Case Name: Hill v. Thixton, &c.
Court: Kentucky Court of Appeals
Jurisdiction: Kentucky
Decision Date: 1893-02-23
Citations: 94 Ky. 96
Docket Number: 
Parties: Hill v. Thixton, &c.
Judges: Chief Justice Bennett dissenting.
Reporter: Kentucky Reports
Volume: 94
Pages: 96–114

Head Matter:
Case 14 — .PETITION ORDINARY —
February 23.
Hill v. Thixton, &c.
APPEAL FROM DAVEISS CIRCUIT COURT.
I. Fraud — Certificate of Obligor that there is no Defense to Note. — Where the obligor in a note accompanies it with a certificate that it is a bona fide debt against him, that “there is no offset, discount or counter-claim or defense against the same,” and that it will be paid at maturity, he is not estopped, even as against one who has purchased the note upon the faith of the certificate, to impeach the note for fraud, provided he alleges and proves that the certificate was also obtained by fraud.
•:2. Transfer of Peddler’s License — The withdrawal of one member of a firm to which a .peddler’s license has been issued, does not deprive the remaining members of the firm of the right to do business'under the license. This .is not such a transfer of the license as ■ the. statute denounces.
J. A. DEAN FOR APPELLANT.
.•As the payees -of. the note sued on were peddlers, and had not taken out license as required by law, there can .be no recovery on the note. (Rash v. Holloway, 82 Xy., 674; Rash v. Farley, 12 Xy. Law Rep., 913.1
WEIR, WEIR & WALKER for appellees.
If the plaintiffs in the purchase of the note relied upon the statement* in the certificates, they operate to estop the defendant from relying upon the defense of want of consideration and fraud in procuring- the note. (Crahtree v. Atchison, 13 Ky. Law Rep., 321; Wells v. Lewis, 4 Met., 270; Rudd v. Matthews, 79 Ky., 486.)
O. S. WALKER on same side in petition for rehearing.
■Cited: Jaqua v. Montgomery (33 Ind., 36), 5 Am. Rep., 168; Dickerson v. Colgrove, 100 H. S., 578; Kellogg v. Curtis (69 Me., 212), 31 Am. Rep., 274; Swift v. Smith, 102 U. S., 442; Crumwell v. Sac County, 96 IJ. S., 63; Goodman v. Simonds, 61 U. S., 343; Greenwood v. Hayden, 78 Kv., 333.)

Opinion:
-JHDGE HAZELRIGG
delivered the opinion of the court.
In the summer of 1888 Hill, the appellant, who was a timid and unlettered man, was visited by a stranger, who induced his assistance toward starting his lightning-rod enterprise in the neighborhood by obtaining a promise to let-him rod his house, assuring him that :it would cost him only four dollars. In a few days some four other strangers appeared, and proceeded to decorate his humble shanty with the most improved lightning conductors "known to science." After completing the job they asked him to sign some papers which they 'called "recommendations," purporting to prove to the neighbors the good character •of the work.- He signed his name to two of these papers. He could not read writing, and could scarcely write his name. They then presented him a note to sign for one hundred and seven dollars and ten cents, due in six months. He refused to do so. They became mad, and told him he had to sign it. Angry words passed, threats were made, and finally appellant called on his mother for help. The talk was continued, the men declaring that he must sign the note. They threatened to sell his home in the United States Court. To stop the excitement among the men and prevent a difficulty, he finally signed it.
