* Section 5 (2) of the Statute of Frauds and Limitations of 1867 (Q.) provides that no action shall be brought "whereby to charge the defendant upon any special promise to answer for the debt default or miscarriages of another person" in the absence of a sufficient note or memorandum in writing relating to such promise.

GIBBS AND MASON JJ. This is an appeal by the appellant (defendant) against a (plaintiff) in an action heard by Douglas J. in the Supreme Court of Queensland. The action was one in which the respondent, a firm of stockbrokers trading on the Melbourne Stock Exchange, alleged that the appellant had contracted to satisfy the liability to the respondent of Commerce Australia Pty. Ltd. ("the company"), this liability amounting to $84,211.19 at the time when the appellant guaranteed its repayment. (at p164)

2. In 1969 the appellant with other men named Tanner, Rice and Bushell agreed to join with the Ostwald family in forming a company called Baldore Pty. Ltd. To provide their proportion of the amounts to be invested in this company the appellant and his three associates decided to speculate on the stock market. For this purpose they proposed to use the Company which was a dormant company as a vehicle for their operations. It had only two shareholders, the appellant and his wife; it had a paid-up capital of $100 and accumulated losses of $3,000. By arrangement with the respondent the company was allowed a credit of $30,000 by the respondent with which to trade. In the period from October 1969 to April 1970 it engaged in trading operations, buying and selling shares. At the end of the period the company owed the respondent $84,915.21, an amount slightly in excess of the figure already mentioned. The debt was not paid and the respondent threatened to exercise a power of sale which was conferred upon it by the rules of the Melbourne Stock Exchange. This power of sale related to shares which had been purchased by the respondent for the company, title to which had not been vested in the company or in the members of the syndicate. On various occasions the appellant requested the respondent to postpone the exercise of this power of sale. The respondent acceded to these requests and it is on the agreements reached in connexion with the postponements that the respondent sued in the action. (at p165)

3. The last postponement obtained by the appellant was until 31st January 1971. The respondent then sold such of the company's shares as it held, realizing $14,830.14, which it set off against the debt owing to it, leaving a balance of $69,381.05 owing by the company. Action was then brought by the respondent against the company for this amount resulting in the respondent obtaining a judgment by default on 17th April 1971. (at p165)

4. The agreements alleged by the appellant are pleaded in pars 19 and 21 of the statement of claim. They are in the following terms:

"19. On the Seventeenth day of September, 1970 the

defendant and Commerce Australia by its agent the

defendant, promised the plaintiff that in consideration of the

plaintiff's undertaking not to institute such proceedings: -

(a) Commerce Australia would itself institute forthwith

a selling programme of the said shares and apply the

proceeds therefrom in part satisfaction of the said sum

of $84,211.19; and

(b) if Commerce Australia did not institute such a selling

programme forthwith, the defendant would himself

pay, or would himself procure the payment to

Commerce Australia of sufficient funds to enable it to pay

to the plaintiff forthwith the sum of $25,000.00 in part

satisfaction of the said sum of $84,211.19 at the rate of

8 per cent per annum from the First day of October,

1970 and would take all steps necessary to ensure that

Commerce Australia did pay the said sum of $25,000.00

to the plaintiff forthwith;

(c) Commerce Australia would pay to the plaintiff the

balance of the said sum of $84,211.19 and interest

thereon at the rate of 8 per cent per annum from the

First day of October, 1970 on or before the Thirtyfirst

day of December, 1971."

"21. On the thirtieth day of December, 1970, the defendant

promised the plaintiff that in consideration of

(a) the plaintiff's agreeing not to take any steps to sell

such shares before the Thirtyfirst day of January, 1971;

and

(b) the plaintiff's agreeing not to institute before the

Thirtyfirst day of January, 1971 any proceedings

against Commerce Australia by reason if its failure to

pay to the plaintiff the said sum of $84,211.19 and

interest thereon;

(c) the plaintiff's agreeing not to take any proceedings

against the defendant by reason of his failure to pay, or

procure the payment of, sufficient funds to Commerce

Australia to enable it to pay the said sum of $25,000.00;

the defendant would pay, or procure the payment of sufficient

funds to Commerce Australia to enable it to pay to the

plaintiff the whole of the said sum of $84,211.19 together with

interest thereon on or before the Thirtyfirst day of January,

1971, and would ensure that Commerce Australia did pay the

said sum of $84,211.19 and interest thereon to the plaintiff on

or before the Thirtyfirst day of January, 1971."

