Townsend v. Cowles

WALKER, J. — According to the settled law in this State, the guaranty sued on, which was made before the maturity of the note, imports an absolute engagement to pay the debt when due, in default of payment by the makers. — Donley v. Camp, 22 Ala. 659; Walker v. Forbes, 25 Ala. 139. The guarantor, without contesting the law above stated, successfully resisted a recovery in the court below, by parol proof that, by the agreement under which the guaranty was given, he was to be liable only after a prosecution of the makers of the note “to judgment and insolvency;” and by proof that the payees had, by letter, requesting the execution of the guaranty, represented to the defendant that the guaranty, if executed, would not give recourse against him by the holders of the paper, [434] until they “ had gone to the end of the law against the makers.” It is argued for the appellants, that the proof thus made available to the appellee, was inadmissible, because its effect was to vary the written contract of the guaranty. This argument the defendant contests; but for him it is also urged, that, conceding the testimony to have been inadmissible in that point of view, it was at least proper evidence upon the question of the fraudulent procurement of the guaranty. For the plaintiffs it is argued, in reply to this last position, that whatever misrepresentation was made, pertained to the law of the contract, and, therefore, does hot constitute a fraud. Neither the oral evidence given by the witness. Rudler, as to the agreement under which the guaranty was given, nor the letter of the plaintiffs, as to the effect of the guaranty, was admissible for the purpose of varying the written contract, of guaranty, or giving to it a different effect from that which the law assigns to it. ■ "When the parties have committed their contract to writing, it is presumed that they have agreed upon the writing as the expositor of the terms of the contract; and it cannot be varied by any antecedent parol stipulations, or by any representations made through the medium of a letter. This principle is now too well recognized and understood to require further support than is afforded by a reference to some of the decisions of this court. — Hair v. LaBrouse, 10 Ala. 548; Cowles v. Townsend & Milliken, at the last term; Holt v. Moore, 5 Ala. 521; Holley v. Younge, 27 Ala. 203; Waddell v. Glassell, 18 Ala. 561; West v. Kelly, 19 ib. 353; Hogan v. Smith, 16 ib. 600; Carlton v. Fellows, Read & Co., 13 ib. 437. The inconsistency of the evidence with the writing, however, was no objection to its admissibility in reference to the question of fraud in procuring the execution of the guaranty by the defendant. If the evidence conduced to show fraud, it was clearly admissible; and its admissibility in that point of view, did not depend on its correspondence with the written contract. If the evidence was relevant and pertinent to the question of fraud, it was competent. [435] 3. It is certainly the law, that a mere misrepresentation of the legal effect of the guaranty would not constitute a fraud. The principle, and the reason of it, are thus stated in Chitty on Contracts: “ Nor does a misrepresentation as to the legal effect of an agreement avoid the same, as against a party who has been induced by such misrepresentation to enter into it; for (every man being supposed to know the legal effect of an instrument which he signs) such misrepresentation must be taken to be of a matter within his own knowledge.” — See Chitty on Contracts, (9th Am. from the 5th London edition,) 591-592. The same principle was asserted in the case of Lewis v. Jones, 4 B. & C. 506, (10 E. C. L. 393,) in which it was held, that a false representation as to the effect of signing a composition agreement in favor of an insolvent debtor, upon one bound for the debt, did not constitute a fraud. In an Indiana case, where a note was given for the purchase of a land-warrant, it was decided, that a false representation as to the acts of Congress governing the location of land-warrants was not fraudulent, because, in the language of the court, “ It is considered that every person is ac-qainted with the law, both civil and criminal, and no one can therefore complain of the misrepresentations of another respecting it.” — Platt v. Scott, 6 Blackf. 389. Of the same import is the subsequent decision in the same State of Russell v. Branham, 8 Blackf. 