Wickham v. Grant

/The opinion of the court was delivered by Horton, C. J.: This action was commenced in a justice’s court and appealed to the district court, where the judgment complained of was rendered. The defendant below did not file any written answer or other pleading before the justice, and no demand therefor was made. Upon the appeal the case was tried on the original papers, and therefore the defendant was authorized to introduce on the trial any evidence to prove any defense which he had, and without filing an answer, he was authorized to set up any defense that he had to defeat a recovery upon the notes sued on. He therefore [522] had the right to show that the notes were obtained by fraud, and without consideration. It is established from the evidence and findings, that the defendant is a Swede who cannot read or understand English thoroughly, and relied upon and believed to be true all that was said to him by one Carl Carlson, in regard to the meaning of the words “before that date” contained in the notes signed by him, who was selected by John Swanson, a director of the Salina & Southwestern railroad company, to go among the Swedish people in Smoky Hill township, McPherson county, and work up private subscriptions for the company. Both Carlson and Swanson are also Swedes, and men of great influence among the population of the neighborhood where they reside. Carlson, who obtained the notes from the defendant, told him that the railroad was to be completed from the city of Salina to the town of Lindsborg on or before the first day of June, 1879; that that was the condition of all the subscriptions, and that the words “before that date,” contained in the notes, referred to and meant the 1st day of June, 1879. Carlson further said that if the railroad was not so completed to Lindsborg before the 1st day of June, 1879, that the defendant need not and would not have to pay the notes at all. The defendant, wishing to transport to the railroad several hundred bushels of wheat on hand at the time of these representations, and relying upon the representations as true, signed the notes in controversy. It also appears from the findings that Swanson and Carlson believed the representations, at the time they were made, to be true. Even if this be conceded, the contracts which the defendant was induced to enter into were fraudulent. Whoever positively and generally makes a false assertion, as an inducement • for another to contract with him, and succeeds on that ground, is guilty of a fraud which vacates the contract. It must be as represented, or it is fraudulent. A man who does so, ought to suffer; he must answer for the truth. (Snyder v. Findley, Coxe, 78.) Even where the representations, however innocently made, are untrue in fact, the party who relies upon them ought npt to be bound by a misrepresentation which [523] positively and directly deceives him; and where an expressed representation turns out to be untrue, it is immaterial whether the party making it knew it to be false, or not. If he did not know it to be true, (and he could not know it to be so if it were false,) he is as answerable as if he made it knowing it to be false. As the defendant by confiding in the false and erroneous representations of Carlson was induced to sign the notes, he ought in equity and good conscience not to pay them. ( Waters v. Mattingly, 1 Bibb, 244; East v. Matheny, 1 A. K. Marsh. 192.) As the board of directors of the railroad company delivered to Swanson, a resident director at Lindsborg, the blank notes, and as he chose Carlson to take the notes and obtain subscriptions thereby, the company could not accept such notes and obtain the benefits therefrom, and at the same time disown or disregard the representations and means by which the signers were induced to execute them. The notes are non-negotiable, and the plaintiff cannot enforce their collection if they were void in the hands of the railroad company. It is immaterial, in our view, upon the findings of fact, whether Swanson had any authority to employ Carlson to take subscriptions and to direct him to make the representations so made, or not; and it is likewise immaterial whether he informed the railroad company of the representations made to secure and obtain the subscriptions. The company accepted the notes and must take them, as was well said by the court below, “with their burdens, as well as their benefits.” Our attention is called to Cornell v. Railway Co., 25 Kas. 613, and it is urged that’ that case is decisive in favor of the plaintiff. All that was decided or intended to be decided in that case was, that parol testimony is inadmissible to contradict the terms of a written agreement, ánd that the testimony of a conversation between the parties at the time of the execution of a contract, varying, enlarging or changing its terms, is inadmissible. Here the testimony of the defendant was admitted, not to contradict the terms of the notes, but to show that he was imposed upon, and that a fraud in law was [524] practiced in obtaining his signature thereto. Fraud vitiates everything it touches, and a contract obtained thereby is not enforcible. Evidence is always admissible to show that contracts, and even final judgments of courts of record, have been fraudulently obtained; and where the evidence sustains it, courts have the power to grant relief in all cases. The judgment of the court will be affirmed. All the Justices concurring.