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[1990] ZASCA 12
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Nedbank Ltd. v Van Zyl (349/88) [1990] ZASCA 12; 1990 (2) SA 469 (AD); [1990] 4 All SA 637 (AD) (15 March 1990)
IN THE SUPREME COURT OF SOUTH ApRICA
(
APPELLATE DIVISION
)
In the matter between:
NEDBANK LIMITED
. . Appellant
and
...
MAGRIETA VAN ZYL
Respondent
CORAM
: Corbett CJ, Hefer, Nestadt, FH Grosskopf JJA,
et Nicholas AJA
DATE OF HEARING
: 1 November 1989
DATE OF JUDGMENT
: 15 March 1990
JUDGMENT CORBETT
CJ:
On 10 September 1980 the respondent signed a written contract of guarantee
("garansie") in terms of which she bound herself to the
appellant, Nedbank
Limited, as surety and co-principal debtor (with renunciation of the benefits of
excussion and division) for the
repayment on
2 demand of all moneys owed by
Petrus Gideon Van Zyl ("Van Zyl") to the appellant on overdraf t then or f rom
time to time thereafter.
At the time of the execution of this contract, which is
more correctly to be described as a suretyship, the respondent was married
to
Van Zyl in community of property. In entering into the contract she was duly
assisted by her husband. In February 1981 respondent
and Van Zyl became
estranged and they were divorced on 25 May 1982. In terms of a consent paper
entered into by the parties and incorporated
in the decree of divorce the assets
of the joint estate were divided between the parties. It appears that during the
subsistence
of the marriage respondent was not possessed of any assets outside
the joint estate.
During 1984 Van Zyl defaulted on his obligations to appellant and the latter
endeavoured to recover from him the amount owing on overdraft.
which as at 23
October 1984
3 amounted to Rl5 213,61. He failed to pay and default judgment
was taken against him. He did not satisfy the judgment and disappeared.
In March 1985 appellant instituted action against respondent in the Transvaal
Provincial Division claiming payment of the aforesaid
amount of R15 213,61,
together with interest and costs. Appellant sought to hold respondent liable for
this amount solely on the
basis of the deed of suretyship signed by her on 10
September 1980. The matter came to trial before Roux J who held that the deed
of
suretyship was a nullity and dismissed appellant's claim with costs. With leave
granted by the trial Judge, appellant now appeals
against the whole of the
judgment and order of the Court a
quo
.
One of the crucial issues which arises on appeal is whether a wife married in
community of property can validly enter into a contract
in terms of which she
stands surety
4 for a monetary obligation undertaken by her husband. There
are two conflicting decisions on this point. In
Reichmans (Pty) Ltd v
Ramdass
1985 (2) SA 111
(D) Friedman J held that such a deed of suretyship
was valid; and in the unreported case of
Volkskas Bpk v Van Heerden
,
decided on 20.5.85 in the Cape Provincial Division, Rose-Innes J held that it
was not. In the present case Roux J preferred to follow
the decision, and
reasoning, in
Volkskas Bpk v Van Heerden
.
Fundamental to the decision in the latter case were the propositions that a
person cannot stand surety for his own obligation; and
that if he purports to do
so the resulting transaction is a nullity. There is authority to support these
propositions. The obligations
of a surety are essentially accessory in nature,
in the sense that they are grafted onto a principal obligation and without a
principal
obligation they can have no separate existence. The definition of a
contract of suretyship
5 given in Caney,
The Law of Suretyship
, 3rd
ed, p 27 reads as
follows:
"Suretyship is an accessory contract by which a person (the surety)
undertakes to the creditor of another (the principal debtor),
primarily that the
principal debtor, who remains bound, will perform his obligation to the creditor
and, secondarily that if and
so far as the principal debtor fails to do so, he,
the surety, will perform it or, failing that, indemnify the creditor."
This definition (as it appeared in the second edition of Caney) was cited
with approval in
Trust Bank of Africa Ltd v Frysch
1977 (3) SA 562
(A) at
584 F and in
Sapirstein and Others v Anqlo African Shipping Co (SA) Ltd
1978 (4) SA 1
(A), at 11 H. Of course, this is not to say that the principal
obligation must be in existence at the time when the contract of suretyship
is
entered into. As appears from the two decisions just cited, a suretyship may
be
6 contracted with reference to a principal obligation which is to come
into existence in the future, in which event the obligation
of the surety does
not arise until the principal obligation has been contracted. In the meanwhile
it is, as Van der Keessel (
Praelectiones
3.3.24) puts it, "in pendenti".
(See also
Diqest
5.1.35.)
