Voreis v. Nussbaum

Miller, J. The appellant contends that the court erred in its conclusions of law upon the special finding of facts. A synopsis of so much of the finding as is necessary to present the questions of law involved, is as follows: On the 19th day of November, 1888, the defendant Lottie A. Voreis, who was at the time a married woman, executed her promissory note of that date, payable one year after date, to the order of William Bucklen, at a bank in Plymouth, and at the same time she, with her husband, George W. Vories, executed a mortgage upon her separate property to secure the payment of the note. That George W. Voreis, her husband, received the consideration for which the note was executed, and used the same in the payment of his own individual debts, and for his — 268 — own use; but afterward gave his wife ten dollars of the money; that no part of the consideration was used for the betterment of her separate property or business. That afterward, but before its maturity, the note was duly assigned to one Leonard Flagg, who, before its maturity, for a valuable consideration, and in the regular course of business, assigned it to the plaintiffs. That the plaintiffs, as well as the assignors, at the time of the execution of the note, and of its assignment, had knowledge that the defendant Lottie was a married woman; that neither the payee of the note, the assignor Flagg, nor the plaintiffs, made any inquiry of the defendant Lottie A. Voreis or 'her co-defendant Georgp W. Voreis, as to who received the consideration for the note, or who would receive the benefit therefron; but that neither the assignor Flagg nor the plaintiffs had any actual knowledge or notice whatever that the consideration for the note was not received and used by said defendant Lottie for her own special use and benefit, and had no actual knowledge, or notice, that said note and mortgage were executed by the wife as surety for her husband. That one of the plaintiffs, and the one who purchased the note from Flagg, and the defendants lived, at the time of such purchase, in Marmónt, a small village in Marshall county, and were well and intimately acquainted. The court, as a proposition of law from the foregoing facts, concluded that the plaintiffs were entitled to a recovery against the defendant Lottie, for the full amount of the note, and against both the defendants for a foreclosure of the mortgage, and judgment was rendered accordingly. Since September 19th, 1881, there has been in force in this State the following statute, section 5119, R. S. 1881: “A married woman shall not enter into any contract of suretyship, whether as endorser, guarantor, or in any other manner ; and such contraet, as to her, shall be void.” The fact that the husband did, and the wife did not, receive the consideration for which the note was executed, con — 269 — clusively establishes the proposition that she was a surety and not the principal in the note, notwithstanding the form, of the contract. Vogel v. Leichner, 102 Ind. 55; Cupp v. Campbell, 103 Ind. 213; Nixon v. Whitely, 120 Ind. 360; Crisman v. Leonard, 126 Ind. 202. The question to be decided is, does the statute above cited invalidate a note, made payable in bank, executed by a married woman as surety, in the hands of an innocent purchaser, for value, acquired in the regular course of business ? It seems to be the settled doctrine of the courts and text writers that a note executed in violation of a statute is void even in the hands of an innocent purchaser for value. In Tiedeman Commercial Paper, section 178, it is said: “But where the statute, making the consideration illegal, declares a contract founded on such a consideration to be absolutely void, the language of the statute must be given its proper effect, and so the courts have held that the commercial paper founded on such considerations is void even in the hands of bona fide holders.” In Vallet v. Parker, 6 Wend. 615, it is said: “ Wherever the statutes declare notes void, they are and must be so, in the hands of every holder; but where they are adjudged by the court to be so, for failure, or the illegality of the consideration, they are void only in the hands of the original parties, or those who are chargeable with, or have had notice of the consideration. In 2 Randolph Com. Paper the law is laid down in these words: Section 517. “All contracts which violate the provisions of the statute law either expressly or by implication are void. And this is true, although the prohibition of the statute be not expressed, but must be implied from its nature and objects. Where a statute expressly declares the contract which forms the consideration of the note or bill to be void, the note or bill is illegal and void even in the hands of a bona fide holder for value. So, where the Legislature has pro — 270 — hibited a transaction, a bill or note given for it is void.” See, also, Sondheim v. Gilbert, 117 Ind. 71; Spray v. Burk, 123 Ind. 565. The statute says that “A married woman shall not enter into any contract of suretyship,” and follows this prohibition with the express declaration that any “ such contract, as to hér, shall be void.” Stronger language could not have been chosen in which to express, the legislative intent to prohibit .the making of such contracts, and to declare that the conser quence of a violation of the statute should be to declare the instrument void. The presumption is that the word “ void ” was understandingly used by the law-makers, and this presumption is strengthened by the fact that the term correctly expresses the status of contracts executed in violation of. statute, as establishéd by the overwhelming weight of authority. The statute was enacted to shield and protect married women from contracts 1'rom which neither they nor their estates could be benefited, and such contracts were, therefore, to be void as to them. We have therefore held that they alone can invoke the benefit afforded by the prohibition. Plant v. Storey, ante, p. 146; Johnson v. Jouchert, 124 Ind. 105. We see no reason why, when they have elected to claim the benefit of the act, the words of the statuteshall not be given the same force and effect that would have obtained if the words “ as to her” had been omitted. While the statute makes the contract of suretyship void as to a married woman, she alone can claim the benefit of the statute, and being, under our statute, bound by an estoppel in pais, like any other person, it follows, logically, that she may in some cases be estopped by her conduct or representations from claiming the benefit of the statute. This is not an affirmance or ratification of a void contract, but an estoppel against the exercise of k personal right. The cases in which married women have, been estopped from claiming the protection of the statute are cases where — 271 — some statement, affidavit or representation has been made by the party to be estopped, which has been, in good faith,, relied upon by the other contracting party, so that to permit her to show the truth would be to assist in the perpetration of a fraud. The cases of Ward v. Berkshire Life Ins. Co., 108 Ind. 301, Rogers v. Union Central Ins. Co., 111 Ind. 343, and Lane v. Schlemmer, 114 Ind. 296, are of this character. In Cupp v. Campbell, supra, and Lane v. Schlemmer, supra, it was held that a married woman is not estopped by the mere form of the contract, which she has no power to make. In this case there was no statement or representation of any kind to indicate that the appellant was the principal in the note, and received the consideration, except the form of the contract. • This, we are satisfied, was not sufficient to' constitute an estoppel to prevent her from showing who received the consideration and who did not. To hold otherwise would be to nullify the statute, and look to the form rather than to the substance of the transaction. This was well expressed by McBride, J., in the late case of Cummings v. Martin, 128 Ind. 20, in these words: “ It can not be doubted that one of the principal reasons for the enactment of the statute forbidding married women to enter into any contracts of suretyship, and paaking such contracts void as to them, was to prevent them from squandering or encumbering their property as sureties for improvident husbands. The courts .have rightfully shown a disposition to scan closely contracts where there was reason to suspect that the transaction, while in form a contract, with the wife as principal, was, in fact, an attempted evasion of the statute, the consideration moving solely to the husband. Where this has been found to be true, it has uniformly been held that the contract is within the inhibition of the statute, and is void as to the wife.” Judgment reversed, with instructions to restate the con — 272 — elusion of law in accordance with this opinion, and to render judgment for the appellant Lottie A. Voreis. Filed April 27, 1892.