Charles Dudley Robert Ward v. National Bank of New Zealand, Ltd (1883)

CASE BRIEF
Charles Dudley Robert Ward v. National Bank of New Zealand, Ltd., (1883) 8 AC 755,

Facts:

1. The appellant had given a limited guarantee to the respondent (National Bank of New Zealand) to secure advances to John King.

2. The guarantee allowed the bank to make advances to John King, and the appellant guaranteed the due payment of those advances up to a specified limit.

3. The appellant's co-surety, John Macintosh, also provided a guarantee for a separate amount (£600) on a certain date.

4. Subsequently, the bank received bills of exchange drawn by John King and accepted by John Macintosh, totaling £1400, as security.

5. On April 3, 1879, an agreement was reached between the bank, John King, and John Macintosh, releasing John Macintosh from his original guarantee in exchange for a new guarantee for a higher amount (£2000).

6. The appellant was not aware of or consented to this arrangement between the bank and the co-surety.

Issues:

1. Whether the appellant is released from liability under his original guarantee due to the release of the co-surety, John Macintosh, and the substitution of a new guarantee.

2. Whether the transactions between the bank, John King, and John Macintosh, including the release of the co-surety and the new guarantee, constitute a valid defense for the appellant.

Arguments:

Appellant's Arguments:

1. The appellant contends that altering the terms of the original guarantee without his consent or knowledge is a breach of contract.

2. Cites legal precedents such as Holme v. Brumshill and Polak v. Everett to support the argument that any alteration to the contract, even if potentially beneficial, requires the surety's consent.

3. Argues that the release of the co-surety, John Macintosh, affects the right of contribution between the co-sureties and impairs the appellant's position.

4. Asserts that the bank's actions, including the release of John Macintosh and the acceptance of a new guarantee, constitute a violation of the original contract.

Respondent's Arguments:

1. The respondent argues that the language of the original guarantee allows the bank to take any security or give time to the debtor, providing flexibility in securing the advances.

2. Contends that the appellant was not prejudiced by the release of the co-surety and the substitution of the new guarantee.

3. Emphasizes that the right of contribution among co-sureties is based on equity, not contractual terms, and requires an actual payment by the surety.

4. Argues that the appellant fails to establish any damage suffered due to the substitution of the guarantees and that the onus is on the appellant to prove such damage.

Judgment:

The Court held that the plea presented by the appellant did not constitute a valid defense. The judgment stated that the appellant did not sufficiently allege or imply that the liability was joint, that he became surety on the faith of the co-suretyship, or that any right of contribution had been affected or taken away. The Court emphasized the lack of evidence showing damage or injury to the appellant resulting from the described substitution. As a result, the appellant's appeal was dismissed, and the original judgment in favor of the respondent was upheld.

AUTHOR:

SRIVATHSA EKALAVYA YEEDU

1ST YEAR STUDENT AT

NATIONAL LAW UNIVERSITY KOLKATA (WBNUJS)