SIR JAMSHEDJEE JEEJIBHOY, BART Vs. SORABJI BYRAMJI WARDEN

JUDGEMENT

(1.) This is an appeal by the representatives of the original plaintiff in a suit to enforce a mortgage by deposit of title deeds. The suit was brought on the Original Side of the High Court of Bombay on 7 January 1936, by an old lady named Jaiji Hirjibhoy Parekh. Her daughter Meherbai had married one Byramji Hirjibhoy Warden, father of the defendants. Byramji had died on 26 October 1924, leaving a will whereby he had appointed the defendants, his four elder sons, to be his executors. Probate had been granted to them in 1925. By his will dated 6 October 1922 (codicil of 19 August 1924), Byramji declared (cl. 11) that his immovable properties were generally mortgaged and that it would take a long time before they could be sold at the best price after paying the mortgage debts. He accordingly authorized his executors to postpone the sale for any period not exceeding five years from the date of his death. He referred (cl. 12) to the fact that Bai Jaiji (the plaintiff) and a number of other persons held his promissory notes, stating that he ordinarily renewed them yearly or at longer intervals and paid them interest monthly or at times at longer intervals. He directed that the amount due to these creditors should be paid with interest by his executors and he authorized his executors to renew these notes with interest. After making provision for his daughters, for a fifth son named Rustomji and for certain other persons, he directed that at the end of seven years after his death the residue of his property should be divided into four equal parts, each part to be held in trust for one of his four elder sons (the present defendants-respondents) for life and on such son's death for his children. At his death the estate of Byramji, which consisted mainly of shares in companies and immovable properties in Bombay, was valued by the Collector for the purposes of the duty payable on obtaining probate at about 8? lacs of rupees and the debts of Byramji were returned at about 6 lacs. The debt due to Bai Jaiji was entered as amounting to Rs. 25,780 for principal and Rs. 620 for interest. That the solvency of the estate would depend entirely upon the condition of the property market in Bombay has at all times been plain and after the death of Byramjj his executors found it difficult to realize his properties. By 1928 the fifth son, Rustomji, was threatening steps to realize the sum of Rs. 50,000 which had been settled upon him by his father's will and in this year several mortgages were given by the executors over immoveable properties of the estate to creditors of the testator. In particular, on the 10 August 1928, an equitable mortgage by deposit of title deeds was given to Bai Jaiji and the registered memorandum set forth the terms thereof as follows: Memorandum of Agreement made and entered into at Bombay this 10 day of August 1928 between Sorabji Byramji Warden, Hirjibhoy Byramji Warden, Jamshedji Byramji Warden and Pestonji Byramji Warden all the four of Bombay Parsi Inhabitants, Executors and Trustees of the last Will and Testament of the late Byramji Hirjibhoy Warden of the one part and Bai Jaiji Hirjibhoy Parekh of Bombay Parsi Inhabitant of the other part, WHEREAS the said Byramji Hirjibhoy Warden, was during his lifetime indebted to the said Jaiji Hirjibhoy Parekh in a certain sum, which with interest up to date exceeds the sum Rs 30,000 AND WHEREAS the said Byramji Hirjibhoy Warden, died in October 1924 leaving a Will dated 6 October 1922 Probate whereof has been issued by the High Court of Bombay in its testamentary Jurisdiction to the said Sorabji, Hirjibhoy, Jamshedji and Pestonji, the sons of the said Byramji Hirjibhoy Warden, and Executors and Trustees of the said Will AND WHEREAS the said Bai Jaiji Hirjibhoy Parekh, has called upon the Executors to pay off the debt due to her by the estate and in default, threatened to proceed further in a Court of law, and the Executors having at present no cash available for the satisfaction of the said debt, offered to give security to the extent of Rs. 30,000 by giving an equitable mortgage of the right, title and interest of the said Byramji Hirjibhoy Warden in the immovable properties described in the schedules A, B and C hereto by depositing their respective title-deeds described in the Schedules D, E and F which the said Bai Jaiji Hirjibhoy Parekh, the creditor, has agreed to accept and not to sue, till such time not exceeding two years as the depression in the property market in the opinion of the mortgagors passes off, AND WHEREAS the said Byramji Hirjibhoy Warden was entitled to the entirety of the immovable properties in the schedules A and B and to a half share in the immovable property described in the schedule C hereto, NOW IT IS HEREBY AGREED that the deeds and documents specified in the Schedules D, E and F relating respectively to the immovable properties described in the Schedules A, B and C have this