D. C. 1908 SIMPSON v. DOLAN. Clute, J. two or three." He further says: "The bank did not pay this I think the evidence fully supports the finding of the learned county court Judge. The question here is whether upon that finding of facts the plaintiff can recover. It is strongly urged on behalf of the bank that the 4th section of the Statute of Frauds applies, and that there is no liability. In Batson v. King (1859), 4 H. & N. 739, one Dalton wanting money, he and the defendant applied to the plaintiff to draw a bill to be accepted by Dalton and indorsed by the defendant, and the defendant promised the plaintiff that he should not be called upon. The jury found that Dalton and the defendant were both principals in the transaction. Held, that the plaintiff, having paid the bill, was entitled to recover the amount without proof of a promise in writing under the 4th section of the Statute of Frauds. During the argument, Pollock, C.B., says: "If a man says to another, 'if you will at my request put your name to a bill of exchange I will save you harmless,' that is not within the statute. It is not responsibility for the debt of another. It amounts to a contract by one, that if the other will put himself in a certain situation the first will indemnify him against the consequences." Martin, B., points out that, "As between the holder of a bill of exchange and the parties whose names were on it, Dalton as acceptor was primarily liable, and the drawer and indorser stood in the relation of sureties for him. But as between the parties it may always be proved what is the real nature of the transaction. As between themselves, Dalton and the defendant were the real principals. The plaintiff having paid the bill, had the right to sue the defendant for money paid to his use. The Statute of Frauds has no application to the case. It might have been otherwise if Dalton had been entirely separate from the defendant and the plaintiff had become responsible for Dalton upon the defendant's promise to indemnify him. Dalton and the defendant being both principals, the only answer which the defendant had was by a plea in abatement for the non-joinder of Dalton." See De Colyar on Guarantees, 2nd ed., 66. In Encyc. of the Laws of England, 2nd ed., vol. 6, p. 267, it is said: "There must be a clear expectation on the part of the promisor that the person primarily liable will pay, and that his own liability will only arise on default of such payment," citing Sutton & Co. v. Grey, [1894] 1 Q.B. 285; Guild & Co. v. Conrad, [1894] 2 Q.B. 885; Harburg India Rubber Co. v. Martin, [1902] 1 K.B. 778. In Sutton v. Grey, the plaintiffs, who were stockbrokers, entered into a parol agreement with the defendant that he should introduce clients to them, and that the plaintiffs should transact business on the stock exchange for the clients thus introduced, upon the terms that, as between the plaintiffs and the defendant, the defendant should receive half the commission earned by the plaintiffs in respect of any transactions by them for any clients introduced by the defendant, and that he should pay to the plaintiffs half of any loss which might be incurred by them in respect of such transactions. The plaintiffs claimed to recover from the defendant half the loss which they had incurred in stock transactions which they had entered into on behalf of one Robertson, who had been introduced to them by the defendant. It was held that the contract was not within sec. 4 of the Statute of Frauds, and the action maintainable, though the contract was not in writing. Esher, M.R., said (p. 286): "I do not think that the relation between the plaintiffs and the defendant was that of partnership. They had no intention to become partners, and, as the law now stands, a partnership cannot be constituted without such an intention." He finds the true relation between the plaintiffs and the defendant was this: "If you will find persons who wish to operate upon the stock exchange and will introduce them to us as clients, we will, on behalf of the persons whom you thus introduce to us, transact the ordinary business of a broker on the stock exchange, and make ourselves personally responsible according to its rules on these terms: that our broker's commission on the stock exchange shall be divided between us and you, just as if you were our partner and a member of the stock exchange, and that, if there should be a loss in respect of the transactions, you shall indemnify us against half the loss." He proceeds: D.C. 1908 SIMPSON v. DOLAN. Clute, J. D. C. 1908 SIMPSON บ. DOLAN. Clute, J. "The contract, in my opinion, is one which regulated the part Lopes, L.J., in the same case, at p. 290, says: "The true test, as derived from the cases, is, as the Master of the Rolls has already said, to see whether the person who makes the promise is, but for the liability which attaches to him by reason of the promise, totally unconnected with the transaction, or