1866.

WOOD

v.

PRIESTNER.

plied" did not necessarily import a past consideration, and ought to be read "for goods to be supplied.”

Holker, in support of the rule.-No doubt, where an instrument is ambiguous, the intention of the parties must be ascertained from its language construed by the light of surrounding circumstances. So construing this guarantee, it applies to past transactions only. At the time it was given the defendant's son was indebted to the plaintiffs in the sum of 1707. for coal supplied, and they were willing not to enforce immediate payment if they received some security for the debt. The words "in consideration of credit given" mean "in consideration of forbearance to press for payment; and the words "for coal supplied" mean "for coal already supplied." It would be a forced construction to make these words applicable to a future supply. The only expression which points to a future consideration is "any accounts due;" but bearing in mind that the debt of 170%. consisted of the aggregate of several monthly accounts, the defendant guaranteed that if his son failed to pay any of them he would pay them to an amount not exceeding 1007. In Allnutt v. Ashenden (a) the defendant guaranteed an "account" for wines and spirits; and there being an existing account at the time the guarantee was given, it was held that it did not extend to future supplies of goods. Nicholson v. Paget (b) is also an authority in the defendant's favour. There Bayley, B., said "that it is the duty of the party who takes such a security to see that it is couched in such words as that the party so giving it may distinctly understand to what extent he is binding himself." In Hood v. Green the question arose upon demurrer to a plea which set out the guarantee. The

(a) 5 Man. & G. 392.

(b) 1 C. & M. 48.

declaration stated that it was a guarantee for a future debt; and as the plea did not allege that there was any existing debt the guarantee could only apply to a future transaction. [Pigott, B., referred to Goldshede v. Swan (a).]

KELLY, C. B.—I am of opinion that this is a continuing guarantee, and that the plaintiffs are entitled to retain the verdict. The question in these cases does not depend solely on the words of the instrument; if they are ambiguous, it is necessary to look at the surrounding circumstances, and apply them to the language used.

Then let us look at the guarantee and the facts as they existed at the time it was given. It begins thus:"June 10, 1861. In consideration of the credit given by Messrs. The Hindley Green Coal Company to my son, Mr. Thomas Priestner, for coal supplied by them to him, I hereby hold myself responsible to them as a guarantee." If this had been a guarantee in consideration of credit already given, and had been intended to be confined to the amount already due, the language would have been "in consideration of your forbearance to sue for the amount payable by my son, I hereby guarantee," &c. Then what are the surrounding circumstances? The plaintiffs had supplied the defendant's son at various periods with coal to the amount of 170l. 97. was paid on account, leaving 1617. due. The plaintiffs then refused to supply any more coal unless they had some security, and the defendant accepted a bill of exchange for 61, and obtained his father's signature to the guarantee in question.

Now we must assume that it was the intention of the parties that the supply of coal should continue, because immediately the guarantee was given the plaintiffs con(a) 1 Exch. 154.

1866.

WOOD

v.

PRIESTNER,

1866.

WOOD

v.

PRIESTNER.

tinued to supply coal for a considerable time, and until more than 100%. was due. Looking at the surrounding circumstances, I am at a loss to understand why, when 91. was paid, 617. secured by a bill of exchange, and 1007. due, if the intention was that the defendant's father should become a surety for the 1007. only, it would not have been sufficient for him to have given the plaintiffs a promissory note for that amount.

The guarantee proceeds :-"I hereby hold myself responsible as a guarantee to them for the sum of 1007., and in default of his non-payment of any accounts due, I bind myself by this note to pay to the Hindley Green Coal Company whatever may be owing to an amount not exceeding the sum of 1007." Mr. Holker says that the 1707. consisted of an aggregation of several accounts, and therefore the word "accounts" was used. But the guarantee not only uses the words "any accounts due," but also the words "whatever may be owing." Then does that mean that the instrument is to be a guarantee to the amount of 1007. upon the accounts due when the guarantee came into operation, or that the instrument is to be a guarantee to the amount of 100%. upon any accounts which may thereafter be owing? In my opinion the true meaning is that the instrument is to be a guarantee, not merely for the specific sum of 100%. then due, but (inasmuch as the defendant's son was to be supplied with goods thereafter) also a guarantee for any accounts which might thereafter be owing, to the extent of 1007. I do not understand how the expression "whatever may be owing" can be applied to the specific sum of 100%. which was then due: whereas it has a natural and intelligible application to any sum or sums which might thereafter become due.

Under these circumstances, though I am far from saying

MICHAELMAS TERM, 30 VICT.

that the case is not susceptible of argument, or without doubt, I think that this is a continuing guarantee, and that the rule must be discharged.

MARTIN, B.-I do not mean to dissent from the judgment of the Lord Chief Baron, but I think this by no means a clear case. (His lordship then stated the facts.) The defendant knew nothing whatever of the transactions between his son and the plaintiffs, and therefore, if the defendant is liable, it must be a liability upon the guarantee itself. Now, looking at the existing circumstances, viz., that there was a debt of 170%., that 97. was paid, and a bill given for 617, leaving 1007. due, I am not prepared to say that Mr. Holker's argument is wholly unfounded. On the other hand, the words of the instrument are not so clear that they may not be read in the manner contended for by the plaintiffs' counsel. I cannot assent to the opinion expressed by Bayley, B., in Nicholson v. Paget, that a guarantee is a contract of a peculiar description. It seems to me that it ought to be construed in the same manner as any other contract.

BRAMWELL, B.—I am also of opinion that the rule ought to be discharged. I have difficulty in saying that this is a clear case. It may be one of those cases which are referred to as shewing the uncertainty of the law, whereas they only shew the stupidity of people in not taking care to express themselves plainly, and make intelligible contracts.

Upon consideration, I have come to the conclusion that this is a continuing guarantee. In order to interpret such an instrument the surrounding circumstances not only may, but must be regarded. In this case, the defendant's son was indebted to the plaintiffs on certain accounts, which, on being delivered from time to time, were not paid, and a further dealing on credit was contemplated. Those are

1866.

WOOD

V.

PRIESTNER.

1866.

WOOD

v.

PRIESTNER.

the only circumstances which, in my opinion, are material to be looked at. Then what is the language of the instrument? "In consideration of the credit given." If that related to a past debt, it must also relate to a past credit, and then the guarantee would be invalid for want of consideration, and no parol evidence admissible by the Mercantile Law Amendment Act (a) would render it good. It would be equivalent to this: "On account of the credit you have already given my son, I guarantee," &c. There is a presumption against the defendant giving and the plaintiffs receiving an invalid document when the law upon the subject is so familiar.

It has been argued that the expression "in consideration of the credit given" means "in consideration of the time you have agreed to give for payment of the debt." But that would be altering the words, and if it were as contended in all probability some time would have been specified. After the case of Goldshede v. Swan (b) I cannot say that "credit given" may not be construed in a future sense, though it is by no means the usual expression. The more usual expression is "in consideration of your giving credit," which may be for weeks, or months, or years. I think the meaning is "in consideration of the credit you are going to give for the supply of coal to my

son."

It is argued that the plaintiffs' construction would alter the words of the guarantee, but I do not think they require to be altered. The word "credit" is used in its ordinary sense, as, for instance, when a person says to a coal merchant, "I wish you to supply me with coal; is any credit given?" To which the reply might be, “Yes, there is credit for a month; and if you deal with me you shall have credit for that period for the coal supplied."

(a) 19 & 20 Vict. c. 97, s. 3.

(b) 1 Exch. 154.