Case Name: Bebout v. Bodle
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1882-01
Citations: 38 Ohio St. 500
Docket Number: 
Parties: Bebout v. Bodle.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 38
Pages: 500–505

Head Matter:
Bebout v. Bodle.
Where a principal debtor, by falsely and fraudulently representing to the creditor that his surety has consented to an extension of time for payment, procures from the creditor an agreement for such extension in consideration that interest be paid, such agreement is, as to the creditor, fraudulent, and he may, upon discovery of such fraud, even after the period of extension has expired, repudiate such agreement and sue upon the original contract without refunding or tendering back the interest paid under such invalid agreement.
Error to the District Court of Knox county.
The original action was brought in the common pleas court of Knox county, by Phrebe S. Bodle, against William A. Bebout and Solomon Bebout, to recover a judgment upon a promissory note, signed by them jointly.
Solomon filed his answer, setting fourth that he signed the note without any consideration, and as a mere surety for his son William, which the plaintiff at all times well knew; and that afterwards, without his consent, the note was extended for 'a further period of time, upon an agreement to pay interest.
To this answer the plaintiff replied as follows:—
“And now comes the said plaintiff, Phebe S. Bodle, and for her reply to the matter and things set up and allegations made in the answer of the said defendant, Solomon Bebout, says : that on the said 29th day of April, a. d.'1873, the defendant, William A. Bebout, contriving and intending to cheat and defraud the plaintiff out of her rights in the premises, and to fraudulently procure the discharge and release of said Solomon Bebout, who is his father and the security on .said note upon which this action is founded, came to this plaintiff and requested her to extend the time for the payment of said note to the 15th day of June, A. d. 1873. Plaintiff says that she then and there declined and refused to agree to extend the tizne of the payment of said note, unless the said Solomon Bebout, who was the only solvent paz-ty on said note, would agree to and consent to the same, and thei'eupon the said defendant, William A. Bebout, to induce and procure the said plaintiff to consent to the said extension of time for payment of said note, falsely and fraudulently represented and stated to the plaintiff that he had duly informed his father, Solomon Bebout, of his desire to procure said extension of time for payment of said note, and of his intention to request plaintiff to agree to the same, and that said Solomon Bebout had fully consezited thereto, and that his said application for said extension was made with the full knowledge and consent and authority of the said Solomon Bebout, which said statements so made were then and there falsely and fraudulently made by said William A. Bebout, to cheat, defraud and injure the plaintiff, and to fraudulently procuz-e consent of plaintiff to said extension of time on said note for payment thei'eof, and thei’eby procure the discharge of said Solomon Bebout from all liability on said note; as in point of fact and in truth the said Solomon Bebout had not consented nor agreed to the said extension of time, and had not authorized said William A. Bebout to procure the same, and indeed knew nothing about the same. Plaintiff says that she believed and relied upon said statements and representations so made to her by said William A. Bebout as aforesaid, and relying upon and believing said statements and representations she did agree (as she would not otherwise have done) to extend the time for the payment of- said note until the said 15th day of June, a. d. 1873, and gave plaintiff writing to that effect, which is now in his possession. Plaintiff says that this is the same agreement set up and described in said answer. Plaintiff avers that said agreement was obtained as aforesaid by falsehood, fraud and deception, and was never of any legal force or effect, and never binding on this plaintiff, and in no way acted as a release or discharge of said Solomon.”
To this reply a general demurrer was interposed, and sustained by the court, and, plaintiff failing to amend, judgment was rendered against her in favor of. said Solomon.
Upon proceedings in error in the district court this judgment was reversed, and the reply held to be sufficient.
George W. Morgan and William M. Moons, for plaintiff in error :
1. Surety was released by payee giving time in consideration of interest paid in advance, without the knowledge or consent of surety. 14 Ohio St. 387; 15 Ohio St. 70, 295; Fawcett v. Freshwater, 31 Ohio St. 637.
2. It was incumbent on the payee to ascertain from the surety, whether he was willing to enter into a new agreement as surety for the principal; and the neglect to do so, released the surety from the obligation of his contract. 1 Story Eq. Jur. (10 ed.) 324, 325, and cases cited ; 2 T. R. 73 ; McCramer v. Thompson, 7 Am. Law Reg. 92.
