Jones v. National Building Ass'n

Mr. Justice Paxson delivered the opinion of the court The learned referee found as matter of fact that at the time the note in controversy was executed, J. M. C. Ranch, the secretary of the building association, represented to David T. Jones, the surety in said note, that he would only be security on the loan for about three mofiths, or until Mr. James, the principal, could get an insurance policy on his house and deposit it with the association; that about ten weeks after, Mr. James procured a policy of insurance on his house, and deposited it with the association ; and that soon after, Mr. Jones demanded of Mr. Ranch a compliance with his agreement and a release of his (Jones’s) obligation as surety, and that Mr. Ranck again assured him that he should be released. The referee’s finding of the law is not so satisfactory. It was “ That D. T. Jones, the surety, is estopped to set up as a defence to this action the fraudulent representations of the agent of the association.” [218] The court below sustained, the finding of the referee upon the law. No exceptions were filed to his finding of facts. The contention on the part of the association, plaintiff, is, that the secretary had no authority to make the representations by which Jones was induced to sign the note as surety; that it was therefore a fraud and not binding on said association — that is to say, the latter could repudiate the fraud, and yet hold on to its fruits. This cannot be done. Common honesty and the law of the land alike forbid it. Whether the association was incorporated or unincorporated, whether the secretary was or was not authorized to make the representations to Jones, it is clear the association cannot have the benefit of the security and at the same time repudiate the contract by means of which they obtained it. N.o principle of law is better settled than that a man cannot reap the fruits of his agent’s fraud: Musser v. Hyde, 2 W. & S. 314; Hunt v. Moore, 2 Barr 105; Mundorff v. Wickersham, 13 P. F. Smith 87; Keough v. Leslie, 11 Norris 424. The association took this security cum onere, and the maxim qui sentit commodum sentire debet et onus applies. The judgment is reversed as to David T. Jones, the surety.