Brinkman v McGill

• Jurisdiction: South Africa
• Citation: 1931 AD 303

Brinkman Appellant v McGill Respondent
1931 AD 303

1931 AD p303

Citation	1931 AD 303
Court	Appellate Division
Judge	De Villiers CJ, Curlewis JA and Roos JA
Heard	April 16, 1931; April 17, 1931
Judgment	April 29, 1931

Flynote : Sleutelwoorde

Principal and surety — Discharge of surety — Alteration of obligation without consent of surety — Implied consent — Abandonment of rights against surety.

Headnote : Kopnota

Appellant signed as surety an acknowledgment of debt for £750 on condition that the amount was to be included in a mortgage bond to be passed by the debtor in favour of the creditor, the respondent, in respect of a debt of £2,000 so that the whole amount of the bond would be £2,750. The debt of £750 was to be repaid at the rate of not less than £50 per annum for the first two years and thereafter at the rate of not less than £100 per annum; the whole amount to become due on failure to pay instalments and interest on date due. The appellant undertook the suretyship obligation on the basis that the term "Mortgage bond" in the acknowledgment of debt meant that in the first instance a notarial bond would be passed to be converted into a special mortgage bond when the debtors rights over

1931 AD p304

certain land were converted into title by the Government. A notarial bond was thereafter passed which provided that the capital amount of £2,750 should be repaid after six months notice, such notice not to be given by the creditor within a period of two years; that the amount should be reduced by £750 in stated annual instalments, such instalments being the same as set forth in the acknowledgment of debt; that on failure to pay such instalments the whole amount of the bond should become due and that if the interest on the capital sum were not paid on due date the capital sum should become due. After payment of the first £50 due under the acknowledgment of debt, and before the special mortgage bond had been passed, the debtor's estate was sequestrated and respondent claimed in her estate for the full amount of the bond less £50 and offered cession of the claim in respect of £750 less £50 to appellant against payment by appellant of the amount due by the debtor under the acknowledgment of debt. Appellant having contended unsuccessfully in a trial court that he had been discharged from liability.

Held, on appeal, that on the facts the respondent had not been negligent in not obtaining the passing of the special mortgage bond before insolvency.

Held, further, that the condition in the bond as to the right of the mortgages to call up the capital sum of £2,750 on six months given, after two years, and the condition that if the interest on the capital sum be not paid on due date the capital sum should become due without notice, were both reasonable and fair conditions to which no objection could be taken; that the appellant by the terms of his suretyship must therefore have impliedly consented thereto, and could not now avail himself of the fact that they constituted a variance of the obligation of the principal debtor.

Held, further, that the fact that the appellant in proving his claim in the debtor's estate had not mentioned the suretyship could not be accepted as proof of the abandonment of the claim against the surety.

The decision of the Eastern Districts Local Division in McGill v Brinkman and Another, confirmed.

Case Information

Appeal from a decision of the Eastern Districts Local Division (GUTSCHE, J.).

The facts appear from the judgment of ROOS, J.A.

D. Grant Hodge, K.C. (with him T. B. Brinkman), for the appel lant: Appellant's liability as surety was subject to the condition that a mortgage bond would be passed over the property and the onus was on the respondent to prove that it had been passed and registered. See Celliers v Papenfus and Rooth (1904 T.S. 73); Aymard v Webster (1910 T.S. 123); Baumann v Thomas (1920 AD at pp. 433-4); Halsbury's Laws of England (vol. XV, para. 924 and 1024 and Act 13 of 1918, secs. 55 and 61).

Even if it had been agreed that a notarial bond should be passed it was also agreed that immediately title was issued a mortgage bond would be passed and there was unnecessary delay in carrying

1931 AD p305

out that undertaking; the delay was due to respondent's neglect to discharge the duty. See Maasdorp's Institutes of Cape Law (1st ed., vol. III, pp. 379-80); Baumann v Thomas (supra); Halsbury's Laws of England (vol. XV, paras. 924, 1037, 1054; and vol. VII, para. 891); Carter v White (25 Ch at p. 670 per COTTON, L.J.); Wilkinson v Clements (8 Ch. App. 96 at p. 110) and Hollander & Co. v The Royal Insurance Co. (4 C.S.C at pp. 70-1).

The terms of the principal obligation were materially altered by subsequent agreement between respondent and the principal debtor without the knowledge or consent of the appellant who was thereby discharged. See Burge on Suretyship (Bk. 2, Ch. 8); Maasdorp's Institutes of Cape Law (1st ed., vol. III, p. 376 ad fin to 377 (top) and 378 (top); Colonial Government v Edenborough (4 C.S.C at p. 296); van Oosterzee v McRae (1 Menz. 305); Estate Liebenberg v Standard Bank (1927 AD at p. 510); Halsbury's Laws of England (vol. XV, paras. 1025, 1034 and notes; vol. VII, para. 874); English and Empire Digest (vol. 26, p. 158, sec. 1199); Harrison v Seymour (p. 163, sec. 1223); Botten v Salmon (1891, 2 Ch. 48, p. 92, sec. 636; and vol. 12, p. 363, sec. 3024); Croockewit v Fletcher (1 H. & N. 893).

If respondent's contention that appellant's liability as surety arose on the passing of the notarial bond be upheld, the deposition made in support of respondent's proof of debt amounted to an abandonment of respondent's claim against appellant as surety. See Act 32 of 1916, sec. 42 (3) and Schedule II, Form C. A surety becomes a creditor of the principal debtor from the moment the suretyship is undertaken and is a party interested in the terms of the proof of debt and supporting deposition which are filed for his inspection. Such a deposition is therefore not res inter alios acta and it therefore constitutes notice to appellant and the principal debtor of abandonment of right of recourse against the sureties. See Rossouw and Rossouw v Hodgson and Others (1925 AD at pp. 102-3).

F. G. Reynolds, K.C. (with him, A. W. Back) for the respondent: In law a notarial bond is included in the term mortgage bond. If there was a variance the proper course would have been to except.

The words "property Banzi" in the acknowledgement of debt are ambiguous as they might refer to movable or immovable

1931 AD p306

property and a special bond over movables is a mortgage bond. See Wille on Mortgage and Pledge (p. 95). Evidence was therefore admissible on this ground and if the property is shown to be a mere right of occupation a special mortgage over immovables could not be the meaning of mortgage bond.

The meaning of the word "mortgage" is ambiguous. Grotius (2.48) divides mortgage in different ways inter alia into movable and immovable. The statutory definitions or mortgage differ as appears from Act 13 of 1918, sec. 61 and Act 32 of 1916, sec. 2 as amended by the Act of 1926, sec. 3 (b). See also Wille on Mortgage and Pledge (pp. 1, 2, 5); Hare v Heath's Trustee (3 C.S.C. 32 at p.34) and Maasdorp's Institutes of Cape Law (4th ed., vol. II, p. 242).

If once there is ambiguity evidence of the circumstances of the case is admissible. See Richter v Bloemfontein Town Council (1922 AD 57 at pp. 70, 71, 79); Garlick v Smart (1928 AD 82 at p. 87) and de Wet v Hollow (1914 AD 157).

The instrument was unilateral. See Cunningham v Holcroft (1907 T.S. 251); Arthur v Central News Agency (1925 TPD 588) and Stephens' Digest of Evidence (art. 92).

Evidence was admissible to identify what was the mortgage bond to be passed in terms of the acknowledgment of debt. See Mowlem v Morris (1929, E.D.L. 211).

There was in fact and in law no duty on respondent towards appellant to see that a bond over immovables was...