PAYMENT UNDER GUARANTEE

Otago Daily Times, Issue 20448, 30 June 1928, Page 19

PAYMENT UNDER GUARANTEE

CLAIM AGAINST BANK MANAGER. COURT RESERVES DECISION. (Special to Daily Times.) CHRISTCHURCH, June 29. A claim for £2500 damages for alleged misrepresentation in the matter of certain guarantees was the basis of a legal argument beard in the SupremeCourt to-day before Mr Justice Adams. The plaintiff was Harry Digby James, printer, Grevmouth (Mr J. A. Murdoch and Mr J. W. Hannan) and the defendant was Edward Ernest Bayly Mabin, bank manager, Nelson (Mr M. Myers, K.C. and Mr IV. F. Ward). The statement of claim set out that when Mabin was manager of the Bank of New South Wales at Greymouth he advised .fames to enter into a guarantee of the account of E. J. Bundle and Co., timber merchants. In September last the bank demanded from James and two other guarantors payment of £32,000. To secure a release of his liability James paid the bank £2500. The company was unable to pay that sum to James. He alleged that to induce him to enter into (ho guarantee Mabin fraudulently and falsely represented that the company’s financial position was quite sound. Janies had discovered since that the representations made to him by Mabin were untrue and that Mabin’s advice was given negligently, carelessly," and recklessly. James therefore claimed the sum of £2500. Mr Myers said that if the case went to trial it would involve great expense and it appeared to the defendant’s advisers that there was no case to answer. He submitted that the matter could be disposed of by the application of wellknow elementary principles of law without the citation of a. single authority. The case was based on fraud alone, and could not be based on anything else. Mabin was not advising James in regard to an investment, but was inducing him to enter into a contract with the bank. James’s case was that Mabin induced him to sign the guarantee by fraudulent misrepresentation. James, therefore, was not liable to the bank and need not have paid the £2500 which he chose to pay voluntarily to the bank. The whole course of action had gone. Mr Murdoch, in reply, contended that a quasi-contractual relationship existed between the plaintiff and the defendant through the latter approaching the former and inducing him to sign guarantees. Counsel contended that Mabin acted beyond the scope of his authority as manager of the Greymouth branch. When he found that he was in a difficult position he obtained the guarantee for his personal protection. His Honor: Do you say that the guarantee was obtained by fraud ?—Yes, your Honor. His Honor: The main answer to that is that if it is fraud the bank could not recover a penny from the guarantor. If that is so James’s payment of £2500 to the bank was voluntary. Do you say it was fi’kud dissociated from the bank?— Yes, your Honor. Mr Hannan said there was no allegation in the statement of claim that Mabin made his statements for the bank or acted as the hank’s agent. Mabin went far beyond a bank manager’s duty. The statements complained of were made by Mabin before the signing of the guarantee. His Honor reserved his decision.