Case ID: tenn_61/html/0092-01.html
Source: Caselaw Access Project
Author: {"author": "SNEER, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Thomas Frazier et al. v. R. L. Gains et al.
    
    1. PRINCIPAL and SURETY. Simile indorsement. A note signed in blank-by tbe sureties, and delivered to the principal, authorizes him to fill it up to any amount, and his act, although the amount may exceed their expectations, is binding upon them, if the note come to the hands of an innocent holder before maturity. The note not being negotiable does not alter the case, nor does the fact that a seal was affixed, since the abolishment of private seals. If payable in bank notes the measure of damages will be the value of such notes at maturity.
    Cases cited: 22 How., 97; Waldren et al. v. Young; MSS. Jackson, 1872; Goodman v. Simonds, 20 How., 361; 10 Cush., 373; Violet v. Patton, 6 Cranch, 142; 2 Dana, 514; 22 Eng. Law and Eq., 516; Bank of Pittsburg v. Neal et al, 22 How., Ill; 1 Smedes & M., 25; 2 Dana, 142;'5Ind., 258; 9 Ala., 800; 13 Id., 271; 18 Con., 353; 1 Smedes &M., 17;'6 Ala., 44; 8 Ind., 787; 1 Amer..L. G, 575.
    PROM WARREN.
    Appeal from the Chancery Court. B. N. Till-MAN, Chancellor. a
    E. H. Ewen- for Frazier et al.
    
    T. B. Murray, A. S. Marks and Jnto. H. Savage for Gains et al.
    
   SNEER, J.,

delivered the opinion of the Court.

The complainants are Thomas N. Frazier and Jas. H. Fulloss, and have brought their bill to be relieved from the payment of a note,' in the words and figures following':

Sixty days after' date, we, or either of us, promise to pay Gracy & Gains seven thousand two hundred and ninety-eight dollars and seventy-five cents in current bank notes, for a lot of bacon, for value re-ceiyed of them. Witness our hands and seals, this 10th of April, 1862.” T. C. Goff, [l. s.]
Isaac B. HeNSON, [l. s.]
J. A. Eulloss, Sec’y, [l. s.]
Thos. H. Eeazieb, Sec’y, [l. s.]

The complainants signed said note while the amount was in blank, the said Eulloss agreeing to be the surety of Henson, and the said Frazier the surety of Goff. The note was given for a lot of bacon, sold and delivered by Gracy .& Gains to Henson & Goff. Before the execution of said note, Henson & Goff had contracted with .Gracy & Gains, in writing, for a lot of bacon, estimated to contain thirty thousand pounds, more . or less, at twenty-five cents per pound, in current bank notes, -and they were required, as a condition precedent to the delivery of the bacon, to execute a note with two good securities for the price. At that time the bacon had not been weighed, and the precise amount not ascertained. The note was, however, prepared in advance, and was presented first to Fulloss, and then to Frazier, who signed the note in blank as to the amount, the same having ■ already been signed by their principals. The note was then brought to the ■ defendants, Gracy & Gains, who thereuj>on weighed and delivered about thirty thousand pounds of bacon, amounting in value, according to the contract, to seven thousand, two hundred and ninety-eight dollars and seventy-five cents, which amount was inserted in the note, upon the delivery of the bacon, of which thirty-three hundred dollars has been paid by the principals, and credited upon the note, leaving the balance of four thousand two hundred and ninety-eight dollars and seventy-five cents unpaid, and now in controversy. The complainants claim to be exhonerated from the payment of any part of said note, on the ground that their principals were not authorized to bind them for more than three thousand dollars; and that the payment of three thousand three hundred dollars On said note was intended to relieve them to the extent of their liability, and that they are not bound for any more.

