Case ID: ala_38/html/0057-01.html
Source: Caselaw Access Project
Author: {"author": "R. W. WALKER, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CLOUD vs. WHITING.
    [ACTION ON PROMISSORY NOTE, BY ASSGNEE AGAINST MAKER.]
    1- Estoppel'sn pais against matter, from setting up defenses against assignee• of %ote.-r^Where the maker of a promissory note, in response to an inquiry by one who is about to purchase it, states that he has no defense against it, this does not preclude him from setting up against-such purchaser a defense subsequently arising out of the original contract, a g., a total failure of'consideration; but, where-the note is. purchased by the assigneo on the faith of a promise by the maker to-pay it, tile latter is thereby estopped from asserting tbe invalidity of the note as between himself and the payee; either on the ground of fraud, or subsequent failure of consideration, and will'be conipelledi to pay the assignee at all events.
    Appeal from the Circuit Court of Montgomery.
    Tried before tbe Hon. S. D. Hale.
    This action was brought by John Whiting, against N. Cloud and A. Underwood; and was founded on tbe defendants’ promissory, note for $3,240,, dated tbe 1st June,, '1856, and payable twelve months after 'date, to the order t»f M. P. Blue, by whom it was ‘endorsed to the plaintiff. On the trial, as the bill of exceptions states, “ the plaintiff read to the j ury the note süéd on, and then proved that, about the 6th June, 1856, the defendants came to him, "together with M. P. Blue, the • payee of the note, and requested him to take said note from ’ Blue, and to credit a judgment which he had against Blue and another person, 'on account of said note, with''the Sum of' $3,000, and also to advance to defendants the' sum ot '$2,500, — promising him that, if he Would do so, they Would repay said $2,500 on'the 1st January then next, and would probably pay the noto at the same time, from' funds which said Cloud expected to draw from his father’s estate, but would certainly pay the note at maturity; that plaintiff assented to this, advanced the $2,500 to defendants, and credited said judgment with ■ $3,0'0'0 as a payment, as requested and agreed on. The facts above stated were admitted by the defendants; and the plaintiff admitted that the $2,500, so advanced by him, was-repaid by the defendants before the ■commencement of this suit. The defendants introduced evidence' tending to show, that said nóte was given by '.them to said Blue for the .purchase of certain goods and chattels bought by them from him about the 1st June, 1856 ; that said Blue represented" to them, at the time said contract was made and said nóte given, that said goods aa& chattels were free from all incumbrances; that they believed and relied on said representations, and would not .have made the purchase but for such representations; that an execution, issued on a judgment rendered by the circuit court of Montgomery, was at -that time in the hands of the - sheriff of said county, and had been levied by him on said ■•.goods and chattels,,and said Blue had given his cousent in ■writing that the same might be sold by the sheriff without advertisement; that the said goods were afterwards sold by the sheriff, under an alias execution issued on said judgment ; and that said defendants, at tbe time they purchased said -goods and chattels, had no knowledge or infermationof said judgment, execution, or levy.” This being all the evidence, the court charged the jury, in substance, that if they believed plaintiff bought-the note, advanced the $2,500 to defendants, and entered a credit of $3,000 on the judgment, as above-stated, “ on-tire faith of a promise by the defendants to repay said $2,500 on the 1st Janu.sjy next thereafter, and to pay said note at the same time probably, hut certainly at its maturity,”-then they must find for the plaintiff. This -charge, to which the defendants excepted, is now assigned as error.
    Elmore & Yancey, for appellants.
    Watts, Judge & Jackson, contra.
    
   R. W. WALKER, J.

Where the maker of a note "is inquired of by one wishing to purchase it, -whether he "has any defense against it, and answers that he has none, this estops him from afterwards setting up any defense which existed at the time, within his knowledge, but he does not thereby preclude himself from making a defense subsequently arising out of the original contract; such, for example, as a total failure of the consideration. When, however, the note is purchased by a third person on the faith of a promise by the maker to pay it, the latter is thereby estopped from setting up the invalidity of the note as between himself and the payee, whether on the ground of fraud in the original contract, not known to the maker at the time of such promise, or of subsequent failure of consideration ; and will be compelled' to pay the assignee at all events. — Clements v. Loggins, 2 Ala. 514; Maury v. Coleman, 24 Ala. 381; Lanier v. Hill, 25 Ala. 554; Drake v. Foster, 28 Ala. 654; Plant v. Vogelin, 30 Ala. 160; Powers v. Talbott, 11 Ind. 1; Rose v. Wallace, ib. 112.

..'Judgment affirmed.