Passumpsic Bank v. Goss

Barrett, J. Goss procured Page to sign the note in suit as his surety, for the purpose of enabling him to obtain a loan at the bank, in the usual course of discount. The money was obtained, and, the note not being paid, this suit was brought. Two questions are raised by the bill of exceptions, and have been discussed at the bar. 1st, as to the charge given, and the refusal to charge as requested ; 2d, as to the alleged variance. I. As the case shows that neither the bank, nor any of its directors, had knowledge or notice of the alleged agreement between Goss and Page, can Page avail himself of that agreement in defence to this suit ? We can not regard this case as coming within the principle of the decision in Fletcher v. Austin et als., 11 Vt. 447, and in the similar case of Pawling et als. v. The United States, 4 Cranch. In those cases the bonds bore evidence on their face, that they had not been completed according to the original intention. They carried notice of that fact to the respective obligees, and put them on inquiry, and thus charged them with full knowledge of the true state of the facts touching the execution and delivery thereof. The case of Leaf v. Gibbs, 4 Car. & P. 466, is broadly distinguishable from this, in the fact, that the plaintiff procured the notes to be given to secure the payment of an existing debt for goods sold to two of the signers, under an arrangement that the defendant’s mother, as well as the defendant, should also sign them. In pursuance of this arrangement, the plaintiff procured the signature of the defendant. On application to the defendant’s mother, she refused to sign, The plaintiff, however, kept the notes, and sued the defendant on one when it became due. The plaintiff was fully cognizant of the arrangement, and knew that, as against the defendant, he was not entitled to hold and enforce the notes, [319] The case of Awde v. Dixon, 5 L. & E. Rep. 512, upon a first impression, seems to come nearer to the present case, and to countenance the defence here made. But on examination it clearly stands on a different ground. In that case the payee’s name was left blank when the defendant signed the note as surety. It was inserted at the time the note was delivered, and the money was advanced upon it, the principal “ stating falsely that he had authority to deal with it.” Moreover, the defendant signed, having a space for the name of the person who was to sign as co-surety. "With the note in this condition when presented to the plaintiff, he becomes the payee, by having his name inserted, and receives it. It is obvious from the report of the case, that the court deemed the- insertion of the payee’s name, and the passing off of the note, to be a forgery upon the defendant, the same as if the sum had been left blank when signed by the surety, and after-wards had been filled with a larger sum than had been agreed between the principal and surety. In the case of Johnson et al. v. Barker, 4 B. & Aid. 440, it seems that the deed had never been delivered to the plaintiffs. It had only been entrusted to Burnell, one of the creditors, for the purpose of having all the creditors procured to sign it. Burnell was entitled to hold it for that purpose alone, until all the creditors should have signed it. All not having signed, it remained as an escrow in his. Moreover, as it was a composition deed, and embraced all of Burpin’s creditors as one party to it, and they were all named at its foot, it was upon its face incomplete, as between the parties, until all the creditors should have executed it. In the case in hand, the note was perfect on its face, and was delivered to the plaintiffs in the usual course of business, in behalf of the party apparently entitled to deal with it. The cases cited by counsel for the defendant, involving the negotiation of partnership paper by one partner after the dissolution of the partnership, bear an analogy quite too remote to entitle them to control, or even indicate the proper decisions of this case. And we conceive that it would be forcing an analogy where none exists, to treat Goss as holding the relation of agent to Page, in dealing with the note in question, with the view of [320] holding, as a consequence, that Page is acquit of liability, because his agent, Goss, transcended his authority. The object of Page’s signing the note was that money might be obtained upon it of the plaintiffs. It carried evidence of this fact upon its face. Being apparently a perfected instrument, duly executed, and designed to be used for that purpose, it was entrusted by Page with Goss. It was used by Goss for the purpose indicated upon its face, and the money was advanced upon it in the ordinary course of loan, in good faith, and without notice or knowledge of any condition or reservation in favor of Page, as to the circumstances under which it was or was not to be used by Goss. As between the plaintiffs and