John Owen and J M. Gutch, - Appellants; Sarah Homan, - Respondent
| Jurisdiction | England & Wales |
| Judgment Date | 11 February 1851 |
| Date | 11 February 1851 |
| Court | High Court of Chancery |
English Reports Citation: 42 E.R. 307
HIGH COURT OF CHANCERY
S. C. 20 L. J. Ch. 314; 15 Jur. 339. Observed upon, Oriental Finance Corporation v. Overend, Gurney, & Company, 1871, L. R. 7 Ch. 142. See Bateson v. Gosling, 1871, L. R. 7 C. P. 14; Duncan, Fox, & Company v. North and South Wales Bank, 1880, 6 App. Cas. 11; Nicholas v. Ridley [1904], 1 Ch. 211.
[378] owen v. homan. Dec. 12, 13, 14, 16, 1850; Feb. 11, 1851. [S. C. 20 L. J. Ch. 314; 15 Jur. 339. Observed upon, Oriental Finance Coiporation v. Overend, Gwney, & Company, 1871, L. R. 7 Ch. 142. See Batesm v. Gosling, 1871, L. R. 7 C. P. 14; Duncan, Fox, & Company v. North and South Wales Bank, 1880, 6 App. Cas. 11; Nicholas v. Ridley [1904], 1 Ch. 211.] The creditor must make a full, fair, and honest communication to the surety of all circumstances connected with the transaction to which the suretyship is to be 308 OWEN V. HOMAN 3 MAC. * 0. 379. applied which, are calculated to influence the discretion of the surety in entering into the required obligation. How far is the creditor responsible for the misrepresentation or non-communication of material circumstances by the debtor where there is no communication between the creditor and the surety, and particularly in a case where the creditor desires his debtor to procure the suretyship contract and abstains from all communication with the surety, quaere. The general law being that the creditor discharges a surety by any dealing or arrangement with the principal debtor without the surety's assent which at all varies the situation, rights, or remedies of the surety, will the surety be discharged in a case where the creditor precludes himself by covenant from suing the debtor, except in certain events, those events not comprising all that might reasonably stimulate the creditor to sue if his power or discretion were unfettered, and what would be the effect in such a covenant of a reservation to the creditor of a power to sue the debtor if required to do so by the surety, qmere. Assuming that if the remedies are reserved against the surety the liability of the surety is not discharged by an arrangement between the creditor and debtor which does not alter the rights and position of the surety in regard to the creditor or debtor, it must still in each case be considered whether the arrangement between the creditor and debtor did in law or equity affect the surety and his rights, and whether the reservation of the remedy against the surety is such as that the liability of the surety may be enforced to its full extent consistently with the compact between the creditor and debtor. In the case of a bond given by one of several joint debtors the legal effect of which is to merge the simple contract debt, can this effect be controlled by the parties agreeing by a separate instrument that such bond shall be deemed a collateral security only and that all remedies shall remain for the simple contract debt as if the bond had not been taken, quaere. The granting of a receiver is a matter of discretion to be governed by a view of the whole circumstances of the case, one of such circumstances being the probability of the Plaintiff being ultimately entitled to a decree. Thus a receiver was refused in a case where important points arose upon the construction of deeds, that construction being attended with considerable doubt and difficulty. This waa an application on the part of the Defendant Sarah Homan to discharge an order pronounced by the Master of the Rolls, referring it to the Master to appoint a receiver of the rents and profits of her real and personal estate. It appeared from the pleadings that the Plaintiffs claimed to be holders of certain promissory notes given [379] by S. Homan, amounting to a large sum, as security for a debt alleged to be due to them from the firm of Messrs. Harris & Bowers upon a banking account; and the object of the suit was to obtain a declaration that the rents and profits of certain premises, settled to the separate use of S. Homan by an indenture of release and settlement, dated the 28th November 1836, were liable to pay to the Plaintiffs the principal and interest monies secured by the three promissory notes in the bill mentioned; and the bill prayed that such principal and interest monies might accordingly be ordered to be raised out of such rents, and that a receiver might be appointed, and for an injunction. The substance of the bill, so far as it is material to be stated, was-that Messrs. Harris & Bowers carried on trade at Worcester under the firm of Messrs. Harris, Bowers, & Co., and kept a banking account with the house represented by the Plaintiffs; that, in the year 1844, Messrs. Harris, Bowers, & Co. were indebted to the bankers in upwards of 7000, and that that debt continued to increase up to the end of the year 1848, when it amounted to ,17,448 ; that, in the year 1844, the Plaintiffs