Source:

South African Case Law, Juta's (1838 to date)/CHRONOLOGICAL LISTING OF CASES – 1838 to date/1963/Volume 1: 299 ­ 566 (February)/ORKIN LINGERIE CO
(PTY), LTD v MELAMED & HURWITZ 1963 (1) SA 324 (W)

URL:
http://jutastat.juta.co.za/nxt/gateway.dll/sacl/3/24475/24533/24539?f=templates$fn=default.htm

ORKIN LINGERIE CO (PTY), LTD v MELAMED & HURWITZ 1963 (1) SA 324 (W)
1963 (1) SA p324

Citation 1963 (1) SA 324 (W)

Court Witwatersrand Local Division

Judge Trollip J

Heard September 1, 1962

Judgment September 20, 1962

Annotations Link to Case Annotations

Flynote : Sleutelwoorde
Principal and surety ­ Suretyship ­ What amounts to ­ Essence of ­ Agreement to pay taxed costs shown to be a contract of suretyship ­ Non­
compliance with sec. 6 of Act 50 of 1956. ­ B Agreement invalid.
Headnote : Kopnota
A contract of suretyship in relation to a money debt can be said to be one whereby a person (the surety) agrees with the creditor that, as
accessory to the debtor's primary liability, he too will be liable for the debt.
The essence of suretyship is the existence of the principal obligation of the debtor to which that of the surely becomes accessory.
C When an agreement between the plaintiffs (respondents) and the defendant (excipient) was arrived at that an application for the winding up
of the C company should be withdrawn, the attorney acting for the defendant agreed that, should one I fail to pay the taxed costs, the
defendant would pay such costs, and the plaintiffs would further excuss I should the defendant fail to pay and hold it liable for the costs of
excussion. The plaintiffs sued I but as his estate was sequestrated without D anything apparently being obtained from him, they sued the
defendant for the taxed costs and the costs of the proceedings against I. Defendant excepted to the declaration as disclosing no cause of
action in that the agreement sued on was a contract of suretyship and, as it was not in writing, it was invalid by reason of section 6 of Act 50
of 1956.
Held, that the agreement sued on was a contract of suretyship.
Held, further, though such agreement was in writing, that it did not E comply with the provisions of section 6 of Act 50 of 1956, in that it had
not been signed by or on behalf of the surety (defendant).
Held, accordingly, that the agreement was invalid and that the exception should be upheld.
Case Information
Exception to a declaration. The nature of the pleadings appears from the reasons for judgment.
F E. Morris, for the excipient (defendant).
L. O. Miller, for the respondents (plaintiffs).
Cur. adv. vult.
G Postea (September 20th).
Judgment
TROLLIP, J.: The exipient has excepted to the respondents' declaration on the ground, inter alia, that it discloses no cause of action. I shall H
refer to the parties as the 'defendant' and 'plaintiffs' respectively.
The declaration sets out that the plaintiffs are attorneys practising in partnership in Johannesburg and they acted for the Central Trading
Company (Pty.),Ltd., referred to in the declaration as 'the company', in an application brought in the Transvaal Provincial Division against it for
winding­up by the defendant, whose attorney was one Mendel Levin. On the 15th April, 1958, when the application was still pending, the
plaintiff, Joel Melamed, and Mendel Levin entered into an oral agreement settling the proceedings on certain terms and conditions and

