Causey v. Wiley, Banks & Co.

By the Court. McDonald J. delivering the opinion. [1.] This voluminous record presents points on the single issue, whether the original complainant was circumvented into the signature of the notes as surety for his son, William J. Causey. On the trial of an issue of that sort, great latitude is allowed in the admission of evidence; and circumstances, seeming to have little or no connection with the principal transaction, are often looked to, because, on a strict and close examination, they may throw light upon, and explain circumstances, which have a direct bearing upon it, and which are in evidence. Whether the explanatory circum — 449 — stances are sufficient to defeat the force of those in support of the main issue, is a question for the consideration of the jury. In questions of fraud, it is often necessary to enquire into the quo animo of the parties; and circumstances to elucidate that, may be given in evidence. It may be of consequence, too, to prove a knowledge of the party said to he practiced upon, of the existence of a certain state of things which is disputed by him; and circumstances tending,"even remotely, to establish such knowledge, is proper evidence. That E. M. Causey took up a note signed by W. J. Causey and L M. Causey, given the year before the matter in issue took place, taken in connection with the fact that W. J. Causey had conveyed property to L. M. Causey and others, to pay off. such liabilities, is admissible on the question whether L. M Causey knew of the pecuniary embarrassments of W. J. Causey, however valueless its influence may be on that part of the issue which related to the conduct of the parties in procuring the signature of the intestate of plaintiff in error to the notes. So it may be said in regard to Murdock’s testimony. He proved that W. J. Causey was poor, but not that he was insolvent. Though poor, he purchased a stock of goods, and gave a mortgage, but there is no evidence of antecedent debts. But it is evidence to be considered, that he commenced business years before, without means, and is only admissible to prove, inferentially, that his father had knowledge of his circumstances at the beginning. It is true, that it is slight evidence that he continued to be solvent. The evidence of Miller proved the existence of a letter, but not its contents, and is only admissible as evidence of the knowledge of L. M. Causey that his son was then without means. There is nothing in the evidence of Miller, certainly, to prove the existence of a legal or moral obligation on the part of L. M. Causey, to pay the debt in question, and it could not have been admitted for any such object. The presump. — 450 — tion is against Miller’s having written such a letter as would fix a liability on him, and if he did not, the request of L. M. Causey was not complied with. For the same reason, the evidence of H. H. Collier ought to harm been received. [2.] The testimony of G. P. Culverhouse was inadmissible by the terms of the statute, and ought to have been rejected, as it was. [3.] There is no error in the charge of the Court, in regard to the consideration necessary to support a contract of surety-ship. If there be legal capacity, and no imposition, such contract is binding. On the issue of fraud or no fraud in procuring (he contract, weakness of capacity, combined with the fact that it is a contract of suretyship, is entitled to consideration. The prominent grounds of complaint, of the judgment of the Court below, are to be found in the 10th and 12th grounds of the motion for a new trial, and amount together, to an allegation of a want of appositeness in the charge of the presiding Judge, to the facts and circumstances of the ease, as in evidence before the jury. The plaintiff’s counsel relies, in support of his cause, on the principle, that although weakness of mind, short of legal incapacity to contract, is not sufficient, of itself, to invalidate the note, yet, very slight circumstances of fraud or imposition, are sufficient to sot it aside, and that the Court ought to have given the jury more explicit instructions upon that point. The Court charged the jury, in substance, that in proportion to the mental infirfnity of the party, he is to be supposed to be less capable of resisting importunity, and of guarding himself against the circumvention and machinations of those who meditate a fraud' upon him, and that under that view of the caso, if L. M. Causey was competent to contract, he was liable on the notes, and should be decreed to pay them,, unless they should believe, from the evidence, a fraud was practiced on him, in the procurement of his name, as sesecurity on the notes, by Wiley, Banks & Co., or Theodo — 451 — rick N. Montfort, the attorney at law, or some other person, with their knowledge or concurren.ce, and it is a settled principle that fraud is not to be presumed, but must bo proved by those alleging it. We think that this charge was too general, and not sufficiently explicit, as to the legal and equitable principles applicable to the case made by the bill, answers and proof, and especially, in instructing the jury, without further explanation, that “it is a settled principle, that fraud is not to be presumed, but must be proved by those alleging it.” It was in proof, in this case, that Lemon J. Causey had been a long time afflicted with paralysis, or dead palsy, at the time he signed the notes as security for his son; some of the witnesses thought him capable of attending to ordinary business understandingly, while others believed him to be incompetent. The defendant’s, creditors of William J. Causey, had heard of his embarrassments, and so well satisfied were they, that their debt was in jeopardy, that it was considered worth a trip by one of them, from Charleston to Crawford county, in this State, to attempt to secure it. lie went to Knoxville, accompanied by his attorney from another county, and had an interview with the debtor, William J. Causey, who was a favorite son of his paralysed father; the creditor, the attorney, and the son, after an interview in Knoxville, went together to the house of the father, and soon induced him to sign the notes as security; the son at the time, being latterly insolvent. The imbecile father said at the time, and in the presence of the parties, according to the answers, after the notes had been signed by him, that it was the enemies of his son who had circulated reports injurious to his credit; but this declaration, indicated that he believed, at the time, that his son was solvent. The Court, on the hearing of such a cause in equity, should give in charge to the