W. T. Rawleigh Co. v. Dumoulin

W. T. Rawleigh Co. v. Dumoulin

The respondents proved they signed the guarantee under an error as to its nature (believing it to be a mere reference); error as to the nature of a contract nullifies consent under art. 992 C.C.; third-party fraud not participated in by the creditor does not validate the contract; signing without reading does not create a bar (fin de non-recevoir) to proving error. Therefore the guarantee was void and the appellant could not recover.

Citation
[1926] SCR 551
Parties
Appellant (seller): W. T. Rawleigh Co.; Respondent (guarantor): Alexandre Dumoulin; Respondent (guarantor): J. E. Desrochers
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
31 May 1926
Procedural Posture
Civil Appeal (sale of Goods / Guarantee) / On Appeal to the Supreme Court of Canada From the Court of King's Bench, Appeal Side, Province of Quebec
Outcome
Appeal dismissed with costs; judgment of the Court of King's Bench affirmed
Legal Topics
Error as to Nature of Contract, Fraud (dol) by Third Party, Nullity of Contract (art. 992 C.c.), Fins De Non Recevoir (estoppel), Third Party Fraud and Creditor Rights (art. 993 C.c.)
Source Language
English
Contract Law Sale of Goods Suretyship/guarantee Civil Law (quebec) Evidence Error as to Nature of Contract Fraud (dol) by Third Party Nullity of Contract (art. 992 C.c.) +2 more

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Parties

W. T. Rawleigh Co.

Appellant (seller)

Alexandre Dumoulin

Respondent (guarantor)

J. E. Desrochers

Respondent (guarantor)

Procedural Posture

Civil Appeal (sale of Goods / Guarantee) / On Appeal to the Supreme Court of Canada From the Court of King's Bench, Appeal Side, Province of Quebec

Legal Issues

  1. 1 Whether guarantors who signed a guarantee believing it to be a mere letter of reference can be held liable
  2. 2 Whether fraud by a third party who misrepresented the document prevents rescission by the supposed guarantors against an innocent creditor
  3. 3 Whether signing without reading bars a defence of error (fin de non-recevoir)

Ratio Decidendi

The respondents proved they signed the guarantee under an error as to its nature (believing it to be a mere reference); error as to the nature of a contract nullifies consent under art. 992 C.C.; third-party fraud not participated in by the creditor does not validate the contract; signing without reading does not create a bar (fin de non-recevoir) to proving error. Therefore the guarantee was void and the appellant could not recover.

Court Disposition

Appeal dismissed with costs; judgment of the Court of King's Bench affirmed

Orders

  • Appeal dismissed with costs
  • Judgment of the Court of King's Bench (Q.R. 39 K.B. 241) affirmed