GUARANTORS AND BANKS

Evening Star, Issue 21992, 30 March 1935, Page 11

GUARANTORS AND BANKS

INTERESTING POINT IN APPEAL CASE [Per Ukitkb Press Association.] WELLINGTON. March 29. When the Court of Appeal resumed this morning, Mr Saunders continued his argument on behalf of appellants in the case of Wright and Black v. the Now Zealand Farmers’ Co-operative Association of Canterbury Ltd., contending that it was not necessary for the mortgagee to sell, except for cash. Counsel said that if the mortgagee wanted to sell for credit, and have the benefit of someone elsb’s covenant, it must be at the price of the covenant with the mortgagor, and in order that the mortgagee might have this new covenant, the consideration offered should be that of release to the mortgagor. . Referring to the guarantee made in 1909 under which the counter-claim was brought, Mr Saunders said the appellants admitted that they were liable for the interest that had accrued for the whole six years on £12,132, the balance in 1928, and for advances after July 31, 1928, up to April 25, 1931, when the guarantee was cancelled. The Chief Justice: Why do you say you are not liable for the £12,132? Counsel: Because action has been debarred by the Statute of Limitations. The Chief Justice: Then at any time since 1909 when the guarantee was made you could have cancelled it after six years and said you were liable only for the interest and advances? Mr Justice Reed: Therefore the hank has to revise the position every six years if it is to be protected against a guarantor? Counsel: Yes, that is the crux of the matter. Mr Justice Reed; I think the banks would be rather startled if that proposition were to be upheld by the Court of Appeal. Counsel; It doesn’t appear to be understood, your Honour. Mr Justice Reed: If you can support this argument you will have a great hurrying to and fro of the bankers. The case Was adjourned till Monday.