Court Opinion

ID: 7834246
Source: CourtListenerOpinion
Date Created: 2022-09-07 23:34:54.714759+00
Date Added: 2024-06-11T15:49:30.898534
License: Public Domain

Thomson, P. J.,
dissenting.
I find myself unable to accept the conclusion reached in this case by a majority of the court. I agree with them that the evidence showed that the consideration of the note in suit was a gambling debt; and I also agree that such a note is *36absolutely void, even in the hands of an innocent purchaser for value, before maturity. But to my mind the decision of this case does not turn upon any question affecting the validity of the note. The question is, whether, to the extent of the money borrowed upon it, the defendant can be heard to say that it is void. The evidence was that when the note was executed it was agreed between Hyde & Vedder and the defendant, that they should not let it go out of their hands until it was taken up by him, subject to an understanding that they might use it as collateral security, provided they did not “put it up for too much.” Hyde & Yedder kept the note in their possession for some months, when, being in need of some money, they found they could obtain it from the plaintiffs as a loan, securing it by the note of the defendant. Before pledging the note they informed the defendant of what they desired to do, and he assented. The principal opinion states the evidence concerning this part of the transaction somewhat mildly. It says that when the defendant was informed that Hyde & Yedder expected to use his note as collateral for the loan, he made no objection. The evidence was that before obtaining the money they informed him that they could use the note with the plaintiffs as collateral security for a loan, and asked his permission to do so, which he gave, cautioning them not to use it for too much. Acting upon this permission, Hyde & Yedder borrowed $320 from the plaintiffs, pledging the defendant’s note, which was for $1,250, as security. The note was a negotiable promissory note, and had not matured. On its face it appeared to be legitimate commercial paper. The plaintiffs had no knowledge of any fact or circumstance which might affect its validity, or of any fact which would suggest inquiry, and did not know that the defendant had specially authorized its hypothecation. Upon these facts was the defendant estopped from setting up the invalidity of the note, to the extent of Hyde & Vedder’s indebtedness to the plaintiff?
The learned author of the opinion has adopted some defi*37nitions of the doctrine of estoppel formulated in adjudicated cases; and, being unable to make the facts of this case come within the formulas he has found, he concludes that the defendant was not estopped to avail himself of the concealed vice with which the note was originally tainted. It is not always safe to take a statement of a general principle, which is found in the decision of a particular case, as an infallible guide in another case, although of the same general nature, where the facts and circumstances are not the same. Such statements usually take their form from the facts to which they are to be applied; and hence, while they may be within the principle, they are not, and do not purport to be, of universal application. Where special conditions of fact are under consideration, they necessarily give direction to the definition,- and for that reason a complete statement of the doctrine is not to be expected in any single case. The definitions vary in their phraseology as the facts vary; although each, as a partial statement, may be correct, as being comprehended within the same general and fundamental principle. Speaking upon the subject of definitions of the doctrine of estoppel, essayed by courts, the supreme court of New Hampshire, in Horn v. Cole, 51 N. H. 287, said:
“ In the much and well considered case of Preston v. Mann, 25 Conn. 118, 128, Storrs, J., delivering the opinion of the court says, ‘ The doctrine of estoppel in pais, notwithstanding the great number of cases which have turned upon it and are reported in the books, cannot be said even yet to rest upon any determinate legal test which will reconcile the decisions, or will embrace all transactions to which the general principles of equitable necessity wherein it originated demand that it should be applied. In fact, it is because it is so peculiarly a doctrine of practical equity, that its technical application is so difficult, and its reduction to the form of abstract formulas is still unaccomplished.’ This was said in 1856, and little has since been done towards extricating the doctrine from the confusion and conflict of authority with which it was then embarrassed. This, I think, has been *38caused by the fact that courts have continued to exercise their ingenuity in the vain attempt to compress a broad doctrine of equity within the narrow limits of a technical definition.”
