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1916 Supreme(SC) 15
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD SHAW OF DUNFERMLINE, SIR JOHN EDGE, AND SIR LAWRENCE JENKINS.
PRANJIVANDAS MEHTA - Appellant
Versus
CHAN MA PHEE - Respondents
On Appeal From The Chief Court of Lower Burma.
Decided On : Mar. 21. 1916.
Solicitor for appellant :Edward Dalgado. Solicitors for respondent: Arnould & Son.
A written agreement accompanying the deposit of title deeds for an equitable mortgage overrides the general presumption that the security covers all properties described in the deeds; the written contract alone determines the scope and extent of the security.
Headnote:(A) Equitable Mortgage - Deposit of title deeds - Written agreement - Scope of security - Where titles of property are handed over with nothing said except that they are to be security, the law supposes that the scope of the security is the scope of the title - However, where titles are handed over accompanied by a bargain, that bargain must rule - When the bargain is a written bargain, it alone determines the scope and extent of the security, and any implication that might be raised in the absence of a document is put out of the case and reduced to silence by the document. (Paras 4-5)
(B) Interpretation of Security - Use of singular terms - A memorandum specifying "grant of a house" in the singular is limited to a single property and cannot be extended to include multiple plots of land under leases unless clearly evidenced. (Paras 6-8)
Facts of the case:
An original borrower deposited four title documents relating to multiple properties as security for a loan. The liability was later assumed by the borrower's daughter, who executed a promissory note for a larger sum. A memorandum on the back of the note specified the security as "grant of a house" in a specific location. Subsequently, the properties were subdivided into four plots. Upon attachment of the properties by another creditor, the holder of the security claimed an equitable mortgage over all properties. The lower court held that the security was limited to only one house.
Findings of Court:
The written agreement serves as the limit and standard for measuring the obligations of the borrower. The term "grant of a house" is singular and refers specifically to the conveyance of one house, not the multiple plots of land covered by other leases.
Issues: Whether the deposit of multiple title deeds created a charge over all the properties or whether the subsequent written memorandum limited the security to a single house.
Ratio Decidendi: The court ruled that while the deposit of title deeds generally creates a charge on the property referred to, a written bargain accompanying the deposit overrides this general rule. The written document alone determines the scope of the security. In this case, the singular phrasing "grant of a house" limited the security to one specific property.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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property law
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mortgages
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equitable mortgage
- deposit of title deeds
- scope of security
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equitable mortgage
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mortgages
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practice and procedure
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evidence
- interpretation of written documents
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evidence
Judgement
Appeal from a judgment and decree of the Chief Court of Lower Burma (May 6, 1914) varying the judgment and decree of Robinson J. at the trial.
In 1902 Ko Tha Gywe borrowed from Revashankar Jagjivan & Co. the sum of Rs. 50003 depositing with them as security four documents of title relating to two houses in Rangoon. These documents were as follows —(1.) A building lease dated April 2, 1884. from the Government to one Maung Bwa of a plot of land for five years, the tenancy to continue thereafter until terminated by either party giving three months notice in writing; (2.) a building lease dated July 1, 1884, from the Government to Ma Thit, the wife of Ko Tha Cywe, of another plot for the same term ; (3.) a sale deed, dated January 5, 1888, whereby the said Maung Bwa assigned to the said Ma Thit a dwelling-house described as situated in 14th Street, Rangoon, for the residue of the term of five years created by the lease of April 2, 1884 ; (4.) a sale deed, dated January 3, 1901, by which Ko Tha Gywe purchased a house " known as No. 88, situate in 14th Street, Rangoon." Ko Tha Gywe died shortly afterwards and his daughter Ma Saw took over his liability under the loan, executing on January 1, 1903, a promissory note for Rs. 6000 in favour of the lenders. She subsequently from time to time borrowed further sums from them, the above documents remaining in their possession. On June 1, 1906, Ma Saw and her husband gave the lenders a promissory note for Rs. 13,000 in respect of the total amount lent. Upon the back of this note there was a memorandum, signed by Ma Saw and the lenders, as follows " As security—grant of a house in 14th Street, Rangoon." In December, 1906, the business of the lenders was transferred to the appellant and the above promissory note was indorsed to him.
In 1908 Ma Saw obtained from the Government two fresh leases in respect of the plots of land referred to in the deposited documents. These leases divided the land into four plots numbered 65, 66, 66a, and 67. There was one lease in respect of plots 65, 66, and 66a and the house standing upon them, which was then known as No. 92, Strand Road. The second lease was in respect of plot 67 and a smaller house thereon, known as No. 87, 14th Street. The plots did not accurately correspond with the three plots referred to in the deposited documents, but it appeared (as their Lordships found) that the house upon plot 67 was that which had been sold to Ko Tha Gywe and was the subject of the fourth deposited document.
In 1909 a creditor of Ma Saw obtained a money decree against her and attached the four plots with the two houses thereon. The appellant applied to the Court, claiming to have an equitable mortgage upon the whole property and praying that the sale should be made subject to his charge. The proclamation of sale accordingly-stated that the appellant claimed to have an equitable mortgage for Rs. 13,000 and interest. At the sale the appellant purchased plot 67 with the house known as No. 87, 14th Street, and the respondent purchased plots 65, 66, and 66a with the house known as No. 92, Strand Road. The appellant instituted a suit in the Chief Court, to which the respondent and others were made defendants, claiming, inter alia, a declaration that he was entitled to a valid charge upon the whole property. Robinson J. made a decree in the appellants favour. On appeal Hartnoll, acting Chief Judge, and Twomey J. reversed that decision so far as it related to the respondent, holding that only one house was given as security and that that house was No. 87, 14th Street purchased by the appellant.
De Gruyther, K.C., and Parikh, for the appellant. The equitable mortgage in favour of the appellant extended to both houses. The fact that the documents of title were deposited and remained in the possession of the lenders is conclusive. The charge is evidenced by the deposit and is not limited by the subsequent memorandum Ashton v. Dalton (( 1846) 2 Coll. 565.) ; Ex part
