Cracklaw V. Clements

Present: The Hon. Sir Joseph T. Hutchinson, Chief Justice, and Mr. Justice Middleton.

CRACKLAW v. CLEMENTS et al.

D. C. Kandy, 18, 898.

Appropriation of payments - Payment of interest-Appropriation-Mortgage debt-Unsecured debt.

A mortgage bond was dated July 15, 1904; on October 3, 1904, and January 16, 1905, the mortgagor paid two sums of Rs. 90 each for the interest then due on the bond; and on May 6, 1905, he made a payment of Rs. 96, which he wished to place against the interest, but which the mortgagee insisted on placing against an unsecured debt due to him from the mortgagor. Afterwards the mortgagor made three other payments, the last of which was in April, 1906. The mortgagee deposed that about October, 1907, the mortgagor agreed to allow him to appropriate all the payments which he had made towards the amount due by him on the unsecured debt.

Held, that all the payments, before the arrangement of October, 1907, should be credited to the more onerous debt, viz., the mortgage debt.

Held, that when part of a mortgage debt due on a bond for a definite and certain sum had been paid off, the parties could not afterwards agree that the payment should be cancelled, because such an agreement would be in contravention of the Stamp Laws.

Held, further, that this principle should be applied as regards payment of interest as well,

APPEAL by the second defendant from a judgment of the District Judge of Kandy. The facts material to the report, sufficiently appear in the judgment of the Chief Justice,

Van Langenberg (with him Bawa), for the. second defendant, appellant.

F. J. de Saram, for the plaintiff, respondent.

Cur. adv. vult.

March 11, 1909. Hutchinson C. J. -

This is an appeal by the second defendant. The action was brought by the mortgagee on a mortgage bond: the first defendant is a mortgagor and the second defendant is a purchaser of the mortgaged property subsequent to the mortgage. The only question now is as to the amount due for interest on the mortgage; the plaintiff claims, and the District Court has awarded him, interest from the date of the bond, but the appellant says that certain payments which were made by the mortgagor to the mortgagee ought to be credited to him as on account of the interest on the mortgage.

The bond is dated July 15, 1904. It is for the penal sum of Rs. 7, 200 to secure the repayment of Rs. 3, 600 and interest, and is stamped as a bond to secure Rs. 3, 600. On October 3, 1904, and January 16, 1905, the mortgagor paid two sums of Rs. 90 each for the interest then due on the bond, and on May 6, 1905, he made a payment of Rs. 96, which he wished to place against the interest, but which the plaintiff insisted on placing against an unsecured debt due to him from the mortgagor. Afterwards the mortgagor made three other payments, the last of which was in April, 1906, and which he did not appropriate, but which the mortgagee appropriated to the unsecured debt. These payments, which amount together to Rs. 762, are those which the second defendant says should be credited as against the interest on the bond. The second defendant bought the mortgaged property in November, 1907, at a Fiscal's sale in execution against the mortgagor. The mortgagor admitted, and consented to judgment against him for the full amount of the plaintiff's claim.

The plaintiff deposed that about September or October, 1907, the mortgagor agreed to allow him to appropriate all the payments which he had made towards the amount due by him on the promissory note (i. e., the unsecured debt), that he had threatened to put the bond in suit unless the mortgagor so agreed, and that the latter did so agree. The District Judge believed that the parties did make that arrangement, and I see no reason to doubt it.

The appellant says, in the first place, that there was no proof of the existence of the unsecured debt, because the promissory notes were not produced. The plaintiff, howe

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