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IN THE MATTER OF THE INSOLVENCY OF HECTOR CROSS BUCHANAN AND FREDRRICK WILLIAM BOIS
NLR2V193
In the Matter of the Insolvency of Hector Cross Buchanan
and Fredrrick William Bois.
D. C., Colombo, 1,762.
Guarantee by a member of each of two firms-How far it binds the firms- Terms in which guarantee is accepted-Contract by letters.
A was a member of the firm of C. R. & Co. and of A. S. & Co. He wrote to G
recommending a loan by G to M of £7,000 on the security of a coffee estate known as the Roeberry estate, with "reference
to which he stated in his letter, " It is an excellent security apart from our guarantee of principal and interest." G
replied that he would be able to lend £7,000 " on the Roeberry estate with " C. R. & Co.'s guarantee of principal and
interest." Subsequently C. R. & Co. wrote to G asking him for the £7,000, and the amount was thereupon transmitted to
them by G,-
Held, that the two letters constituted a contract between G and C. R. & Co., whereby they agreed to guarantee the principal and interest of the mortgage, and that the guarantee did not extend to and bind the members of the firm of A. S. & Co.
THE facts of the case appear in the judgment of Bonser, C.J.
Wendt, for appellants. Dornhorst, for respondent.
24th September, 1896. Bonser, C.J.-
The appellants in this case are the trustees of George Alston, who was at the time of his death a partner in the firm of Campbell, Rivers & Co., Glasgow, and of Alston, Scott & Co., Colombo.
This is an application in the insolvency of two members of that latter firm, Hector Cross Buchanan and Frederick William Bois, to be allowed to prove for a sum of Rs. 151,773.88.
It appears that the two firms were very closely connected. In fact all the members of the firm of Campbell, Rivers & Co. were members of the firm of Alston, Scott & Co.
They seem to have carried on business as general merchants and to have financed local planters.
In the year 1879 a planter named Mant, owner of the Roeberry estate, obtained a loan from a Mr. Hutchison of £7,000 sterling upon a mortgage of that estate. In December, 1882, Hutchison wished to call in his money, and in January, 1883, Mr. John P. Alston, then of Glasgow, who was a member of both firms, and who had admittedly authority to bind both firms, wrote to a Mr. Gibson the following letter: -
Glasgow, 4th January, 1883.
My Dear Gibson,-Four years ago we arranged a loan of £7,000 with J.W. Hutchison (son of the late Graham H.) on first mortgage over the estate of Roeberry in Hewa Eliya. Mr. H has bought a property and wants the £7,000 in June.. The estate was then valued at £15,000, and although the
coffee is worth leas now, the value has been, kept up by large plantings of cinchona. It is therefore an excellent security apart from our guarantee of principal and interest. Before offering it to any one else,
I think it well to place it before you as a good 7 per cent, investment (interest payable half-yearly) for three years, with six months notice of repayment on either side.
Hoping you are all in good health, and wishing you and Mrs. Gibson many happy new years together.
Alex. Gibson, Esq., I remain, &c.
Edinburgh. John P. Alston.
Mr. Gibson the next day replied in the following terms: -
Edinburgh, 5th January, 1883.
My Dear Alston,-I have yours of yesterday, and write to say that I expect to be able to let you have the £7,000 named in June next on the Roeberry estate, with C. R. & Co.'s guarantee of principal and interest. Not having anything coming in to me from my Ceylon estates just now, I have nothing open for investment, but by shifting investments I see my way to doing it.
With the best wishes of the season to you and yours.
Believe me, &c.,
Alexander Gibson.
In that last letter