day been deposited by the said Sorabji Byramji Warden, Hirjibhoy Byramji Warden, Jamshedji Byramji Warden and Pestonji Byramji Warden, with the said Bai Jaiji Hirjibhoy Parekh with intent to create an Equitable Mortgage upon the said immovable properties for securing to her the said Jaiji repayment with interest of the sum of Rs. 30,000 (Thirty thousand) this day due to her by the estate of the said deceased Byramji Hirjibhoy Warden, represented by the executors of his will, the said Sorabji, Hirjibhoy, Jamshedji and Pestonji, each sum to be repayable at any time within two years from the date hereof, such time to be selected by the said executors and that they will in the meantime pay interest every month on the first day of each English month at the rate of six percent. per annum with compound interest at the same rate with quarterly rests on all arrears of interest not paid on the due date, AND IT IS HEREBY FURTHER AGREED that the said sum of Rs. 30,000 is repayable in Bombay, and until so repaid with interest as aforesaid, the said deeds and documents and the respective properties to which they relate will be held by the said Bai Jaiji Hirjibhoy Parekh as an equitable security and that the executors will, if so required by the said Jaiji, insure the structures on the lands comprised in the said security in a sum not exceeding Rs. 30,000 at the costs of the executors.

(2.) Having received no payment whether on account of principal or interest, Bai Jaiji brought her suit as already mentioned on 7 January 1936. She asked for the usual preliminary decree for sale but added a claim that if the proceeds of sale should be insufficient, the defendants be held personally liable to make up the deficiency, contending that by the memorandum of 10 August 1928, the defendants had made themselves personally liable for the repayment of the principal sum of Rs. 30,000 and interest thereon. This was a very proper question to be decided at the trial. Barlee J. as trial Judge found against the defendants both as regards principal and interest, proceeding on the view that an executor must perform a promise made by him as executor de bonis propriis unless he has expressly excluded his own liability and that this he does not do by the mere use of the word executor. By his preliminary decree (5 August 1936), he gave liberty to the plaintiff to apply for a personal decree against the defendants in the event of the net sale proceeds being insufficient to satisfy in full the plaintiff's claim for principal, interest and costs. While the defendants' appeal to an Appellate Bench was pending, Bai Jaiji died on 25 December 1936, and the executors of her will (the present appellants) were substituted in her stead. At the hearing of the appeal, Beaumont C. J. and Blackwell J. construed the memorandum as imposing no personal liability on the defendants. Their decree dated 28th September 1937, negatived the plaintiff's right to apply for a personal decree against the defendants but gave liberty to the plaintiff to lodge a claim for any deficiency against the estate of Byramji but without prejudice to any question whether such claim was maintainable. The evidence called at the trial has little bearing upon the true construction of the memorandum of 10 August 1928. Defendant 2, Hirjibhai, who appears to have been the most active of the executors, gave evidence that he had advanced some money for paying off debts of the estate, that several creditors had been paid off chiefly out of moneys of the estate, that some legacies had been paid out of moneys advanced by him including a legacy left to one of his sisters which was paid on her marriage. He stated that the promissory notes held by Bai Jaiji carried interest at 6 percent. with quarterly rests and that these had been handed over to him at the time of the mortgage transaction of 10 August 1928, and destroyed. He admitted that the income of the property in suit was collected by him after the granting of the mortgage on 10 August 1928, just as before. His evidence is that whatever might have been thought possible at the date of his father's death in 1924, by 1928 he had no longer any hopes of taking anything by the residuary legacy, since the utmost that could then be expected was that the debts of the estate might be cleared if land values improved. The only other witness called by the defendants was the solicitor who drew up the memorandum of 10 August 1928. He stated that he did so on the instructions of defendant 2 who wanted to protect his grandmother, but that he did not himself see or consult the lady nor were any instructions taken by him from her though defendant 2 was in communication with her throughout. Bai Jaiji herself gave evidence giving her age as 90 years : she said that Byramji had paid her the interest in his lifetime but that after his death defendant 2 had not done so in spite of demands but had asked her to wait two years. She denied that she had handed over to him the promissory notes.

