Harvey v Edwards, Dunlop and Co Ltd
(1927) 39 CLR 302(Judgment by: Higgins J)
Harvey
vEdwards, Dunlop and Co Ltd
Judges:
Knox CJ
Isaacs J
Higgins JGavan Duffy J
Starke J
Legislative References:
Instruments Act 1915 (Vic) - s 228
Case References:
Stokes v Whicher - (1920) 1 Ch 411
Macrory v Scott - 5 Exch 396
Judgment date: 13 April 1927
Judgment by:
Higgins J
If the agreement of the 13th October, 1925, was such that it must satisfy the requirements of the Statute of Frauds -- s 228 of the Victorian "Instruments Act 1915" -- I am not at all satisfied that those requirements have been satisfied. I need not give a laborious explanation of this statement, as I think that the agreement is not touched by the Statute of Frauds; but I may say, generally, that the letters, with the power of attorney incorporated by reference, do not, without the aid of extrinsic verbal evidence, show that the defendant was guaranteeing the debt of the Interstate Stationery Manufacturing Co Pty Ltd due to the plaintiff.
It should be noticed that the power of attorney of 6th November, 1925 (Ex 4), although it authorises the payment of £489 0s. 9d. to the London office of the plaintiff Company, does not show what the payment was for; and that the letter from Crisp and Crisp of 28th September, 1925 (Ex G), is not in any way referred to in the letter from Eggleston and Eggleston of 14th October, 1925. The latter letter takes a conversation by telephone of the 13th October as the starting point. The connection between the two letters does not appear except by oral evidence; and such evidence is inadmissible for the purpose of the Statute. For aught that appears in the writings, which are connected on their face and may legitimately be used, the payment of £489 0s. 9d., with interest, may have been to free the defendant, Harvey, of an actual, or supposed, personal liability for his Company's debt. In short, there is no memorandum in writing of the contract.
But, in my opinion, the agreement in fact made -- as found by the learned Judge of first instance, and not here impugned -- was not a "special promise to answer for the debt default or miscarriage of another person" within the Statute. The contract, as found by the learned Judge, was made between the plaintiff, the Interstate Company, and the defendant,
by which, in consideration that the plaintiff would refrain from signing judgment against the [Interstate] Company, the defendant agreed to execute the power of attorney in the form approved, to send it on to the attorney under power without unreasonable delay, and to instruct him to sell in such time and upon such terms as would allow him to pay principal and interest at 8 per cent. to the plaintiff at its London office before the end of February, 1926. A term was necessarily implied in this contract that the defendant had not done and would not do anything calculated to prevent or impede the sale taking place, and the proceeds being applied in payment of the amount owing to the plaintiff in manner provided.
Now, the Act requires a writing for an enforceable contract when there is a special promise to answer for the debt, default or miscarriage of another person. What does "answer for" mean? It must mean to answer for personally -- to impose on the promisor and his assets generally a liability for the debt. It cannot mean to impose a mere liability on a particular asset, as when B pledges his shares for the payment of A's overdraft without undertaking any personal liability. In the present case the liability is imposed only on the proceeds of the sale of some property in Paisley. There is nothing to bind the defendant to pay out of his assets generally any deficiency, should those proceeds be insufficient for the debt. The defendant has not promised to answer for the debt of the Company, although he may have promised that his Paisley property shall, in a popular sense, answer for that debt. The case cited by the Chief Justice [ Macrory v Scott , 5 Exch. 396] seems to be very relevant. There, Parke, B., pointed out that an agreement to the effect that property already pledged as security for one debt should remain in pledge for another, was not an agreement that required a writing under the Statute of Frauds. I know of no case in which the Statute has been held to apply in which an action for assumpsit (or covenant) would not lie.
This was substantially the view taken by the learned Judge; but so much time was taken up in the argument before us as to the sufficiency of the letters for the purpose of the Statute of Frauds, that this view has not received the attention which it deserved. I concur with the judgment of Dixon, A.-J, where it states
"The agreement was not, in my opinion, a special promise to answer for the debt, default or miscarriage of another."
The judgment goes on to add --
It was an agreement to take certain definite steps which were expected to result in the debt of another (for which or some part of which the promisor was already liable or thought himself liable) being answered out of specific property of the promisor.
It surely tends more to certainty in the law if a court of Appeal, when agreeing with the ground on which the decision below was given, adhere to that ground, instead of exploring for another ground which is more debateable. No case has been cited that in the slightest degree tends to qualify the natural meaning of the Statute, and we are free to follow the natural meaning.
In my opinion the appeal should be dismissed.