Brewing Co. v. McLean

Opinion by Oblady, J., The defendant executed a bond — as surety for J. M. Nelson who signed the bond as piincipal — to the plaintiff in the sum of $2,000, conditioned for the prompt payment by Nelson, as follows: “ For all beer which may be shipped or delivered to him by said Brewing Company in excess of the sum of one thousand dollars.” The bond ivas dated October 16, 1895, and signed by the defendant in the presence of a representative of the plaintiff, under the following circumstances. Nelson had been a customer of the plaintiff since September 11, previous. On September 26, he gave to the plaintiff a check for $360.25 to pay for a carload of beer, and then ordered more, the price of which was $325. On October 2, the plaintiffs’ agent (Sapp) presented the check of Nelson to the bank on which it was drawn; at which time it was protested for want of funds to meet it, and it was not paid at the time the bond in suit was signed. The plaintiff refused to make any further sales to Nelson unless he would give a bond to protect them. On October 4, an agreement in writing was entered into between the plaintiff and Nelson by which the plaintiff was to sell and deliver beer at certain named prices to Nelson, who was to have the exclusive right to sell the plaintiff’s product in certain towns, and if a greater credit than $1,000, should be desired by him it was provided that, viz : “ a bond shall be furnished in the sum of [41] two thousand dollars penalty for the faithful payment of such excess over one thousand dollars.” W. J. Sapp, the agent of plaintiff in securing the bond, testified as follows: “Q. Did you know at that time that Nelson, the principal, was insolvent ? A. Well, I judged so because of a talk I had with him in East Liverpool there, and my people wrote me that they would not ship any more goods unless I got a bond. His credit was extinguished.” The defendant’s uncontradicted testimony is as follows: “ Mr. Sapp, when he came into the office, was introduced to me by Mr. Nelson, and he said that he had been down to East Liverpool for two days, and had thoroughly gone over the ground in that locality and was under the impression that it was a good place ; that Nelson no doubt could make considerable money by disposing of their beer there; that the profit per barrel would be about $2.00 and the quantity of beer per month would probably be a car load or so. Nelson said, ‘ Yes; the field looked to him as if it was all right.’ That bond was presented, and I said, ‘ Mr. Sapp this is something I never did before in my life, and I dislike the idea of doing it.’ Mr. Sapp said, ‘I assure you it is all right; Nelson has friends down there, and can dispose of the quantity of beer I have stated.’ I looked over the bond carefully, and I said: ‘ If he is newly started into the business there, as you say, I have no hesitation in being of some assistance to Nelson, as I have known him for twenty-five years.’ ” The court held, that in the absence of inquiry the plaintiff was not bound to inform McLean of the state of accounts between them and Nelson, and their failure to do so was not a fraud upon him. A verdict for the plaintiff was directed by the court. It can hardly be supposed that McLean would have signed the bond if he had been informed of the real state of facts. As to the single fact of beiñg indebted to them, it was not the duty of the plaintiff to volunteer information but Sapp, speaking for the plaintiff, directly led McLean to believe that the enterprise was newly started, and after personally investigating the locality, he was of the opinion that Nelson no doubt could make considerable money in it. The very opposite was the truth. The business had been in existence for some time and was so disastrous as to extinguish Nelson’s credit; he was [42] known to be insolvent and indebted to the plaintiff in $1,100, part of which was a dishonored check of $360. These facts were personally known by Sapp, who, when he assured McLean that it was “ all right,” fraudulently concealed material facts by which Nelson was held out to be a trustworthy person about to embark in a profitable business. When McLean hesitated to sign the bond, the plaintiff, by Sapp, anticipated further or particular inquiry, by representing to him that it was “all right.” It cannot be denied that the facts were wilfully suppressed and we hold as matter of law that they were material: Story’s Eq. Juris. see. 215; Bolz v. Stuhl, 4 Pa. Superior Ct. 52. The first, second and fourth assignments of error are sustained and the judgment is reversed.