HIGH COURT, ACCRA
DATE: 27 NOVEMBER 1967
BEFORE: AMISSAH J.A.
CASES REFERRED TO
(1) Birkmyr v. Darnell (1704) 1 Salk. 27; 91 E.R. 27.
(2) Matson v. Wharman (1787) 2 T.R. 80.[p.675] of [1967] GLR 674
NATURE OF PROCEEDINGS
ACTION by the plaintiffs against the defendants on a letter of guarantee of payment. The facts are set out fully in the judgment.
COUNSEL
S. Annancy for the plaintiffs.
James Quashie-Idun for the defendants.
JUDGMENT OF AMISSAH J.A.
The issue in this appeal turns within a very narrow compass. It is whether the learned trial magistrate was right or not in construing a letter written by the appellants, the Royal Dutch Airlines, as a guarantee for payment of the price of live animals consigned by the respondents to Messrs. Animal Distributors, Inc., a corporation in New York.
Some time in 1964, the respondents agreed to send animals to this corporation in New York. According to the president-director of the respondents it was a condition of the contract that the corporation should find somebody in Ghana to guarantee them against payment for the animals or to send the money to the respondents, presumably in advance of consignment. The guarantee was asked for, if indeed it was, for the obvious purpose of providing someone here on whom the respondents could fall if the corporation were to fail to pay for any animals sent them. If this was the true position, and the learned magistrate held that it was, then in my view it lends a distinctive colour to what took place subsequently.
While waiting for the guarantee the respondents received a letter dated 28 July 1964, from the appellants, a resident company in Ghana, in the following terms:
“Dear Sirs,
We are holding a guarantee from Messrs. Animal Distributors, New York of $600 (£214 5s. 9d.) plus freight charges for a shipment of live animals. Would you kindly advise us when your shipment will be ready so that we can inform consignee.
We are enclosing our time table for which you will note that the most convenient flight is leaving Accra on Saturday morning at 08.40.
Yours faithfully,
K.L.M. ROYAL DUTCH AIRLINES
(Signed) A. de Jager
General Manager for Ghana.”
The respondents, on the strength of this letter shipped some crates
[p.676] of [1967] GLR 674
of live animals by the appellants’ airline to the corporation in New York. The total value of this shipment was £159 5s. 9d. Later upon demand the corporation sent a cheque for $200.24 (two hundred dollars and twenty-four cents) or £71 2s. in payment for the animals. The respondent therefore sued the appellants as the guarantors of the corporation for the payment of the full price of the animals shipped. The learnedmagistrate found that the letter quoted above was a guarantee and found the appellants liable to make up the difference between the full price of the animals and the money paid by the New York Corporation. It is from this decision that the appellants have appealed. Mr. James Quashie-Idun for the appellants has argued forcefully that the letter cannot be construed as a guarantee. The appellants did not say in it that they were guaranteeing the corporation in the payment of the price of the animals. On the contrary the guarantee spoken of was a guarantee by the corporation to the appellants themselves against contingencies that may arise during the performance of the contract of carriage made between the appellants and the corporation. In sum his argument is that the words “we are holding a guarantee from Messrs. Animal Distributors, New York” can never mean “we are guaranteeing Messrs. Animal Distributors, New York.” This argument is not without its attractions. But the question which has to be answered is this: What would an ordinary person reading this letter in the light of the surrounding circumstances interpret it to mean? It seems to me that the appellants rely quite heavily upon the fact that they are carriers of world repute and therefore whatever they write must be taken as connected only with their ordinary business of carriage. Their whole attitude appears to be coloured by this factor. There is, however, nothing which makes it either physically or legally impossible for them to guarantee a third person. So their normal business is one but only one of the surrounding circumstances to be looked at in the construction of the document. Now the appellants’ case is that the guarantee they said they hold was a guarantee in their favour given them by the New York corporation. The obvious question is why then mention it to the respondents? The appellants seem not to be able to say more about this than that it was either a supply of unnecessary information or a mistake. In either event it was unfortunate from their point of view. Because they ought to have been aware, if indeed they were not, as a business organisation, that one of the points of anxiety of the consignors was
[p.677] of [1967] GLR 674
in respect of the payment for their goods. Mr Quashie-Idun conceded this much, although he added that the respondents must have been worried about the payment for the freight as well. But this was a contract in which the payment for the freight was the responsibility of the consignees. There was therefore no need for the appellants to inform the respondents that the corporation had given them a guarantee for the payment of freight Accepting, however, for the moment that the reference to the payment for freight was necessary or even surplusage, there still remains the question that the appellants said they were holding a guarantee for $600 (six hundred dollars) apart from the freight. What was this sum for? I am told that it was for contingencies occurring in the carriage, but how can anybody other than the appellants and possibly the corporation know this by reading the letter?