The appellant, though disputing the making of the agreements and the existence of any personal liability on his part, admitted that the agreements had not been performed. The appellant also pleaded s. 5 (2) of the Statute of Frauds and Limitations of 1867 (Q.) which provides that no action shall be brought "whereby to charge the defendant upon any special promise to answer for the debt default or miscarriages of another person" in the absence of a sufficient note or memorandum in writing. (at p166)

5. Douglas J. found the agreements alleged by the respondent to have been established on the evidence. The correctness of this finding is not now in issue. His Honour went on to make a further finding which is of crucial significance because it led his Honour to conclude that s. 5 (2) of the Statute of Frauds and Limitations had no application. The finding in question was expressed in these words:

" ... whereas the transactions of buying and selling of

shares were carried out by Commerce Australia Pty. Ltd. in

its own name, in fact, and, in reality, they were carried out by

that company as agent for the syndicate comprising

Marginson, Tanner, Rice and Bushell." (at p166)

6. It was conceded, and in our opinion rightly conceded, by the appellant's counsel that there was evidence to support this finding and that in this sense it was open to his Honour to reach a conclusion unfavourable to the appellant on this issue of fact. There were, for example, admissions made by the appellant in cross-examination that he and his wife were the only shareholders in the company, that the other members of the syndicate were not shareholders, that no capital was put into the company by the members of the syndicate, that no directors' meetings were held, that the relevant decisions were made by the members of the syndicate, that Bushell acted as manager of the company having been "elected" to that position by the members of the syndicate and that shares bought by the company were shares which the members of the syndicate had resolved to buy. The substance of the relationship between the company and the members of the syndicate is perhaps best illustrated by the following answers given by the appellant in cross-examination:

"Legally, it would appear that the shares - say the

Poseidon shares in the great days - were owned by a

company which in turn was owned solely by Mrs. Marginson

and yourself; is that right? - Yes.

And if this had been a great success, would it have been

possible for Mr. Rice, for example, to have said, 'Well, I am

involved in this somewhere.'? How could he have got his

interest out? - Because this was mutually agreed at the

beginning.

So what was mutually agreed was that Commerce

Australia would be the vehicle for the trading? - That is

correct, because we couldn't operate personally.

...

You wanted to operate through the medium of a corporate

structure? - That is right.

But without the partnership taking shares in that

company? - No, that was to be defined. As I understood, it

never happened.

Was it then that Commerce Australia bought the shares

and held them for the gentlemen in the syndicate? - Yes.

And when it sold, it sold on their behalf and took the

proceeds on their behalf? - Yes." (at p167)

7. The appellant submitted that, although his evidence supported the finding made by the judge, it was nevertheless not a finding which was open on the pleadings. It was said that the appellant had not pleaded the arrangement between the company and the syndicators found by his Honour to have existed, that this arrangement was contrary to an express allegation in the statement of claim which referred to the appellant as the agent of the company and that in the course of the trial his Honour had actually refused to allow an amendment to the statement of claim designed to raise the existence of the arrangement. (at p167)

8. True it is that in par. 15 of the statement of claim where the respondent pleads an agreement made in July 1970 between itself and the company that the company would pay its indebtedness, it is alleged that the agreement was made by the appellant as agent for the company. There is, however, no inconsistency between this allegation and in the company's acting as agent for the syndicators in buying and selling shares on their behalf. The existence of the two agencies involves no antinomy or contrariety. Once this suggestion is disposed of we are unable to discern any basis for holding that the arrangement found to exist was inconsistent with the two agreements pleaded in pars 19 and 21 of the statement of claim. (at p168)

9. Although an application to amend the statement of claim so as to plead the arrangement was refused, this refusal, when considered in the context in which it took place, does not assist the appellant. The reason for the refusal is not altogether clear, although it appears that his Honour was anxious to avoid the possibility of adjourning the hearing and the joinder of additional parties which may well have resulted had the amendment been allowed. From the argument which ensued on the application it seems reasonably apparent that the application was made to ensure that the respondent could rely on the appellant's interest in the shares as a ground for defeating the defence based on the Statute of Frauds and Limitations. However, there was no acknowledgment by Mr. Connolly for the respondent and no decision by the learned judge that this matter was not open on the pleadings as they stood. Indeed, his Honour's reasons for judgment proceed upon the assumption that the matter was open on the pleadings. (at p168)