One of the consequences of the accessory nature of a suretyship obligation is
that it must relate to a principal obligation
owed by another
. This is
reflected in Caney's definition and the principle may be traced back to Roman
Law. Thus in
Digest
46.1.21 one reads (I quote from the Watson
translation) -
"2. When I had advanced money to your slave, you manumitted him, and then I
accepted the same surety [in respect of the debt]. If
the surety accepted
liability for the obligation which rested on you within a year [from the
manumission], he [Julian] says that
he is bound; but that if it was for
7
[the slave's] natural obligation, it is rather the case that no transaction has
been effected.
For it cannot be admitted that a person becomes bound by going
surety for himself
. Bút he thought that if the manumitted slave
became heir to his surety, the ground of the suretyship survives and that in
any
event, there would still be the natural obligation so that though the civil
obligation no longer exist, what has been paid cannot
be recovered. Nor does it
conflict with this that if the principal debtor become the heir of his surety,
the ancillary obligation
is destroyed; for there cannot be a double civil
obligation with the same person [over the same thing]. Conversely also, if the
surety
become heir to the manumitted slave, there remains the same obligation
upon him, although his liability is natural and
one cannot be surety for
oneself
." (My emphasis.)
The
position under Roman Law where a surety became heir to the principal debtor, and
v
ice versa
, is dealt with in
Digest
46.1.5 and it would seem that
the resultant "merger"
8 ("confusio") caused the obligation of suretyship to
fall away. (See also
Domat's Civil Law
(Strahan trans., 1897.) Of course,
as Caney remarks (op
cit
, p 174, n 105), under our modern system of
administration of estates, where an heir is no longer a universal successor,
this position
would not arise. And it is of interest to note that modern Dutch
law has departed from the Roman law in this regard (see Asser, 5de
druk (1988),
Bijzondere Overeenkomsten
, deel iv, p 152).
The Roman-Dutch law of suretyship differed little from the Roman law (see
Wessels,
Law of Contract in South Africa
, 2nd ed, par 3777). In his
Koopmans Handboek
(published in 1806) Van der Linden (at 1.14.10) defines
suretyship ("borgtogt") as -
"....een contract, waar bij iemand zig verbindt voor eenen schuldenaar, ten
behoeven van den schuldeisscher, om hem geheel of gedeeltelijk
te betaalen, het
geen de
9
schuldenaar hem schuldig is, zig alzoo bij zijne
verbintenis voegende";
and the author explains that it follows from this definition that no
suretyship can exist unless there is a valid principal obligation
on the part of
a principal debtor and
"Dat de borgtocht te niet gaat, wanneer de beide qualiteiten van principaalen
schuldenaar en borg zig in een en denzelfden persoon
vereenigen, b.v. wanneer de
één des anders erfgenaam wordt."
(See also J Voet,
Ad Pandectas
, 46.3.20; Huber,
Heedensdaegse
Rechtsgeleertheyt
3.41.3; Kersteman's Aanhangsel, vol 1, p 189.) Pothier,
Traité des Obligations
, par 383 put the position under Roman Law
thus (I quote the Evans translation):
"From the principle that the surety,
according to our definition, is one who
obliges himself for and accedes to the
obligation of another, the
Roman
jurists
10
deduced this consequence, that whenever the two
qualities of principal debtor and surety become united in the same person, which
happens
when the surety becomes heir to the principal; or,
vice versa
,
when the principal becomes heir of the surety, or when a third person becomes
heir to both the one and the other; in all these cases
the quality of principal
destroys that of surety; as a surety is essentially one who is obliged for
another, and a man cannot be
a surety for himself; whence they concluded that in
all these cases, the obligation as surety was extinguished, and that the
principal
obligation remained only."
Moreover, definitions of the contract of suretyship by writers on Roman-Dutch
law emphasize that the surety
undertakes
under
certain circumstances to discharge the obligation of
another
(the
principal debtor): see eg Grotius,
Inleydinghe
, 3.3.12; Van Leeuwen,
Het Rooms-Hollands-Recht
4.4.2 and
Censura Forensis
1.4.17.3;
Voet,
op cit
, 46.1.1; Huber, op
cit
, 3.26.2).