Coleman, a . witness, who was present and working for the strangers, and who had come there with them, testifies that he was employed by the lightning-rod men; that "Hill refused to sign the note; Mr. Medanich told him he must sign the note; that they employed lawyers by the year, and that a number of suits did not cost them any more than one suit; that they did not sue in these little courts here, but they did all their business in the United States Court. Mr. Hill still refused to sign the note, and pretty hot words followed. -Mr. Hill seemed to be a'very timid man, and they scared him into signing the note by threatening him. These men were very vicious, bulldozing kind of men, and were very dangerous men; that from conversations with the men, he learned that the cost of the rod put up for Hill was about seven dollars, and that the profits were about one hundred dollars on the job." "
In June, 1889, the appellees, Thixton and Atchison, claiming to be the owners' and holders of the note, sued Hill, the appellee, thereon, in the Daveiss Circuit Court. He answered that the note was not his act and deed — that the words " negotiable and payable at the bank of Owensboro, Ky.," had been inserted therein after he had put his' name to it, and without his knowledge or consent. That it had been procured, in its original form, by fraud, oppression and intimidation,- and he had executed it to save himself from personal violence, and to avoid bodily harm with which he was threatened. He also alleged that the-plaintiffs' assignors were peddlers, and had no license as provided by law. Upon the state of -case thus presented, we presume thpt no court would sanction the enforcement of the contract and collection of the note sued on. As a matter of fact, on the trial there was no contrariety of testimony, the foregoing facts being established by Hill, the appellee, and Coleman, the employe of the payees of the note, and while denied in the reply, were not contradicted by proof.
But in their reply the appellees rely on the following writings, signed and delivered, as they allege, on the day the note was executed, as an estoppel against any defense to note sued on, and as precluding a court of justice from relieving this timid and ignorant countryman from this bold robbery. The writings are as follows:
"Recommendation.
" To All YYhom it May Concern:
"This is to certify that J. Medanich & Co., agents of the Franklin Lightning Rod Co., has erected,their copper covered lightning conductor on my residence, and has done me good work and given satisfaction in every respect.
" I take pleasure in recommending them to all in need of rods. July 7th, 1888.
(Signed) "W. H. Hill."
"To All Whom it May Concern:
"This is to certify that a note executed by me to J. Medanich & Co., for one hundred and seven dollars and ten cents, due in six months, is a bona fide debt against me, and there is no- offset, discount or counter-claim or defense against the same; and the same is good against me for the full amount thereof, and will be paid at maturity to said J. Medanich & Co., or to such persons as they may assign said note to.
"Given under my hand this, the 7th day of July, 1888. (Signed) W. H. Hill."
Appellees also attempted to avoid the alleged want of license by filing one granted regularly to Medanich, Shay & Co. (the Co. being Freeman), alleging that Shay had retired from the firm, and that the business was being conducted by Medanich and Freeman, the surving members; and this, we think, was a valid license, and not such a transfer as the statute denounces. The appellees alleged that the certificate of recommendation showed on its face that the work had been done by the Franklin Lightning-rod Company, which produced no license, and that the plaintiffs' assignors were only agents. The second certificate was lost, and he alleges want of knowledge or information as to. signing it, and that if he did so, it was procured by fraud, overreaching and deceit, and with intent to estop him in his defense, of which facts the plaintiffs had notice before they bought the note, and knew also that the transaction and circumstances under which the note originated were suspicious, and sufficient to have put them on inquiry.
The trial court properly instructed the jury on the subject of the alteration of the note' after its execution and delivery, and as to its procuration by fraud, threats, &c., but expressly modified these instructions by telling the jury to find for the plaintiffs, even if they believed the note to have been materially altered, or had been obtained by fraud, threats, &c., provided they further believed that the plaintiffs bought and became the owners of the note in good faith, relying on the statements contained in. the two certificates named above, and provided the defendant had signed the papers. Thus is presented for our consideration the real question in this case, and that is, what effect is to be given the certificate agreeing not to set up any defense ?
The court below assumed that the note itself, containing an absolute promise on its face to pay the sum named at its maturity, and importing absolute verity, might be impeached for fraud in its procurement, and. yet the certificates, executed at the same time, importing nothing more than is certainly and definitely implied in the note, could not be so impeached.