10. Was this assumption well founded? That is the next question. Again it must be answered adversely to the appellant. It has never been considered necessary that a plaintiff suing on a contract under the Statute of Frauds should allege in his pleadings that the requirements of the Statute have been complied with (Stephen, Principles of Pleading, 6th ed. (1860), pp. 287-288; Field v. Hutchinson [1839] EngR 953; (1839) 1 Beav 599 (48 ER 1073) ). It is therefore for the defendant to plead and prove non-compliance with those requirements. In this case the primary judge found that there were contracts in the terms pleaded by the respondent. Whether the contracts were for the "debt default or miscarriages of another person" within the meaning of s. 5 (2) of the Statute of Frauds and Limitations depended, as will appear subsequently, not only upon their terms, but upon the additional finding of fact made by his Honour which has already been discussed. It was not for the respondent to prove and allege the existence of these facts, thereby taking the contracts outside the Statute. It was for the appellant who claimed the benefit of the Statute to negative the existence of these facts so as to bring the contracts within the Statute. (at p168)

11. In considering the question whether on the findings made the contracts sued on were within the Statute we must reject the respondent's contention that the contracts were outside the Statute merely because the promise was expressed in the alternative, that is, either to pay the debt to the respondent or to put the company in funds so as to enable it to pay the debt. If a contract contains a promise which answers the statutory description that is enough to attract the operation of s. 5 (2);it is irrelevant that the contract contains another promise or an alternative promise. The Statute requires that a promise of the specified kind should be evidenced in writing. This requirement is unaffected by the circumstance that the promisor may at his option perform another promise in lieu of the promise which falls within the Statute. (at p169)

12. The respondent also contended that the contracts were not contracts of guarantee because the members of the syndicate as undisclosed principals were themselves liable to the respondent, or could be held liable by the respondent, for the principal debt. Certainly the respondent was entitled to look to the company or to the undisclosed principals for whom it was acting to satisfy its debt. But once a third party has sued the agent to judgment he cannot thereafter, without setting aside that judgment, sue the undisclosed principal even if the existence of the principal was now known to the third party at the time when the judgment was obtained. This proposition rests not on the doctrine of election which depends in general upon knowledge of relevant facts but on another principle, namely that when judgment is obtained on a cause of action the cause of action merges in the judgment. Thus the liability of an undisclosed principal merges in a judgment obtained against the agent by the third party (Priestly v. Fernie (1863) 3 H & C 977 (159 ER 820) ; Kendall v. Hamilton (1879) 4 App Cas 504, at pp 514-515 ; Petersen v. Moloney [1951] HCA 57; (1951) 84 CLR 91, at pp 102-104 ). Consequently once judgment was obtained against the company the respondent could not hold the appellant and the other syndicators liable. (at p169)

13. However, this is not enough in itself to produce the conclusion that the contracts were contracts of guarantee under the Statute. It would not be right to ignore the circumstance that at the time when the contracts were made the appellant was in common with the other syndicators liable to the respondent as an undisclosed principal. The liability for the shares bought and sold was not confined to the company; it was liability for which the appellant and the other syndicators could be sued until such time as the respondent put that course beyond its power by suing the company to judgment. Accordingly, by the contracts sued on the appellant assumed an obligation to pay or ensure payment of a debt owing by himself and the other syndicators. A contract does not fall within this description if by the contract the defendant promises to discharge a liability to which he or his property is already subject. In Fitzgerald v. Dressler [1859] EngR 998; (1859) 7 CB (NS) 374, at pp 392-393 [1859] EngR 998; (141 ER 861, at pp 868-869) , Cockburn C.J. emphasized that to fall within the Statute the promise must be "coupled with the absence of any liability on the part of the defendant or his property, except such as arises from his express promise". The Chief Justice went on to say:

"... though I agree that the consideration alone is not the

test, but that the party taking upon himself the obligation

upon which the action is brought makes himself responsible

for the debt or default of another, still it must be taken with

the qualification stated in the note above cited, viz. an

absence of prior liability on the part of the defendant or his

property, - it being, as I think, truly stated there as the result

of the authorities, that, if there be something more than a

mere undertaking to pay the debt of another, as, where the

property in consideration of the giving up of which the party

enters into the undertaking is in point of fact his own or is

property in which he has some interest, the case is not within

the provision of the statute, which was intended to apply to

the case of an undertaking to answer for the debt, default, or

miscarriage of another, where the person making the promise

has himself no interest in the property which is the subject of

the undertaking."

