Findlay and Sullivan v Brown and Co

• Jurisdiction: South Africa
• Judge: Innes CJ, Solomon JA and Wessels JA
• Judgment Date: 24 March 1926
• Citation: 1926 AD 272
• Hearing Date: 24 March 1926
• Court: Appellate Division

Innes, C.J.:

It has been a pleasure to listen to Mr. Fischer's ingenious argument; but the matter is clear and there is no need to trouble Mr. Beck's. The appeal is from an order over-ruling an exception to a special plea and entering judgment for the defendants upon the undisputed facts. The declaration founds upon a written agreement by which the defendants undertook to lend £800 to a man named Gerrard, on the condition inter alia that he should bond certain movable assets as security. Gerrard executed and registered the bond, and then ceded to the plaintiffs his right to the advance. The action is not brought to substitute the plaintiffs as debtors; the liability to repay is to remain with Gerrard, and the claim is merely to receive the amount of the loan as his cessionaries. There are several special pleas, but the first is the only one with which we are concerned. It raises the defence that Gerrard is an unrehabilitated insolvent, his estate having been sequestrated by the Cape Provincial Division in 1915, the year before the Union Insolvency Act of 1916 came into existence; that he did not duly inform the defendants in writing of that fact as required by sec. 141 (1) of Act 32 of 1916, and that the agreement and the bond were therefore illegal, and no action can be maintained in respect of them. The clause in question reads as follows: - "Every person shall be guilty of an offence and shall be liable on conviction to imprisonment with or without hard labour for a period not exceeding one year who, being an unrehabilitated insolvent, obtains credit to an amount exceeding twentyfive pounds, without previously informing in writing the person from whom he obtained that credit that he is insolvent." The exception to the plea based upon those provisions was overruled and, as it was common cause that no written notice had been given, judgment was entered for the defendants. The matter comes to us on appeal against that order.

Now sec. 141 makes it a criminal offence for an insolvent to obtain credit in disregard of its terms; a contract in contravention of its provisions is therefore a transaction absolutely forbidden, and consequently null and void; and the appellants in these proceedings stand in the shoes of the insolvent; their position can be

Innes, C.J.

no better than his. The only question therefore is whether the section applies; if it does there was no right which the insolvent could cede. It is contended that it does...