Harmer & Co. v. Gibb [1911] ScotLR 1050 (22 July 1911)

Harmer & Co. v. Gibb [1911] ScotLR 1050 (22 July 1911)

The guarantee was for a limited sum only (£200), not for the whole debt subject to a limitation. However, the cautioner was not entitled to a pro rata deduction of assets realised because there was no bankruptcy or equivalent insolvency. The pursuers' failure to communicate with the cautioner about the realisation of the debtor's assets did not discharge the cautioner, as no new term was implied into the contract by the correspondence. The cautioner is entitled to a deduction for the proportionate value of the insurance policy security, but not to other deductions or equities claimed.

Citation
[1911] ScotLR 1050
Parties
Pursuer: F. W. Harmer & Company; Defender: James Gibb (and after his death, his trustees)
Jurisdiction
Scotland
Judgment Date
22 July 1911
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, First Division
Outcome
Interlocutor of Lord Ordinary recalled; defender liable under guarantee for £200, less proportionate value of insurance policy; remit to Lord Ordinary to proceed as accords; expenses awarded as specified.
Legal Topics
Construction of Guarantee, Extent of Cautioner's Liability, Rights of Cautioner on Realisation of Debtor's Assets, Deduction of Securities and Assets, Implied Terms in Contract Continuation
Contract Law Guarantee Law Commercial Law Construction of Guarantee Extent of Cautioner's Liability Rights of Cautioner on Realisation of Debtor's Assets Deduction of Securities and Assets Implied Terms in Contract Continuation

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Parties

F. W. Harmer & Company

Pursuer

James Gibb (and after his death, his trustees)

Defender

Procedural Posture

Civil / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, First Division

Legal Issues

  1. 1 Whether the guarantee was for a limited sum only or for the whole debt subject to a limitation as to amount of liability
  2. 2 Whether the cautioner (guarantor) was entitled to deduct a rateable proportion of assets recovered from the sum sued for
  3. 3 Whether the pursuers' conduct in realising the debtor's assets without informing the cautioner discharged the cautioner from liability

Ratio Decidendi

The guarantee was for a limited sum only (£200), not for the whole debt subject to a limitation. However, the cautioner was not entitled to a pro rata deduction of assets realised because there was no bankruptcy or equivalent insolvency. The pursuers' failure to communicate with the cautioner about the realisation of the debtor's assets did not discharge the cautioner, as no new term was implied into the contract by the correspondence. The cautioner is entitled to a deduction for the proportionate value of the insurance policy security, but not to other deductions or equities claimed.

Court Disposition

Interlocutor of Lord Ordinary recalled; defender liable under guarantee for £200, less proportionate value of insurance policy; remit to Lord Ordinary to proceed as accords; expenses awarded as specified.

Orders

  • Recall of Lord Ordinary's interlocutor dismissing the action
  • Find defender liable to pay pursuers for goods supplied up to £200, less proportionate value of insurance policy