Garvin V. Abayawardene

Present: Bertram C. J. and Schneider J.

GARVIN v. ABAYAWARDENE.

487-D. C. Matara, 421.

Sum of money hypothecated by bond by toddy-renter as security-Money deposited by Government at a bank at request of renter-Failure of bank-Is Government responsible for loss! -Is Government bound to take steps to recover sum from the bank! -Trust.

A toddy renter deposited with the Government Agent a sum equivalent to two months' instalments of the purchase money and executed a bond purporting to hypothecate this sum as security for the discharge of his obligations under the contract. The Government Agent at the renter's request deposited the amount in the Bank of Colombo on fixed deposit. The bank failed.

Held, that the Government was not responsible for the loss, and that the Government Agent was not under any obligation to take steps to get back what he could from the bank.

Any person acting at the request of another in this way would be entitled to refuse to bring an action of the nature suggested, unless he were indemnified against all possible expenses.

THE Attorney-General, plaintiff, appellant, sued the defendant, respondent, to recover the sum of Rs. 1,341.66, being the balance due to the appellant on the purchase by the respondent of the privilege of selling toddy by retail in the village of Weligama for one year from October 1, 1920. The respondent pleaded, inter alia, that at the time he bought the said privilege he deposited a sum equal to the amount claimed by the appellant as a security deposit, and that the deposit was available to the appellant.

It was found at the trial that the respondent has in fact deposited certain money with the Assistant Government Agent, Matara, and that soon afterwards he had requested the Assistant Government Agent to deposit the money in the Colombo Bank so as to enable the respondent to earn interest on the money. The money was in accordance with this request deposited in the said bank on May 20, 1920, and on July 7, 1920, the respondent by his bond purported to hypothecate the sum so deposited and dealt with as security. It was further proved that the bank stopped payment in June, 1921, and the deposit ceased thereupon to be available to the Crown as security for the said privilege.

The learned District Judge (E. Rodrigo, Esq.) dismissed the plaintiff's action with costs, holding, inter alia, that in the circumstances the appellant must bear the loss of the money deposited in the Colombo Bank.

The Attorney-General appealed.

Elphinstone, K.C., Solicitor-General (with him Akbar. C.C., and Mangakoon, C.C.), for plaintiff, appellant.

Samarawickreme (with him H. V. Perera). for the defendant, respondent.

July 23, 1924. Bertram C. J.-

This case raises a question of law on which unfortunately there appears to he no authority, and we must accordingly decide it upon a first impression according to principles which seems to us to be applicable to the case. The facts briefly stated are these: The defendant was a toddy renter, and in pursuance of the usual system of obtaining the rent he deposited with the Government Agent a sum equivalent to two months' installments of the purchase money, and, again, in pursuance of the usual system, he subsequently executed a bond purporting to hypothecate this sum in the hands of the Government Agent as security for the discharge of his obligations under this contract. Before the bond was actually executed, the defendant on April 30, 1920. by a letter to the Government Agent, requested him to deposit the amount above referred to in the Bank of Colombo on fixed deposit, where it would earn on his account interest at 6 per cent. This was accordingly done. Before the expiration of the rent, the Bank of Colombo stopped payment. The learned District Judge says: " After a few months the bank became insolvent and failed to pay its creditors any dividend whatever on their claims." The amount thus deposited

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