Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1898-06-09


ports which are shown to have been
read and weighed by the complainant
10 the manner described in his tssti-
mony, which | have quoted, operated
to discharge him from his obligation
az surety.
The learned counsel for the com
plainant cites from Mr.. Iiigalow the
principle, that false representation
may he mado scienter, j. made by one
Of tho parties to q contract, eithsr
without knowledge of its truth or
falsity, or under circumstances In
which the person making il ought to
have known its talaity." And no cites
ut length great number oil cases set
ting aside or resembling contracts OBJ
tanned by material false representations
or sustaining actions brought By de'
positurs against tho individual directors
OF insolveat banks, whose fslse Htute-
monts Of thu soyenoy OF their banks,
although made without knowledge,
had induced Huch depositors to con-
tinue or become such.
All Of this ia Enthusiastically sound
law. and 20 is another proposition cited
by conplainRnt's counsel, from | liige-
low on frauds, page All: "Tho general
rule in equity is that any contract of
however solemn character, may within
certain limits 10 rescinded for CON
structiye and fortiori for actual
fraud or to state matter with references
to the title Of this section, any con-
tracts may he rescinded for innocent
Misrepresentation, which was sufficient
Involvement thereto.
The last phrase ia an essential ele.
ment Of the proposition and is the essen
tial fact, existing in every case cited
by the learned counsel. The misrepre
sontations, in every case cited, were
sufficient inducement to the contract
And wherever these equitable primer
rles arc fully stated, or whatever the
case may be in which they are applied,
whether it be in suit for tho specifiC
performance OF contract, or for the
reeciRsiou OF contract, or for the diH-
charge of surety from the obligation
of his contract OF suretyship, it is
either stated or necessarily implied that
the Misrepresentation are such as to be
sufficient iuducemOnt to the contract.
And Furthermore there must be such Q
connection between the nature of tht
representation and tho nature of the
contract that the person making The
representations might reasonably infei
that they would constitute an Induce
ment to enter into tho contract. Thii
seems to me to hs too obvious as a gen
erul proposition to require elaboration
Now let ua apply this to the facts o
this case, and lot it bs taken for granted
for Tint purpose that these reports mad'
by the directors in the manner de
scribed must be taken to have boei
made by tho corporation roapnndent
will again repeat that the IeportH werI
required by the statute TO contain ant
did contain an exhibit lin detail, ant
under appropriate heads of the re
sourceH and liabilities of the association
at the close of buRineHs on a past da!
by the comptroller specified, and tina
they contained nothing else; ami ais
| that they were in fact incorrect to th
extent of Smiths dedication, although
believed to be correct when made.
1t 10 obvious that the object OF tn
publication of such statements was t
inform Stockholders aud depositors AM
all thosu who might intend to hecom
stockholders or depositors, or who migt!
| in any manner entrust their money t
|
For this purpose, whatever statement
may no contained in these reports nigh
he sufficient indIcement tn act, an
tue directors might reasonably infe
that they would b6 relied upon, an
constitute such Rn inducement. Blu
would any reasonable man infer tina
they would operate as an inGlucement
any ono to become surety in the bond {
an employe of the hank, and COULD be 8
construed as to make the validity OF til
bond depend upon their correctness
Would any reasonable man look to thos
REPORTS for information aa to the formt
fidelity Of an employe of bank, wit
a view to aacertnining whether he cGul
become with safety surety on hi
official bond for tho faithful perform
ance OF his dutesP In short, do th
statements contained in these report
go 10 tho subject matter Of contraC
of suretyshir? ] think not.
Tho learned counsel for complainant
has presented a single case, Graves VI
Lebanon National Bank, 10 Bush. pag
81, which hsld that the sureties in a
official bonu were released ny the il
correctness of such bank report. Bl
that case stands absolutely alone an
unsupported and therefore | will nj
stop to analyze it, although l am dis
poHed to think that the suspicious ev
IDENTIFY entertained by the learned iuuG
us to the Ind faith of some Of the d
recivrs involved in that case migl
have influenced somewhat his decision
That case is cited and vigorously o.
posed in a New Hampshire oast
Ashuelot SavingR Bank VI. Albee, G3
, H., pages 16l and l63. and | will quo
at some length from the opinion Of Il
court delivered by Chief JuHtice Do
. "The law required that thorough o,
. mination of the plaintiff afairs shou
bs made by the trustees or by cor
mittee of trustees, once in every y
months; that report OF such oxamin
, tion signed by a COMMITTEES Of tho tru
tees, should DO returned to the bar
I COMM ssioners, thrt copy of tho r
port should bv published by Il
plaintiff in newspaper; and that prop
/ blanks for these examinations shou
be FURNISHED to the plaintiffs by ii
bank commissioners, g. L.. &C ITO, HH, 2, 3,
} "Thess duties were performed wi
} an exception by which the examination
: reports and publications wure render
, useless. The committee erroneous
believed their exRmiuations we
thorough. BY their superficial
> spection tho annual defalcation "
not discovered. They acted in go
j faith, and according to their unde
> standiug of their duty; but as fl
I qusntly happens in such business, co
: tidonce in the treasurer, and lack
, special defective skill, made the o
: aminers incompetent for tho ia
assigned them. Tbs case is not
Y exceptional instance but the onerati
, of a general system. Muny tru
q | fnnda nrirntn and nnhlic. need Il