Britannia Steamship Insurance Association, Ltd v. Duff and Another [1909] ScotLR 894 (15 July 1909)

Britannia Steamship Insurance Association, Ltd v. Duff and Another [1909] ScotLR 894 (15 July 1909)

The guarantee given 'for mortgagees' was a general obligation not limited to the period of the original mortgage, and remained in force so long as any mortgage existed. The insurance association was not obliged to notify the guarantors of non-payment of calls, as no special circumstances existed to take the case out of the ordinary rule. The defenders failed to establish that they were prejudiced by lack of notice. Accordingly, the defenders remained liable under the guarantee.

Citation
[1909] ScotLR 894
Parties
Pursuer: Britannia Steamship Insurance Association, Limited; Defender: Thomas Lawrie Duff; Defender: John Eiston Wilson
Jurisdiction
Scotland
Judgment Date
15 July 1909
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, Second Division
Outcome
appeal allowed; interlocutor of Lord Ordinary recalled; decree granted as craved for pursuers
Legal Topics
Guarantee Liability, Notice to Guarantor, Termination of Guarantee, Marine Insurance, Mutual Insurance Association Rules
Insurance Law Contract Law Suretyship Guarantee Liability Notice to Guarantor Termination of Guarantee Marine Insurance Mutual Insurance Association Rules

Case Brief

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Parties

Britannia Steamship Insurance Association, Limited

Pursuer

Thomas Lawrie Duff

Defender

John Eiston Wilson

Defender

Procedural Posture

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

Legal Issues

  1. 1 Whether the obligation under a guarantee given 'for mortgagees' of a ship continues after discharge of the original mortgage and creation of a new mortgage.
  2. 2 Whether failure by the insurance association to notify the guarantors of non-payment of calls by the debtor liberates the guarantors from liability.

Ratio Decidendi

The guarantee given 'for mortgagees' was a general obligation not limited to the period of the original mortgage, and remained in force so long as any mortgage existed. The insurance association was not obliged to notify the guarantors of non-payment of calls, as no special circumstances existed to take the case out of the ordinary rule. The defenders failed to establish that they were prejudiced by lack of notice. Accordingly, the defenders remained liable under the guarantee.

Court Disposition

appeal allowed; interlocutor of Lord Ordinary recalled; decree granted as craved for pursuers

Orders

  • Defenders found liable for payment of the sum claimed under the guarantee.
  • Assignation to defenders of pursuers' claim against the Cullum Company in liquidation.