Court Opinion

ID: 7184167
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:50:56.495127+00
Date Added: 2024-06-11T16:16:01.056363
License: Public Domain

Ogden, J.,
dissenting. Adhering to the opinion on the main point in this cause, which, as the organ of the Court, I delivered when our first judgment was rendered, I have some observations to add.
I think it is a mistake to say that the case was before considered by us under the aspect of the Bank having made representations to persuade the defendants to become accessory to Marcháis’ contract. In the opinion then delivered, the facts are fully and accurately stated as to the manner in which the negotiations were commenced and carried on between Marcháis and the Bank, and from that statement I think it evident the case was viewed in its true and proper light. We had, then, no doubt that the Bank as well as the defendants understood that the real obligation which the defendants contracted was that of assuring to the Bank the payment of the price of certain assets which the Bank undertook to sell to Marcháis. We then considered that as the notes which evidenced that obligation, and which are referred to in the act of sale, had not passed into the hands of third persons, we could properly inquire into all the circumstances under which they were given in the same manner as if the defendants, instead of signing notes as sureties of Marcháis,• had only signed the act of sale as sureties.
It has been stated in argument that there is no evidence of the resolution of the Bank having been communicated to the defendants prior to the execution of the notes by them; but surely it cannot be doubted that the transactions on their face render it morally certain that the notes were signed by the defendants and received by the Bank, in pursuance of the agreement on the part of Mar-cháis to purchase and of the Bank to^sell the assets.
The facts of the case have not been presented in any new light. If we had any doubt as to the defendants having been entirely ignorant of any misconduct on the part of Marcháis when they consented to become his sureties in the purchase of the assets of the Bank, it would be our duty to remand the case for further evidence, because it was assumed in the argument and there is nothing to contradict it in the record, that such was the cace. And yet it appears clear to my mind, that if by signing an obligation as Marcháis1 sureties for the purchase of the assets, they are to be rendered liable instead of Marcháis’ official sureties for the previous acts of embezzlement committed by him, such a result could only be arrived at by inferring their knowledge of these acts and willingness to aid him in this manner in preventing the discovery of them.
Viewing the defendants as innocent of any connivance or participation in the frauds of Marcháis, the legal question presented in my mind does not admit of *390any serious difficulty. Although Marcháis himself is estopped from denying that there was any sale, the defendants are not. The error vitiates the contract as to the sureties. Error in a contract, when indued by the fraud of a third person, annuls it; (Tuiliier on Obligations;) and more certainly must this effect be produced when the party to the contract, against whom this error is pleaded, by his own negligence or omission, enabled said third persons successfully to practice the fraud.
I do not see how the fact of the defendants consenting to become Marcháis' sureties in the purchase of certain assets from the Bank, in any manner relieved the Bank from the obligation of inquiring into and being responsible for the truth of the representations of their own cashier as to what assets remained on hand. It has been said in argument that the Bank made no representations to the sureties. The act of sale itself states, without qualification, that they sell to Marcháis the assets therein enumerated — -the clause excluding the warranty can only have reference to the solvency of the debtors, as there must be a thing sold as well as a price to constitute a sale, he who sells a debt or incorporeal right necessarily warrants its existence at the time of the transfer; but the warranty of the solvency of the debtor is not implied. Civil Code, Arts. 2616, 2617.
The ground which has been taken, that Marcháis' official sureties are released in consequence of the Bank having accepted the suretyship of the defendants for the amount of Marcháis' purchase must depend for its correctness on the question whether the defendants, by agreeing to become the sureties for the price of a sale of specific assets which the Bank were to sell to Marcháis, thereby incurred a responsibility for his previous acts. I think there is no principle on which such an extent could be given to the obligation, and that on that point this case cannot be distinguished from the case of Favor & Brum v. The United States, 5th Peters’ R., in which the Supreme Court of the United States held that the surety of a government defaulter could not be held responsible for a previous dereliction of the principal unless the bond was retrospective in its language. The great principles of equity are of universal application: Sa dem lex Romm et Athenis.
I find nothing in the arguments which have been presented to sontrovert these views of the legality of the case, except what is derived from the new legal abstraction, that suretyship is a collateral contract. Toullier admonishes us that “This theory of reciprocal and unilateral contracts is an imperfect one, which will mislead if its application be not made with discernment. There is accuracy only in the division founded in the nature of things. The promise is unilateral when it is not yet accepted; it becomes bilateral by the acceptance.” And even the textual provisions of our Code establish the existence of reciprocal obligations in contracts of suretyship, the creditor being bound at all times to hold himself in readiness to subrogate the surety who pays to all his rights unimpaired growing out of the contracts.
There is nothing peculiar in the principles of the civil law to distinguish it from the common law on this subject, and the same principles of equity ought to control under both systoms. In the ease of Dillingham v. Jenkins, the language used by Chief Justice Sharkey does not sustain the doctrine contended for by the appellants, but rather the reverse. He says: “if the principal is bound, the surety is also, unless he is discharged by some variation in the the terms of the contract; but if there is no change in the risk he took upon himself he is not discharged.” In the present case, by the fraud of Marcháis, and the error *391on the part of the Bank induced by that fraud and their own neglect, the risk was changed entirely from what the parties contemplated it to he when the eon-tract was entered into.
As to the extent to which the sureties should be relieved, my original impression was that the contract ought to be annulled only as to the assets which had no existence when the Bank undertook to make sale of them. I yielded that opinion to my colleagues who thought that if the sureties could avail themselves of the plea of error, it should have the effect of setting aside the sale in tolo. 1 think there was error in that conclusion, and my opinion is, that the judgment before pronounced ought to be amended in that respect.
Yoorhies, J., concurring with Ogden, J.