Promissory note enforcement and vendor's lien: prior acknowledgment preserved the claim and displaced the statutory charge.

A promissory note taken in the name of one plaintiff remained enforceable by her where delivery was made through the other plaintiff and her later suit ratified that delivery. The vendor's lien for unpaid purchase money was displaced where, under the vendor's arrangement, the vendee incurred an enforceable liability to a third person in substitution of the original payment obligation; a benami payee did not preserve the charge without the vendee's knowledge of that arrangement. Prior deposition admitting execution of the note and indicating a subsisting liability was treated as an acknowledgment, so the suit was within limitation.

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Issues: (i) Whether the promissory note executed in favour of the second plaintiff could be enforced by her notwithstanding the plea that she was only a benamidar or that the note was not validly delivered to her; (ii) whether the vendor's lien or statutory charge for the unpaid purchase money survived after the vendee executed a promissory note in favour of a third person; (iii) whether the suit on the promissory note was barred by limitation or was saved by an acknowledgment in the defendant's earlier deposition.

Issue (i): Whether the promissory note executed in favour of the second plaintiff could be enforced by her notwithstanding the plea that she was only a benamidar or that the note was not validly delivered to her.

Analysis: The note was delivered to the first plaintiff acting on behalf of the second plaintiff, and her later suit on the instrument amounted to ratification of that act. The circumstance that the second plaintiff was absent when the note was executed did not make the instrument void. The person named in the promissory note remained the proper person to sue on it, even if the beneficial interest was said to lie elsewhere.

Conclusion: The second plaintiff was entitled to sue on the promissory note, and the plea of invalidity failed.

Issue (ii): Whether the vendor's lien or statutory charge for the unpaid purchase money survived after the vendee executed a promissory note in favour of a third person.

Analysis: A vendor's lien is not lost by a mere direction to pay a third person, but the position changes where the vendee, under the arrangement made by the vendor, incurs an enforceable liability to a third party in substitution of the original payment obligation. In such a case there is a contract to the contrary within the meaning of the governing property law, and the statutory charge cannot be retained consistently with the third party's right to sue on the same sum. The fact that the payee may be a benamidar does not preserve the charge unless the vendee knew of that arrangement.

Conclusion: The vendor's lien and charge were extinguished for the amount covered by the promissory note.

Issue (iii): Whether the suit on the promissory note was barred by limitation or was saved by an acknowledgment in the defendant's earlier deposition.

Analysis: An acknowledgment need not be express; it may be inferred from the language used and the surrounding circumstances. In the earlier deposition the defendant admitted execution of the note and, in context, indicated that the liability under it was still subsisting. The statement was made in circumstances showing that there was occasion and opportunity to deny the debt if it had ceased, and the deposition therefore amounted to an acknowledgment within the meaning of the limitation law.

Conclusion: The suit was within time and was not barred by limitation.

Final Conclusion: The appeal succeeded, the decree for sale was set aside, and a personal decree for the amount due on the promissory note was maintained in favour of the first plaintiff at the instance of the second plaintiff.

Ratio Decidendi: Where a vendee, under the vendor's arrangement, becomes directly liable to a third person for the purchase money, the vendor's statutory charge is displaced by a contract to the contrary; and a liability admitted in prior evidence may amount to an acknowledgment for limitation if the context shows a subsisting debt.

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