3. The representations of a man bind him so far as his own interests are concerned, but cannot affect the interests of other parties, unless he was authorized to make them. If the representations of the principal were not tested by the payee, by ordinary vigilance, she cannot make an innocent party liable for her own laches. Selser v. Brock, 3 Ohio St. 302; Farmers and Traders’ Bank of Jamestown v. Lucas, 26 Ohio St. 385; Kerr on Fraud and Mistake, 136, 137, 256, 257; Story Eq. J. (10 ed.) 324, 325; 2 Parsons on Cont. 270, 271; Moore v. Turbeville, 2 Bibb 602; Saunders v. Hatterman, 2 Ind. 32; Farrar v. Alston, 1 Dev. 69; Post v. Williams, 6 Ind. 219, 2 Kent Comm. 484; Warner v. Daniels, 1 Woodb. & M. 90, 101, 102; Chitty on Contracts (10 Am. ed.) 750, 751.
4. The agreement for the extension of time was voidable. It was the right of the payee, to affirm, or disaffirm it. She elected to affirm and did not sue until after expiration of extended time. It is too late to set up the fraudulent representations of the principal. A party who affirms a voidable contract, is bound by it in all its parts. 2 Story on Cont. 297; Galloway v. Holmes, 1 Doug. 330; Pearsoll v. Chapin, 44 Penna. 9; White v. Gardner, 10 C. B. 919; Deposit and General Life In. Co. v. Ayscough, 6 E. & B. 761; Clark v. Dickson, El., Bl. & El. 148; Nicholls’ case, 3 D. & J. 387; Mixer’s case, 4 D. & J. 580; Scholfield v. Templer, 4 D. & J. 586; Kerr on Fraud & Mistake, 48, 49.
5. The agreement to give time, though founded on the false and fraudulent representations of the principal, was binding on the payee until she refunded to him the money received in consideration for the extension of time. Moreley v. Dickinson, 12 Cal. 561.
W. C. Cooper and H. H. Greer, for defendant in error.—
If Mrs. Bodle, prior to the expiration of the time agreed upon, had ascertained that the surety had not consented to the extension, and with full knowledge of all facts, had still elected to affirm the fraudulent agreement, there would be reason in the claim that she had waived her right to repudiate the contract; but this is not the fact. There is nothing to show that Mrs. Bodle had any knowedge of the fraud, or knew the surety had not consented to the extension of the time of payment, until he filed his answer in the case. Counsel for the plaintiff in error insist that Mrs. Bodle is bound to refund the money before she can repudiate the contract. We reply, why should Mrs. Bodle return this money to William A. Bebout, when there is no dispute that there was due from him to her many times the amount so paid ? He was entitled to credit for the amount, but not for a return of the money. We think the case of Moreley v. Dickinson, 12 Cal. 581, is not analogous to the case at the bar and does not support the claim of the plaintiff in error. We respectfully invite the attention of the Court to : 8 Ohio, 191; 26 Ohio St. 379; 28 Ohio St. 10; 61 Penn. St. 427; 23 N. Y. 264; 50 N. Y. 670.

Opinion:
Longworth, J.
That a valid agreement, with a principal debtor, to extend the time of payment of the debt, made without the consent of his surety, operates to discharge such surety, is an elementary proposition.
It is equally clear that to have such effect the agreement must be valid and binding upon the parties between whom it is made. It must be the substitution of a subsequent for a former agreement. Such is not the case here if the facts stated in the reply are truly stated; and this the demurrer admits.
The agreement for extension, although a pecuniary consideration passed, was voidable by reason of the fraud practiced upon plaintiff by the principal debtor. It is said that it was in the faith that his fraudulently false statements were true that plaintiff consented to the extension, which she otherwise would not have done. Here, then, was no valid agreement, even as between the creditor and principal debtor, and nothing which could operate to discharge the surety.
But it is claimed in argument that the plaintiff, by not suing until after the expiration of the extension, must be held to have ratified the invalid coir tract. We do not so understand it. That she would have had the right to ratify it is clear; and if, upon discovery of the fraud she liad failed to take any action signifying her intention to repudiate the agreement, she might be held to have ratified it, we may concede. But the only facts before us are those stated in the record, and upon this ¡matter it is silent.
It is further urged that in order to enable plaintiff to repudiate the contract she was bound to refund to William the money paid as its consideration, or at least to tender it back. This cannot be true. This sum, which was the interest covering the period of extension, during which the principa] remained actually unpaid, was due to the plaintiff from William, irrespective of the question whether the agreement was valid or invalid. We can see no reason why plaintiff should be compelled to pay to this defendant money which was her own in either event, and to which he could not, in any aspect of the case, be entitled.
Judgment affirmed.