Wythes v Labouchere
| Jurisdiction | England & Wales |
| Judgment Date | 31 January 1859 |
| Date | 31 January 1859 |
| Court | High Court of Chancery |
English Reports Citation: 44 E.R. 1397
BEFORE THE LORD CHANCELLOR LORD CHELMSFORD.
S. C. 5 Jur. (N. S.), 499; 7 W. R. 271.
[593] wythes v. labouchere. Before the Lord Chancellor LSlrct' Cneimsford. Dec. 17, 18, 20, 22, 1858; Jan. 11, 13, 14, 31, 1859. [S. C. 5 Jur. (N. S.), 499 ; 7 W. K. 271.] Notice to a creditor when his debt is contracted that the relation of principal and surety exists between his co-debtors is sufficient to affect him with the consequences of that relation without any further acceptance of it on his part. But it is not a consequence of that relation that the creditor, without any inquiry on the part of the surety, should acquaint him with every circumstance affecting the credit of the debtor, or of any matter unconnected with the transaction in which he is about to engage which may render it hazardous, the principles applicable to insurances not applying to such a case. A customer, being desirous of obtaining an advance from his bankers on the credit of a surety, employs solicitors for that purpose, who are also the ordinary solicitors of the bankers, but are not employed by them in the transaction in question. The solicitors, however, give information to the bankers as to the sufficiency of the surety, and debit them with the costs of preparing the instrument of suretyship. Held, that they could not be regarded as having acted for the bankers from the beginning, so as to affect the bankers with notice of any concealment or misrepresentation on the part of the customer towards the surety. 1398 WYTHES V. LABOUCHERE SDBO. ftJ. BM. Repayment of a sum given by bankers to a customer for the purpose of constituting a Parliamentary qualification, on an understanding that it was to be returned : Held, not a payment on his general account so as to discharge a surety. This was an appeal from the decision of Vice-Chancellor Wood, dismissing the bill with costs. The faets are fully stated in the Lord Chancellor's judgment. Mr. Rolt, Mr. Daniel and Mr. Rogers were for the Appellant. Sir R. Bethell, Mr. Willcock, Mr. W. M. James and Mr. G-. Simpson, for the Respondent. The following authorities were referred to : Walker v. Hardman (4 Cl. & Fin. 258); Pidcock v. Bishop (3 B. & C. 605); Stone v. Campion (5 Bing. N. C. 156); Ex parte Sharp (3 M. D. & D. 503); Hamilton v. Watson (12 Cl. & Fin. 109, 118); Owen v. Homan (3 Mac. & G. 378; S. C. 4 H. Lords Ca. 997); Railton v. Matthews (10 Cl. & Fin. 934); Smith v. Bank of Scotland (I Dow, 272); North British Insurance [594] Company v. Lloyd (10 Exch. 523); Hollier v. Eyre (9 Cl. & Fin. 1); Manley v. Boycot (2 Ell. & Bl. 46); Pooley v. Harradine (1 Ell. & Bl. 431); Amott v. Holden (18 Q. B. 593); Bodenham v. Purchas (2 B. & Aid. 39); Simson v. Ingham (2 B. & C. 65); Newmarch v. Clay (14 East, 239); Williams v. Rawlinson (3 Bing. 71); Clayton's case 1 Mer. 605). Judgment reserved. Jan. 31. the lord chancellor. In this case the Plaintiff seeks to obtain relief from a bond for 30,000, which he alleges that he executed to the Defendants as surety for Mr. James M'Gregor on the grounds- 1st. Of misrepresentation made by the Defendants or their agents, or of omission by the Defendants to state facts which were material to be known by the Plaintiff, and which it was their duty to communicate to him, and by which misrepresentation or omission he was induced to execute the bond. 2d. That the bond has either been satisfied by payments made by M'Gregor, or that the Defendants have so dealt with M'Gregor's funds in their hands that the Plaintiff is entitled to be relieved altogether, or at least in part, from his liability. The following are the facts which raise the questions :- M'Gregor was formerly manager of the Liverpool [595] Commercial Banking Company, and the Defendants (bankers) were the London agents of the company. In 1845, M'Gregor ceased to be the manager and became the managing director of the South-Eastern Railway Company. He was possessed of 3436 South-Eastern Railway shares; 1241 South-Eastern Steam Packet shares, and 500 shares in the Liverpool Commercial Bank. These shares had, some years before the transactions in question, been deposited with the Defendants as security for advances made by them to M'Gregor to the amount of 92,000. They were afterwards returned to the Liverpool bank about 1849, and were in the possession of the bank as securities for advances made to M'Gregor, the amount of which, at the time of the commencement of the transaction in question, had been agreed between the parties at a sum of 116,000. The Liverpool bank were desirous of closing their account with M'Gregor and pressed him for a settlement, and in consequence he applied for assistance to the Defendants and also to the Plaintiff, a railway contractor in very extensive business. At this time M'Gregor was indebted to the Defendants upon a mortgage, dated 12th April 1851, for 9000, which included property of various descriptions, not of the kind usually taken as securities by bankers, and amongst other things certain policies of insurance on the life of M'Gregor. The Plaintiff had previously made advances to M'Gregor, one in April 1852, for 5000, and another in May 1852, for the same amount, and upon the occasion of the second advance the Defendants gave up three of the policies included in their mortgage to enable M'Gregor to raise money upon them, and they were assigned for the benefit of the Plaintiff. This was the state of things between the parties when [596] the present transaction began. M'Gregor being desirous of settling with the Liverpool bank, in December 1852 applied to the Plaintiff to assist him. M'Gregor says he saw the Plaintiff on the 7th or 8th of December, and asked him to give him his name for such a sum of money as would enable him, with what he could raise by way of loan on the 3DEO.ftJ.BST. WYTHES V. LABOUCHERE 1399 shares themselves, to redeem them from the Liverpool hank and close his account with it; and a sum was named, taking the market price of the day. The apparent deficiency in the shares was about 12,000. There is a good deal of evidence given by the Plaintiff as to the original application by M'Gregor for assistance being limited to 12,000, and there is a direct contradiction between them upon this and upon many other points, but I consider the question not sufficiently material to render it necessary to occupy any time in ascertaining where the truth lies. There is no doubt that the Plaintiff, before the execution of the bond, had agreed to assist M'Gregor by giving security to the amount of 30,000, and whether originally or ultimately seems to be perfectly immaterial, so far as the Defendants are concerned. One thing is clear upon the evidence, that on the morning of the llth December 1852, the Plaintiff had agreed to give his bond to the Defendants for the sum of 30,000. He met M'Gregor at the London Bridge Railway Terminus early on that day. M'Gregor drew up a memorandum as to the time at which the bond should be payable. This M'Gregor took to the bankers, and it was altered by them to the terms which now form the condition of the bond. M'Gregor brought it back so altered and delivered it to Mr. Freeman (who had come to the London Bridge Terminus in the interval) as instructions to draw the bond. Mr. Freeman was a member of the firm of Tilliard, Sons & Freeman, who were the solicitors of the Defendants and also of the South-[697]-Eastern Railway Company, and of M'Gregor their chairman; but Mr. Tilliard attended principally to the business of the Defendants, and Mr. Freeman to that of the railway company. Mr. Freeman, having received his instructions, went away to his office at the Old Jewry, the Plaintiff, who was to leave London for Belgium that evening, agreeing to remain till his return with the bond. Freeman found Tilliard at the office, and asked him, in order to save time, to draw up the form of a condition for payment...
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