Royal Bank of Ireland Ltd v Smith and Smith

• Jurisdiction: Ireland
• Court: Supreme Court (Irish Free State)
• Judgment Date: 01 January 1927
• Date: 01 January 1927

S. C., I. F. S.,

Royal Bank of Ireland, Ltd.

Plaintiffs

William Smith and John Smith

Defendants

Verbal agreement - Title deeds to be deposited - "Not to exceed £4,000" - Letter of guarantee "as arranged" - No mention of title deeds - Liability of guarantors - Representation - Rectification.

In 1918 the defendants agreed, verbally, with a branch bank manager to guarantee J. R. S., to the extent of £4,000, for sums to be advanced by the bank to J. R. S. for the purchase and stocking of a farm, the title deeds of which to be deposited as security for such sums. Defendants later signed a letter of guarantee, in the usual form and without reading it, on being assured by the branch manager that it was "as arranged"at the previous interview. Defendants would not have signed otherwise. The farm was purchased and the title deeds deposited. In March, 1925, the bank called on the defendants to pay off the account of J. R. S., which stood at £7,400 odd. Attempted sales of the farm proved abortive, and the Bank took a conveyance of the farm in consideration of £3,000, "part of the sum due from J. R. S." One of the defendants paid the bank £1,000 on foot of the guarantee. The letter of guarantee contained no mention of the title deeds of the farm, and gave the bank power to deal with collateral securities as the bank thought fit. Plaintiffs claimed payment of £3,000 and interest, on foot of the guarantee:—Held(Hanna, J.), that the letter of guarantee should be rectified and that there...