277. The decision in the ease of Starr v. Bennett, 5 Hill, 303, assorts the same doctrine, in reference to an action of deceit against an officer, for a misrepresentation of the legal effect of his return. The principle we have stated is also sanctioned by Parsons, in his work on Contracts. — See 2d vol., page 270, note y; see, also, Craig v. Blow, 3 Stewart, 452; Jelks v. McRae, 25 Ala. 440; Cooke v. Nathan, 16 Barb. 342. The authorities recognize as the basis of the law upon this subject, that a misrepresentation, in a matter of mere judgment equally open to the inquiries of both parties, is not a fraud. The misrepresentation of the legal effect of the guaranty was, from the very nature of it, but the expression of an opinion upon a question of law equally [436] open to the inquiries of both parties, and as to which the law presumes that the defendant had knowledge. — Juzan v. Toulmin, 9 Ala. 682; Munroe v. Prittchett, 16 ib. 789; Addison on Con. 128. ■ We do not regard the decision in Rivers & Portis v. Dubose, 10 Ala. 477, as an authority against the views above expressed by us. In that case, the distinction between a misrepresentation as to a matter of law and as to a matter of fact was not noticed. The misrepresentation was evidently treated and regarded as one of fact. Upon the supposition that the misrepresentation was as to a matter of fact, the opinion was correct. It may be that the court erred in regarding the misrepresentation as pertaining to a matter of fact; but, be that as it may, we will not attribute to the court the position that a misrepresentation of the law was of itself a fraud, when it does not appear that they deemed it a misrepresentation of law, and when such a decision would be so palpably at war with principle and authority. If we regarded it as going the length supposed, we could not follow it without departing from a plain and well established principle of law. It is clear upon authority and reason, that a party is not estopped by a misrepresentation of the law. — Brewster v. Striker, 2 Comstock’s Rep. 19; Jelks v. McRae, 25 Ala. 444. Notwithstanding a misrepresentation as to a matter of law does not, per se, constitute a fraud; yet other circumstances, concurring with such misrepresentations, may make it a fraud. If any peculiar relationship of trust or confidence existed between the parties, and the plaintiff lias availed himself of such trust or confidence to mislead the defendant, by a misrepresentation as to the legal effect of the contract, it would constitute a fraud. So, if the defendant was in fact ignorant of the law, and the other party, knowing him to be so, and knowing the law, took advantage of such ignorance, to mislead him by a false statement of the law, it would constitute a fraud. 1 Story’s Equity, §§ 197-198; 2 Parsons on Con. 270; Juzan v. Toulmin, supra; Munroe v. Pritchett, supra; Cook v. Nathan, 16 Barb. 342. [437] The parol evidence objected to, and the letter of plaintiffs, were pertinent and relevant to the question of fraud; and, although of themselves they did not establish fraud, they constituted a link in the chain of evidence necessary to prove it; and it would have been improper for the court to have rejected them when offered. They should have been admitted; and if no other evidence on the point was adduced, the court should, when the evidence was closed, have excluded the evidence. — Spears v. Cross, 7 P. 437; Cuthbert v. Newell, 7 Ala. 457; LaRoque v. Russell, ib. 798: Inerarity v. Byrne, 8 P. 176; Mardis v. Shackelford, 4 Ala., 493; Crenshaw v. Davenport, 6 Ala. 390. We cannot assent to the argument of the appellants’ counsel, that a fraud in the misrepresentation of the legal effect of the contract, in a material particular, would not vitiate it. We understand the rule to be, that fraud will always avoid a contract, when the party affected by it has taken no benefit from it, and has not ratified it; and therefore, if a fraud in the misrepresentation of the law, according to the principles laid down in this opinion, should be shown, it would avoid the contract. — 2 Parsons on Contracts, 264; Story on Contracts, § 495; Chitty on Contracts, 586-587. The entire evidence is set out in the bill of exceptions. Construing the two charges asked by the plaintiff in reference to the evidence, it is clear that they were correct according to the principles laid down in this opinion. The court erred in the refusal to give those charges; and for that error, the judgment of the court below is reversed, and the cause remanded.