Drabek v. Grand Lodge of Bohemian Slavonian Benevolent Society

McAllister, J. If Schleiss, the principal in the bond, was, at the close of his first term as secretary, a defaulter in his capacity as such officer, as respected a material amount of the funds of plaintiff below, as seems to have been the fact, and if such fact was known to plaintiff’s president before, and at the time of the delivery by the defendants of the bond in suit, but unknown to the defendants, or any of them, and the latter, before they would deliver said bond, made or caused to be made inquiries of said president, or in open lodge, in his presence and hearing, for information respecting the condition of the accounts or financial relations with the plaintiff of said Schleiss as such officer, and if the fact of such defalcation was fraudulently concealed from them by the said president, or other agent of plaintiff, acting within the scope of his apparent authority, and having knowledge of such defalcation, or they falsely represented to the defendants that said accounts of said Schleiss were all right and correct, and thereby induced them to deliver said bond to plaintiff, then the same would be void and no recovery could be had upon it. Smith v. The Bank of Scotland, 1 Dow. 272, 292 et seq.; Railton v. Matthews, 10 Cl. & Fin. 934; Lee v. Jones, 17 C. B. N. S. 482; Wayne v. Commercial Nat. Bank, 52 Pa. St. 250; Franklin Bank v. Cooper, 36 Me. 180; S. C., 39 Me. 542; Sovy ads. The State, 39 N. J. L. 132; Roper v. Sangamon Lodge, etc., 91 Ill. 518. Eow, by the instruction to the jury upon.the issue of fraud, given at the instance of the plaintiff below, the court augmerited the burden of proof to which the defendants were subject under that issue, beyond what the law required, by directing them that it was incumbent upon defendants to show, in addition to the knowingly false representations, that they were made with the intention to deceive the defendants, and with the purpose of deceiving them and inducing them to deliver the bond. The instruction was erroneous and misleading. It is fraud in law, if a party makes representations which he knows to be false, and injury ensues, although the motive from which the representations proceeded may have not been bad. Fraud will be inferred. Case v. Ayers, 65 Ill. 142; McBean v. Fox, 1 Ill. App. 177; Gough v. St. John, 16 Wend. 645; Railton v. Matthews, 10 Cl. & Fin. supra. The error of that instruction clearly requires a reversal of the judgment. But there is another important question which will arise upon another trial, and which we can not, with propriety, avoid passing upon, viz.: The admission in evidence under the objection and exception of the defendants, of a conversation with Schleiss, and the letter written by him August 18, 1885, set out in our statement of the case, after he had been dismissed and ceased to be in the service of the plaintiff in any capacity. The statements made by him in neither the conversation nor the letter can be considered as part of any res gestee¡ and the question being considered independently of the circumstance of his being dead, we think it clear, upon principle and authority, that the evidence was incompetent as being mere hearsay. In speaking of the admissions of a principal as evidence against a surety upon his collateral undertaking, Greenleaf says: “In the cases on this subject, the main inquiry has been whether the declarations of the principal were made during the transaction of the business for which the surety was bound so as to become part of the res gestae. If so, they have been held admissible; otherwise not. The surety is considered as bound only for the actual conduct of the party, and not for whatever he might say he had done, and therefore is entitled to proof of his conduct by original evidence where it can be had, excludingall declarations of the principal made subsequent to the act to which they relate, and out of the course of his official duty.” 1 Greenleaf on Evidence, Sec. 187. The correctness of the rules, with their qualifications as embodied in the above quotation, has been recognized and illustrated by some of the ablest courts in the country. Stetson v. City Bank, 2 Ohio St. 167, opinion by Ranney, J.; Hatch v. Elkins, 65 N. Y. 489; Union Savings Association v. Edwards, 47 Mo. 445 ; Chelmsford Co. v. Demarest, 7 Gray, 1. But it is insisted in argument on behalf of plaintiff below that the admissions and declarations of Schleiss were receivable in evidence under the rule as to the declarations and entries of persons since deceased, made against their interest, being competent evidence; and the cases of Whitmarsh v. George, 8 Barn. & C. 556, and Middleton v. Melton, 10 Barn. & C. 316, are cited in support of the doctrine. We are inclined to the opinion that the admission of Schleiss in conversation, of having received a specific sum during the business of his office, and he having since died, was competent. 1 Greenleaf on Ev. (May’s Ed.) Secs. 151, 152, and authorities cited in notes; but that the admission of his letter of August 18, 18-85, was not competent. The letter contains statements of amounts received by him; and then several statements of matters not relevant to any point in issue. The whole letter was given in evidence by the plaintiff under objections and exception by defendants. One of the rules as to the production of evidence is, that it must correspond with the allegations and be confined to the point in issue. “ This rule excludes all evidence of collateral facts, or those which are incapable of affording any reasonable presumption or inference as to the principal fact or matter in dispute ; and the reason is, that such evidence tends to draw away the minds of the persons from the point in issue, and to excite prejudice and mislead them.” 1 Greenleaf on Ev., Sec. 52. Tiie assurance in the letter that his sureties would not suffer on his account, was well calculated to mislead the minds of the jurors. The plaintiff could, under no rule of law we are aware of, have given original evidence tending to prove that there was a probability that the defendants might reimburse themselves if they had to pay the amount in question. Leach v. Nichols, 55 Ill. 273. Besides, it is clear from reading the letter, that all the collateral matters adverted to and embraced in it, and which were received in evidence, are to be put upon the same footing of irrelevancy, and proceeded from motives of self-interest on the part of the writer. They were written in extenuation of his conduct, and not against his interest. We are well aware that some courts have held that where part of the entries or declarations are against the pecuniary or proprietary interest of the declarant, that would carry the whole. But we have been cited to and we can find no authority, which would authorize the introduction of such collateral matters when the party producing them would not be authorized to give original evidence of the same on account of their irrelevancy and mischievous tendency. The judgment below should be reversed and the cause remanded. Reversed and remanded.