To the same effect were the remarks of Williams J. (1859) 7 CB (NS), at pp 394-395 (141 ER, at p 869) :

"At the time the promise was made, the defendant was

substantially the owner of the linseed in question, which was

subject to the lien of the original vendors for the contract

price. The effect of the promise was neither more nor less

than this, to get rid of the encumbrance, or, in other words, to

buy off the plaintiffs' lien. That being so, it seems to me that

the authorities clearly establish that such a case is not within

the statute. The case of Williams v. Leper

[1766] EngR 152; (1766) 3 Burr 1886 (97 ER 1152) , proceeded

upon this, that the defendant there had an interest in the

property: his property was encumbered by the landlord's

claim for rent; therefore, the promise was a promise to pay a

debt to which that property was subject, and not simply a

promise to answer for the debt or default of another, within

the meaning of the statute." (at p170)

14. These observations state one instance of a wider principle that has been expressed in later decisions such as Harburg India Rubber Comb Co. v. Martin (1902) 1 KB 778, at p 786 , where Vaughan Williams L.J. said:

"What was the subject-matter of the contract? If the

subject-matter of the contract was the purchase of

property - the relief of property from a liability, the getting rid of

incumbrances, the securing greater diligence in the

performance of the duty of a factor, or the introduction of business

into a stockbroker's office - in all those cases there was a

larger matter which was the object of the contract. That

being the object of the contract, the mere fact that as an

incident to it - not as the immediate object, but indirectly -

the debt of another to a third person will be paid, does not

bring the case within the section."

See also per Cozens-Hardy L.J. (1902) 1 KB, at p 793 . However, these later decisions do not in any way qualify the correctness of what was said in Fitzgerald v. Dressler [1859] EngR 998; (1859) 7 CB (NS) 374 (141 ER 861) . (at p171)

15. But it is not enough to take a contract out of the Statute that the defendant's promise relates to property in which he has a commercial interest only. It must relate to a legal or equitable right which the defendant possesses in the property (see Harburg India Rubber Comb Co. v. Martin (1902) 1 KB, at p 791 ; Davys v. Buswell (1913) 2 KB 47, at p 58 ; Williams v. Leper [1766] EngR 152; (1766) 3 Burr 1886 (97 ER 1152) ; Castling v. Aubert [1802] EngR 191; (1802) 2 East 325 (102 ER 393) ). So in Harburg (1902) 1 KB 778 , where the promise related to the company's property in which the defendant had only a commercial interest as a shareholder in the company, the contract was held to fall within the Statute. (at p171)

16. In the present case the defendant's promise related to a debt for which he was antecedently liable. Moreover, the object of his promise was to free the shares held by the company on behalf of the appellant and the other syndicators from an exercise of the power of sale which the respondent enjoyed, by ensuring that further time was given to pay the debt owing to the respondents. The case therefore falls outside the Statute. (at p171)

17. In the result we would dismiss the appeal. (at p171)

JACOBS J. I agree that the appeal should be dismissed. (at p171)

2. Under the agreement as pleaded - and it was the agreement as pleaded which was found to have been made - I have considerable doubt whether there was a guarantee at all. It may have been a primary liability which was undertaken by the appellant, not necessarily in substitution for the liability of Commerce Australia Pty. Ltd. but, on such a view, in addition to, or, rather, collateral to, the obligation of the debtor company to pay. (at p172)

3. However, apart from an argument based on Albert Building Society v. Pratt (1893) 19 VLR 195 which was eventually not pressed before us and upon which therefore counsel for the appellant was not heard, no submission was made that the contract sued on was not one which created a secondary liability. Mr. Connolly for the respondents was content to accept that the contract was one of guarantee and to argue that it was not a contract of guarantee which fell within s. 5 (2) of the Statute of Frauds and Limitations of 1867 (Q.) for the reason that it fell within the class of case to which the reasoning of the Court of Common Pleas in Fitzgerald v. Dressler [1859] EngR 998; (1859) 7 CB (NS) 374 (141 ER 861) applied. I must therefore deal with the appeal on that basis. (at p172)

