The phrase "continuing to deal with the customer in the way of its business as a bank" in a guarantee requires bona fide fresh transactions, not merely keeping an account open, particularly when the customer is insolvent, to constitute valid consideration.

Lord Atkinson. -

This is an appeal from the judgment of the Supreme Court of Trinidad and Tobago, dated 24th Feb ruary 1926, dismissing with costs an ac tion brought by the appellants against the respondent upon a guarantee signed by the latter and dated 23rd March 1921, to recover the sum of $5 000, or £1,041 13s. 4d., its equivalent in sterling.

By an order of the Supreme Court, dated 21st June 1926, final leave to ap peal to His Majesty in Council was granted to the appellants.

The appellants at all material times were and are Banking Corporation regis tered in Canada with a Branch at Port of Spain, Trinidad. The respondent was and is a merchant carrying on business at Port of Spain, and at the date on which the said guarantee was given was the sole partner of the firm of Salvatori Scott and Company. Antoni Brothers at all mate rial times were a partnership firm carry ing on business, inter alia, as cocoa mer chants at Port of Spain. The firm con sisted of three brothers named Antoni and a fourth partner named Roque Antoni. This firm was distinct from Antoni Hermanous, a partnership carry ing on business in Venezuela, as was so found by His Honour Mr. Justice Adrian Clark, who tried the action.

This firm of Antoni Brothers was, in March 1921, heavily indebted to their bankers, the appellants, on two separate accounts; the first, their current account, on which they were indebted in the sum of $1,592.63, and the second, a loan ac count, upon which they were indebted in the sum of $57,000. In respect of this latter indebtedness the bank held as a security two promissory-notes of the firm, dated respectively 6th March 1920 and 23rd July 1920, for the respective amounts of $40,000 and $17,000.

It was not questioned in the argument before the Board that during the year 1920, if not before, the firm had obtained from their bankers, the appellants, large advances of cash on credit, to enable them to purchase quantities of cocoa to carry on their trade or business of dealers in that commodity.

In the winter of 1920-21 the market for cocoa in Trinidad simply collapsed, entailing upon this firm losses so heavy as to threaten bankruptcy. To add to their misfortune, the appellants, near the end of the year 1920, ceased to make advances to the firm, as they had there tofore done, to enable them to carry on their trade, with the result that the firm had no capital to carry on their business, and were practically insolvent.

They held, no doubt, at this period documents of title to quantities of cocoa shipped by them, and were entitled in respect thereof to rebates on freight amounting, in the whole, to about $3,000. They were also entitled to an equity of redemption in a certain house worth $4,000. These two pieces of property constitute the entire assests of the firm. Both were transferred by them to the appellant bank as security for the debts they owed to that institution. The firm, from about the end of the year 1920, had owing to their complete lack of capital and their insolvent condition, practically ceased to attempt to carry on their busi ness of cocoa dealers, so that it had be come quite obvious that, unless they could obtain financial assistance in the shape of advances of capital, they would never be able to regain to any extent their formal commercial position, and would be forced to summon a meeting of their creditors. The instrument of gua rantee is, with the exception of the last clause of it, a printed document. It is under seal, and is signed by the guaran tor under the name and style of Salvatori Scott and Co.

Before dealing with the construction of its language, it is necessary to consider the condition of things out of which it sprung, and the objects apparently desig ned by the parties to it to be effected by it. The manager of the bank at the date of this guarantee was one Jerram Connell. He ceased to be manager in Janu ary 1923, when he went to reside in New York. He was examined in the latter city on commission on 25th