#6761 - Mutual Finance V. John Wetton - Restitution of Unjust Enrichment BCL

Mutual Finance v. John Wetton

Facts

The defendant company was originally founded by the Wetton family, consisting of a father and two sons - that is, William Wetton, Percy Wetton, and Joseph Wetton. The defendants were quarry owners, who sold stone, and for that purpose owned their own wagons and also contracted with outside firms of carters for carriage. Joseph Wetton also carried on the business of quarrying and selling stone and, I think, of carting, and for those purposes would find a lorry useful. I gather him to have been an unsatisfactory member of the defendant company and generally unsatisfactory in his business relations; so much so, that he had been forced to leave the defendant company and had caused great anxiety and grief to his father.

The plaintiff company was formed for the purpose of financing, and does finance, the purchase of motor-cars and lorries on the hire purchase system. A bargain being concluded between a seller and a buyer for the sale of a vehicle on hire purchase terms, the plaintiffs purchase it from the seller and let it on hire purchase to the buyer, the sum so obtained including a percentage to them for their risk and trouble.

The sellers in the present instance were a company named G. W. Smith (1925), Ld., who were approached by a purchaser named Fred Clarke, and by Joseph Wetton, at the end of 1935, Clarke desiring to purchase a Foden lorry for which a price of 920l. was charged - namely, 50l. cash and 24 instalments of 36l. 15s. each. The plaintiffs were asked to finance the transaction.

They were accordingly furnished by Joseph Wetton with a guarantee dated December 4, 1935, purporting to be signed by William and Percy Wetton and witnessed by Joseph Wetton. In fact, however, the whole document appears to have been concocted by Joseph Wetton without the knowledge of his father or brother. Having obtained what they imagined was a valid guarantee, the plaintiffs on the same date handed their cheque for 750l. to the sellers, and the lorry was handed over to Clarke… Clarke almost at once fell behind with his payments, and the plaintiffs, both by letter and telephone, demanded fulfilment of the guarantee.

On January 14 the plaintiffs determined the hiring and demanded the return of the lorry, and on January 16 issued a certificate of authority to seize the vehicle.

The interview took place on January 16. As to this interview I find the following facts: Lopresti and a Mr. Wales, general manager of the sellers, were present as well as Percy Wetton and J. G. Mottershead, the defendants' secretary. Lopresti asked if the signatures were genuine, and both Percy Wetton and Mottershead refused to admit their genuineness, but from a desire not to commit Joseph did not say in terms that they were forgeries. Lopresti, however, had no doubt that they were forgeries, and said that it was a serious matter for Joseph, and that he could take out a warrant for his arrest. Percy Wetton said that he was not himself interested, but that his father was very ill, so ill that he could not tell his father, and that if Joseph were arrested it might cause his death.

No assertion of an intention to prosecute if an agreement was not come to was made, nor did the plaintiffs promise not to prosecute if the defendants entered into a new guarantee. But both parties had this question of prosecution in mind and Lopresti meant and intended that the possibility of a prosecution should influence Percy in undertaking the liability, and Percy was to his knowledge so influenced. As both parties knew, the guarantee would never have been signed but for the fear of the prosecution of Joseph if the defendants did not agree.

Eventually, the guarantee was signed by Percy and the hire-purchase was taken over by Gregory. Eventually, however, Gregory defaulted in his payments, and on November 17, 1936, the plaintiffs determined the agreement and on December 11 called on the defendants to fulfil their undertaking.

Holding

But it is said that that guarantee is voidable because it was obtained by duress or by undue influence. If the question were whether there was any such duress as the common law would recognize, I should unhesitatingly answer, No. But the right to avoid a contract is not at the present time confined to questions of duress. It depends on the much wider relief given on principles originally evolved in the Chancery Courts under the name of undue influence.

Just as a contract may be invalid because it is...