1963 (1) SA p325

TROLLIP J
that agreement was then confirmed by an exchange of letters. Those allegations are contained in para. 4 of the declaration which must be set
out in full:
'4. (a) On the 15th of April, 1958, and at Johannesburg, an oral agreement was entered into between Joel Melamed, acting on A behalf of
the plaintiffs, and the said Mendel Levin, acting on behalf of the defendant, both of them duly authorised, where under it was
agreed that the said application would be settled on the following terms and conditions:
(i) That the said application would be withdrawn;
(ii) That certain Rashid Ismail would pay to the plaintiffs the taxed costs incurred by the said company in opposing the said
application; and,
B (iii) That in the event of the said Rashid Ismail failing to pay to the plaintiffs the said taxed costs, the defendant would pay the
same to the plaintiffs.
(b) At the same time the said Mendel Levin acted as the duly authorised attorney and agent of the said Rashid Ismail.
(c) The said agreement was confirmed by a letter dated the 15th April, 1958, written by the plaintiffs addressed to the said C Mendel
Levin, in reply to a letter dated the 14th April, 1958 written by the said Mendel Levin addressed to the plaintiffs, copies whereof are
hereunto annexed marked 'A' and 'B'.'
Annexure 'A' is a copy of a letter dated 14th April, 1958, written and apparently signed by Mendel Levin to the plaintiffs relating to the
proceedings and stating:
© 2018 Juta 'I
andreceived
Companya telephone
(Pty) Ltd. call this morning to the effect that the above D matter has been
Downloaded settled
: Thu Feb 08on2024
the 20:55:36
followingGMT+0200
basis: (South Africa Standard Time)
(a) That the application herein be withdrawn.
 (c) The said agreement was confirmed by a letter dated the 15th April, 1958, written by the plaintiffs addressed to the said C Mendel
Levin, in reply to a letter dated the 14th April, 1958 written by the said Mendel Levin addressed to the plaintiffs, copies whereof are
hereunto annexed marked 'A' and 'B'.'
Annexure 'A' is a copy of a letter dated 14th April, 1958, written and apparently signed by Mendel Levin to the plaintiffs relating to the
proceedings and stating:
'I received a telephone call this morning to the effect that the above D matter has been settled on the following basis:
(a) That the application herein be withdrawn.
(b) That the balance of the capital amount be paid to me forthwith.
(c) That Rashid Ismail pay the respondent's costs.
(d) That a notice of withdrawal be served on you by me.
Will you please confirm the above, whereupon the requisite notice will be served upon you.'
E Annexure 'B' is a copy of a letter, dated 15th April, 1958, written and apparently signed by the plaintiffs to Mendel Levin in reply and reading
as follows:
'We are in receipt of your letter of the 14th instant, in connection with the above matter, contents of which have been noted.
We confirm the telephonic conversation which the writer had with your F Mr. Levin to­day, when the terms of settlement as outlined in your
letter of the 14th instant were confirmed subject to the further condition that should Rashid Ismail fail to pay the respondent's costs, then the
applicant will be liable to pay the respondent's taxed costs.
We shall be pleased if you will kindly serve the notice of withdrawal on us.
In terms of the settlement, we enclose herewith our cheque for the sum of £2112s.'
G The declaration proceeds to allege that in pursuance of the settlement the defendant's application was withdrawn and that on the 15th
April, 1958, the company ceded
'its claim for its said costs against the defendant to the plaintiffs'
by a written cession, a copy whereof was annexed marked 'C'. The cession refers to the company's
H 'right, title and interest in and to the claims which the company has for costs to be paid by certain Rashid Ismail, and failing payment by him'
the defendant. These costs were duly taxed on the 1st August, 1958 at R474.62.
Para. 6 avers that on the 12th September, 1958, the plaintiffs notified the defendant by letter of their intention 'to excuss' Rashid Ismail if the
defendant failed to pay the R474.62 and to hold the defendant liable for 'the costs of excussion'. A copy of the letter is annexed

