1. In this case, the plaintiff, being minor, by his mother and next friend, sued the defendant (his maternal uncle) for an account of his management, generally, of the plaintiff's estate from October 1910 to March 1916 and, in particular, of certain items of moveables (paddy and outstandings). The Subordinate Judge dismissed the suit following Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 .
2. The plaint does not expressly say that the defendant was appointed as agent by plaintiff's mother, nor have we in this case any power-of-attorney, as in Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 and in Ramayya Chettiar v. Sappanimuthu Chettier, A.S. No. 90 of 1921. The plaint was filed prior to the decision in Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 and it cannot be said that it was cleverly worded with a view to evade that decision. The allegations are loose and general, equally consistent with defendant being regarded as an agent appointed by the plaintiff's guardian as well as with defendant being a mere inter-meddler and the guardian passively acquiescing and remaining content with defendant's promises of accounting. I do not think the allegations in paragraph 3, sub-paragraphs (2) and (3), necessarily amount to an allegation that defendant is an agent. At the same time, it must be conceded that all the allegations will cover and are consistent with a case of agency. The defendant denied agency. But the Subordinate Judge without inquiring into the fact of agency and on the allegations in the plaint, held that the suit is not maintainable.
3. I find several difficulties in applying Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 to this case. First, the English cases [Barnes v. Addy (1874) 9 Ch. App. 244 : 43 L.J.Ch. 513 : 30 L.T. 4 : 22 W.R. 505 In re Barney; Barney v. Barney (1892) 2 Ch. D. 265 : 61 L.J.Ch. 585 : 67 L.T. 23 : 40 W.R.637 Mara v. Browne (1896) 1 Ch. D. 199 : 65 L.J. Ch 225 : 73 L.T. 638 : 44 W.R. 330 are all cases where the defendants had dealing with trustees and the cestuis que trustent sued to make them liable. The defendants were not dealing with guardians. Now I do not think the legal position of a guardian is identical with that of a trustee. It may be readily conceded that, for several purposes, their positions are analogous (vide Section 88 of the Indian Trusts Act) and we may speak of guardians who hold a fiduciary position, loosely as trustees. I do not think the statement of Romilly, M.R., in Mathew v. Brise 14 Beav.315, amounts to more thin this. In Muthusubbia Chettiar v. Rangia Goundan, 7 M.L.J. 191 it has been held that the powers of a guardian are less extensive than those of a trustee, although the soundness of such a wide proposition has been doubted in Vembu Iyer v. Srinivasa Iyengar 17 Ind. Cas. 609 : 23 M.L.J. 638 : 12 M.L.T. 547 The latter case suggests that the position of a guardian is in some respects wider than that of a trustee (see the judgment of Masilamani Pillai, J., in Ramayya Chettiar v. Sappanimuthu Chettiar, Appeal Suit No. 90 of 1921). Whatever may be the position of guardians in English Law, it is impossible to bring a guardian under the definition of 'trust' and 'trustee' in the Indian Trusts Act. If every guardian is a trustee, the Legislature might have easily said so. The fundamental difference is that the legal estate vests in the trustee, but does not vest in the guardian. The Cestui que trust, if sui juris muy require the trustee to convey the estate to him (section 56 of the Trusts Act) but until this is done, the estate vests in the trustee. No such conveyance has to be executed by the guardian to his ward on his attaining majority.
