O'Young v Walter Reid and Company Limited - [1932] HCA 14

47 CLR 497

O'YOUNG AND ANOTHER

WALTER REID AND COMPANY LIMITED

ON APPEAL FROM THE SUPREME COURT OF Contract-Guarantee-Memorandum in writing signed by the party to be charged

Lapsed offer-Subsequent resuscitation-Statute of Frauds (29 Car. II., c. 3),

A guarantee in writing was signed by the parties to be charged but was mislaid for some time. Another guarantee was drawn up and also signed by the parties to be charged but the obligation SO undertaken was not the same as under the former document. Subsequently the former document was found and the parties verbally acknowledged their signatures to it and agreed that it should operate on their guarantee.

Held, that the guarantee SO acknowledged satisfied the requirements of sec. 4 of the Statute of Frauds.

Stewart v. Eddowes, (1874) L.R. 9 C.P. 311, and Koenigsblatt v. Sweet, (1923) 2 Ch. 314, applied and followed.

Decision of the Supreme Court of New South Wales (Full Court) affirmed.

APPEAL from the Supreme Court of New South Wales.

The plaintiff, Walter Reid &Co. Ltd., brought an action against the defendants, Luke O'Young and George Lum, by a specially indorsed writ claiming the sum of £400 as being an amount due on a guarantee dated 12th October 1927, whereby the

47 CLR 498

OF A. defendants jointly and severally guaranteed the due payment by

Charles Young of moneys advanced to him and of goods supplied or to be supplied to him. The declaration alleged that in considera- tion of the plaintiff agreeing to advance moneys to Charles Young and to supply him with goods in the way of his trade in respect of a business then being purchased by Young at Bankstown the defend- ants jointly and severally guaranteed and promised the plaintiff that they would be responsible to the plaintiff for the due payment by Young of all or any advances made or thereafter to be made by the plaintiff to Young and of the price of the goods supplied that the guarantee should be a continuing one, but that the joint and several liability of the defendants thereunder should not exceed £400 that the guarantee should extend to and be applicable to the whole debt that should ultimately be due to the plaintiff from Young in respect of the advances or goods supplied; that the plaintiff should beat liberty, without discharging the defendants or either of them from liability under the guarantee, to grant time or indulgence to Young in respect of the advances or goods, and to accept payment from Young in cash or by means of negotiable instruments and to treat Young in all respects as though the defendants were jointly liable with Young as debtor to the plaintiff instead of being merely sureties for Young that the plaintiff accordingly advanced moneys to Young and supplied him with goods in the way of his trade in respect of the business referred to above to the extent of £400 or more; that, although the plaintiff had done all things requisite under…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading O'Young v Walter Reid and Company Limited

Details

AGLC: O'Young v Walter Reid and Company Limited [1932] HCA 14
Case: [1932] HCA 14
Decision Date: 12 May 1932

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Supreme Court of New South Wales concerning a guarantee agreement. The plaintiff, Walter Reid and Company Limited, sought to recover £400 from the defendants, Luke O'Young and George Lum, under a guarantee they had provided for moneys advanced and goods supplied to one Charles Young. The defendants pleaded that they had not made the alleged promise.

The central legal issue before the court was whether a written guarantee, initially signed by the parties to be charged but mislaid and later verbally acknowledged and agreed to operate as their binding agreement, satisfied the requirements of section 4 of the Statute of Frauds. This involved determining if the subsequent verbal acknowledgment and agreement to be bound by the earlier signed document constituted a sufficient memorandum in writing to render the guarantee enforceable.

The Court reasoned that the original guarantee document, dated 12th October 1927, was initially an offer. However, subsequent events, including the signing of a second, different guarantee, and later communications between the parties, led to a situation where the parties verbally acknowledged their signatures on the first document and agreed that it should operate as their binding guarantee. The Court applied the principles from *Stewart v. Eddowes* and *Koenigsblatt v. Sweet*, holding that this subsequent acknowledgment and agreement to be bound by the earlier signed document, particularly in light of the jury's finding that a crucial conversation with Lum had occurred, was sufficient to satisfy the Statute of Frauds. The Court found that the parties had effectively revived the original offer and agreed to be bound by it, creating a binding agreement evidenced by a sufficient memorandum in writing.

The High Court dismissed the appeal, affirming the decision of the Supreme Court of New South Wales. The Court concluded that the guarantee of 12th October 1927, as acknowledged and agreed to by the parties in January 1928, constituted a valid and enforceable agreement satisfying the Statute of Frauds.

Orders