Court Opinion

ID: 6502051
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:14:48.110454+00
Date Added: 2024-06-11T15:54:38.333538
License: Public Domain

CLAY, J.
The principal questions presented by this record, are believed to arise out of the bill of exceptions ; because .that -sets forth the facts of the case, upon which, with the principles •here to be laid down, the fate of the cause must ultimately be de-cided. Hence, although embraced by the last-assignment of-errors, they will be first considered.
*599The first point raised upon the bill of exceptions, is, -whether the court erred in suffering to go to the jury, as evidence, the mortgage from Marshall, the principal in the note sued on, to Preston, when it bore the attestation of two witnesses, neither of whom had been introduced, or given evidence of its execution — nor had the absence of either been accounted for. To sustain the opinion of the court admitting it, the counsel for the defendant in error relies on the ground, that the plaintiffs below objected generally, only, to its being read, without stating their grounds of objection, and that’it had been spoken of and admitted, by both the mortgagor and the mortgagee. We do not think either of those grounds sufficient to justify its admission. It was not the ground of the action, the plaintiffs were not parties to it, nor had it been set out in the pleadings so specifically, as to have called on them to admit, or deny its execution. The fact ofits having been spoken of and admitted by the mortgagor and mortgagee, (neither of whom was a party) in the course of the trial, was not a substitute for the evidence of a subscribing witness, and could not bind the plaintiffs, who were not parties to it, and made no admissions in relation to it. The first step, to be taken by a party, who introduces an instrument of writing, collaterally, is to prove its execution by the subscribing witness, if it have one, and, if not, to prove the hand writings of the individual or individuals, by whom it was executed, or in some other legal mode establish its genuineness. Until he offers legal proof of its execution, it is enough to object. generally — he has not placed himself in a position to claim any other objection; for, until then, he has not proved even the legal existence of such a contract. This general rule is held to be indispensable, by the highest authority, even v/hen it was proved that the obligor had admitted that he executed the bond; and though the admission was made in an answer to a bill of discovery. [See Greenleaf on Evidence, 604, § 569, and the authorities there cited ; and the case of -Bennett v. Robinson’s adm’r, § S. & P. 227.] It is true this rule has some éxceptions, but the facts of this case 4o not bring it within any one of them. And, if the obligor can make the objection, because a fact may be known to the witness, which may not be known to him; and be-, cause he has a right to avail himself of all the knowledge of the subscribing witness relative to the transaction; how much more forcibly do the reasons apply in favor of one who-is not a party to' *600the instrument, has no knowledge of it, and has made no admissions concerning it ? In the case of Falls & Caldwell v. Gaither, [9 Porter, 605,] this court seems to have relaxed the rule, so far as to admit the testimony of an agent, by whom a written contract was executed — although the subscribing witness might have been within the reach of tiie process of the court. It seems to me, that this was establishing a new exception to the general rule; and, as an agent may be presumed free from the interest, which must attach in the case of the parties to the contract, lam not now disposed to disturb the point. But, I cannot agree, where a pa-peris introduced collaterally, to affect the interest of one who is not a party to it, to dispense with the knowledge of all the circumstances attending its execution, which the subscribingwitness may be supposed to possess. I, therefore, conclude, the court erred in admitting the mortgage as evidence, under the circumstances set forth in the bill of exceptions.
2. Tbe next question arising on the bill of exceptions is, whether the court erred in charging the jury upon the facts as stated ? The charge was, that if the jury believed, from the evidence, that Preston was the agent of the plaintiffs, to secure the notes due them by Marshall; and took the note sued on, with the defendant .as security, at the time, having a mortgage on the effects of Marshall to secure himself personally, and did not inform the defendant of the existence of that mortgage ; and that defendant at the time he signed the note for Marshall was not in any manner notified of said mortgage; that, then, it was a concealment, which amounted to a fraud on the defendant, and they must find in his favor.
The broad principle assumed in this charge is, in a few words, that when a man Is taking a note, or obligation with security, and happens to know circumstances unfavorable to the credit, solvency, or responsibility of the principal, which are unknown to the person becoming security, and does not communicate, or make them known to him, that the omission to make them known is a fraud; which vitiates and destroys the binding efficacy of the contract.' This would be carrying the doctrine very far, and before it is adopted as the law of the land, ought to be well understood in its practical results, as well as sustained by authority. Is such a principle recognized, or acted upon, generally, by men of the most scrupulous honor and honesty ? Why does one man *601usually require security of another ? It is because he has not sufficient confidence in, or knowledge of, the solvency, or ability of the one, who is to undertake the payment of the debt, or performance of the duty. It would seem that the very requirement of security, implied this want of confidence, or knowledge — and that'it would admonish one, not better acquainted with the circumstances of the principal, to be upon his guard — and it is no doubt often the case, that the security agrees to be bound, because he knows the situation of his principal better than the obli-gee or payee. It is not assumed as a fact, on which the charge .is founded, that either the plaintiffs, or Preston, as their agent, represented the property of Marshall, the principal, to be free from incumbrance; nor that it was through the agency of Preston, the defendant bound himself as security; on the contrary, in a foregoing part of the bill of exceptions, it is stated that “ Marshall obtained the signature of the defendant to the note, on which, said defendant has been sued by plaintiffs, and that Preston also knew that said defendant was about to sign said note for Marshall, and did permit said defendant to sign it, without letting him know that the goods then in possession of said Marshall had, previously bv said Marshall, been mortgaged to said Preston.” This is the state of facts, to which the charge of the court must be understood as having reference. It is, in effect, merely that Marshall, the principal himself, obtained the defendánfis signature as security; and that Preston permitted him to sign the note, without telling hitg, that he (Preston) had a mortgage on the goods of the principal. On what principal of law was Preston bound to interpose and make known such a fact? We cannot believe such an one can be found, or that Preston was under even a moral obligation, so to Lterfer.