(3.) Before the Board Mr. Roxburgh, for the appellants, in a clear and careful argument, examined separately three possible answers to the question whether the defendants had rendered themselves personally liable to Bai Jaiji, (1) that they were so liable both for principal and interest ; (2) that they were so liable for interest alone either (a) for two years from the date of the memorandum, or (b) until repayment ; (3) they were not so liable at all. In the High Court the learned trial Judge had taken the first view and the Appellate Bench the third : their Lordships agree however that the second must be carefully considered. It was further contended for the appellants that personal liability might be brought home to the defendants either on the footing that they have agreed to pay or on the footing that they have admitted assets. Upon the second of these alternatives it was suggested that the learned Judges in India do not seem to have disputed the applicability of the principles of English law and that the English decisions, some of which were followed by Barlee J. are particularly strong to the effect that an executor may incur liability by making a statement about the assets of the testator which amounts to an admission of assets. Their Lordships, however for reasons which will be indicated later in this judgment, are not prepared to give unqualified adherence to the view that English law as to admission of assets is law in India either within or outside of the Presidency towns. In the present case it is to be observed that in the plaint the personal liability of the defendants was put entirely upon the memorandum of 10 August 1928. It was not pleaded that the defendants had become liable by reason of any admission of assets dehors the memorandum whether by conduct or by words. Indeed admission of assets as distinct from agreement to pay personally was not in the plaint put forward as a ground of claim at all. In these circumstances while the memorandum must be given its true effect in law, it is not open to the appellants, for the purposes of this appeal, to rely on statements made in evidence by defendant 2 as to his sister's legacy having been paid or other creditors having been paid or having been given security. If, however, the appellants should at any time get judgment against the defendants for any sum to be realized out of the assets of the testator, it may be that in execution proceedings it still will be open to them on the basis of some such facts to make a case (under sub-s. (2) of S. 52 of the Code) that the defendants have not duly applied all the assets which came to their hands. The only matter upon this appeal is the nature and extent of the liability incurred by the defendants under the memorandum of 10 August 1928. The defendants are in the opening words described as executors and trustees of the will of Byramji. The recitals do not contain any details of the debt due from Byramji's estate. The dates of the loans, the rate of interest, the sums outstanding for principal and for interest are not given: all that is said is that up to date the debt exceeds Rs. 30,000. The recitals do however purport to disclose in terms that the executors had no cash available wherewith to pay the debt, that their only prospect of paying depended on the state of the property market which was at that time depressed, and that they were giving security in order to gain two years time. There is here no suggestion that the defendants as executors had been in default in any way or were admitting that they had assets out of which they might and should have paid. Their offer to Bai Jaiji as recited is an offer to give her security for the testator's debt to the extent of Rs. 30,000 by equitable mortgage of the right, title and interest of the testator. Though defendant 2 deposed that the debt originally carried interest at six percent. with quarterly rests, the learned trial Judge was not prepared to believe that compound interest was payable at all, the promissory notes having been destroyed. But the way in which the debt is recited in this memorandum without any distinction between what was then due for principal and interest is, in their Lordships' opinion, some corroboration of the defendant on this point and there is no contradiction by Bai Jaiji. Their Lordships find it very difficult to make any inference against the defendants on the ground that the original terms as to interest were varied by the memorandum-a contention which seems to them to be unproved. The operative clause of the memorandum begins by creating an equitable mortgage upon the properties for securing to Bai Jaiji repayment with interest of the sum of Rs. 30,000 then due to her by the estate of Byramji represented by the executors of his will. This is followed first by a clause, such sum to be repayable at any time within two years from the date hereof such time to be selected by the said executors, which is no more than a way of saying that it was not to be demandable for two years. Then comes the interest clause (so to call it), that they (the said executors) will in the meantime pay interest every month on the first day of each English month at the rate of six percent. per annum with compound interest at the same rate with quarterly rests on all arrears of interest not paid on the due date.