Wm. J. Lemp Brewing Co. v. Secor

Williams, C. J. (after stating the facts as above). The sole question presented in this record is whether or not the facts show an assent to the variation of the agreement between plaintiff’s agent and said sureties. The jury, having found the issues in favor of all the defendants, necessarily found that the agreement and representations between plaintiff’s agent and the principal obligor, Secor, and said defendants, were as contended by said defendants. In the case of Holliday et al. v. Poole el al., 77 Ga. 160, one of the defendants filed a plea to the petition or declaration, as follows: “He is surety only in said case,-and was deceived by the said plaintiff, in signing said note, by stating that T. A. Poole, defendant, said for him to sign for him, and he would sign his, and the same is not true, and of this he puts himself upon the country.” Chief Justice Jackson, in speaking for the court, said: “If the surety on the note was induced to sign it, and did sign it, by false representations of the payee that his brother had requested him to sign 'as suret}q and then he would sign notes of his also as surety, this does- not make a case of fraud and misrepresentation without damage to the surety, but it is a case of fraud with damage, and serious damage. The damage is that it makes him obligate himself to pay this note; that it induces him to sign a paper on which he can be sued, and- is here actually sued; that it puts him where he has to incur costs of suit, and his own lawyers’ fees, to defend the suit, and on these notes to incur the obligation to pay also the fees of the payee’s lawyers, and if there had been a recovery by the payee in the case, it would have been not only the principal and interest, but the fees, 10 per cent, of the debt, for the payee’s counsel.” *544 The unbroken line of authority is that if each one of thes 3 sureties signed this obligation with the understanding with plaintiff’s agent that it was neither to be a completed obligation until certain other designated solvent sureties signed it, nor was it to be delivered until so signed, and that, without securing the signatures of such sureties, such obligation was transmitted to plaintiff, such obligation is void. Evans et al. v. Keeland, 9 Ala. 43; Bank of Monroe v. Anderson Bros. Min. & Ry. Co., 65 Iowa, 692, 22 N. W. 929; Waterbury v. Andrews, 67 Mich. 281, 34 N. W. 575; 14 Am. & Eng. Ency. Law (2d Ed.) p. 1166, and authorities cited in note 10; Id., p. 1167, and authorities cited in notes 1 and 3; 20 Cyc. p. 1419, and authorities cited in note 29; White Sewing Mach. Co. v. Saxon et al., 121 Ala. 400, 25 South. 784. But did plaintiff, by mailing the notice by registered letter to each one of said sureties, cause them to be bound? The jury have found by their verdict that plaintiff, throrigh its agent, participated in the agreement with these sureties that said contract was neither to be a binding one until certain other persons signed a,s sureties, nor was the same to be delivered until then, but, disregarding this agreement, the said obligation was delivered to plaintiff. Plaintiff, when it' sent the notice by registered mail to each one of these sureties, in law, had actual knowledge of this agreement, found by the jury to have been made between plaintiff, through its agent, and tire principal in said obligation, with all of said sureties. Under such finding by the jury, wrhat was plaintiff attempting to do in sending this notice to the defendants? Unquestionably attempting to vary the contract; in effect, attempting to make a new contract. That original obligation would not have become effective until all the parties agreed upon had signed it. Now, in effect, plaintiff, notwithstanding such agreement with said sureties, was attempting to make a contract, and cause it to be complete with only them on the obligation as sureties. In the case of Anderson v. Bellenger et al., 87 Ala. 336, 6 *545 South. 82, 4 L. R. A. 680, 13 Am. St. Rep. 46, Mr. Justice McClellan, speaking’ for the court, said: “The contract of suretyship must be strictly construed in favor of the surety. His obligation is voluntary, without any consideration moving to him, without benefit to him, entered into for the accommodation of his principal, and, generally, also for that of the obligee; and courts see to it that his liabilities thus incurred are not enlarged beyond the strict letter of his undertaking. To the extent, and in the manner, and under the circumstances, pointed out in his obligation, he is bound, and no further. His contract cannot be changed in any respect. Whether an alteration is or is not to his benefit is not open to inquiry. ‘He has a right to stand upon the very terms of his contract’; and, if a variation is made which extends its liability ‘to another person, or to any other subject, or for any other period of time than such as may be included in its words,’ and he does not assent to it, such variation is fatal to his obligation, whether he is injured thereby or not.” : See, also, Miller v. Stewart et al., 9 Wheat. (U. S.) 680, 6 L. Ed. 189. Did the sureties assent to the change of the agreement made by them with the plaintiff through its agent? It is true plaintiff, by registered letter, notified defendants that it had approved this bond. Plaintiff insists that, in