required Bowers to procure security, and that Bowers gave them, as security for such old debt a joint and several promissory note of himself and hia aunt S. Homan for 1000 payable on demand; that on various subsequent occasions they repeated their request for security, and Bowers in like manner brought them promissory notes, signed by himself and S. Homan, payable to the house on demand, and on two occasions brought bills of exchange drawn by himself upon S. Homan payable three months after date; that at the end of the year 1848 they were the holders of two 3 MAC. fc 0.380. OWEN V. HOMA.N 309 promissory notes, the one for 1000, given in 1844, and the other for 3000, given in January 1848, and also of one note for 500, given in 1845; [380] that the Plaintiffs claimed of the Defendant payment of the amount of those securities ; that they also held two bills of exchange, dated in 1846 and 1847 respectively, that had been paid to them by Bowers, one for 500 and the other for 1000 payable three months after date, but upon those bills they made no claim, as it had been agreed with Bowers that they should be given up when the note for 3000 was given. (The note for 1000, given in 1844, and that for 500, given in 1845, were given as security for the existing debt, but the two bills of exchange and the note for 3000 were given in relation as well to the old debt as to advances then required.) The bill then stated various changes in the firm of the Plaintiffs, and that a dissolution of the partnership between Bowers and Harris took place in December 1848 ; that Bowers traded alone till April 1849, and then formed a new partnership with Joseph Bowers and Sarah Ann Bowers; and that such last-mentioned firm became bankrupt in August 1849. The bill then set forth a settlement made on the marriage of S. Homan with her husband John Homan, one of the Defendants in the suit, by which certain property was settled to the separate use of S. Homan during the joint lives of her husband and herself, with an absolute power of appointment by deed or will, and in default of appointment in trust to her next of kin according to the statute, with all necessary provisions to give S. Homan the power of charging or disposing of the settled property at her discretion. The bill, after stating applications to S. Homan for payment of the notes and a refusal to pay, prayed to the effect before stated. [381] To this bill the Defendant S. Homan put in her answer, in which ahe set forth the will of her first husband Eichard Harris, dated the 10th March 1829, under which she acquired the property which was the subject of settlement upon her second marriage, and out of the rents and profits of which the Plaintiffs sought to be paid. It then stated that S. Homan was eighty years of age, and that, in consequence of a severe fall, which for a time deprived her of her mental faculties, her memory as to recent circumstances was enfeebled and perplexed, and that she was unable to speak to occurrences during the last fifteen years. The answer then set forth the circumstances under which the notes in question were obtained from her, and those circumstances were stated to be-that Bowers, in 1844, informed her that he wished to borrow a sum of money of his bankers for a short time for the purposes of the partnership, and requested, as a temporary security to the bank for the advance, that S. Homan would join him in a note or bill for 100, and, upon Bowers promising that the partnership would pay it when due, she did consent to join him in a note or bill which she had since ascertained to be for 1000; that Bowers obtained an advance from the bankers on the security thereof, which advance, however, was debited to the partnership account; that, in about twelve months after, upon a representation that the former note or bill had been paid, and for the purpose of procuring a further advance from the bankers, Bowers induced her to join in another note or bill for 500, and that he obtained an advance from the bankers thereon which was also debited to the partnership account; that, sometime afterwards, Bowers represented that the two notes or bills had been paid, and induced S. Homan again to join him in a note or bill for 500, for the purpose of his procuring an advance [382] of money to enable him to make large purchases of tea at cash price ; that no application was made to her for payment of either of those notes or bills, although, she had called more than once at the bank and the managing clerk at the bank had frequently visited her, and that, upon the representation by Bowers that all such notes or billa had been paid, she was induced to join in another note or bill for 300, as she believed, but which note or bill she had since been informed was for 3000. The answer then stated that the Defendant believed that the bankers were fully cognizant of all the representations made by Bowers to induce her to give the notes and bills and of their having been paid, and that the two first-mentioned notes or bills had in fact been paid...
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