1926 Present : Garvin J. and Maartensz A .J.

 MUTTUNAYAGAM v. SENATHIRAJA et al.

8O-D. C. Colombo, 52,878.

Husband and wife-Debts contracted during marriage-Death of wife- Joint liability-Compensation-Roman-Dutch law.

Where husband and wife are jointly liable for debts contracted during marriage, on the death of the wife the liability on a mortgage  debt created by the husband remains the joint liability of the survivor and the heirs of the deceased Spouse in solidum.

Compensation as known to the Roman-Dutch law is part of the law of Ceylon.

Compensation is the reciprocal extinguishment of  debts between the same parties. It differs materially from set off as it is known  to the English law and the Civil Procedure Code.

THIS was an action for the recovery of a sum of Rs. 202,066 alleged to be due on three bonds executed by Christopher Brito and assigned to the plaintiff by the mortgagees. The first bond was executed to secure a loan of Rs. 60,000 from W. W. Martin, and the second and third bonds were executed to secure a loan of Rs. 30,000 from the second defendant. Martin assigned his bond to the second defendant, who assigned all the three bonds to his son, the plaintiff. An estate called Dombawinne was hypothecated by the said bonds.

Christopher Brito was married to his wife Tangamma in 1866. Before their marriage they entered into an ante-nuptial agreement excluding community of property. Christopher Brito purchased Dombawinne in 1879 and his wife died in 1900, leaving her surviving four children: first defendant, who died during the pendency of this action; Philip Brito, who was married to the third defendant; Theresa, who was married to the fourth defendant; and C. M. Brito, whose interests are vested in the first defendant. Christopher Brito died in 1910. Till his death he dealt with Dombawinne estate as his own, and by his last will, executed on December 23, 1910, left all his property to the first defendant, appointing the second defendant the executor of his will. The action was defended by the third and fourth defendants. They alleged that the second defendant received the income from Dombawinne from 1905 up to the death of Brito and that by operation of law the debts due on the bonds had been reduced to that extent. The learned District Judge gave judgment for the plaintiff.

In appeal the questions resolved themselves into four: -

(1) Whether the right of action on the bond was prescribed.

(2) Whether there was a misjoinder of parties and causes on action.

(3) Whether the defendants were entitled to plead compensation in respect to the income of Dombawinne estate.

(4) Whether the defendants' claim in reconvention could be maintained. The main question argued was one of compensation.

Hayley (with him Tisseverasinghe, Rajapakse, and Gnanapragasam), for third and fourth defendants, appellants.-Compensation is the principle that when the characters of debtor and creditor are merged in one, then whatever money comes into the hands of the creditor (and which he is liable to pay to his debtor) must be applied in reduction of his debt.

No question of prescription can arise as the compensation takes effect as from the date on which the creditor received the money of his debtor. (Lee's Introduction, p. 237; Voet. XVI. tit. 2 ss. 1, 2 and 4; Binase v. Maklutsana1; 4 Maas. (2nd ed.) 166).

The debt must be a "liquid" one. But that means one not-necessarily actually and definitely ascertained, but one which could be ascertained or assessed. (2 Nathan (1913 ed.) 641.) See 1 Pothier, 415, 416, 419 (pt. III. c. 4, s. 3), also p. 422; 4 Maas. 192; Voet XLI. tit. 3 s. 1.

If community exists, you can set off against the husband's claim a debt due by the wife. (2 Nathan 648.)

It can be set up even against a cessionary of the creditor. (Voet XVI. tit. 2 s. 4 in Lee's Introduction, p. 237.)

The second defendant cannot plead prescription. He took p