It appears that Gracy & Gains took said note in good faith, with no knowledge of' any understanding or agreement between the principals and sureties, as to the extent of the liability assumed by the latter, or of any representation made by the principals to the sureties of the 'probable amount for which said note was to be filled up; and that they accepted said credit of three thousand three hundred dollars without any knowledge that the same was understood by either of the parties to be in exhoneration of the complainants from any further liability. The ground assumed by the complainant is, that there was an understanding between Goff and Henson that they, the complainants, were not to be 'bound for more than about the sum of three thousand dollars, and that with this amount the note was to be filled up. But it is not shown in the proof that Gracy & Gains had any knowledge of any understanding. On the contrary, the proof satisfies us that they were in utter ignorance of it. It- -does not appear either, that either Fulloss or Frazier placed any positive limit or restriction upon their principals, as to the amount for which said note was to be given; but their equities rest upon the ground that they were deceived by the representations .of Goff, as to the amount of the bacon bargained for, and that they did not expect to be bound for more than three thousand dollars. Upon this point their own testimony is decisive. It seems that Goff represented to Fulloss that the bacon would not amount to more than three or four thousand, dollars, and Fulloss states in 'his deposition that he did expect the note to be filled up for three thousand dollars, or near that sum, and that he did not authorize them to fill up the note in any other amount; while Frazier, in his testimony, states that “ Goff did not know precisely the amount the note, would be for, but thought about three thousand dollars, ' a little more or less. That he did not authorize Goff, or any one pise, to fill up the blank with any amount whatever, but that he signed with the expectation and belief that Goff would fill up the note with the sum he had previously represented to him that the bacon would come to, or the sum of three . thousand dollars, or about that sum, and expected to be responsible for that sum, but nothing was said about the amount, or about its being filled up with any amount.”

It appears that Goff had' made these representations to Frazier about two weeks before the latter signed the note, and when thé note was carried by Goff to Frazier to get his signature, the latter discovered that it was in. blank, as to the amount, but seeing that all the other parties had signed it, and relying upon Goff’s representation, previously made, he signed the note without further questions, and delivered it to Goff in its blank condition.

It will be observed from this statement that the complainants do not bring themselves within the principles governing a case where the payee of a note is advised of the fact that the agent exceeds his authority in filling a blank in a note, or even within the principles of the case, when there is a positive restriction upon the agent’s authority. It is manifest that the complainants were deceived by the man they trusted, and whom they were befriending, but the defendants are innocent of all connivance at, or knowledge of, the wrong at the time they parted with their property for the note; and we know of no principle upon which this overweening confidence of the complainants can be visited upon the defendants. Whatever might have been the first expectations of the complainants as to the result, yet they did not limit the authority of their agents, nor do they fix notice upon the’ defendants of the deception; and they must be held bound upon the familiar doctrines of the law which govern the relation of principal and agent; nor is the application of these doctrines affected in the least degree by the non-negotiability of the note in question, nor by the circumstance that a seal or scroll is affixed to tbe signature upon the note, as the note was executed after the enactment ' of the statute which abolishes the private seal to contracts, and abrogates the effect of a seal as it existed at common law.

The equities of the parties must, therefore, rest upon the familiar principle that where one of two innocent parties must suffer through the fraud or negligence of a third party, the loss must fall on him who gave the credit. 22 How., 97; Waldren et al. v. Young, MSS. Jackson, 1872.

The rule is, that when one party, intending to accommodate another, signs his name to a blank paper, he authorizes the other to whom he delivers it, añd for whose accommodation it was made, to fill up the blank, and he is bound by it. Goodman v. Simonds, 20 How., 361; 10 Cush., 373; Violet v. Patton, 5 Cranch, 142; 2 Dana., 142; 22 Eng. Law and Eq., 516. So a note signed in blank- and delivered is an authority in law to fill it up to any amount; it is an unlimited letter of credit, and the intention of the principal as to the amount to be inserted could not control the act of the agent in dealing bona fide with third parties. Bank of Pittsburg v. Neal et al., 22 How., 111; 5 Mon., 25; 2 Dana., 142; 5 Ind., 258; 9 Ala., 800; 13 Id., 271; 18 Conn., 353.

If the note, however, be taken with the knowledge that it has been filled in violation of the limitation imposed by the principal, the holder will be in no better situation than the 'agent. I Smedes & Mar., 17; 6 Ala., 44; 8 Ala., 787; 1 Amer. L. C., 575.

In this case, whatever the complainants might have understood as to the amount for which they were to be bound from the representation of their principals, yet there was no positive restriction upon the latter, and even if there had been, the defendants parted with their property for the nbte in good faith, and without any knowledge of any such understanding.

The complainants must, therefore, be held bound upon the note, and can not be heard to complain as against innocent parties, of an act occasioned by their % own incaútion. The note is, however, payable in current bank notes, and the measure of their liability must be the value of current bank notes at the time of the maturity of the note.

The decree will be reversed, and the cause remanded for an account of the value of the currency contracted to be paid, and for further proceedings in accordance with this opinion. The costs of this Court and the Court below will be paid by ^complainants.