4. Taking what was said in Fitzgerald v. Dressler as a definitive statement of the law, it has been submitted on behalf of the respondents that it was sufficient to take the agreement outside the Statute that the appellant had an interest in property known to the law which he was protecting by his promise, the property being the shares to which he (with others) was entitled as undisclosed principal and which could be sold by the respondents under the terms of the brokerage contract. To this counsel for the appellant makes two replies. First, it is submitted that what was said in Fitzgerald v. Dressler must be read in the light of the later decisions of the Court of Appeal in Harburg India Rubber Comb Co. v. Martin (1902) 1 KB 778 and Davys v. Buswell (1913) 2 KB 47 . Secondly, it is submitted that reliance on a liability as undisclosed principal is not open because the respondents by taking judgment against Commerce Australia Pty. Ltd. had terminated or foreclosed any claim against the appellant based upon his liability to the respondents as an undisclosed principal. (at p172)

5. I shall deal with these submissions in turn. It is, I think, correct that Fitzgerald v. Dressler [1859] EngR 998; (1859) 7 CB (NS) 374 (141 ER 861) the relevant passages of which are set out in the judgment of Gibbs J. and Mason J. cannot be regarded as authority for the bare proposition that a guarantee will be outside the Statute in every case where the promisor has himself an interest in the property which is the subject of the promise. That expression was sufficient to cover the facts of that case and may not be inconsistent with the actual decision in the Harburg Case (1902) 1 KB 778 because there the only interest of the promisor was as a director, shareholder and creditor of the principal debtor and such interests were not in a legal, as distinct from a commercial, sense interests in the property of the principal debtor. However, such a view is hardly consistent with the reasoning in the Harburg Case and it is not consistent with that reasoning as it was explained and applied in Davys v. Buswell (1913) 2 KB 47 . In the latter case the promisor was a debenture holder with a floating charge over all the assets of the company. He therefore had an equitable interest in the assets of the company available for payment of the principal debt. It was held that the existence of such an interest, whether it was legal or equitable, did not bring a guarantee by the debenture holder within the exceptional class of case to which the Statute did not apply. The right of property provided a "motive" but it was not an "object" of the contract: per Vaughan Williams L.J. (1913) 2 KB, at p 55 , referring elliptically to the distinction which he had drawn in the Harburg Case (1902) 1 KB, at p 786 . Kennedy L.J. said (1913) 2 KB, at p 57 :

"I cannot see why, in the application of an enactment, the

policy of which is based on the view that it is desirable in

such a case that the contract should be expressed in writing,

the mere fact that the guarantor had such an interest should

make any difference, or why the enactment should or should

not be applicable according as he had or had not a legal or

equitable interest in the assets which might from time to time

belong to the company, payment of whose debts was

guaranteed." (at p173)

6. The effect of the cases has been summarized by the late Dr. James Williams in his work on the Statute of Frauds, Section IV, at p. 18:

"If, however, it appears from a consideration of all the facts

of the case, either (1) that the object intended to be secured by

the contract to the promisor in return for his promise is (a)

the discharge of an encumbrance affecting property

belonging to him or in regard to which he possesses a legal right or

rights, or (b) the transfer to him, by way of purchase, of the

promisee's right against the debtor, or (2) that the promise of

guarantee is an incidental term in a larger contract to whose

main object the guarantee is accessory merely, then such

promise will not be within the Statute.

The guarantee, in all of these cases, is regarded as being

merely ancillary to the main purpose of the transaction: and

the courts, having decided that the Statute applies only

where the contract is substantially a contract of guarantee,

have therefore held that the Statute does not affect these

cases." (at p173)

7. However in any comprehensive enunciation a place must be found for the established rule that the Statute only applies where there is an absence of any liability on the part of the promisor or his property, except such as arises from his express promise. See per Cockburn C.J. in Fitzgerald v. Dressler [1859] EngR 998; (1859) 7 CB (NS) 374 (141 ER 861) . Cockburn C.J. would appear to have equated these words with absence of interest in the property which is the subject of the promise and it is with the incorrectness of giving the latter words too wide a meaning that the Harburg Case (1902) 1 KB 778 and Davys v. Buswell (1913) 2 KB 47 deal. However, it still remains true that the Statute does not apply when the promise of guarantee is a promise to answer for moneys in respect of which the promisor is in any case independently liable, whether alone or jointly with others. Such a promise is not exclusively a promise to answer for the debt, default or miscarriage of another. Stephens v. Squire (1696) 5 Mod Rep 205 (87 ER 610) . See also Orrell v. Coppock (1856) 26 LJ Ch 269 . (at p174)

8. In Davys v. Buswell (1913) 2 KB, at pp 55-56 , Vaughan Williams L.J. said:

"I do not think that, in any sense in which the word

'interest' has been used in any of the prior cases on the

subject, the plaintiff here had any such interest as would

make it true to say that he gave the guarantee by reason of

any liability or obligation which existed independently of the

guarantee, or that he was contracting for the protection of

any right. The case seems to me to be one of a guarantee pure

and simple, and therefore to come within the statute."

