. Then come the words on which the difficulty arises: The amount dues under the hypothecation deed executed on 3rd February 1900 is excluded. This translation, as well as the translation by the lower Courts, is challenged by the appellants; and an alternative reading is given to us by the Bench clerk, 'while the balance due under the hypothecation deed executed on 3rd February 1900 stands.' The appellant argues that this means that the amount remains as a charge on the other property, i.e., the house and house site, and that it was put in to make that clear. The respondent supports the view taken by the lower Court that it was intended to keep alive the liability on this property also.
9. In these circumstances I think it best to see what the nature of the original mortgage was. Exhibit A was a simple mortgage, that is to say, a promise by the mortgagor to pay the mortgage-money with a right to proceed against the hypothecated properties for the purpose of recovering the amount. Exhibit E, the prior mortgage, was a usufructuary mortgage. When the property was sold by Exhibit F the title to the property passed to the mortgagee who already had the right to possession. What, then, became of the mortgagee's rights under Exhibit A with reference to this property? I am unable to see how Exhibit E can have failed to operate as a merger. His right under Exhibit A was to bring the property to sale. When the property had passed into his hands as absolute owner, this right must, apart from any statutory possession, Necessarily disappear. It is quite true that under Section 101 of the Transfer of Property Act it is in the power of the mortgagee to keep the charge alive, but I am unable to see any express words or necessary implication in the language quoted above by which the mortgagee declares that it shall continue to subsist. The alternative requirement is that the continuance would be for his benefit. It is most obvious that if there is another property liable for the mortgage amount which is sufficient to discharge it, it cannot be for the benefit of the mortgagee to keep alive the charge on the property purchased so as to render him liable to make a rateable reduction. I am inclined to think that the appellant's reading of the clause is the correct one. Anyhow, I am clear that it has not been made out that the view taken by the lower Court is correct.
10. I would refer to the view that I have expressed in Thuvoor Venkatasubba Reddy v. Bagiammal 29 Ind. Cas. 113 : 2 L.W. 469 : (1915) M.W.N. 339 : 17 M.L.T. 411 that a mortgagee is entitled, subject to the provisions of Sections 56, 60 and 81, to proceed, for the whole amount of his mortgage debt, against any portion of the mortgaged property, and I decline to introduce limitations to this right save as are to be found in the language of the Act, or as arise by fraud of the mortgagee or in circumstances coming within the purview of Section 90 of the Trust Act, which must be alleged and made out as an answer to the plaintiff mortgagee's claim.
11. In my view it does not rest on the plaintiff to show that he paid the full value of the unencumbered property to the defendants No. 1 and 2, but on the defendants to establish the contrary. The property was, as above stated, subject to a usufructuary mortgage in favour of the plaintiff on which Rs. 500 was due and the purchase-money was Rs. 950. Defendants Nos. 1 and 2 did not set up any case of fraud or allege that the sum of Rs. 950 was not the full value for the property. The 5th defendant is the real contesting defendant. He purchased the equity of redemption in the house property covered by Exhibit A long after the sale under Exhibit F, his purchase being in 1908, while Exhibit F is in 1901. In his written statement he claims the rateable reduction, but alleges no grounds in support of the claim. In my opinion this case is covered by the principles laid down in Sesha Aiyangar v. Krishna Aiyangar 24 M.P 96 : 12 M.L.J. 283 and Mir Esuf Ali Haji v. Pachanan Chatterjee 6 Ind. Cas. 842 : 11 C.L.J. 639 : 15 C.W.N. 800 and the plaintiff mortgagee is entitled to enforce his claim for the whole amount of his mortgage against the property covered by Exhibit A, and I would give a preliminary decree for sale for the whole amount found due on the mortgage; but as my learned brother, takes a different view, the appeal will be dismissed with costs.