Court Opinion

ID: 6678490
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:18:25.006785+00
Date Added: 2024-06-11T16:00:46.269381
License: Public Domain

Me. Justice Gaey,
concurring. The case of Dunn v. Garrett, 93 Tenn., 650, decided October 2d, 1894, and reported in the Central Law Journal of December 14th, 1894, page 490, sustains the conclusion announced by Mr. Justice Pope in the leading opinion in this case. The facts of that case are thus stated by Mr. Justice Beard, as the organ of the court: A bond, unofficial in character, was executed by one Garrett as principal, and by the defendants as his sureties, payable to complainant as obligee. This bond, regular in its form and perfect in its face, was delivered by the principal obligor, and was accepted by the latter in good faith, as a complete instrument, without any facts or circumstances attending its delivery to excite suspicion or arouse inquiry on the obligee’s part as to the mode of its execution. On these facts, the question here presented for determination is this: After loss covered by the terms of this bond has occurred to the obligee by the default of *511the principal obligor, can a surety avoid recovery for this loss upon the ground that he had made a private agreement with his principal at the time of signing, and leaving it in the latter’s hands, that the principal obligor should not deliver it to the obligee until another party has signed it as surety, when in violation of this agreement, and without the knowledge or consent of the surety, the bond was subsequently delivered?
After quoting with approval the following language from the case of Jordan v. Jordan, 10 Lea, 124, to wit: “The law makes the principal the agent of the sureties for the special purpose of delivering the instrument. * * * It is a case for the application of the ordinary principle of agency, that when the agent is clothed with apparent authority to do the act, he may bind the principal within the limits of that authority, whatever may have'been his private instructions,” the court proceeds as follows: “In other words, the surety has innocently, but negligently, placed it in the power of his agent to inflict a loss upon another, who is equally innocent, and in no respect guilty of negligence. In such a case, the effect of the holding of Jordan v. Jordan, supra, was, whenever a loss occurred as the result of such negligence, to apply the rule announced in Lickbarrow v. Mason, 2 T. R., 63, that, ‘whenever one of two innocent persons must suffer by the acts of a third, he who has enabled the third person to occasion the loss must sustain it.’ * * * In State v. Potter, 63 Mo., 212, the court says: ‘Here the surety who defends this action had invested the principal with an apparant authority to deliver the bond, and there was nothing on the face of the bond or in any of the attending circumstances to apprise the official who. accexffed it, that there was any secret agreement which forbade its acceptance. The surety is alone at fault in the matter, as, but for his unwarranted trust in Turley, the' latter would never have had it in his power to occasion the loss which the beneficiaries of this bond must suffer, if the defence made by the surety is successful. * * * Surely, then, a more opportune application of the language of Lord Holt in Hern v. Nichols, 1 Salk, 289, could not occur than to the ease before us, that, ‘seeing somebody must be the loser by the deceit, it is more *512reasonable that he that employs and puts trust and confidence in the deceiver should be loser, than a stranger.’ * *
The court then concludes as follows: “We are satisfied to adopt the rule as found in Dair v. Baited States, supra, and other similar cases already referred to, as resting on sound principle, and sustained by the weight of authority. We agree with the court in Nash v. Fugate, when it says: “Itis impossible to foresee the mischief of adopting a different rule,’ for ‘an obligee having in his possession an instrument signed by responsible parties, to all appearances complete and valid, may at any distance of time be confronted and defeated by a secret parol agreement between the principal obligor and some of the sureties, of the existence of which he had not even a suspicion. How is it possible to provide against these secret agreements? How are they to be met and disproved? In the nature of things, the obligee can offer no evidence besides the bond, as the. knowledge of the condition is generally confined to the principal obligor and his sureties.’ It is proper to add, that in all such cases, to give the holder the benefit of the rule here announced, it must affirmatively appear, as it does in this case, that he took the instrument in question without notice of its conditional delivery.”