4. There is no law prohibiting a guardian from entering into contracts on behalf of his ward When such contracts are entered, they are not void. When they are not completely executed, the question of enforcing them against minors in Cours will be decided with reference to the test, how far they are binding on the minors.In so far as such contracts impose a mere personal liability on the minor, they may not be enforced [Waghela Rajsanji v. Shekh Masludin 11 B.P 551; 11 I.A. 89 : 11 Ind. Jur. 315 : 5 Sar P.C.J. 16 : 6 Ind.Dec. (N.S.) 364 Indur Chunder Singh v. Radhakishore Ghose 19 C.P 507 : 19 I.A. 90 : 6 Sar. P.C.J. 185 : 9 Ind. Dec. (N.S.) 782 and there may be difficulties in giving effect to them [Batchu Ramajogayya v. Vajjula Jagannadham : (1919)36MLJ29 . But these difficulties need not trouble a Court in cases where all that remains is something to be enforced on behalf of and for the benefit of the minor: (see Masilamani Pillai, J.'s judgment in Ramayya Chettiar v. Sappanimuthu Chettiar, A.S.No. 90 of 1921). Mr. Sitarama Rao, the learned Vakil for the respondent, suggested that in such a case, the minor may sue on the principle that the general rule that only parties to a contract can sue, does not apply where a benefit is reserved under or arises out of the contract, in favour of a third person, in such circumstances as to amount to a trust: (vide Pollock on Contracts, 9th Edition, pages 222--223). This suggestion leads me to doubt the soundness of applying tlie English decisions to a case of a guardian. If the contract entered into by the guardian was made on behalf of the minor, and the unexecuted part of it relates not to a liability but to a right of the minor, I do not see why the minor cannot sue on a contract of agency, just as he can, on any other contract. Even Phillips, J., who differed from Masilamani Pillai, J., (in Ramayya Chettiar v. Sappanimuthu Chettiar, A.S.No. 90 of 1921), does not seem to question such a proposition. On the terms of the power-of-attorney in that case, he held that the contract of agency in it was not created on behalf of the minor, but was personal to the principal.
5. Secondly, Lord Selbourne's judgment in Barnes v. Addy (1874) 9 Ch. App. 244 : 43 L.J.Ch. 513 : 30 L.T. 4 : 22 W.R. 505 indicates an exception to the main principle he was laying down;--'Unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees' (at page 251). When we examine the facts in the English cases, this aspect of the matter seems to become important. In Barnes v. Addy (1874) 9 Ch. App. 244 : 43 L.J.Ch. 513 : 30 L.T. 4 : 22 W.R. 505 the two Solicitors (Mr. Duffield and Mr. Preston) were sought to be made liable on the ground that Mr. Duffield prepared the deed of appointment of Barnes as sole trustee and the deed of indemnity, and introduced Addy to a broker for the purpose of selling oyt some of the stock to pay some amounts to which the trust estate wras liable and that Mr. Preston settled the deed of indemnity on behalf of Mrs. Barnes. These acts were alleged to amount to a fraud on the part of the Solicitors. In In re Barney, Barney v. Barney (1892) 2 Ch. D. 265 : 61 L.J.Ch. 585 : 67 L.T. 23 : 40 W.R. 637 the widow of the testator acting as executrix decided to carry on the husband's business but this amounted to a breach of trust. Two friends assisted her by initialling all cheques issued by her on the bankers with whom the funds were invested, it being understood that the cheques were not to be honoured without their initials. On this ground, they were sought to be made liable. In Mara v. Browne (1896) 1 Ch. D. 199 : 65 L.J. Ch 225 : 73 L.T. 638 : 44 W.R. 330 the defendants were acting solely as Solicitors. North, J., held that Hugh Browne was 'a principal in the matter and was not a mere agent for persons urides whose lawful directions he was acting.' The Court of Appeal reversed this judgment (Smith, L.J., being more guarded in his opinion on one point in the case).
