Wijewardene V. Jayawardene

1923 Present : Bertram C.J. and De Sampayo J.

WIJEWARDENE v. JAYAWARDENE.

289-D. C. Colombo, 45,217.

Surety-Beneficium excussionis-Creditor holds securities given by debtor in trust for surety-Surety discharged if securities become valueless owing to dilatoriness or act of creditor-Creditor can call upon surety to guarantee costs of excussion-Extent to which surety is discharged by misfeasance of creditor.

Where a surety has not renounced the beneficium  excussions. the creditor holds all securities given by the debtor in trust for the surety. The surety is discharged if the securities become valueless, not only by the dilatoriness of the creditor, but also by any act on his part; the act must not be a merely negligent act, but must be a positive act on the part of the creditor.

If a creditor can show that there is no reasonable hope of excussion being successful, he is to ask the surety to guarantee bis costs of excussion.

The extent to which surety is discharged by the misfeasance of the creditor considered.

THE facts are set out in the judgment.

Drieberg, K.C. (with him Hayley, Koch, and Canakeratne), for the defendant, appellant,

Elliot, K.C. (with him Samarawickreme and B. F. de Silva), for the plaintiff, respondent.

Cur adv. vult.

March 20, 1923. BERTRAM C.J.-

The question for consideration in this case is the responsibility of a creditor who is called upon by his surety to excuss the property of the debtor before requring the surety to pay any sum found ultimately due. More particularly the question is: What are the obligations of such a creditor with regard to the proper conduct of the excussion, and what is the position of the surety if that excussion is not properly carried out ?

The effect of the surety bond in this case has already been considered by this Court in the case of Wijewardene v. Jayawardene. [1 (1917) 19 N, L. R. 449.] It was there decided that the surety had not effectively renounced the beneficium ordinis seu excussionis, and that the creditor must first excuss the effects of the principal debtor before calling upon the surety to pay.

The general facts of the case are stated to some extent in. the reported case above referred to, but it may be briefly stated that the transaction related to a now extinct newspaper called the "Ceylonese," that the creditor held a mortgage bond over the  assets of that newspaper to secure the payment of the sum of Rs. 10,200 and interest, as well as such further advances as might Jayawardene be made to the Ceylonese Union Company, the proprietors of the paper. The surety was himself interested in the paper, and, at his request, the creditor stayed action on the mortgage bond for a year. The surety meanwhile was to act as managing director of the company, and apparently it was hoped that he would during that period liquidate the mortgage debt. Whether such hopes were entertained or not, they were altogether falsified, because at the end of that year the creditor's debt had swollen to Rs. 46,375'59. The surety was sued upon his bond on May 26, 1916. He pleaded the beneficium excussionis on November 15, 1916. Decree directing the excussion was entered on July 6, 1917, and on August 15, 1917, the creditor proceeded to excuss the assets of the debtor by instituting an action on his mortgage bond. The assets of this paper had been the subject of previous mortgages. One of these in favour of Mrs. Helena Wijewardene had already been paid up. At the date of the institution of this new action the creditor's security was as follows : He had a secondary mortgage in the form of hypothecation over the stock-in-trade, plant, and accessories of the company, which included some valuable machinery. He had a secondary mortgage over the book debts of the company. This was not a hypothec, but was by the way of assignment of the debts by way of mortgage. Further, he had a primary mortgage of the same

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