If the- maker may have been overreached in the execution of the one, why may he not have been in the execution of the other ? And if he can impeach one, why may .he not the other? The case of Crabtree v. Atchison, 93 Ky., 338, is relied on by appellees. In that case it is said that "the writing delivered to the payees of the note, and exhibited to the appellees by the payees to induce them to purchase it, and upon the -assurances of which they relied in making the purchase, was equivalent to personal assurances made to the appellees by the appellant face to face, to induce them to make the purchase, and upon which they relied in making the purchase." That is, that the assurance that he had no defense was a continuing, ever present and existing truth, asserted "face to face" to "whomsoever it might concern," and as such must estop the appellee from denying the truth of such assurance. But was not the absolute promise of the appellee contained in the other writing executed at the same time (the note), agreeing to pay the sum of one hundred and seven dollars and ten cents in six months after date, at the Bank of Commerce of Owensboro, Ky., a continuing and existing promise, and which the payees were at liberty to exhibit to the appellees and the world as an inducement to buy the paper?
And why shall the one be said to have the force of a "face to face" assurance, that "the same is good against me for the full amount thereof, and will be paid at maturity," any more than the other is a "face to face" assurance that "I will pay the sum of one hundred and seven dollars and ten cents," which was the full amount of the note, "in six months," which was at its maturity?
In the case of Crabtree v. Atchison, supra, the answer was not deemed sufficiently explicit to raise the question of fraud in the procurement of the certificate, and the case was reversed on other grounds. The principle announced followed the case of Wells, &c., v. Lewis, &c., 4 Met., 269, and no fraud was properly alleged by the defendant as to the obtention of the certificate.
We are clear that there is no difference in principle between the assurance given in the note and that given in the certificate. And yet we know that a subsequent "face to face" assurance, given by the maker of a note that lie would pay the amount of it at its maturity, is an estoppel against Ms assertion of any defense thereto. We conclude, therefore, that as the promise in the note can not be given the force .of a personal and continual assurance, so can not that effect be given the other and accompanying paper.
They are in effect a single transaction, and are to be considered .as if embodied in but a single paper; executed and delivered together, they stand or fall together. What may be used to impeach the one may be used to impeach the other.
There is not an idea or thought expressed in the one paper which is not expressed in the other. In the certificate we have that which is but the extended meaning of the note — "bona fide debt against me." Certainly the note distinctly imports as much. "No offset, discount or counter-claim or defense;" of course not, says the note by clear implication. "The same is good against me and will be paid at maturity." Surely these assurances are, even in express terms, embraced in the note.
The case of Wells, &c., v. Lewis, &c., 4 Met., 269, cited against this view, was where neither the note nor the accompanying paper was attacked for fraud. The consideration alone of the note was sought to be impeached, and its makers having voluntarily given the certificate that they had no offset in order to give currency to their paper, would have been guilty of perpetrating a fraud on the innocent holder if defense had been..allowed. If the note and its accompanying "letter of credit" were executed voluntarily, and free from imposition and fraud, then recovery should be had; if the note or its "certificate of good character" were not so obtained, then whatever defense, discount or offset might have been used against the original obligee may be used against the assignee.
Such is the purport of the statute regulating the assignment of such paper. Moreover, we are by no means certain that the appellees were free from notice sufficient to have put them on inquiry. They had been told by a party from whom they were seeking information as to his solvency that Hill was poor; that his brother was putting up the money with which to buy the little farm; that he was too good a man to be imposed on by lightning-rod men, and that there was certainly something wrong about the note. Upon presentation of the note alone of the appellant, importing as it did a valid consideration, and containing an express promise to pay in the usual form, a purchase would have been more in ac-' cordance with the usual course of trade than when the holder shows evidence of the necessity of fortify-, ing his property by a suspicious overshow of virtue. It was a statement on which they had but slim right to rely. It was indeed calculated to arouse and excite suspicion. An ordinary and unsuspicious-looking promissory note was in bad company when it had to be backed up by such an unusual paper. The majority opinion of the court in Jaqua v. Montgomery, 33 Ind., 36, sustains this view. In that case Gregory, C. J., who delivered one of the opinions, in speaking of such an accompanying paper, says "it looks too much like the act of the thief in attempting to cover up his crime."
The judgment below is reversed, with directions to allow the case to proceed according to the principles, of this opinion.
Chief Justice Bennett dissenting.