6. In the first two cases, the defendants did not get possession of any part of the trust property. They were sought to be made responsible solely for their acts in advising aud co-operating with the trustees. In the third case, though Hugh Browne came into possession of the trust funds, he carried out the directions of the trustee. I am far from saying that an agent (of the guardian), lawfully entering into possession of the property under the directions of the guardian and carrying out all the directions of the guardian, should be liable to the ward, solely on the ground that the acts of the guardian were in excess of his powers and, therefore, the agent's entry is tortious. In such a case, the agent ought not to be liable. But when the agent has not carried out the directions of the guardian and has not accounted for property that .came into his possession, I do not see why, while those acts may give rise to an obligation ex contracto, there should not be also an obligation ex delicto making him liable to the ward if property is actually received. That the same act, while giving rise to relations ex contracto between A and B may also give rise to relations ex delicto between B and C is a common conception known to law, In all such cases, no doubt it is necessary for the protection of the defendant from a multiplicity of actions that the guardian also should be a party. In Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 and in Ramayya Chettiar v. Sappanimuthu Chettiar, A.S. No. 90 of 1921, the guardian was not a party and this fact was relied on as a ground of decision by Abdur Rahim. J., in the former case and Philips, J., in the latter. Again, I do not see why, in such a case, if the fact that the estate was that of a minor, was known to the defendant, the minors, action should not be held to lie on the principle of the exception (I have stated already) to the rule that only the parties to a contract can sue. When property is received for the purpose of being-dealt with for the benefit of the ward and has not been accounted for to the guardian, I do not see why the facts do not amount to a trust in favour of the ward and the ward should not be entitled to sue. In the present case, though the frame of the suit is one for accounting, the allegations disclose that considerable items of property have come to the hands of the defendant. I do not know if that was the case in Ramanathan Chettier v. Muthiah Chetty : (1920)38MLJ247 But if it was alleged that some properties came to the hands of the defendants in that case, I doubt the correctness of that decision. It seems to me a large and dangerous extension of the English cases to apply them to cases of guardian's agents, who have received properties and have not accounted for them even to the guardian. The position is so anomalous that it has only to be stated a guardian deals with an agent, on behalf of the minor's estate, but cannot sue to enforce the agent's liabilities on the minor's behalf, but should sue in his own right though he has no rights ex hypothesi and the minor cannot sue.
7. For all these reasons, I am inclined to doubt the correctness of the decision in Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 Even if it is not entirely erroneous it requires to be limited. I would, therefore, refer to a Full Bench the question, whether a minor cannot maintain a suit against an agent appointed by the guardian for the benefit of the minor's estate (a) generally, and (6) at least in respect of properties received by the agent and not accounted for to the guardian.
8. Jackson, J.--I agree.
9. This appeal coming on for hearing, upon perusing the grounds of appeal, the judgment and decree of the lower Court and the material papers in the case and the Order of Reference to a Full Bench, dated 25th January 1924, and upon hearing the arguments of Mr. S. Varadachari, for the Appellant, and of Mr. T.V. Gopalaswami Mudaliyar, for the Respondent, the Court recorded the following
11. Coutts Trotter, C.J.--The question referred to us is, 'whether a minor connot maintain a suit against an agent appointed by the guardian for the benefit of the minor's estate (a) generally, and (b) at least in respect of properties received by the agent and not accounted for to the guardian.'
12. The reference was really necessitated--I do not gather that the learned Judges had much doubt about the point themselves--by the decision of a Bench of this Court, in Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 which, in my opinion, applied itself to the wrong angle of view in looking at these matters. It is not a question of trustee de-son-tort; it is a question of a contract made by a minor with an agent to manage his property and a contract Avhich no one can suggest is void, though it may be voidable at the instance of the minor. It may be that the minor cannot be sued upon it, but here the minor is seeking to enforce his rights of property against a person who has undoubtedly had control of his estate and whom it is sought to make accountable for the estate and its funds which have passed into his hands. The English rule is perfectly clear; it has been clear, ever since the case of Dormer v. Fortescue (1744) 3 A. 124 : 26 E.R. 875 decided as early as 1744 by Lord Hardwicke, that in a position of this kind, the minor is entitled to call upon the agent to account.
13. I do not wish to say more because my learned brother Ramesam, J., in the Order of Reference has given his reasons for believing that Ramanathan Chettiar v. Muthiah Chetty : (1920)38MLJ247 is wrongly decided and can no longer be regarded as good law, and I am entirely of the same opinion. I think that this Reference must be answered in the affirmative as regards both (a) and (b).
14. Ramesam, J.--I agree.
15. Wallace, J.--I agree and have nothing to add.