Lakshmanan Chettiar V. Muttiah Chettiar

1948  Present : Howard C.J. and Canekeratne J.

LAKSHMANAN CHETTIAR, Appellant, and MUTTIAH
CHETTIAR, Respondent

S.C. 234-D.C. Galle, X 56

Trust-Defendant attorney of plaintiff-Money owing to plaintiff-Endorsement of promissory note to third party by defendant as attorney-Assignment of decree-Fraud or fradulent breach of trust-Burden of proof-Prescription-Trusts Ordinance, Section 111.

Defendant was the attorney of the plaintiff who was a money lender resident in India. Plaintiff had two debtors A and S. A. gave a promissory note and a decree was obtained against the estate of S. Three days before leaving the service of the plaintiff the defendant assigned the decree to one Alagappa Chettiar and he had previously endorsed the Note to the same Chettiar who recovered the money from A. No consideration had been paid by the Chettiar. Plaintiff claimed that defendant was a trustee of these monies and liable to account to the plaintiff. This action was brought more than six years after the transaction in question.

Held, that in the absence of fraud or fraudulent breach of trust to which the defendant was a party, the action was prescribed in terms of section 111 of the Trusts Ordinance for the reason that the money was neither retained by the defendant nor converted to his own use.

Held further, that the burden of proving fraud was on the plaintiff. Fraud must be established beyond reasonable doubt and a finding of fraud cannot be based on suspicion and conjecture.

APPEAL from a judgment of the District Judge, Galle.

H. V. Persia, K.C., with C. Renganathan, for defendant appellant.

F. A. Hayley, K.C., with M. Somasunderam, for plaintiff respondent.

Cur. adv. vult.

November 25, 1948. HOWARD C.J.-

The defendant appeals from a judgment of the District Court of Galle entering judgment for the plaintiff for the sum of Ru. 8,500 with legal intersets thereon at 5 per cent, from October 3, 1934, and the sum of Its 5,706.81 with legal interest thereon at 5 per cent. from January 15, 1938, and costs. The plaintiff is a. professional money lender who resides in India. The defendant was his agent and attorney at Colombo from about 1919 to January 28, 1933. Amongst the debtors of the plaintiff were two persons, I. M. Alles and C. B. A. Samaranayake, both of Gallo. Alles died while a sum of Rs. 6,500 and interest was owing to the plaintiff's firm on a promissory note (P1) for Re. 7,000. Alles' estate was administered by his executor Mr. W. B. de Silva. Samaranayake died while a sum of Its. 7,000 was due to the plaintiff's firm. One E. C, Abeygoonewardene who had intermeddled with the estate of Samaranayake was sued by the defendant as the plaintiff's attorney in D. C. 27,002 and a decree had been obtained on September 28, 1929, for a

sum of Rs. 8,619.20 with legal interest and costs. Of this sum Rs. 2,695 had been recovered and accounted for by the defendant. On January 25, 1933, three days prior to his leaving the service of the plaintiff and departing for India, the defendant by P20 assigned this decree to one A. L. A. S. M. Alagappa Chetty for an alleged consideration of Rs. 3,000. Alagappa had himself substituted as plaintiff in D. C. 27,002 and has recovered a sum of Rs. 5,706.81 (vide P19). The defendant has also prior to January 28, 1933, endorsed promissory note P1 granted by Alles to the same Alagappa Chetty who has recovered from the executor of Alles' estate the sum of Rs. 8,500 on October 3, 1934. It is the plaintiff's case that the defendant assigned the decree and endorsed the note to Alagappa without plaintiff's authority and with fraudulent intention, that no consideration received from Alagappa has been accounted for, that the assignment and endorsement had been made for the defendant's benefit and that through Alagappa has collected the sums mentioned and that the defendant is liable to pay the said sums to the plaintiff.

The position o

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