1963 (1) SA p326

TROLLIP J
marked 'D'. It referred to the terms of the settlement as being 'that certain Rashid Ismail was to pay the (company's) costs' and
'that should Rashid Ismail fail to pay the (company's) costs, then you (defendant) would be liable to pay the (company's) taxed costs'.
AIt also intimated that the plaintiffs had that day written to Rashid Ismail for payment and that if no payment was received action would be
instituted against him. The letter concluded that if it did become necessary to 'excuss' him the defendant would be held liable for 'costs of
excussion'.
B The declaration then asserts that action and judgment were taken against Rashid Ismail but his estate was sequestrated without anything
apparently being obtained from him. The costs of those proceedings were duly taxed at R670.74 for which the plaintiffs alleged the defendant
was liable. The defendant requested further particulars for the basis of this allegation but this request was refused.
C The plaintiffs therefore claimed R1,145.36 being the R474.62 and R670.74.
Para. 4 of the declaration is obscure in that it alleges that the oral agreement was that the costs would be paid to the plaintiffs. If that was
the agreement it is difficult to understand why it was then necessary for the company to cede any claim for the costs to the D plaintiffs. But
reading the annexures and the remainder of the declaration as a whole, I think that it is reasonably clear that the agreement was that the
costs were those of the company, and that payment in terms of the agreement had to be made to the plaintiffs as representing the company,
and that is what para. 4 of the declaration meant to convey.
E The ground of the defendant's exception was simply that the agreement set out and relied upon in the declaration was a contract of
suretyship by the defendant, and because it was not in writing signed by the defendant, it was invalid by reason of sec. 6 of Act 50 of 1956;
the declaration therefore disclosed no cause of action and was bad in law.
F That statutory provision (in so far as is relevant) reads:
'No contract of suretyship entered into after the commencement of this Act, shall be valid, unless the terms thereof are embodied in a written
document signed by the surety.'
There is no definition of 'contract of suretyship' given in the Act, and G the expression must therefore bear its ordinary meaning. Various
definitions of suretyship have from time to time been given. They are collected in Wessels on Contract, 2nd ed. paras. 3774, 3785 to 3793, and
Caney on Suretyship, pp. 11, 17 and 18. I think that, having regard to them, a contract of suretyship in relation to a money debt can be said to
be one whereby a person (the surety)agrees with the creditor that, as H accessory to the debtor's primary liability, he too will be liable for that
debt.
The essence of suretyship is the existence of the principal obligation of the debtor to which that of the surety becomes accessory. (Caney, p.
11; Wessels, paras. 3774; 3798).
Williston on Contracts, rev. ed. vol. 4, para. 1211 says:
'Whoever is liable to pay the debt of another whether for value . . . or gratuitously . . . as between himself and the person primarily liable, is a
surety (per JESSEL, M.R., in Imperial Bank v London & St. Katherine Docks Co., (1877) 5 Ch. D. 195 at p. 200) . . . whether one is a surety, therefore,
depends not

1963 (1) SA p327

TROLLIP J
on his relation to the creditor but on his relation to the principal debtor .. . The English terminology of calling an obligor a surety who is liable in
any way for the debt of another not only is in inveterate common use in America, but is intrinsically the better since it centres attention on the one
vital point that the debt as between principal and surety is the debt of the principal.'
A Applying the above principles I think that the agreement the plaintiffs have set out in the declaration and are relying upon in suing the
defendant is a contract of suretyship.
The application proceedings between the defendant and the company were, according to the declaration, settled while they were still pending.
In B the absence of any agreement to the contrary, that would have meant that the defendant was not liable for the company's costs or the
company for its costs but each party would have been liable to bear its own costs. It seems quite clear that when the matter was first
tentatively settled, as appears from the letter of the 14th April, 1958, annexure 'A', only Rashid Ismail was to be liable to pay the company's
costs; no C mention was made of the defendant being under any liability to pay them. It was only thereafter, as appears from the letter of the
15th April, 1958, annexure 'B', that it was then agreed to add to Rashid Ismail's obligation 'the further condition' that if he should fail to pay the
company's costs, then the defendant would be liable to do so. D From that it clearly appears that the obligation of Rashid Ismail was the
principal debt whilst that of the defendant was added later as being accessory thereto; and it was only to arise if and when the former
defaulted when the defendant would then pay it on his behalf; as between them the debt was manifestly that of Rashid Ismail. Consequently all
the essential elements of a contract of suretyship are present. And indeed E the plaintiffs in effect sue and rely on the agreement as a
contract of suretyship, because the greater part of their claim is for the costs they incurred in 'excussing' Rashid Ismail and the only basis on
which those costs can be claimed on the declaration as at present framed is that the agreement was one of suretyship. No other basis is
alleged; the F plaintiff in fact refused to give particulars of any other basis on which those costs might have been claimed.
© 2018 Juta and Company (Pty) Ltd. Downloaded : Thu Feb 08 2024 20:55:36 GMT+0200 (South Africa Standard Time)
Mr. Miller contended that the Court should order that the exception stand over until the trial and the action be allowed to proceed to trial
 defaulted when the defendant would then pay it on his behalf; as between them the debt was manifestly that of Rashid Ismail. Consequently all
the essential elements of a contract of suretyship are present. And indeed E the plaintiffs in effect sue and rely on the agreement as a
contract of suretyship, because the greater part of their claim is for the costs they incurred in 'excussing' Rashid Ismail and the only basis on
which those costs can be claimed on the declaration as at present framed is that the agreement was one of suretyship. No other basis is
alleged; the F plaintiff in fact refused to give particulars of any other basis on which those costs might have been claimed.
Mr. Miller contended that the Court should order that the exception stand over until the trial and the action be allowed to proceed to trial
because the facts might show that the agreement was not a suretyship. In G particular he contended that if the agreement was regarded as a
written one the circumstances surrounding its conclusion might show that it was not one of suretyship; such evidence might show, for example,
that the defendant was primarily liable for the costs when the application proceedings were settled, but that in terms of the settlement
agreement Rashid Ismail undertook to pay them on behalf of the defendant; if he H did not pay them then, according to the defendant's primary
liability, the defendant would have to pay. That would show, so the argument ran, that the defendant was not a surety but that as between
him and Rashid Ismail the debt was his and not Rashid Ismail's.
It would appear that the Court has a discretionary power exercisable principally on considerations of convenience to defer hearing and deciding
on exception until the trial of the action. (See e.g. Richards