11
Modern South African writers also accept that
under our law it is essential to the existence of a suretyship that there be a
principal
obligation in terms whereof someone other than the surety is the
debtor; and that a person cannot stand as surety for his own debt
(see De Wet
& Yeats,
Kontraktereg en Handelsreg
, 4de ed. p 345; 26 LAWSA par 153;
Caney,
The Law of Suretyship
, 3rd ed, pp 27-8, 174; Wessels,
Law of
Contract in South Africa
, 2nd ed, paras 2624, 4368; Van Jaarsveld,
Suid-Afrikaanse Handelsreg
, 3de ed, p 760). It may be argued that the
corollary to this would seem to be that a contract, intended by the parties to
constitute
a suretyship, in terms of which a person purports to stand surety for
a principal obligation owed by himself, is a nullity (see 26
LAWSA par 153; cf
Croxon's Garage (Pty) Ltd v Olivier
1971 (4) SA 85
(T), at 88 A-C). In
Standard Bank of SA Ltd v Lombard and Another
1977 (2) SA 808
(W), at 813
F-H, and in the
12
Reichmans
case,
supra
, at 114 E, it
was accepted or assumed that a person cannot validly stand as surety for his own
debt. In
Litecor Voltex (Natal) (Pty) Ltd v Jason
1988 (2) SA 78
(D)
Didcott J expressed doubts as to the correctness of a classification of
invalidity, but went on to say (at p 81 B) -
"To guarantee the payment of your own debt is a futile exercise, to say the
least, neither underwriting nor reinforcing the obligation
to pay it that rests
on you in any event. Failing the basic test for a suretyship, it does not amount
to such. Nor does it accomplish
anything else. It is not worth, in short, the
paper on which it is written."
It seems to me that whatever the precise terminology should be an undertaking
in a contract whereby a person purports to stand as
surety for his own debt is
not a legally enforceable one.
In the present case the respondent bound herself
13 in terms of the contract as surety
and
co-principal debtor ("borg
en medehoofskuldenaar"). It is clear, however, that this undertaking as
co-principal debtor did not in
any way change the purported nature of the
contract, viz one of suretyship, the effect of such an undertaking merely being
a renunciation
of the benefits of excussion and division (see
Neon and Cold
Cathode Illuminations (Pty) Ltd v Ephron
1978 (1) SA 463
(A), at 471
D-E).
The next question is whether a contract whereby a woman married in community
of property purports (with her husband's assistance)
to stand surety for an
obligration undertaken by her husband amounts to standing surety for one's own
debt.
The legal position in regard to contractual debts incurred by husband or wife
where they are married to one another in community of
property was
authoritatively stated by this Court in
De Wet, NO v Jurgens
,
1970 (3) SA
38
(A),
14 as follows (at p 47 D-F):
"Dit blyk duidelik dat die man en die vrou se skulde gemeenskaplike skulde is
wat uit die gemeenskaplike boedel betaalbaar is. Hulle
is dus eintlik
medeskuldenaars. Dit is wel waar dat die man gewoonweg verantwoordelik is vir
die betaling van skulde, maar dit beteken
nie dat net hy skuldenaar is nie.
Betalings word van hom geëis omdat hy in beheer van die boedel is, en hy
word in die Hof aangespreek
omdat, behalwe in sekere uitsonderingsgevalle, slegs
hy voor die Hof gedaag kan word. Wanneer hy skulde betaal, betaal hy dit uit
die
gemeenskaplike boedel, en wanneer hy 'n vonnisskuld nie betaal nie, word
eksekusie teen die bates in die gemeenskaplike boedel
gehef."
On the facts of this case it is not necessary to consider what the position
is with regard to so-called "private debts" (see Lee &
Honore,
Family,
Things and Succession
, 2nd ed, paras 82-4).
15
If the principles enunciated in
De Wet NO v
Jurgens
,
supra
, be applied in the present case, then it is clear that
on 10 September 1980, when the suretyship contract was signed, the principal
debt, viz. the amount owed or to be owed to appellant on overdraft, was the
joint obligation of Van Zyl and respondent. Moreover,
although the suretyship
was entered into by respondent alone as surety (Van Zyl's signature thereof
being merely to supplement respondent's
limited contractual capacity: see
Cross v Pienaar en 'n Ander
1978 (4) SA 943
(T), at 949 F-G), the
suretyship obligation which she thus purported to incur would, if valid,
likewise become a joint obligation
owed by Van Zyl and herself. There was thus
at the time of signature of the suretyship a complete identity of surety and
principal
debtor: the purported effect of the transaction was to make respondent
and Van Zyl co-sureties of the overdraft obligation in respect
of which they
were
16 co-debtors. It was consequently a clear case of persons standing
surety for their own debt and, in my view, in the light of the
principles
expounded above, the suretyship was unenforceable when entered into.
The position is, of course, complicated by the fact that at the time when
appellant instituted action against respondent (in March
1985) respondent was no
longer married to Van Zyl, their marriage having been dissolved by divorce on 25
May 1982. Although the evidence
on the point is not clear, it seems probable
that as at the date of divorce Van Zyl's current account with appellant was
overdrawn.
