Clopton v. Elkin

Simball, J., delivered the opinion of the court: The plaintiffs in error sought to be relieved from liability on the ground, mainly of fraud practiced upon them as sureties for the debt of one Kendrick. The matters complained of as error, arose upon the rulings of the circuit court on the pleadings, on the admission and [103] rejection of testimony, the instructions to the'jury, and on the motion for a new trial. The defense (raised somewhat in the other pleadings) mainly urged, is contained in the second plea, to-which a demurrer was sustained. In that plea these facts are averred; that before the sale made by the administrators, the defendants informed them, that they would become the sureties of Kendrick for any amount of property he might buy at the public sale ; that Kendrick purchased corn to the amount of $1138.45; but that afterwards, before the date, and execution of the note, Kendrick became indebted to the administrators, by assumpsit, or otherwise, and not for property bought at the sale, in the further sum of $400, parcel of the note; and that afterwards, without the knowledge and consent of the defendants, the said administrators fraudulently, and knowingly, prepared, or caused to be prepared, the note, including the $400 ; and presented the same to the defendants, signed by Kendrick, as for the amount of his ■purchases; and held the same out to the defendants as for that sole consideration; being misled, and supposing that such was the only consideration, the defendants ignorantly signed the note. The plea affirms as a proposition of law, that it was a fraud upon the defendants, after they had informed the administrators of the extent to which they would undertake for Kendrick, purposely and knowingly to include in the note, another and different indebtedness of Kendrick; and to hold out to them that they were only binding themselves for the amount contemplated, when in truth more was included of which they were ignorant. It would seem that the circuit court held the plea to be bad, because it omitted to implicate Kendrick, the debtor, in the covin and deceit; for under the judgment of respondeat ouster, the defendants interposed another plea, in all respects reiterating- the allegations of the former, with the new and additional fact, that Kendrick took part with the administrators, in the imposition upon the defendants ; which plea, [104] upon demurrer, was ruled to be good. The principle announced by Lord Tindall, in 4 Bing. N. S. Rep., and accepted by the elementary writers, is, that fraud by the creditor, or by the debtor, with his assent, in relation to .the obligation of the surety, will discharge the latter from liability. This doctrine was pressed by counsel in Graves v. Tucker, 10 S. & M., 9, but the circumstances did not bring the case within its operation. The plea by three of ’the defendants was, that they signed and se.aled the bond in the belief that Middleton & Hogg had executed the same, as their act and deed, whereas, in truth, said writing obligatory was only to be binding on Middleton & Hogg, on the condition that Hem-mingway & Parker should execute the same, which they never did. It was further averred, that Middleton & Hogg delivered the bond to Graves, the principal, to be binding on them on the condition that Hemmingway & Parker became obligors. The plea was declared to be insufficient, because the State, the obligee, was in no wise implicated in the ■fraud. Graves was the party in whom the defendant reposed confidence. The State was blameless. To exonerate them from the burden, would be a fraud upon the State. If the State had assented, or been privy to the conditional obligation set up in the plea, then - the defense would have been brought within the operation of the rule, and no liability ■would have been incurred. Of similar import is Fitz v. Green, 2 Dev. Rep., 291 : An order of court required a new bond, with two designated persons as sureties ; one executed it, and left it with the clerk. The other failing to become a party to it, it was held that the instrument had not been accepted, and did not become operative. So where the agent of the plaintiff informed the defendant that another was to join in the note, who failed to do so, was a conditional contract to take .effect upon the performance of the condition. Stone v. Compton, 35 Eng. Com. L.Rep., 64. The plea, in substance, states that the administrators knew the note embraced $400 over and above the amount for which the defendants notified them they -would under105 lake for the principal, yet they held it out, and pretended that it was only for the proper sum, and the defendants signed in ignorance. We think the defense is brought within the range of the principle illustrated in the authorities cited ; but whether it reaches and taints the whole contract, or only the excess, will be considered hereafter. On the trial, the court refused to permit one of the defendants to depose that McAllister, one of the administrators, and whilst acting as such, admitted to be true a series of facts, being mainly those set out in the second and fourth pleas. At the time of the trial, McAllister and his associate were not in office, having' previously surrendered or been discharged from their trust. The suit was being prosecuted by W. G. Elkin, administrator do lonis non. Among the exceptions to the rule, which excludes hearsay testimony, the admissions of a party to the record, or of one identified in interest with him, are as against such party admissable. 