C.&A. Johnstone v. Duthie

In March 1888 James Duthie, provision merchant in Aberdeen, disposed of his business to his brother-in-law John Reid Cormack, who had previously been his manager, and Cormack thereupon became tenant of Duthie's shop and took up his business. While he was in business, Duthie had been supplied with goods by Messrs C. & A. Johnstone, wholesale merchants in Aberdeen, and at the date when he transferred the business to Cormack he owed them a sum of £50.

On 2nd April 1888 Duthie granted Messrs C. & A. Johnstone the following letter of guarantee—“In addition to the account of £50 pounds due by me to you for goods supplied to my shop at 50 Summerfield Terrace, I hereby guarantee and undertake to see you duly paid for all goods you may supply from and after this date to the order of J. R. Cormack, to whom I have made over my business there.” Goods were thereafter supplied to Cormack under this guarantee down to April 1890, when the account was closed.

On 19th November 1890 Cormack became bankrupt, and Messrs C. & A. Johnstone then brought an action against Duthie for payment of £137, 15s., being the balance admittedly due under the account.

The defender averred in answer in his statement of facts—“Cormack, as manager for the defender, had carried on a successful business in the Summerfield Terrace shop prior to March 1888. The grocery Page: 502 ↓

The defender pleaded—“(1) The pursuers having given time to Cormack for payment of his accounts beyond the usual period allowed in the trade, and in breach of the understanding between the parties, the defender was thereby liberated from liability under his guarantee. (2) Separatim —The pursuers having allowed Cormack unreasonable terms and an excessive period of credit, outwith the ordinary custom and conduct of trade, and without communication to the defender, he is not liable under the guarantee.”