1963 (1) SA p328

TROLLIP J
v. Guardian Assurance Co., 1906 T.H. 205; Hudson v Hudson, 1927 AD 259 at p. 269).
A Moreover where evidence of the surrounding circumstances under which a written contract, relied on in the pleading excepted to, was
entered into might resolve an ambiguity in the contract in favour of the pleader and against the excipient the Court will usually dismiss the
exception (e.g. Cairns (Pty.) Ltd v Playdon & Co. Ltd., 1948 (3) SA 99 (AD); Delmas Milling Co. Ltd v Du Plessis, 1955 (3) SA 447 (AD) at p. B
455 C to G) so that the issue can be investigated and decided at the trial.
In the present case, however, the plaintiffs allege that the oral agreement was confirmed by the letter (annexure 'B') written in reply to the
letter (annexure 'A'). That means that the plaintiffs accept that the agreement relied upon was in writing and contained the terms set out C in
the letters (Cohn v Rand Rietfontein Estates Ltd., 1937 T.P.D. 334). Those terms, in my view for the reasons already given, set out clearly and
unambiguously a contract of suretyship, and no parol evidence of surrounding circumstances would therefore be admissible to prove that it was
not a contract of suretyship (See Cohn's case; Delmas D Milling Company Ltd v Du Plessis, 1955 (3) SA 447 (AD) at p. 453 C to G). In
particular no parol evidence would be admissible to prove that the defendant was primarily liable for the company's costs at the time the
proceedings were settled, because even supposing that was so, it is clear that in terms of the written agreement Rashid Ismail assumed that E
primary liability, thereby releasing the defendant, and the defendant merely became secondarily liable as a surety. No parol evidence would be
admissible to contradict that. Secondly, because the agreement relied on is in writing and is now before the Court and must now be interpreted
without the aid of evidence, there is no reason why the hearing and decision of the exception should be deferred until the trial as F submitted
by Mr. Mille. I think therefore that it is right and proper that the Court should now dispose of the issue raised by way of exception. See
Standard Building Society v Cartoulis, 1939 AD 510 at p. 516, which is most pertinent on this aspect and fully supports that conclusion.
G Sec. 6 of Act 50 of 1956 requires not only that the terms of the contract of suretyship must be in writing but also that that writing must be
signed by the surety, otherwise the contract is invalid. Here the former requirement is fulfilled but the latter one is not. Neither the defendant
nor anyone on its behalf signed the letter (annexure 'B') which embodied the terms of the suretyship, and there is no allegation H in the
declaration that the defendant assented to those terms in writing signed by it or someone on its behalf.
The agreement relied upon by the plaintiffs in its declaration is therefore invalid, and the exception that it discloses no cause of action and is
bad in law must succeed. As the declaration must in consequence be set aside there is no need to consider the other arguments directed
towards further alleged defects in it.
The order is: The exception that the declaration discloses no cause of action and is bad in law is upheld; the declaration is set aside; the

1963 (1) SA p329

TROLLIP J
plaintiffs are given leave to file an amended declaration within 21 days from the date hereof; and the plaintiffs are to pay all the costs in
respect of the exception.
Excipient's Attorney: Mendel Levin. Respondent's Attorneys: Fluxman & Martin Frack.

© 2018 Juta and Company (Pty) Ltd. Downloaded : Thu Feb 08 2024 20:55:36 GMT+0200 (South Africa Standard Time)