In the ease of Fowler v. Allen, 32 S. C., 229, there were two questions raised by the appeal, the second of which was: Whether there was error in instructing the jury that even if the defendant did sign the notes upon the condition stated, which it is conceded was not complied with, she would nevertheless be liable thereon, unless the plaintiff had notice that she signed upon such conditions. In delivering the opinion of the court, Mr. Justice Mclver said: “As to the second question, while it is not to be denied that there is some conflict in the cases elsewhere, we think the decided weight of authority, as well as argument, is in favor of the proposition that where one signs a negotiable note, perfect on its face, as surety for another upon the condition known only to the principal, that it is not to be delivered to the payee until something else is done, the surety will be liable, even if such condition be not complied with, unless notice is brought home to the payee of such condition. *513This proposition does not rest alone upon the peculiar character of negotiable paper, but upon the well settled principle that where one of two innocent persons must suffer, the loss should fall upon him who put it in the power of a third person to cause such loss; as well as upon the principle that where an agent is clothed with apparent authority to do an act, he may bind his principal within the limits of that authority, whatever may have been his private instructions. Here the principal debtor, after signing the notes, takes them to the defendant for the purpose of procuring her signature as his surety, in accordance with the agreement made by him with the plaintiffs, and when he delivers them properly signed, surely the payees cannot be affected by any private instructions which the surety may have given to her principal, unless the same were communicated to the payees. The surety, by signing the notes, complete in form, and placing them in the hands of her principal to be delivered to the payees even though upon a condition, has placed it in the power of her principal to deceive the payees, and if loss ensued, it must fall upon the one who contributed to that loss rather than upon the innocent payees, who were left in ignorance of the conditions upon which the notes were signed. The principal debtor was the agent of the surety and not of the creditor, and if he has done an act for the doing of which he was clothed with apparent authority, even though it may have been done in violation of his private instructions, the person who invested him with such apparent authority must take the consequences * * .* Some of the cases, notably Dair v. United States, 16 Wall., 1, followed by Butler v. United States, 21 Id., 272, have extended the principle above laid down to unnegotiable as well as negotiable instruments.”
It was no part of the duty of the plaintiff herein to supervise the execution of the bond, and when it was delivered to him he had the right to presume that the signatures were genuine, unless he had notice of the forgery, or there were facts apparent upon the face of the bond sufficient to put him on inquiry. It was not contended that the plaintiff had actual notice of the forgery at the time the bond was delivered, but that the bond upon its face disclosed facts sufficient to arouse suspicion, and *514put the plaintiff on inquiry. There is no doubt that such facts would defeat a recovery upon the bond. The testimony offered by the defendant to show that the signatures of W. A. Susong and A. E. Susong were not genuine, but were forgeries, was, under our view of the law governing this case, only competent in case the bond showed upon its face such facts as were calculated to excite suspicion, and put the obligee on inquiry. Whether the bond upon its face disclosed such facts, was a preliminary question to be decided in the first instance by the presiding judge. Wicker v. Pope, 12 Rich., 391; note 3 to section 564 of Greenl. Evid. (2d edition).
In ruling upon this question, the presiding judge said: “There is nothing about the bond as delivered which is sufficient within itself, on the evidence here, to put the obligee of the bond on notice.” In the case of Sims v. Jones, ante, 91, this court says: “Where the rulings of the Circuit Judge are brought in review before this court, two things must appear: (1) That the ruling to which exception was taken is erroneous; (2) That the appellant has suffered prejudice by such erroneous ruling.” There is nothing in the “Case” showing that the appellant has suffered prejudice by the rulings of the presiding judge, alleged to be erroneous. A copy of the bond is set forth, but it does not show upon its face that there were facts sufficient to put the plaintiff on inquiry.
The appellant contends that it appears that the bond was not probated by a subscribing witness, as required by Rule 66 of the Circuit Court, and that this was a fact sufficient to put the plaintiff on inquiry. This requirement of the rule was held to be a nullity in the case of Grollman v. Lipsitz, lately decided by this court.
It would be very unj ust to the plaintiff that a new trial should be granted, on the ground that the bond disclosed facts sufficient to excite inquiry, and it should appear upon the second trial that the Circuit Judge was right in holding that no such facts existed.
There being nothing before this court showing that the appellant has'suffered prejudice by the rulings of the Circuit Judge, the exceptions relating to this question cannot be sus*515tained. I concur in the opinion delivered by Mr. Justice Pope.