Upon divorce the community of property and of debts subsisting between Van
Zyl and respondent was terminated and respondent became
endowed with full legal
capacity. Each became entitled to half the joint estate, such as it was, and the
assets thereof were divided
by
17 agreement between them. Debts incurred as
joint liabilities during the marriage and unpaid as at the dissolution of the
marriage
remained exigible from the former parties to the marriage. In Lee and
Honorê (op
cit
, par 97) it is stated that such a debt may be
enforced by the creditor concerned for the whole amount outstanding against the
estate
of the spouse who incurred it and for half the amount against the estate
of the other spouse; and that the original debtor who has
paid the whole amount
has a
regressus pro semisse
against the other spouse because the debt was
a joint one. As the learned author of this section (Prof A H van Wyk) indicates,
however,
the position is not altogether clear, particularly in the light of our
case law. I do not find it necessary, however, in present
circumstances to
express any view as to the precise nature of the post-nuptial liability of the
spouses for community debts. What
is of significance is the fact that as at the
date of dissolution of the marriage the amount owing to
18 appellant on
overdraft remained a joint liability of the parties; and that thereafter all
subsequent amounts advanced by appellant
to Van Zyl on overdraft constituted his
own separate liability.
I would again emphasize that at no time did appellant seek to recover the
amount owed on overdraft (as at 23 October 1984) from respondent
on the basis of
her liability for the joint debts of the community (at the time of the
dissolution); and that the present claim is
based entirely on the contract of
suretyship.
The questions which now arise are how, if at all, the termination of the
marriage and the consequent dissolution of the community
of property and debts
between Van Zyl and the respondent affected the position; and whether under such
changed circumstances respondent
became liable on the suretyship for the
outstanding amount of van Zyl's overdraft. The suretyship is in the widest
possible
19
Zyl's overdraft. The suretyship is in the widest
possible terms. The relevant portion reads:
"Vir die verlening deur Nedbank Beperk . (hierna 'die genoemde Bank') van
sekere bankfasiliteite aan Petrus Gideon van Zyl....(hierna
genoem die 'genoemde
skuldenaar') garandeer en verbind ek.... die
ondergetekende Magrieta van Zyl my...
sowel gesamentlik as afsonderlik... as borg
en medehoofskuldenaar vir die
terugbetaling op aanvraag van enige geldsom of geldsomme wat die genoemde
skuldenaar... nou of hierna van tyd tot tyd aan genoemde
Bank.... skuldig mag
wees.... hetsy die skuld voortspruit uit geld wat reeds voorgeskiet is of hierna
voorgeskiet sal word...."
Accordingly it might be contended that as there is no limitation as to the
duration and applicability of the surety's undertaking
it covers overdraft
obligations (to the appellant) incurred by Van Zyl after the divorce; and that
qua
such future obligations the suretyship was valid and
20
enforceable.
The chief obstacle in the path of this line of argument is that
proof that the amount of R15 213,61 constituted a post-nuptial overdraft
obligation is totally lacking. As I have indicated, it is probable that at the
time of the divorce Van Zyl's current account was
overdrawn, possibly in an
amount at least equivalent to the amount of appellant's claim; but appellant
made no attempt either in
the pleadings or the evidence at the trial or in the
course of argument before us to establish precisely what the overdraft amount
was at the time of the divorce or to show that according to a correct process of
appropriation or allocation of deposits (cf.
Trust Bank of Africa Ltd v
Senekal
1977 (2) SA 587
(W);
Paget's Law of Banking
, 9th ed, pp 118
ff) the debit balance existing at the time of divorce had been wholly liquidated
by 23 October 1984, when the claim
was computed. At the trial a bundle of
documents,
21 marked "B", was handed in by agreement, but it is not clear
what exactly was agreed to in regard to their admissibility or probative
value.
These documents included certified copies of Van Zyl's bank statements. Mr
Bellingham, the bank official called to give evidence
by the appellant, stated
that certain of these documents came from a file under his control, but these
did not include the bank statements.
It is impossible to say whether or not
these are computer printouts. Bellingham stated that at the time of the trial he
was the sub-accountant
("onderrekenmeester") at the Uitenhage branch of
appellant bank, where Van Zyl's current account was as from March 1981. He also
said: "Ek was die bestuurdersklerk op die stadium", but is not clear what stage
("stadium") is referred to. Under cross-examination
he said (referring to the
bank statements): "Die state word deur ons hoofkantoor opgestel". In my view,
the bank statements themselves
cannot be used to prove
22
the drawings and deposits on Van Zyl's bank
account (cf
Narlis v South African Bank of Athens
1976 (2) SA 573
(A);
Trust Bank of Africa Ltd v Senekal
,
supra
, at 590 E - 591 B) ; and
Bellingham himself did not purport to give any original evidence in this
connection. Thus even if the claim
could in law be based upon the validity of
the suretyship in so far as it related to the post-nuptial obligations of Van
Zyl to appellant
bank it must fail for want of a proven factual foundation.