jury, the principles on which Courts of Equity act, in reference to cases of this sort. “When the party executing an instrument, is a weak man, and liable to be — 452 — imposed upon, the Court will look upon the circumstances, and the nature of the transactions, with a very jealous eye, and will very strictly examine the conduct and behavior of the persons, in whose favor it is made. If it see that any acts, or stratagems, or any undue means have been used;” “if it see the least spark of imposition at the bottom; or that the donors,” (security here) “is in such a situation with respect to the donee,” (the principal in the note here) “as may naturally give an undue influence over him ; if there be the least scintilla of fraud in such a case, the Court will, and ought to interfere.” Hill on Trustees, (154) 2d Am. Ed. In the case of Griffin vs. Deveulle, and others, reported in the appendix to the 3d vol. of Wooddison’s Lectures, Lord Chancellor (Thurlow, I believe it was) remarked that “ the Court would not set aside the voluntary deed of a weak man, who is not absolutely non compos, nor any deed of improvidence or profuseness, for these reasons merely, when no fraud appears, as was laid down by Sir Joseph Jekyll in Osmond and Pitzroy ;but, that Sir Joseph Jekyll might have been pleased to add, that from these ingredients there might have been made out and evidenced an inference of fact, that there was fraud and misrepresentation used.” The learned Chancellor seems to have laid down the sound rule, and the only rule which can protect, effectually, weak men from the machinations of artful men of superior mind, viz: that upon proof of weak mind, and that the instrument was executed without consideration, or was improvident or profuse, fraud would be inferred, and to rebut it, proof must be made that it was the voluntary act of the party himself, unmoved by the words or conduct of the party taking the benefit under it. The latter part of the charge under consideration unexplained, may have misled the jury, and in all such cases, we hold that an explanation should be given, to-wit: that fraud maybe inferred from circumstances. It may be proved un — 453 — questionably, like any other charge. Men may be convicted of capital offences upon circumstantial evidence. Fraud also, may be proved by circumstances, but it is not to be presumed. This principle may be illustrated in a manner to elucidate the law of this case: A. being a man of powerful mind, trades with B., a person of weak and impaired mind ,• he purchases property from him, and pa3us an inadequate price; this is proven, and the evidence stops here. Fraud is: not to he presumed, for a man of strong mind may sell property for greatly less than its value, and may have sufficient reasons for it, hot if it be shown that B. was a person of weak mind, and easily imposed on, fraud may be presumed from the combination of the two circumstances, strength of mind on the one hand, and weakness of mind on the other, and the great inadequacy of the price paid for the property. The proof of these circumstances alone, would throw on the person taking a largely disproportionate benefit under the contract, the necessity of making proof that there was nothing in his conduct or behavior toward the party with whom he made, the contract, showing fraud; that there was nothing of imposition, influence or encouragement, to trade, &c., &c. In the case of Chesterfield vs. Jansen, 2 Vesey, Sr., 155, Lord Hardiuick enumerates several species of fraud, and the law on the subject, summarity, which as it is short, T will extract “ 1st. Fraud arising from facts and circumstances of imposition, which is the plainest case. 2d. Fraud may he apparent from the intrinsic value and subject of the bargain itself, such as no man in his senses, and not under delusion, would make, on the one hand, and as no honest or fair man would accept on the other; which are inequitable and unconscionable bargains, and of such, even the common law will take notice. A third is such as may be presumed from the circumstances and condition of the parlies contracting; and this goes further than the rule of law, which is, that fraud must be proved, not presumed; but it is wisely established in — 454 — a Court of Equity, to prevent taking any surreptitious advantage of the weakness, or necessity of another, which knowingly to do, is equally against conscience, as to take advantage of his ignorance. A fourth kind of fraud may be collected and inferred in the consideration of a Court of Equity, from, the- nature and circumstances of the transaction, as being an imposition and deceit, on other persons not parties to the fraudulent agreement.” The law upon this subject is as fully stated in this extract, as it can be found in the same compass, any where?, and if the principles there laid down are analyzed, it will be found, that fraud may he established by circumstances, as well as by positive proof. Indeed, like most crimes, fraud can be established, generally by circumstances only; for when men determine, deliberately, to commit a fraud, they would scarcely avow their purpose; they would rather lay their plans so adroitly as to avoid detection, and the worst frauds can often be searched out, only by circumstances pointing, more or less, directly to the object accomplished. The charge of the Court that “ fraud is not to be presumed, but must be proved by those alleging it,” is no doubt correct in a case to which it applies; but, in a. case where either facts or circumstances tending to establish fraud, are in proof, it cannot apply. To say that fraud is not to be presumed, is equivalent to saying that it is not to be supposed to exist without proof, either positive or circumstantial. Such an isolated charge, without explanation, to do away its positive effects, cannot apply to any case where there is evidence to prove fraud, and the jury are not left to bare presumption, without facts or circumstances to support it, to set aside the alleged fraudulent transaction. In looking through this case, such facts and circumstances, we are bound to say, are in proof, as to call for a charge of the Court to the jury, that they might consider the facts aud circumstances, to determine the issue of fraud or no fraud. The charge as delivered by the Court, without explanation, was well calculated to make an impression on the mind of the — 455 — jury, that in the opinion of the presiding Judge, if they found fraud in the case, it must be upon presumption alone. We are well satisfied that such was not the intention, but the absence, of such intention cannot vary the law of the case. Judgment reversed.