John K. Gilliat and Company Limited v Land and Agricultural Bank of Kenya (Civil Case No. 145 of 1938)
Observed later treatment
No later-treatment classification is recorded for this judgment.
Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.
AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.
Holding
A first legal mortgagee's rights under section 29 of the Chattels Transfer Ordinance, 1930 are not prejudicially affected by a subsequent chattels mortgage over crops on the mortgaged land. The proviso to section 29 applies only to sales by third parties, not to sales by the prior mortgagee. Discharge of the first mortgage does not revive rights under the subsequent chattels mortgage. A chattels mortgagee is not a 'subsequent mortgagee' within section 45A of the Land and Agricultural Bank Ordinance. The Land Bank may lawfully reserve the right to bid at its own auction sale without court permission.
Outcome
Plaintiff's claim dismissed; defendants' title to coffee and coffee crops upheld
Facts
By indenture dated 19 January 1932, the defendant Land and Agricultural Bank became first legal mortgagees of Karatina Estate, a coffee farm. On 25 January 1932, the plaintiff Gilliat & Company became chattels mortgagees of all coffee crops on the estate under the Chattels Transfer Ordinance, 1930. The mortgagor fell into arrears. On 30 June 1937, the defendant exercised its statutory power under section 45A of the Land and Agricultural Bank Ordinance to sell the estate by public auction. The conditions of sale reserved the defendant's right to bid. The defendant was the highest bidder and purchased the estate for Sh. 20,000, substantially less than the debt owed. On 25 July 1937, the defendant executed an indenture discharging its first mortgage and conveying the estate to itself. The plaintiff claimed the proceeds of the 1937-38 coffee crop (Sh. 5,955) and future crops, asserting its chattels mortgage became a first charge upon discharge of the defendant's mortgage.
Issues
- Whether section 29 of the Chattels Transfer Ordinance, 1930 protected the defendant's rights as first legal mortgagee against the plaintiff's subsequent chattels mortgage.
- Whether the discharge and cancellation of the first legal mortgage on 25 July 1937 gave rise to rights under the chattels mortgage.
- Whether the plaintiffs were 'subsequent mortgagees' entitled to three months' notice under section 45A of the Land and Agricultural Bank Ordinance, 1930.
- Whether the defendants committed a breach of fiduciary duty by purchasing the property at their own auction sale.
- Whether the insertion of a condition reserving the right to bid at auction was ultra vires or invalid without leave of the Court.
Orders
- Suit dismissed.
- Costs awarded to the defendants.
Rules and key headnotes
Legislation cited (5)
- Land and Agricultural Bank Ordinance, 1930 s.45A
- Land and Agricultural Bank (Amendment) Ordinance, 1933 s.4
- Chattels Transfer Ordinance, 1930 s.28
- Chattels Transfer Ordinance, 1930 s.29
- Registration of Titles Ordinance
Cases cited (10)
- Toulmin v Steere (1817) 36 ER 81
- Squire v Ford (1850) 68 ER 408
- Gokuldoss Gopaldoss v. Rambux Seochand 0 1 I.A. 126 at 133
- Lewis v Hillman (1852) 10 ER 239
- Boyce v Edbrooke [1903] 1 Ch 836
- Farrar v. Farrar Ltd. (40Ch. 409)
- National Bank of Australasia v United Hand-in-Hand and Band of Hope Company (1879) 4 AC 391
- In re Bloye's Trust (1849) 41 ER 1354
- In re Hallett's Estate (1880) 13 Ch D 696
- Doolan v Midland Railway Company (1877) 2 AC 792
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.