Judgement

Appeal (No. 145 of 1920) from a decree of the High Court (March 21, 1918) reversing a decree of the Subordinate Judge of Vizagapatam.

43 Law. Rep. 52 Ind. App. 1 ( 1924- 1925) Vatsavaya Venkata Jagapati V. Poosapati Venkatapati

144

The suit was brought by the present appellant, the widow of the Raja of Tuni, claiming (inter alia) a declaration that Rs. 1,68,629, money advanced by her deceased husband together with interest, was a charge upon a large sum of money which the respondents had received upon the compromise of a suit. The money had been advanced under agreements dated May 22, 1906, and August 14, 1907, for the purpose of the conduct of the suit in question.

The facts appear fully from the judgment of the Judicial Committee.

The trial judge held that the plaintiff was entitled to the declaration for which she prayed, but that decision was reversed by the High Court (Ayling and Seshagiri Ayyar JJ.) upon grounds which appear from the present judgment.

The present litigation had been concluded by compromise save so far as concerned respondent No. 1, the trustee under the deed of July 12, 1902 (referred to in the present judgment), and respondents Nos. 5 and 6, beneficiaries of a one-sixteenth share of the trust property under that deed.

1924. March 10, 13. Upjohn K.C., De Gruyther K.C. and Narasimham for the appellant. There was power under the trust deed of July 11, 1903, to obtain loans for the conduct of the litigation. The appellant has a first charge upon the fruits of the compromise, both by the terms of the agreement when rightly construed, and upon the principle of subrogation In re Johnson (( 1880) 15 Ch. D. 548, 552, 553.) ; Todd v. Moorhouse (( 1874) L. R. 19 Eq. 67.); Leslie v. French. (( 1883) 23 Ch. D. 552, 560.) The lender committed no breach of the agreement; he was entitled to decline to make further advances, having regard to the refusal of the borrowers to account in the manner agreed. That refusal was repudiation by the borrowers, but the lender treated the agreement as still subsisting, as he was entitled to do Johnstone v. Milling. (( 1886) 16 Q. B. D. 460.) If there was a breach by him, it was, as the High Court found, not material.

Kenworthy Brown for respondents 1, 5, and 6. The trustee had no power under the trust deed of July 11, 1903, to charge the trust property, save as to his own interest therein; these respondents were not parties to the agreements. In any case, the Rajas failure to make further advances was a breach going to the root of the agreement, as the High Court found. Clause 12 of the agreement of August 12, 1907, was an assignment of future property and was inoperative as such; it could take effect as a contract only if specific performance was obtainable when the property was acquired; but that remedy was not available having regard to the breach Bhoboosoondree Dasseah v. Issurchunder Dutt (( 1872) 11 Ben. L. R. (P. C.) 36.); Prahlad Sen v. Budhu Singh (( 1869) 2 Ben. L. R, (P. C.) 111,117.); Tailby v. The Official Receiver. (( 1888) 13 App. Cas.523.)

[Lord Blanesburgh referred to Performing Right Society v. London Theatre of Varieties. ([ 1924] A.

C. 1.)]

Further, as the High Court held, the compromise was not one within the terms of the contract. The principle of subrogation does not apply. It applies only when a loan is made at the request of the trustee Todd v. Moorhouse. (L. R. 19 Eq. 69.) A request by these respondents was not proved. The transaction was not a loan, but a speculative transaction giving no equitable rights.

Upjohn K.C. replied. There was under cl. 12 a good assignment of so much of the fruits of the litigation as would repay the advances and interest; even if it related to future property, it attached upon the money being paid under the compromise.

May 5. The judgment of their Lordships was delivered by

43 Law. Rep. 52 Ind. App. 1 ( 1924- 1925) Vatsavaya Venkata Jagapati V. Poosapati Venkatapati

145

LORD ATKINSON. The suit out of which this appeal