Ideal Finance Corporation v Coetzer

• Jurisdiction: South Africa
• Court: Orange Free State Provincial Division
• Judge: Smit JP and Smuts J
• Judgment Date: 05 June 1969
• Citation: 1969 (4) SA 43 (O)
• Hearing Date: 26 May 1969

Smit, J.P.:

Ampthill Motors, Virginia, sold and delivered to one van Wyngaardt a motor car in terms of a written hire-purchase agreement. This agreement embodied a 'guarantee' which was signed by respondent, defendant in the court below, in terms of which he bound himself:

G 'as surety and co-principal debtor of, and jointly as well as severally with, the above-named purchaser for the due, faithful and punctual fulfilment by the said purchaser of all the duties and obligation assumed by him in terms of the aforegoing agreement'.

H This hire-purchase agreement was ceded to appellant. Van Wyngaardt fell in arrear with the payments payable in terms of this agreement and appellant instituted action against him. Judgment was granted against him for the payment of R511.27, which amount van Wyngaardt has failed to pay. Appellant then sued respondent in terms of his guarantee for payment of this amount. Summary judgment was granted for this amount with costs. Respondent, also, failed to pay the judgment debt and appellant gave him notice, in terms of sec. 65 of Act 32 of Act 32 of 1944, to attend an enquiry into his financial position.

Smit JP

At the hearing respondent's attorney took the preliminary point that the magistrate had no jurisdiction to hold such an enquiry in view of the provisions of sec. 18 of the Hire-Purchase Act, 36 of 1942, which reads as follows:

A 'No decree of civil imprisonment or garnishee order or order under sec. 65 of the Magistrates' Courts Act, 32 of 1944, for the purpose of enforcing payment by the buyer of any amount payable under an agreement or as a result of the termination or rescission therof or as damages for any breach thereof, shall be made by any court.'

The magistrate came to the conclusion that, because appellant had bound B himself as co-principal debtor, jointly and severally, with the buyer, he was in the same position as the latter and that he also had the protection of sec. 18 of the Act. He consequently dismissed the application for an enquiry under sec. 65 of Act 32 of 1944.

Respondent signed the guarantee as surety and co-principal debtor; that, C however, does not make him a buyer nor a co-buyer. He has not the rights of a buyer against the seller and never bought nor did he ever intend to buy. The addition of the words 'co-principal debtor' does not transform his contract into any other than one of suretyship. (Maasdorp v Graaff-Reinet Board of Executors, 3 Buch. A.C. 382 at p. 490; du D Plessis v Estate of Teich Brothers, 1914 CPD 48 at p. 50; Shuter v Ridgway, 1926 NPD 149 at p. 152). In Union Government v van der Merwe, 1921 T.P.D. 318 at p. 322, WESSELS, J.P., said it is clear that the addition of the words 'co-principal debtor' to his undertaking as surety:

'Operates as a renunciation of the benefits of the surety . . . but they have a still greater force. The addition of these words shows that the E surety intends that his obligation shall be co-equal in extent with that of the principal debtor; or, otherwise expressed, that his obligation shall be of the same scope and nature as that of the principal debtor.'

In Wessels, Law of Contracts, sec. 4087, the position is put as follows:

'A person who binds himself as surety and co-principal debtor is both surety and debtor. As far as the creditor is concerned, he is a co-debtor; as far as the debtor and co-sureties are concerned, he is a surety. He differs from the principal debtor in that he has a right of F recourse against him. He also has the right to demand a cession of action from the creditor and is therefore entitled to proceed...