1929 Present: Lyall Grant J. and Maartensz A.J.

WALPOLA v. COOKE.

88-D. C. {Inty.) Colombo. 25,455.

Mortgage Decree-Assignment by way of mortgage-Subsequent seizure in execution-Realization of security by decree-holder-Rights of mortgagee-Civil Procedure Code, s. 339.

A obtained judgment against X on a mortgage bond, and mortgaged the decree with B. Subsequently C, in execution of a decree against A, seized the mortgage decree, got himself substituted as plaintiff in the action and had the security realized.

Held, that C had a preferent right to the proceeds of sale.

THIS was a mortgage action in which the plaintiff, A obtained judgment against X for a sum of Rs. 8,480 and interest. Decree was entered on November 25, 1927. Plaintiff assigned the decree by way of mortgage to intervenient appellant B by deed No. 115 of January 21, 1928, which was registered in the register dealing with immovable property. The substituted plaintiff-respondent C, who was judgment-creditor in D. C, Colombo, No. 29,229, obtained decree in that case on August 23, 1928, and seized the decree in this case on August 30, 1928, under section 234 of the Civil Procedure Code, had himself substituted plaintiff on September 17, 1928, and proceeded to execute the decree by sale of the mortgage property. Proceeds amounting to about Rs. 4,000 were brought into Court on November 2. 1928, by the auctioneer. B intervened on November 12, and moved that no sum of money be paid out without notice to him. On C moving to. draw a sum of Rs. 2,577.25, that is, the amount of his decree in D. C, Colombo, No. 29,229, P claimed a preferent right. The learned District Judge held that B had no such right. B appealed.

Keuneman (with Ferdinands), for intervenient appellant.-The learned District Judge was wrong in upholding the contention that deed No. 115 should have been registered in the Register of Movables. A decree is a chose in action, not a chose in possession. Chose in action is omitted from Ordinances No. 8 of 1871 and No. 23 of 1927, section 17 (2). The Supreme Court has held that mortgages of choses in action do not come within the old Ordinance and so need not be registered (Dawson v. Van Geyzel [1 (1893) 3 C. L. R. 35.] ). This ruling will apply to the present Ordinance.

The learned District Judge seems to think that when C seized this decree under section 234 he was really an assignee of the decree and, as such, got himself substituted under section 239. He is wrong. He fails to distinguish between choses in action and choses in possession.

The position of a person who seizes a decree is not the same as a person to whom it is assigned for valuable consideration. A

person who seizes under section 234 is, by section 254, deemed to be an assignee merely for the purpose of giving him the power to execute the judgment and to pay himself out of the proceeds- not an assignee for all purposes whatsoever. This interpretation has been adopted by Your Lordship's Court in Cader v. Saibu.[1 (1923) 25 N. L. R 36.]

We must not be penalized for not taking into possession a thing which we cannot take into possession.

The substituted plaintiff C can execute his decree subject to the mortgage. He ought not to be in a better position than the original mortgagor. If deed No. 115 is construed as an assignment our position is stronger. We could take up the position that it is really a transfer subject to the equity of redemption.

[MAARTENSZ A. J.-Have you got a precedent for a mortgage of a debt or decree?]

Debts could be mortgaged (Burge III., p. 544). What is mortgaged is the right embodied in the decree, that is, the money due on the decree. (Sande's Cession of Action (Ander's), p. 77; Voet XVIII. 4, 9 and 17; Jayasinghe's Notary's Manual 239; Encyclopedia of Forms and Precedents, vol. VIII., p. 704).

Our right against the mortgage property is gone but we can assert our right against the proceeds of the