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Nicholls and ors. Vs. Wilson - Court Judgment

LegalCrystal Citation
SubjectCivil;Company
CourtKolkata
Decided On
Judge
Reported in(1879)ILR4Cal560
AppellantNicholls and ors.
RespondentWilson
Cases ReferredThe City Discount Co. v. McLean
Excerpt:
guarantee - appropriation of payments. - .....of their passage. under these circumstances, the company applied to the plaintiffs to advance the passage-money; but the plaintiffs were not content to make the advance upon the responsibility of the company only, and desired to have the personal security of two of the directors. upon this, messrs. shanks and wilson entered into the guarantee in question, which is in these words (his lordship read the guarantee as set out above).4. it then appears that in the months of august, september, and october 1875, the plaintiffs did pay sums for the passage of the actors, amounting altogether to rs. 13,113-13-4. half of this amount has been since paid by mr. shanks; and this suit is brought to recover the other half from the defendant, who is the executrix of mr. wilson, the other party to the.....
Judgment:

Richard Garth, C.J.

1. We think that this is a very clear case; and it would almost have been sufficient to say that we entirely agree with the learned Judge in the Court below.

2. The whole Question depends upon the meaning of the guarantee upon which the suit is brought.

3. The plaintiff's firm had acted since the year 1874 as the agents or bankers of the Corinthian Theatre Company. That Company were importing in August 1875 several actors from Australia, who were to play at the Corinthian Theatre; and the Company had a difficulty about paying the expenses of their passage. Under these circumstances, the Company applied to the plaintiffs to advance the passage-money; but the plaintiffs were not content to make the advance upon the responsibility of the Company only, and desired to have the personal security of two of the directors. Upon this, Messrs. Shanks and Wilson entered into the guarantee in question, which is in these words (His Lordship read the guarantee as set out above).

4. It then appears that in the months of August, September, and October 1875, the plaintiffs did pay sums for the passage of the actors, amounting altogether to Rs. 13,113-13-4. Half of this amount has been since paid by Mr. Shanks; and this suit is brought to recover the other half from the defendant, who is the executrix of Mr. Wilson, the other party to the guarantee.

5. Her defence is, that after these moneys were advanced, the plaintiffs did in fact receive moneys from the Company, far exceeding altogether the amount paid for passage-money; and that they were legally bound by the terms of the guarantee to have reimbursed themselves out of those moneys.

6. In answer to this, it is contended by the plaintiffs, that although the guarantee says that Messrs. Nicholls and Co. are to repay themselves from the first moneys received by them on account of the Company, that does not mean 'the first moneys that they might actually receive,' but 'the first moneys available for that purpose.' Mr. Branson in his argument went so far as to say that the plaintiff had no right to appropriate the moneys which they were receiving day by day towards payment of the debt due for passage-money--because by doing so the business of the theatre might be stopped; and that if it were doubtful whether the business would be ultimately successful, the plaintiffs might go on to the end of the season, appropriating the Company's moneys to other debts and objects, and only repay themselves this particular debt in case there were a balance in the Company's favour at the end of the season available for that purpose.

7. But we think, having regard to the terms of the guarantee, and the circumstances under which it was given, that this argument is wholly untenable. We must construe the guarantee, as we should any other instrument, according to its natural and ordinary sense and meaning; and we have no right, as against the defendant, to distort or amplify the language in order to put an unnatural construction upon it, to suit the views of the plaintiffs or of the Company.

8. At the time when the guarantee was given, the plaintiffs had been acting for some time as the bankers or agents of the Company, advancing money to them from time to time, and paying and receiving money for them almost daily, and keeping a regular cash account with them, which was regularly entered in the plaintiffs' ledger. The guarantors knew this perfectly well. They knew that the Company had not then sufficient assets to pay the passage-money; and they said in effect to the plaintiffs by this guarantee: 'If you will advance the necessary money for the Company, and will repay yourselves the amount out of the first moneys of theirs, which may come to your hands, we will guarantee you against any loss, if you should not receive enough to cover your advances.'

9. Under these circumstances, we think it clear, that the words 'the first moneys' can have but one meaning; and that the plaintiffs were bound to appropriate the first moneys of the Company which they received towards payment of this particular debt. Instead of this, it appears that they have applied these moneys towards payment of other debts due to themselves. Thus, for example, we will take the first items on the credit side of the cash account on and after the 3rd of August, on which day the plaintiffs made the first payment for passage-money, viz., Rs. 4,800. On that day the plaintiffs received from the Company Rs. 450 for calls on shares, and on the 6th and 11th of August Rs. 750 and Rs. 250 also for calls, in all Rs. 1,450. Instead of appropriating this sum towards payment of the Rs. 4,800 passage-money, they applied it, as appears from the account, in part payment of a balance of Rs. 2,452-7-9, which was then due to themselves for prior advances to the Company. And this is what they seek to know. They are attempting to appropriate the moneys which they have since received from the Company to the payment of other sums which they have paid on the Company's account and to postpone the payment of this particular debt for passage-money to the payment of those other debts.

10. We consider that they have no right to do this. As against the guarantors they were bound to appropriate the first receipts to the payment of this debt, and if they omitted to do so, it was at their own risk. As they have in fact received sufficient to pay the amount of the passage-money, the guarantee is discharged.

11. Another point was then made by Mr. Branson, that the cash account was not an ordinary debtor and creditor account kept by the plaintiffs as bankers or agents, but as treasurers of the Company.

12. But this really makes no difference. Whether the plaintiffs were treasurers or not, this was an account kept by them with the Company, in which receipts and payments were regularly entered, and which was posted, like the other accounts of the plaintiffs' customers, in their ledger. No other account was kept by the plaintiff's with the Company but this; and as the guarantee clearly had reference to some account which was being kept between the plaintiffs and the Company, it is plain that this was the account which both parties had in view when the guarantee was given. It cannot be pretended that, whatever the account may have been called, the plaintiffs bad not a right to retain any sums received by them on that account against debts due to them from the Company.

13. Mr. Branson called our attention to the case of The City Discount Co. v. McLean (L.R., 9 C.P., 602), but this case has really no application to the present. It only decides, that the well-known rule laid down in Clayton's case, that payments credited on one side of an account should in the absence of any specific appropriation go to discharge in order of date the earlier items on the debit side, is not an arbitrary and inflexible rule, but that it may be modified or departed from, under special circumstances.

14. In this case the guarantee itself expressly provides the proper mode of appropriation, and the plaintiffs are of course bound by the terms of it.

15. We consider the case to be perfectly clear; and we dismiss the appeal with costs on scale No. 2.


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