He implicitly recognizes that an independent liability will take the promise of guarantee outside the Statute. (at p174)

9. Therefore for this passage in Williams to be a comprehensive statement of the law there must be taken to be comprehended within the second main grouping those cases where there is a liability in the promisor independent of that arising from the guarantee. It may be that in such circumstances the contract of guarantee can be regarded as incidental to a larger contract the object of which is to secure to the promisor benefits relating to his own independent rights and obligations. However, it may be preferable to recognize a third group into which cases of antecedent liability may be regarded as falling. (at p174)

10. In the present case it has been submitted on behalf of the appellant that the object intended to be secured by the contract to the promisor in return for his promise was not the transfer to him, by way of purchase, of the promisee's right against the company Commerce Australia Pty. Ltd. I think that this submission is correct but it has also been submitted that the object intended to be secured could only be regarded as the discharge of an encumbrance affecting property belonging to the appellant or in regard to which he possessed a legal right or rights if regard was had to his legal obligation as an undisclosed principal and that such regard could not be had. Likewise, it was submitted that the only antecedent liability of the appellant was a liability as undisclosed principal and that in the light of the judgment against Commerce Australia Pty. Ltd. and the pleadings no regard could be had to such a liability. That brings me to the appellant's second main submission. (at p175)

11. I would accept that if it is necessary to have regard to the appellant's legal obligation to the respondents as an undisclosed principal, then there is force in the appellant's argument. However, in my opinion, there is no need to have regard to that legal obligation. The relevant "liability on the part of the defendant or his property", to use the words adopted by Cockburn C.J. in Fitzgerald v. Dressler (1859) 7 CB (NS), at p 392 (141 ER, at p 868) from the notes to Forth v. Stanton [1845] EngR 83; (1670) 1 Wms Saund 210, at p 210 (l) [1845] EngR 83; (85 ER 217, at p 224) , is not the liability at law of an undisclosed principal to the other contracting party but is the liability of the appellant personally to indemnify Commerce Australia Pty. Ltd. in respect of the actions taken by that company on his behalf and the liability of the property in which he has a beneficial interest - the shares purchased - to be used in satisfaction of that indemnity. The fact that the appellant might have been, but was not, held liable by the respondents as an undisclosed principal is irrelevant to this liability. There was no need to rely on any law governing election, if that be the correct word, between remedy against agent and remedy against undisclosed principal. Indeed there may not have been a situation of undisclosed principal at all. Commerce Australia Pty. Ltd. was the legal person in whom it was intended that the shares purchased would be legally vested. It held its rights under the contracts of purchase and would have held title to the shares as trustee for the appellant, among others. As such, Commerce Australia Pty. Ltd., acting within its powers as it undoubtedly was and therefore not in breach of trust, was entitled to be indemnified; and the respondents were entitled to be subrogated to its right of indemnity. The law is correctly stated in Halsbury's Laws of England, 3rd ed., vol. 38, at pp. 943-944:

"Where a trustee has properly paid or incurred expenses or

liabilities in performing a trust, or in respect of the trust

property, he is entitled to reimbursement or indemnity in

respect thereof out of the trust property, or from a person sui

juris who is beneficially entitled thereto. His right extends to

calls on shares which he has been obliged to pay ...

Persons to whom a trustee has incurred liability in respect

of which he has a right of indemnity may be entitled to be

subrogated to the trustee's right." (at p176)

12. On this view of the matter, the appellant was with his co-venturers always liable to make good personally and out of the purchased shares the indebtedness of the company to the respondents, whether or not the respondents chose to sue the company to judgment. It does not matter whether the company is described as trustee or as agent in this context. The same right to indemnity and consequent right in the creditor to be subrogated thereto existed. There was thus at all times an antecedent liability in the appellant so that the promise sued on was not solely a promise to answer for the debt default or miscarriage of another. (at p176)

13. The conclusion of the trial judge was therefore correct and he was entitled to look to the fact of agency despite the prior judgment against the agent and the form of the pleadings. I would therefore dismiss the appeal. (at p176)