whether he has an interest in it independently of the promise." In the former case the agreement is within the statute. In the latter it is not. Kay, L.J., said (p. 291): "When a man simply agrees to assume liability for the debt of another, he has no interest whatever in the transaction, except by virtue of the guarantee. In the present case the defendant had an independent interest in the transactions. Another distinction is this, that the contract is one which regulated the terms upon which the defendant was to be employed by the plaintiffs. I agree with Bowen, L.J., that 'this is really a contract which regulates the terms of the agency, and the defendant's liability to answer for the debt of another is only an ulterior consequence of the terms in which the contract is framed."" In Guild v. Conrad, the defendant orally promised the plaintiff if he, the plaintiff, would accept certain bills for the firm in which his son was a partner, he, the defendant, would provide the plaintiff with funds to meet the bills. Held, that this was a promise of indemnity and not of guarantee, and therefore not required by sec. 4 of the Statute of Frauds to be in writing. The trial Judge, at p. 892, says: "The defendant's promise was not a contract to pay if the foreign firm did not pay, because there was no expectation at that time that the foreign firm would be able to pay. The contract was to find funds to enable the plaintiff to meet these acceptances." Lindley, L.J., after referring to the findings of the trial Judge, says: "The nature of the promise is all important; because, if it was a promise to pay, if the Demerara firm did not pay, then it is void under the Statute of Frauds as not being in writing. But if, on the other hand, it was a promise to put the plaintiff in funds in any event, then it is not such a promise as is within the Statute of Frauds. I think that the learned Judge has taken the true view, though it is very near the line." Davey, L.J., at p. 896, says: "In my opinion, there is a plain distinction between a promise to pay the creditor if the principal debtor makes default in payment, and a promise to keep a person who has entered, or is about to enter, into a contract of liability, indemnified against that liability, independently of the question whether a third person makes default or not." This case was referred to and distinguished in Beattie v. Dinnick (1896), 27 O.R. 285. D. C. 1908 SIMPSON บ. DOLAN. Clute, J. D. C. 1908 SIMPSON V. DOLAN. Clute, J. In Harburg India Rubber Co. v. Martin, [1902] 1 K.B. 778, reference is made to Lord Esher's judgment in Sutton v. Grey by Stirling, L.J., at p. 791. He says the word "interest" means some species of interest which the law recognized, and adds: "It has been contended that we ought to read the words 'interest in the transaction' in a wide sense, and as importing a 'business interest' in the syndicate that kind of interest which a creditor and a shareholder of a company has in its prospects. To do this would, I think, go a long way to repeal sec. 4 of the Statute of Frauds, and to extend the doctrine of Couturier v. Hastie, 8 Exch. 40, very much further than I am prepared to extend it." The question is, then, whether in the present case the bank had such an interest as would bring a promise made by the bank to pay the cheques countersigned by Dolan, within the true meaning of Lord Esher's judgment, as having an interest in the transaction. No doubt the case is very close to the line. To ascertain the meaning of the arrangement the whole transaction has to be looked at. The bank had a large overdrawn account of the previous year, which they hoped to reduce, and which was in fact reduced, by the business carried on under this arrangement in 1906. It was undoubtedly the intention of the bank and the business was so carried on as to give effect to this intention-that any goods which were received by Dolan and for which he countersigned the cheque of Flynn Bros., the bank was to receive the benefit of. Their arrangement was such that they could control the business output, the sales and the receipt of money, and they did so control it under the management suggested by them, that they did in fact receive the proceeds of all the sales including the sale of the produce delivered by the plaintiff. They had, therefore, a direct money interest in the goods to be delivered; they induced those goods to be delivered by holding out a promise that they would pay for them upon the cheque being presented signed by Dolan, who must, I think, be considered their agent, as well as the agent of Flynn Bros. It was not intended that if Flynn Bros. made default in the payment of the bill they would pay it; but rather if the bill was presented countersigned by their agent, as evidencing delivery of the goods, they would pay it. The bank was not a partner; the bank did not carry on this business. They did, however, enter into this arrangement by which |