The theory of the opinion in the case at bar seems to be, that because the defendant made no direct representations to the plaintiffs by which they were misled, and because their investment in the note was not immediately influenced by his conduct or speech, therefore there can be no estoppel in their favor. Something like this has been said by courts ; but it was said in cases where the estoppel claimed depended upon direct representation or immediaté influence, and therefore amounted only to a statement of the law to be applied to the facts under consideration. It was never intended as a formula which would embrace every possible 'variety of transaction. I think it may be stated broadly, as a principle underlying all technical definitions of the doctrine, that if one by his declarations, or conduct, or silence, is willfully, or negligently, instrumental in causing another to change his position disadvantageously, he assumes a responsibility, which, as against that other, he will not be permitted to gainsay ; and it is immaterial what the method may be by which the result is accomplished.
“In Winter v. Hart. 39 Conn. 16, a firm doing business in Goshen, by representing to the plaintiff, a wholesale dealer in Bridgeport, that the defendants were interested with them in their business, purchased goods from time to time on the defendants’ credit. The bills were made out to the defendants, and mailed to the firm, by whom they were paid. This was all done without the knowledge of the defendants, who as a matter of fact were not interested with the firm at all. Before the last purchase, the defendants accidentally saw the previous bills, but supposed they were the result of a mistake, arising from inadvertence. The bill for the last purchase was not paid by the firm; and the defendants were held for the amount, because, having seen bills from which it appeared that their credit was being used, they neglected *39to notify the plaintiff that the dealing was unauthorized. In Mitchell v. Reed, 9 Cal. 204, a party was held estopped by declarations to third persons which had been repeated to another who had acted on them, although it did not appear that the declarations were intended to mislead that other, or were made with any knowledge that the other could be in any manner affected by them. In Quirk v. Thomas, 6 Mich. 120, Christiancy, J., said: “Nor is there any principle which confines the rule of equitable estoppel to such representations as are made directly, and in person, to the parties acting upon them. Whether direct or indirect, in the presence or in the absence of the parties, is immaterial, so that they are calculated and intended to produce, and do produce the end.”
The defendant did not say to the plaintiffs that the note was good, nor did. he stand by in silence while it was being transferred to them; so that in paying their money on the note they were not directly influenced by either his words or his conduct. But he gave Hyde & Vedder authority to take the note to the plaintiffs, and pledge it with them as something of value. Hyde & Vedder kept the note in their possession in accordance with their agreement, until the trans^ action with the plaintiffs. When they found that the plaintiffs were willing to advance them money upon the note, they applied to the defendant for permission to use it, naming the parties from whom they proposed to obtain the-money; and, with full knowledge that those parties, in parting with their money, would rely on the validity and collectibility of the note, he authorized its use as security for the loan. It is needless to speculate upon what his liability would have been, if he had merely ascertained that the plaintiffs were about to advance money on the faith of his paper, and had neglected to notify them that it was worthless. His attitude towards the negotiation of the note was not negative or passive. The transaction by which the money was obtained, was the result of direct authority given by him for that special purpose. While the plaintiffs did not know that he had given the authority, and were therefore, not *40immediately influenced by it, yet it was given for the purpose of enabling Hyde & Yedder to obtain their money; and if it had not been given, so far as we can see, the loan would not have been made upon that note, because Hyde & Yedder would not have undertaken to use it. The paper, on its face, was valid. The vice with which it was infected was invisible; and, with full knowledge of what he was doing, he was actively instrumental in causing the plaintiffs to part with their money in reliance upon the deceitful appearance of the note. The act of Hyde & Yedder in pledging the note, was, in itself, a representation of its validity; the representation was made by the authority of the defendant; it was therefore his own representation; and it is immaterial that the plaintiffs were ignorant, at the time, of the part he had taken in the transaction. After being the cause of the plaintiffs investing their money in his paper, to permit him to say, as against them, that its consideration was illegal, would be to assist him in' the consummation of a fraud. I think that equity, good conscience, and every rule of fair dealing, loudly demand that, as to the money loaned by the plaintiffs, his plea that the note is void should go unheard.
The note being void originally, its transfer to the plaintiffs did not impart vitality to it; but I think that in so far as may be necessary to protect them from loss, and no further, the defendant should be adjudged estopped to deny its validity; and that they are entitled to judgment against him for the amount loaned with legal interest. It is my opinion that the judgment ought to be reversed.