Court Opinion

ID: 9865869
Source: CourtListenerOpinion
Date Created: 2023-09-25 23:19:51.301351+00
Date Added: 2024-06-11T14:00:08.832913
License: Public Domain

Response to Petition for Rehearing.
Per Curiam
The petition is based primarily upon the erroneous idea that this case is identical with that of Crutchfield v. Robinson, 208 Ky. 354. It is, as recited in the opinion, a companion case to that “with some variations,” and those variations distinguish the two in many respects.
As to the effect of the collateral obligation by the maker the two cases are identical, and the opinion in this case recognizes the controlling effect of the opinion in the Crutchfield case; but in that case there was an additional defense asserted growing out of the fact that the assignee of the note, who was undertaking to enforce its collection against the maker, had made false representations as to the payee’s financial condition which induced the maker to execute the note and accept the collateral obligation of the payee, while as between the bank and Davidson in this case there is no such additional defense. On the contrary, here the original assignee was Grover, who became so far as this record discloses, the individual owner by *428assignment, and thereafter himself assigned the note to the bank.
Counsel appears to confuse the two defenses discussed in the Crutchfield case, and to have the view that there was in fact only one defense, and that the court held that - knowledge of the collateral agreement by Crutchfield was not a defense to the note in his hands unless he had also been guilty of the fraudulent misrepresentation charged against him as to Crump’s solvency A careful reading of the opinion will disclose the inaccuracy of this view, to say nothing of the clear and concise sullibi printed with the Crutchfield opinion, made by a trained expert digester who clearly had no such conception.
But, it is said that the Crutchfield opinion holds that even if Crutchfield knew of the collateral agreement when the note was assigned to him that his representations were merely the answering for the debt or default of another, and not being in writing were in contravention of the statute of frauds, but, that if Crutchfield knew of the contract, and in addition fraudulently represented to Robinson that Crump was solvent, whereby Robinson was induced to execute the note, and if Crump was in fact at the time insolvent, all these facts taken together constituted a defense. But all that has nothing to do with this case, for the effort here as between Davidson and Grover is to hold the latter primarily responsible to the bank as between him and Davidson, on Grover’s written endorsement of the note to the bank, and to base that primary liability upon his alleged fraud practiced upon Davidson, in procuring the execution of the note to Crump. In this case, therefore, the statute of frauds does not and can not apply.
In the Crutchfield case, as in this, an estoppel was relied upon by the holder because of the renewal. In the Crutchfield case there was a plea in avoidance of the estoppel to the effect that the plaintiff therein had represented to defendant at the time of the renewal that the payee, Crump, was making arrangements to pay the amount mentioned in the contract, and would be ready to do so in a few days; and the opinion in that case, after intimating that this was not a good plea in avoidance, stated the evidence given on that issue and held it insufficient to avoid the estoppel. In this case, however, there is a definite plea by defendant that at the time of the renewal it was agreed and understood between him and *429the officials of the bank that the renewal should in no wise affect any existing defenses he may have had to the original notes, and Davidson in his evidence clearly and distinctly upheld this plea in avoidance.
If, as shown by the testimony of Davidson, at the time of renewal it was understood and agreed that such renewal should not affect his rights, clearly there was no waiver of the fraud which had theretofore, as claimed by Davidson, been practiced upon him by Grover and Crump.
The question as to what extent the knowledge of Grover is to be imputed to the bank under the situation involved here is not presented on this appeal; but upon another trial if it should appear that Grover was acting solely for himself when he became the owner of the Dav.idson note which he thereafter discounted to the bank, then the knowledge which Grover had as an individual will not be imputed to the bank when he and the latter were dealing with each other at arm’s length.
There is nothing in the opinion in this case inconsistent with the opinion in the Crutchfield case.
The petition for rehearing is overruled.