Globe Indemnity Co. v. Sylva Tanning Co.

Clarkson, J. From tbe record in this case it appears that tbe issues submitted on tbe material allegations in tbe complaint and answer and unobjected to were as follows: “(1) "Was tbe plaintiff induced to execute tbe bond of 11 November, 1920, by reason of tbe false and fraudulent representations of tbe defendants Carolina Dray Company and George Y. Whitton, as alleged in tbe complaint? To this issue tbe jury answered ‘Yes.’ *196 “(2) Did the defendant Sylva Tanning Company have knowledge of and participate in such false and fraudulent representations, as alleged in the complaint? To this issue the jury answered Nod” In the record there are no exceptions to the court’s .charge, no prayer of the plaintiff for any instructions embodying its contention made here, but the only assignment of error is to the tender of judgment by the plaintiff which the court below refused to sign, in which ■ the following is recited: “That the contract of defendant Carolina Dray Company with said defendant Sylva Tanning Company, recited in the bond set out in the pleadings for the purpose of explaining the obligation of said bond, was upon the consideration and to secure the payment of a preexisting debt arising on former dealings between said defendants, and that said contract was not upon the consideration of a present advancement, as recited in said contract.” The other assignment of error is to the judgment as signed. The issues were duly submitted to the jury. The presumption of law from the record is that the court below charged the law correctly bearing on the evidence as testified to by the witnesses at the trial. The verdict of the jury found that the Tanning Company did not have any knowledge of and participate in the false and fraudulent representations made by the Carolina Dray Company and George Y. Whit-ton. No exceptions were taken to anything during the entire course of the trial until after the verdict. The law presumes that the procedure in the court below was regular. The court should, in its sound discretion and good sense, instruct the jury on all the issues presented by the pleadings and the evidence. Blake v. Smith, 163 N. C., 274. If the plaintiff had any objections to the charge of the court on the contentions he should have called it to the attention of the court. If he desired additional statements’, he should have asked for them. He cannot remain silent, take the chance of winning a verdict, and object afterwards. He is too late. Silence seems to give consent. Sears v. R. R., 178 N. C., 287. The plaintiff now contends, after the verdict, “The obligee (Sylva Tanning Company) admits that the consideration of the contract upon which the bond was written was not a present cash advance of $6,500, as recited in said contract, and as surety believed it to be, but was a preexisting debt.” The record in the case also shows the collateral agreement made by the Dray Company with plaintiff that the written agreement states “Whereas, in consideration of deposit of collateral described in the receipt hereto annexed, the surety has executed or procured the execution of, or may hereafter execute or procure the execution of, obligation of guaranty and suretyship on behalf of Sylva Tanning Company.” *197 On the collateral agreement is a receipt from the Dray Company: “$8,000 in stock of company and bona fide sale of 1,000,000 feet of lumber.” The record also shows that the Dray Company was required to give a detailed financial statement and it had assets over capital stock of $17,444, and also reference statement to bank it did business with and manufacturer it did business with. The Tanning Company in its defense says: “The Carolina Dray Company, through George Y. Whitton, applied to this defendant with the request that they cancel the mortgage upon said property in order that they might operate on a more extensive scale, and as an inducement to this defendant to release and cancel said mortgage, the Carolina Dray Company entered into a contract with this defendant to deliver the quantities of wood, and as a guarantee that it would deliver said wood therein specified tendered to this defendant the bond set out in the complaint, whereupon this defendant did release and cancel said mortgages above referred to, the aggregate amount of which was $6,500; and as this defendant is informed and believes, said chattel mortgages were amply secured, and the property described therein was worth considerably more than the indebtedness against said property.” "When the bond of the plaintiff was given, the Tanning Company canceled mortgages amounting to $6,500. The Dray Company defaulted on its contract with the Tanning Company and it immediately notified plaintiff. The plaintiff waited some five months before bringing this action. These are succinctly the material facts. This is an action on the ground of fraud or deceit to cancel and rescind the supply contract bond. Brown, J., in Pritchard v. Dailey, 168 N. C., 332, says: “The material elements of fraud, a commission of which will justify the court in setting aside a contract or other transaction, are well settled. First, there must be a misrepresentation or concealment; second, an intention to deceive, or negligence in uttering falsehoods with the intent to influence the action of others; third, the misrepresentations must be