Court Opinion

ID: 6580734
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:04.173248+00
Date Added: 2024-06-11T15:57:16.351998
License: Public Domain

Pardee, J.
An elderly woman, feeble in body, of an excitable temperament, and habitually relying upon the judgment of others in matters of business, is informed by her nephew, who had been reared in the family of which she was a' member, and to whom she was greatly attached, that he was a defaulter to the town; this announcement is presently followed by a declaration from Mr. Chapman, the selectman, that the nephew had exposed himself to a criminal prosecution and punishment in the state prison, and that, unless she immediately secured the town against loss, criminal proceedings would on that day be instituted against him. He left her greatly agitated in her mind, and within about half an hour returned with an attorney and offered the mortgage in question for her signature. She signed it without time for deliberation, and without the advice of counsel or friends.
The finding makes it certain that Mr. Chapman believed, and. intentionally produced in the mind of Miss Gager the belief, that her nephew had exposed himself to a criminal prosecution; that such prosecution would be immediately commenced unless she executed the mortgage; that the execution of the mortgage would stifle it; and that he knew that *196slie executed it for that purpose solely. For reasons of public policy a court of equity will refuse to enforce a contract of suretyship entered into under such circumstances.
In Williams v. Bayley, 1 L. R., Eng. & Irish Appeals, House of Lords, 200, one Bayley obtained money from the plaintiffs by forging his father’s name. Upon discovery they insisted (though without any direct threat of a prosecution,) on a settlement, to which the father was to be a party; he consented, and executed an agreement to make an equitable mortgage of his property. Held, that the agreement was invalid. The Lord Chancellor said:—“ But here w*as a pressure of this nature. We have the means of prosecuting, and so transporting, your son. Do you choose to come to his help and take on yourself th.e amount of his debts, the amount of these forgeries? If you do, we will not prosecute; if you do not, wo will. That is the plain interpretation of what passed. Is that, or is it not, legal ? In my opinion,, my lords, I am bound to go the length of saying that I do not think it is legal.” Lord Chelmsford said:—“The defence of the bankers being rested entirely on these two grounds, as I have already said, in my opinion this negotiation proceeded upon an understanding between the parties that the agreement of James Bayley to give security for the notes would relieve William Bayley from the consequences of his criminal act; and the fears of the father were stimulated and operated on to an extent to deprive him of free agency, and to extort an agreement from him for the benefit of the bankers. It apppears to me therefore that the case comes within the principles on which a court of equity proceeds in setting aside an agreement where there is inequality between the parties, and one of them takes unfair advantage of the situation of the oilier, and uses undue influence to force an agreement from him.” Lord Westbury said:—“What remained then as a motive for the father ? The only motive to induce him to adopt the' debt, 'was the hope that by so doing he would relieve his son from the inevitable consequences of his crime. The question therefore, my lords, is, whether a father appealed to under such circumstances to take upon himself an amount *197of civil liability, with the knowledge that, unless he does so, his son will be exposed to a criminal prosecution, with the certainty of conviction, can be regarded as a free and voluntary agent? I have no hesitation in saying that no man is safe, or ought to be safe, who takes a security for the debt of a felon, from the father of a felon, under such circumstances. A contract to give security for the debt of another, which is a contract without consideration, is, above all things, a contract that should be based upon the free and voluntary agency of the individual who enters into it. But it is clear that the power of considering whether he ought to do it or not, whether it is prudent to do it or not, is altogether taken away from a father who is brought into the situation of either refusing, and leaving his son in that perilous condition, or of taking on himself the amount of that civil obligation.”
The petitioner says that Mr. Chapman erred in his belief that the default of the nephew was punishable as an offence. This being so, the deed has no better foundation than a mistaken belief as to facts, produced by the erroneous statement made and persisted in by the agent of the town, and therefore it should be set aside.
In Davies v. London & Provincial Marine Ins. Co., L. Reps. Chancery Div., Vol. 8, 469, the officers of a company, believing that the retention of money by one of their agents amounted to a felony, directed his arrest. Certain friends of his came to the officers of the company and proposed to deposit a sum of money by way of security for any deficiency. On the same day the company was advised that the acts of the agent did not amount to felony, and the directions for the arrest were withdrawn. Later in the day the friends of the agent had a second interview with the officers of the company, and agreed to deposit a sum of money as security for his defaults, no mention being made of the withdrawal of the directions for the arrest. The sum of money was afterwards deposited with trustees on an agreement for the security of the company. Held that the change of circumstances ought to have been stated to the intending sureties, and that the agreement must be rescinded and the money returned to the *198sureties. Fry, J., said:—“But I do think that the contract of suretyship is, as expressed by Lord Westbury in Williams v. Bayley, L. R., 1 H. L., 200, one which should be based upon the free and voluntary agency of the individual who enters into it. I think that principle especially applicable here, because there is no consideration in this case, as in many cases of suretyship, for the contract so entered into; and therefore I think, to use the language of Lord Eldon in Turner v. Harvey, Jac., 169, it is a contract in respeet of which a very little is sufficient. Yery little said which ought not to have been said, and very little not said which ought to have been said, would be sufficient to prevent the contract being valid. It is one, furthermore, in which I think that everything like pressure used by the intending creditor will have a very serious effect on the validity of the contract; and the case is stronger where that-pressure is the result of maintaining a false conclusion in the mind of the person pressed.”
We advise the Superior Court to dismiss the petition.
In this opinion the other judges concurred. •