Report No. 70
Transfers By Persons Having Distinct Interests
The case dealt with in section 45 was one in which several persons are transferees. The case where several persons are transferors is dealt with in section 46, which is the converse of section 45. The problem in section 45 is-What is the share of each transferee in the property transferred? The problem in section 46 is-What is the share of each transferor in the consideration received for the property transferred? In this manner, section 46 is the converse of section 45. The principle adopted is, in substance, the same-the principle of substitution, in the absence of a contract to the contrary.
42.2. Section 46.-
Accordingly, section 46 provides as follows:
"46. Where immovable property is transferred for consideration by persons having distinct interests therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally, where their interests in the property were of equal value, and, where such interests were of unequal value, proportionately to the value of their respective interests."
There are two illustrations to the section in these terms-
(a) A, owing a moiety, and B and C, each a quarter share, of mouza Sultanpur, exchange an eighth share of that mouza for a quarter share of mouza Lalpura. There being no agreement to the contrary, A is entitled to an eighth share in Lalpura and B and C each to a sixteenth share in that mouza.
This is, of course, simple arithmetic.
(b) A, being entitled to a life-interest in mouza Atrali, and B and C to the reversion, sell the mouza for Rs. 1,000. A's life-interest is ascertained to be worth Rs. 600, the reversion Rs. 400. A is entitled to receive Rs. 600 out of the purchase money, B and C are entitled to receive Rs. 400.
This illustration takes the case of interests which, though concurrent, are not of identical character. One is a life interest, the other a reversion. This shows that "interests" in section 46 is not identical with share.
It has been laid down1-2 that the proper mode of apportioning the prices of a life-estate and reversion, when sold together for a lump sum, is to value both interests separately, and not to put a value on one and deduct that from the total price.
1. Cooper and Allen's Contracts (in re:), 4 Ch D 802; Rede v. Oakes, 32 Beav 555; Cavendish v. Vavendish, 4 LR 10 Ch 319; Morris v. Debenham, 2 Ch D 54.
42.4. Distinct interest.-
As illustration (b) shows, the principle is applicable where the interests, though concurrent, are of different nature. The owner of a lease has a distinct interest from that of a reversioner.1 So also has the owner of an undivided fourth part of an estate, joining with the owners of the rest, in selling the whole for a lump sum2.
1. Cooper and Allen's Contracts (in re:), 4 Ch D 802; Clark v. Seymour, 7 Sim 67.
2. Powlett v. Hood, LR 5 Eq 115.
42.5. No change.- The above discussion does not disclose any need for amending the section.
42.7. Section 47.-
A slightly different and more complicated situation is dealt with in section 47. When the property transferred is not immovable property in the entire, but a share therein, two situations are possible. A co-owner may transfer his specific share therein. In such a case, the transferee is not concerned with the interests of the other co-owners, since the other co-owners do not participate in the transfer. Of course, the transferee has to satisfy himself that the co-owner is competent to transfer his share.
This is a matter which may affect the validity of the transfer, but if the transfer is valid, then this aspect has no relevance to the quantum of interest and its ascertainment. But there could be a slightly different situation. All the co-owners join, but what is transferred is neither (i) the entire property, nor (ii) the share of one co-owner, but (iii) a notional share in the property not corresponding to a particular share. This share is just a mathematical abstration. How is such a transfer to be worked out?
Section 47 provides the answer as follows:
"47. Where several co-owners of immovable property transfer a share therein without specifying that the transfer is to take effect on any particular share or shares of the transferors, the transfer, as among such transferors, takes effect on such shares equally where the shares were equal, and where they were unequal, proportionately to the extent of such shares."
The illustration to the section takes these facts-
A, the owner of an eight-anna share, and B and C, each the owner of a fouranna share, in mouza Sultanpur, transfer a two-anna share in the mouza to D, without specifying from which of their several shares the transfer is made. To give effect to the transfer, one-anna share is taken from the share of A and half-arena share from each of the shares of B and C.
It is to be observed, that here the transfer takes effect according to the extent of the shares of each co-owner, and not according to the quantum of consideration received by each. Probably, this rule was enacted to guard against the complications which the latter course would have entailed. For, the value of two shares, otherwise equal, may considerably vary, and if inquiry had to be made as to the value of each share, much unnecessary inconvenience and delay would have been inevitable1.
Of course, a general agreement to sell property implies sale of the proprietary rights therein, and a transfer of a limited interest cannot be inferred from the smallness of the price1. The section does not apply merely because a person's ownership is found to be deficient, Where a person conveys property, a portion of which he has no right to convey, the purchaser is entitled to treat the whole contract as broken, and to sue for damages; and the vendor cannot be heard to say, that he would make an allowance pro tanto, for the purchaser may reply that it is not the interest which he had agreed to purchase2.
But, in such a case, the purchaser may elect to take the interest which the smaller has, with compensation. In certain cases where the deficiency is negligible, it seems that the purchaser may even be compelled to take it at a proportionate price3. But, if there be a material discrepancy between the property sold and the property offered, the court, so far from interfering in the vendor's favour, will assist the purchaser in recovering his deposit4.
In such cases, if the other co-owners can be made to join in the transfer and the entire property is not transferred, the section could apply.
1. Hughes v. Parker, 8 M&W 244.
2. Farrer v. Nightingale, 2 Esp 639.
3. Guest v. Homfray, 5 Ves 818; Hauger v. Eyles, 2 Eq Cas Abr 639.
4. Long v. Fletcher, 2 Eq Ca Abr 5.
42.9. No change.- No changes appear to be needed in the section.