Looking at the matter objectively, I am of the opinion that putting the appellants’ case at its highest, then wording of the letter is ambiguous. If that is accepted then the words should be construed against them. They used those words. On a fair view the appellants’ words amount to saying that the respondents should go ahead and supply the goods and that they, the appellants, would see that the respondents were paid. Transactions of this nature are not unknown to the law. And I make mention of two cases to illustrate the point. In Birkmyr v. Darnell (1704) 1 Salk. 27, the court distinguishing between cases caught by the Statute of Frauds and those outside its pale said at p. 28 that: “If two come to a shop, and one buys, and the other, to gain him credit, promises the seller, if he does not pay you, I will; this is a collateral undertaking, and void without writing, by the Statute of Frauds: but if he says, let him have the goods, I will be your paymaster, or I will see you paid, this is an undertaking as for himself, and he shall be intended to be the very buyer, and the other to act but as his servant.”
In Matson v. Wharam (1787) 2 T.R. 80, the defendant Wharam applied to Matson, one of the plaintiffs, and asked him if he was willing to serve one, Robert Goulthard of Pontefract with groceries. Matson answered they dealt with nobody in that part of the country, and did not know Goulthard; to this the defendant, Wharam, replied, if you do not know him you know me, and I will see you paid. Matson then said he would serve him; and Wharam answered, he is a good chap, but I will see you paid. After Goulthard had failed to pay for the goods the plaintiffs turned on the defendants. Again this case
[p.678] of [1967] GLR 674
turned on the Statute of Frauds. But this time as there was no written evidence of the agreement it was held at p. 81 that:
“If the person for whose use the goods are furnished be liable at all, (presumably in the first instance) any other promise by a third person to pay the debt must be in writing, otherwise it is void by the Statute of Frauds, 29 Car. 2 C.3.” These examples fell on either side of the statute. The reason being in one that there had been an original undertaking as distinct from a guarantee and therefore no evidence in writing was required whereas in the other the court held that the undertaking was in its purport secondary and therefore a guarantee which required written evidence. But clearly in both there was an undertaking which would have been enforced by the law if the requirements as to evidence had been satisfied. The question whether the undertaking should have been in writing or not is not in issue here. We are confined to answering the question whether there was a liability undertaken by the use of a certain form of expression which was relied upon by the person to whom the representation was made. And to that extent I am of the opinion that the words used amount to a representation that the other party should go ahead and perform his side of the arrangement, the maker of the representation would see to it that he was paid. That the guarantee was to the appellant and not to the respondents, is not inconsistent with the view I now hold.
For all that it means is that the appellants had made certain of the funds to meet his liability, and inclined the representation to the category of an original representation. There was also the point made that the amount of the alleged guarantee was higher than the actual value of the animals shipped. And that this argued strongly against the appellants’ undertaking to meet the bill for the price of the animals. But it does appear that before the shipment the respondents and the New York corporation had not agreed on the number of animals to be shipped. According to the evidence they had agreed to the price per each type of animal. So that it must have been after the appellants’ letter of 28 July that the number of animals and therefore the actual value of the shipment was determined. In this connection I am of the view that the appellants’ letter must be construed as an invitation to ship animals up to the value then indicated. Any shipment not above that has to be paid for, if they are called upon, by the appellants.
The conduct of the appellants after the shipment of the animals gives some confirmation of this view and further shows the consistency of the respondents’ story that it was upon the reliance they placed upon the letter that the appellants wrote guaranteeing payment to
[p.679] of [1967] GLR 674
them that they shipped the animals. After the respondents had waited for some time for their money without getting satisfaction their president-director wrote, not to the New York corporation, but to the appellants in the following terms:
“I refer to your letter ACC/UG/729 dated 28th July, 1964 [i.e. the letter quoted earlier in this judgment] and state that it was on the strength of that letter that I despatched four crates of animals and reptiles valued £1549s. 6d. to Animal Distributors, New York, on August 29, 1964.
I am also drawing your attention to the pressure the exchange control will cause to bear on me if the necessary exchange is not effected within a month after shipment, in view of your guarantee. I am therefore writing to give you my final warning that if by Monday September 28 1964, I do not have the amount, I shall be compelled to refer the matter to my lawyers.”
I have myself laid emphasis on the claim that it was upon reliance on the appellants’ letter that the animals were shipped and that the respondents took the view that it was a guarantee. The respondents were giving the appellants a warning that unless payment was made by a definite date they would hand the matter over to their lawyers. Did the appellants throw back the letter, protesting that they had never guaranteed the New york company?
Did they say that they were merely carriers and that the guarantee they spoke of was a guarantee to them for contingencies that might have occurred during the flight of the animals? One would have expected them to do that at least if that was their position. There is no evidence that they did. The next thing was a letter from the New York corporation enclosing a cheque for part only of the price of the animals consigned. Apparently the reason for sending the payment for only part was that some of the animals died in transit. But as the learned magistrate pointed out this was a free on board contract and according to section 62 (g) of the Sale of Goods Act, 1962 (Act 137), the risk in the goods passed to the buyers when they were shipped. Therefore whatever deaths occurred amongst the animals after shipment were at the risk of the New York corporation which on account of the letter of 28th July 1964, may be enforced against the appellants.
In the circumstances I do not think that the decision of the learned magistrate should be disturbed. I accordingly dismiss the appeal.
DECISION
Appeal dismissed
S.E.K.