Page, who ought to be responsible for Goss’ violation of his agreement with Page, that he would not use the note, unless Brown should be procured to sign it as co-surety ? In the first place it is to he remarked that Page alone was in privity with Goss, so far as that agreement is concerned. In view of that fact, common principles would indicate that Page should stand responsible for the personal confidence which he reposed in Goss. The plaintiffs trusted to the paper, which was genuine, and apparently perfected for the purpose intended to be served by it. They were not called on to exercise any personal confidence as to anything beyond the genuineness of the paper and the responsibility of the signers. See Nash v. Skinner, 12 Vt. 219; Commercial Bank of Buffalo v. Kartright, 22 Wend. 348, — opinion of Verplank, Senator. If the case be considered in reference to the existing equities, it can hardly admit of doubt that they are with the plaintiffs. They have parted with their money, in good faith, upon paper that Page entrusted with Goss for the very purpose of enabling him to obtain that money of the plaintiffs, and in a condition to enable him to use it for that purpose, without exciting any suspicion or suggesting any query as to his right to use it. If Page would have shielded himself from liability on that paper, as it was when he thus entrusted it with Goss, a practical and proper sense of fair dealing would seem to require, that in some way he [321] should have put the plaintiffs on their guard against taking it, unless it should have been signed by Brown. In accordance with this view is an old and very uniform doctrine of the land, that where, through the fraudulent act of a third person, one of two innocent parties must suffer, he who has clothed such third pen-son with the means of perpetrating the fraud, must bear the loss, Paley on Agency 201; Goodwin v. Eastman et al. 4 N. H. 455; Bailey, J. in Whithead v. Tuckett, 15 East. p. 442; Barber v. Britton & Hall, 26 Vt. 112. See also the language of Senator Verplank, in the opinion above cited, p. 368. The propriety of this view is strongly illustrated by the well known course of this kind of business. The instance has hardly occurred of a bank making inquiry when paper, genuine and apparently designed for discount, is presented at the counter, whether, as against the makers, it is entitled to be used. If the oourt should sustain this defence in this case, it would become necessary for banks, and equally for all persons, upon the offer of a note with sureties, in the usual course of business, to call before them all the makers, and ascertain by personal inquiry, whether it was “ all right,” and not subject to some side agreement or reservation in favor of some of the sureties, that might render it invalid as against them. We think such a rule of law would not only contravene the well established usages of business, but would surprise, if not shock the judgment of the community upon this subject. We regard those usages as well as the general understanding of business men in this respect, to be based upon firm legal principle. In our judgment the county court committed no error against the defendant Page in reference to this ground of defence. II. The alleged variance. A variance is claimed to exist by reason of the omission in the declaration of the word “ months” after the word “three” in the description of the note. That omission clearly resulted from a mere slip of the pen. Every lawyer understands the stringency as well as the propriety of the rule requiring the proof to conform to the allegation, and particularly requiring that a contract be set out correctly either in tenor or legal effect. Does the declaration sufficiently set opt the note ? The note [322] is payable in three months from its date. After describing it, with the omission of the word “ months ,” the declaration then proceeds: “ and the plaintiffs aver that the said three months from the date of said note have long since elapsed,” etc., in the common form of alleging the breach. Now it is plain that without that averment the declaration would be unintelligible as to the time when said note was payable; for it might as well be three days, or three years, as three months from its date. But with that averment it is perfectly certain, on the face of the declaration, that the note declared on is payable in three months from its date. This being so, no one could be in doubt as to the precise cause of action specially counted upon. We therefore think the declaration answers substantially the requirement of the rules of law in this respect. We know of no rule of construction or intendment that forbids giving effect to that averment in its connection with the other parts of the declaration, as showing the time when the note was payable. The case of Williams et al. v. Willson et al., 2 Vt. 266, is an ample precedent upon this subject. The judgment is affirmed.