1 Greenl. Ev., § 172. But the proposed admissions are not against a party to the' suit, nor is the present plaintiff identified in interest with McAllister,his predecessor. No privity exists between them. Ruff v. Smith, 31 Miss., 62. Moreover, McAllister hot being a party to the record, or interested in the subject matter, because of his former official relation to the estate, was a competent witness to all pertinent matters within his knowledge. We think the testimony was not competent as direct evidence. It was competent for the purpose of discrediting McAllister, when examined by the plaintiff, to prove that such admissions had been made, if McAllister had denied them. McAllister, when introduced by the plaintiff, swore that no such admissions had been made, and upon that point was contradicted by Clopton. A. L. Witherspoon v. Thomas G. Blewett, MSS. opinion.' We do not see how the testimony excluded, which forms the matter of the third assignment of error, could, if admitted, have any material weight in the result. The law is correctly propounded in the third instruction. !In the earlier English cases, as in Pagott’s case, 11 Bep. 2?, [106] it was ruled, that the material alteration of an instrument by a stranger, so vitiated it, thatit could not become the foundation of a suit; subsequently, doubt was thrown upon the doctrine, in Hutchins v. Scott, 2 M. & W. 809. In this country it is well settled that an alteration by a stranger will not avoid the instrument, if it can be made out by evidence what the original instrument was. City of Boston v. Benson, 12 Cush. 61. Davis v. Carlisle, 6 Ala. 707 ; Reese v. Overbaugh, 6 Cow. 746; Nichols v. Johnson. 10 Conn. Rep. 192. The phrase, “ with interest at 8 per cent.” in a note, implies interest from its date, 2 Parsons on bills and notes, 392 and notes. There was no error, therefore, in the fourth instruction to the jury, the subject embraced in the fifth charge has been considered, to a considerable extent, in what has already been said on the pleas. If the creditor or principal, with his assent, imposed upon the sureties a contract which they did not intend to make, by fraudulently and knowingly filling up the note for a larger amount than contemplated, it does not matter whether the defendants were placed thereby in a worse predicament or not, or whether they have been injured or not, or their liability increased or not. The question is, have they been induced to-enter into the contract sued on, under the impression that it conformed to what they had engaged for, and supposed they were making. But the instruction may have been misleading, for it is plain, if the defendants proved to the satisfaction of the jury, that they had informed the administrators, of the extent of the liability they would incur, and the administrators procured their signatures to the note, holding out the idea that it embraced the true amount only, the liability was increased, at least, to the extent of the excess. The tenth instruction does not conform to the views of the law which we have expressed, inasmuch as it affirms that Kendrick must have combined with the administrators, or 'one of them, to perpetrate the deceit and imposition; whereas, the rule is, that the deception and fraud may be the sole act of the administrators. If the principal debtor is guilty, the [107] payees of the note are not affected unless they assented, or had knowledge. This charge conforms to the ruling of the circuit court on the second plea, and is a repetition of a misapprehension of the law. Both the second and fourth pleas assume that the excess of the $100 included in the note, if placed there, under the circumstances stated, avoided the contract in toto. If part of the debt be tainted, and part rests upon a valid consideration, and the two are capable of separation, a recovery may be had for so much as is good. In this and analogous cases, resting upon the same reason, the defense, whether of fraud, failure or want of consideration, must extend to the entire contract, so that one part of it is as much affected by the defense as the other. The very point under review, on a similar state of facts, was considered in Johnson v. Blasdale and Grubbs, 1 S. & M., 20, where $300 was inserted in the note in excess of the purchases made at the administrator’s sale, the sureties contended (as here) that this vitiated the contract and discharged them. The court propbunded the question thus: “Whether the note is voidable in toto, or only for the excess beyond the sum which was authorized,” and held; that it was only voidable for the excess. Also, Goss and Hammond v. Whitehead, 33 Miss. Rep., 215. We think there is error; judgment is reversed. Upon return of the case to the Circuit Court, the pleas should be amended so as to conform to the views herein expressed.