order to prevent it from becoming a completed contract, they should have answered, and then and there dissented. What duty did they owe plaintiff? Could the plaintiff have been bona fide in approving this bond and obligation, and notifying defendants, by said registered letters, that it had approved it, thereby seeking to hold them as bound, in the light of the finding of the jury? By such finding plaintiff had knowledge of and was a party to a different agreement, at variance thereto, to the effect that said obligation was not to be a completed bond, nor delivered to plaintiff, until certain parties had signed it. Now, in derogation of that contract, it is turned over to plaintiff, and plaintiff, 'in effect, says: “Now, though I know it is at variance with the agreement under which yon *546 signed it, I serve notice on ycni now that I approve it.” Where, under the facts found, could the question of good faith, even to create an' estoppel, arise ? But here, where it is necessary to show an express or implied assent, can you say that it exists as a matter of law? Plaintiff, through its agent, with the principal in the obligation, seeking out the sureties, and, either expressly or impliedly, soliciting them to sign this obligation under false representations and certain stipulations, and when it gets possession of the fruit of these false representations and stipulations, is it to be permitted to say to these men to whom such representations and stipulations have been made: “I have the bond. I approve it. • I hereby notify you to that effect, and bind you as sureties for this past and pre-existing indebtedness?” Is this court to be judicially a party to consummating such a wrong? In order for these sureties to assent to this change or variation, it would have been necessarjr for the minds of these sureties to have concurred with that of plaintiff. In the case of Cartmel v. Newton, 79 Ind. 7, Chief Justice Elliott, speaking for the court,’said: “Whether a change in a contract is or .is not beneficial to a surety is not the subject of judicial inquiry. Courts will not attempt to determine whether a change in the terms of the contract will benefit or injure the surety. If it be shown that a change has been made without the consent of the surety, he may demand to be discharged. In the case before us the only contract to which the surety ever gave his consent was one providing that the principal should perform it within a designated period; and we can find ho case which will warrant the conclusion that the creditor may suffer the time to be extended without the knowledge or consent of the surety. The rule in favor of granting the surety the full benefit of the letter of the contract ought not to be made to yield to the rule that time is not of the essence of the contract. * * * In order to constitute a contract, it is essential that the proposition of the one party should be assented to by the other, exactly as made. A contract is never created unless the minds of the parties agree upon one and the same thing. The proposition which the surety signed plainly and unequivocally *547 required that the notes and mortgage provided for should be executed within 10 days. This was a material ingredient of the proposition. The surety never signified his willingness to assent to any other contract. He did not become a party to any other.” In the case of Fuller v. Kemp, 16 N. Y. Supp. 160, Judge Bischoff, of the Common Pleas Court of New York City, said: “ ‘Assent’ is evidenced by a proposition emanating from’ one side, and acceptance of it on the other; the proposition and acceptance together constituting what is sometimes called a ‘meeting of the minds.’” Is there anything in this record to show that, after plaintiff, in derogation of its agent’s agreement, secured possession of this contract and approved it as a completed bond, and so notified these sureties, there was ever a meeting or concurring of their minds with plaintiff’s that it was to be treated or considered as a completed bond to secure Secor’s pre-existing debt? They say that these sureties remained silent, but was there any duty ex aequo et tono for these sureties to speak out? and if they failed to speak, was that an assent that defendants had concurred in and ratified the new obligation ? It is a well-settled principle of equity and right that no man shall receive anything by law except for valid consideration; and, whilst these instruments are incidents and extensively used in the commercial world, and large credits and advances are made upon the faith reposed in them in the various forms which they assume, as letters of credit, guaranties, etc., yet the law throws its proptecting shield around the man that has received no consideration, to the extent that he shall not be deprived of his accumulations or inheritance, unless he has assented thereto under the forms recognized by law. That assent should not be simply by silence when the other party is attempting to at least overreach him, and there is no consideration moving to him, or unless he remains silent under such circumstances as an honest man would speak out. Where the obligee has practiced misrepresentation and fraud upon the surety, he owes such obligee no duty. *548 The judgment of the lower court should be affirmed, and it is so ordered. All the Justices concur.