calculated to deceive and must actually deceive; and fourth, the party claiming must have actually relied upon the representations.” Lunn v. Shermer, 93 N. C., 169; Bank v. Yelverton, 185 N. C., 318. In Black v. Black, 110 N. C., 399, Hoke, J., when on the Superior Court bench, in a case of deceit, gave this charge: “That in order to maintain his action it was necessary for plaintiff to establish that the mule was unsound; that defendant falsely and fraudulently asserted it to be sound; and that these false representations induced plaintiff to make the trade. If plaintiff was not, in fact, misled by defendant, but *198 acted on his own judgment in making the trade, they should find that he was not thereby induced to part with his property.” Mcrrimon, O. J., in sustaining this charge, said: “This plainly implied that the plaintiff could not recover if he took the mule at his own risk, relied and acted upon his own judgment. The evidence was conflicting, presenting two distinct aspects of it — one favorable to the plaintiff; the other to the defendant. The Court referred to it in detail, pointing out its bearing upon the several issues. The charge was intelligent, very fair, sufficiently specific and full, and we are unable to discover any error that entitles the defendant to a new trial.” In S. v. Moore, 111 N. C., 672, Avery, J., says: “As well in civil actions, brought to recover of another for losses incurred by false representations, as in criminal prosecutions founded upon the same species of fraud, the burden is on the actor or prosecutor to show not only the false representation, but that a reasonable reliance upon its truth induced the plaintiff or prosecutor to part, with his money or property, the only difference being as to the quantum of proof.” S. v. Davis, 150 N. C., 853. Admitting that there was no cash advance of $6,500, but it was a preexisting debt, did this false representation induce plaintiff to make the supply contract bond? Did plaintiff actually rely on the representations, or did it rely on the information it had obtained of the Dray Company’s financial statement — collateral—as its collateral agreement says, signed by it, “Whereas, in consideration of the deposit of collateral security in the receipt hereto annexed,” etc., the collateral being $8,000 in stock of company and bona fide sale of 1,000,00°0 feet of lumber? This collateral may have turned out afterwards to be of small value. Was this not a question for the jury on all the evidence? We think it was. Nash, J., in Stafford v. Newsom, 31 N. C., 510, says: “The action for deceit rests in the intention with which a representation is made, or a fact not mentioned. It was not sufficient that the representation made should he calculated to mislead — for that may be done by the most honest communication — but the representation must be made with the intent to deceive. Moral turpitude is necessary to charge a defendant in an action for a deceit.” In Magee and others v. Manhattan Life Ins. Co., 92 U. S., p. 93, the facts are: “In a suit by a company organized under the law of the State of New York against citizens of the State of Alabama, on a bond conditioned for the faithful performance of duty, and the payment of money received for it, executed by the agent of the company who transacted business as such in the city of Mobile, where he resided, and by them as his sureties, the latter pleaded that the company, as a condition *199 upon which, it would retain in its employment the agent then largely indebted to it, required such bond, and also his agreement to apply all his commissions thereafter earned to his former indebtedness to it; 'that the agreement was made, and the commissions were so applied; that the company knew that the agent had no property, and depended upon his future acquisitions for the support of himself and family; that the defendants were ignorant of such indebtedness and agreement; that, had they been informed thereof, they would not have executed the bond; that the agreement as to the commissions and its performance were a fraud on them; and that the bond as to them was thereby avoided.” Mr. Justice Swo/yne, on p. 98, says: “A surety is a 'favored debtor.’ His rights are zealously guarded, both at law and in equity. The slightest fraud on the part of the creditor, touching the contract, annuls it. Any alteration after it is made, though beneficial to the surety, has the same effect. His contract, exactly as made, is the measure of his liability; and if the case against him be not clearly within it, he is entitled to go acquit. Ludlow v. Symonds, 2 Caine’s Cas., 1; Miller v. Stewart, 9 Wheat., 681. But there is a duty incumbent on him. He must not rest supine, close his eyes and fail to seek important information within his reach. If he does this, and a loss occurs, he cannot, in the absence of fraud on the part of the creditor, set up as a defense facts then first learned which he ought to have known and considered before entering into the contract. Kerr on Fraud and Mistake, 96.” The many cases cited in the briefs of counsel on both sides have been carefully considered. We cannot sustain plaintiffs’ assignments of error. We think the court below was correct in the judgment rendered. The question was one of fact for the jury. From the record we can find no prejudicial or reversible- error. No error.