But, the question is, would such concealment, as that disclosed by the evidence 'amount to a fraud, in legal contemplation. It is true, fraud, in its general acceptation may be defined the misrepresentation or concealment of a material fact. But, “ it is extremely difficult to advance any general principle, or elementary .doctrine on this subject. Cases of fraud depend peculiarly on the particular facts which have occurred, the relative situation of the parties, and their means of information.” [See Chitty on Con. 3d Am. ed. 223.) It may be laid down, that to constitute fraud, there mpst be a misrepresentation, or concealment of a *602fact, peculiarly within the knowledge of the party, who does either — or some device must be used, naturally calculated to lull the suspicions of a careful man, and induce him to forego enquiry into a matter upon which íhé other party has information, although such information be not exclusively within his reach. [Id. 223,4.]
The concealment, or non-disclosure of facts, which amount to a fraud, must be “ of those frets and circumstances, which one party is under some legal, or moral obligation to communicate to the other; and which the latter has a right, not merely in foro conscientiae, but juris et dejure, to know.” [1 Story’s Com. on Eq. P. 216, § 207.] In treating further on the subject, the same learned author, remarks, “ for many most material facts may be unknown to one party, and known to the other, and not equally accessible, or, at the moment, within the reach of both; and yet contracts, founded on such ignorance on one side, and knowledge on the other, may be completely obligatory. Thus, if one party has actual knowledge of an event or fact, from private sources, not then known to the other party, from whom he purchases goods, and which knowledge would materially enhance the price of the goods, or change the intention of the party, as to the sale; the contract of sale of the goods will nevertheless be valid.” [Id. 217, 218.]
In the case of Laidlaw v. Organ, [2 Wheat. 195,] where this question substantially came up, Chief Justice Marshall, in delivering the opinion of the court, said: « The question in this case is, whether the intelligence of extrinsic circumstance^!, which might influence the price of the commodity, and which was exclusively within the knowledge of the vendee, ought to have been comrAunicated by him to the vendor? The court is of opinion, that he was not bound to communicate it. It would be .difficult to circumscribe the doctrine within proper limits, when the means of intelligence are equally accessible to both parties. But, at the same time, each party must take care not to say, or do any thing tending to impose on the other.”
It may be further remarked, that to constitute a fraud, an omission to communicate, or a concealment of facts in such cases, should at least be attended by evidence of some trust, or confidence, reposed by one party in the other. The contrary doctrine, to that here laid down, would be extremely inconvenient, and would open an interminable field of litigation. In a large portion *603of tho contracts made between man and man, one of the parties may be possessed of more information than the other, or that which may be exclusively within his knowledge — though accessible to the other, if proper vigilance be exercised. To authorise an action for damages, or a bill in chancery to rescind, every such contract, would lead to endless litigation.
These views result in the conclusion, that the charge of the court below to the jury, was erroneous.
3. The application of the principles laid down to the second and fifth pleas, relied on by the defendant, will shew that they were both defective. Neither of them sets forth such facts, as amount to fraud. Consequently, the court erred in overruling the demurrers to those picas.
4. But the third pica sets forth, in substance, that the plaintiffs knew the property of said Marshall to be encumbered, and frau; dulently represented to the defendant, that Marshall was to have the privilege of discharging the note sued upon, by the proceeds of the property then in his possession; and that tho plaintiffs did not give said Marshall the privilege of so discharging said note; but that their agent has appropriated said property, then in said Marshall’s possession, to the payment of other debts, and that said Marshall is now insolvent. Here is an allegation of a misrepresentation, knowingly made by the plaintiffs to the defendant, calculated to mislead and deceive the latter; a misrepresentation “ calculated to lull the suspicions of a careful man, and induce him to forego, enquiry_into the matter,” and constitutes a legal fraud. We, therefore, conclude, the court below did not err in overruling the demurrer to the third plea.
But, for the errors arising upon the bill of exceptions, and in overruling the demurrers to the second and fifth pleas; let the judgment be reversed, and tho cause remanded.
COLLIER, C. J.
I differed with my brothers in Rails and Caldwell v. Gaither, in what I considered a departure from the ancient and strict rule, which requires proof by the attesting witness, of the execution of the deed, where his evidencq is attainable. That case determines that an agent is competent to prove that a writing was executed by him, under authority from, and on behalf of his principal. Why the evidence of the agent should be admissible, and the principal incompetent in a case in which *604the latter has no interest, I am unable to perceive. I am perfectly willing to regard the case cited, as authoritative, and if in the present case, the mortgagor testified to the execution of the mortgage, or admitted its legal existence, we cannot in my judgment, in the absence, of all interest disregard his evidence. Such proof comes- within the principle we have recognized. I have merely added these few remarks, to call attention to the fact, that what my brother Clay, has said on this point, is hot intended to eon-elude us if the question should hereafter arise.