T H HANCOCK Vs. IMPERIAL BANK OF CANADA

JUDGEMENT

(1.) The appellant in this case is a gentleman who signed a letter of guarantee for advances to be made to the business of a Mr. Garlock. The action is one by the bank, in whose favour he signed the letter of guarantee for advances made. There is no question that the advances were made, and it cannot be disputed that upon the terms of the letter of guarantee itself those terms covered the advances.

(2.) Now the defence of the appellant, who was the surety, is the old defence that he is relieved because there has been behind his back an alteration made in the form of the contract. He really puts his argument on four different grounds. He appeals to a certain letter which came into existence in this way : the debtor and the surety seemingly put their heads together, and the surety was not quite satisfied that he was in a position of complete safety as regards his relations with the debtor and, accordingly, he asked that a solicitor, who was the debtor's solicitor, should draft a sort of proper letter that he should get. That letter was drafted ; it was sent by the solicitors, and it was eventually signed by the principal debtor. That letter includes a paragraph in which it is said : " Further, the guarantee which we have signed with the Imperial Bank is given for the purpose of discount only."

(3.) Their Lordships think it is abundantly clear that that arrangement between the principal debtor and the surety cannot in any way bind the bank, and the only reason why it is said to bind the bank is because the solicitors who drafted the letter happened to be the solicitors for the bank also ; but they were not acting on the bank's instruction, and it is not to be supposed that they would have had authority to alter the contracts of the bank ; but it is sufficient to say that they were not acting on the bank's instructions at all. It is impossible to suppose that an arrangement between the principal debtor and the surety behind the back of the bank, without the bank knowing anything about it, could possibly affect the bank's right.