Finally, I must refer to the decision in the
Reichmans
case,
supra
. In that case Friedman J was confronted with a factual situation
similar to the present one. The main differences were that (a) in
that case the
wife, who stood surety, owned a valuable piece of immovable property which she
had acquired by way of inheritance and
which did not form part of the joint
estate, and (b) husband and wife were still married to one another at the time
when
23
the creditor sued the wife (defendant) on the
deed of suretyship. It was argued on behalf of the defendant that she was in
effect
standing surety for herself and that this was something which in law
created a nullity.
Friedman J rejected this argument and gave judgment for the plaintiff. He
assumed in favour of the defendant that one cannot stand
surety for oneself (see
p 114 E). His further reasoning may be summarized as follows:
(1) It does not follow from the fact that the joint estate may be liable for the
payment of any debt incurred by the wife under the
suretyship that she is
standing surety for herself: her husband, not she, is the principal debtor.
(2) The rights and obligations of the wife under the deed of suretyship differ
in certain respects from those of the principal debtor.
24
(3) The suretyship agreement could survive the dissolution of the marriage, upon
which there would be a total separation of identity
between surety and principal
debtor.
(4) The joint estate is not the only source out of which the wife's indebtedness
to the creditor can and need necessarily be met,
eg where the wife has assets
falling outside the community.
With respect, I am
not able to agree with this reasoning. As to (1), it seems to me that it is
incorrect to say that the husband is
the principal debtor. Husband and wife are
in truth joint debtors with regard to the principal debt, even though it may
contractually
have been incurred by him. As to (2), the rights and obligations
under the suretyship are also those of both husband and wife, owed
jointly. As I
have indicated, the point made under (3) may, given the proper facts, be sound
in the sense
25
that the suretyship is enforceable in respect of
post-nuptial obligations, but I fail to see the relevance of this in a case
where
the marriage has not been dissolved or where the obligations are incurred
stante matrimonio
. And as to (4), the fact that the wife may have assets
outside the community, which is not pertinent in the present case, does not
seem
to me to alter the basic identity between surety and principal debtor.
Friedman J also referred by way of analogy to the following remarks of Botha
J in the
Standard Bank
case,
supra
, at p 813 F-H, (a case
concerned with whether a partner could validly bind himself as a surety for the
debts of the partnership)
-
"In the next place counsel for the defendant submitted that, since a
partnership was not a legal
persona
separate from the individual
partners, partners could not validly bind themselves as sureties for the
26
partnership, because they would in effect be standing in as sureties for
themselves. I was not referred to any authority for the proposition
that
partners could not validly bind themselves individually as sureties for
partnership debts. (Cf Caney on
Suretyship
, 2nd ed at p 48). In matters
of practice and procedure, the law does to some extent recognise the existence
of a partnership as an
entity in itself, albeit not as an entity endowed with
legal personality. Thus a creditor of the partnership is obliged during the
subsistence of the partnership to sue all the partners together for payment of
the partnership debts and execution must first be
levied on partnership assets
before the assets of individual partners may be attached in execution. I can see
no reason in principle
why partners should not bind themselves to a partnership
creditor in such a way that each partner is individually liable in
solidum
to the creditor for payment of the whole of the partnership
debts, even during the subsistence of the partnership. This, I conceive
was
plainly the object sought to be achieved by means of
27
the documents in question in this case. I can see
no reason why the documents should not be valid and operative as such, even if
it
is to be assumed that they do not qualify as suretyships
stricto
sensu
, a matter on which I need not express any firm opinion."
And it is to be noted that in
Du Toit en 'n Ander v Barclays Nasionale
Bank Bpk
1985 (1) SA 563
(A), at p 575 F-G, this Court confirmed these
views. I do not think that the partnership analogy is a valid one. Unlike a
partnership,
there is no basis for saying that the law, to any extent,
recognises the relationship of marriage in community "as an entity in itself";
nor do the f eatures of the law of partnership emphasized in this quotation from
the judgment in the
Standard Bank
case find any parallel in marriage in
community.
I accordingly agree with the conclusion reached by the Court a
quo
.
The appeal is dismissed with costs.
M M CORBETT
HEFER JA)
NESTADT JA)
CONCUR
F H GROSSKOPF JA)
NICHOLAS AJA)