Adams v. Flanagan

36 Vt. 400

• Court: Supreme Court of Vermont
• Decided: November 15, 1863
• Status: Published

Opinion

Audis, J.

The court instructed the jury that upon the legal effect of the evidence the defendants were co-sureties with the plaintiff upon the note. We must assume therefore that whatever the defendants’ evidence tended to prove was proved. The defendants’ evidence tended to show, that the defendants refused to sign the note as co-sureties with the plaintiff and Boynton ; but at the request of Mills, the principal and the maker of the note, consented to sign it as sureties for Adams and Boynton after he and they had signed it; that upon this understanding Mills signed it and went to Adams and Boynton and procured their signatures — that they entrusted the 'note thus signed to Mills — that he presented it to the Flanagans, and that they then signed it in the presence of Mills the maker and of Chittenden the attorney of the payees, with.the distinct and express agree? ment previously stated and then repeated,' that they signed as sureties for Adams and Boynton and not as co-sureties with them ; that they affixed only the word “ surety'/ to their names, and not the words “ surety for Boynton and Adams,” because Chittenden told them that the legal effect of signing after the others and adding the word “ surety” only, would be to make them sureties for and not with them.

It must therefore be regarded as a fact, that there was no concurrent or mutual understanding between the sureties that they were all to be co-sureties jointly for Mills ; but on the contrary that the Flanagans refused throughout the whole transaction to become co-sureties with Adams and Boynton, and insisfed in good faith that they would not sign till after Boynton and Adams had signed, and then only as sureties for them and not with' them. This fact excludes all those cases as precedents where a mutual understanding existed between the sureties that they should be co-sureties with each other.

It must further be considered as proved, that the defendants derived no benefit or advantage from Adams and Boynton signing as sureties. Adams and Boynton were already liable as sureties — the defendants were not. Mills wanted a renewal of the note. It was not for the benefit of the defendants that the 'note was to be renewed.

Neither did the defendants request Adams and Boynton to sign the new note. Nothing passed between the defendants and them on the subject, — nor did the defendants authorize Mills to carry any word, request or communication from them to Adams and Boynton. "Whatever Mills said to them he said without the knowledge or privity of the defendants ; not as from them or for them, but merely from himself, as a volunteer, upon his own credit and from his own notion. Hence there is nothing in this case to indicate that the defendants said or did anything to lead the plaintiff to suppose that they would sign the note as co-sureties with him ; nor that they said or.did anything to enable Mills to mislead the plaintiff, and to induce him to suppose that they would sign with him as a co-surety.

Nor is there any thing to show that the defendants knew or had any suspicion, that Adams signed the note on the expectation that they would sign as co-sureties with him.

The case is bare of all imputation on the defendants of fraud, unfairness, negligence, or acts tending to mislead the plaintiff and to induce him to sign under any misapprehension of the liability which they were to assume.

It does however appear in the case that Mills, 'when he went to get the plaintiff to sign, falsely stated to him that the defendants would sign as co-sureties with him ; and thereby the plaintiff was in fact induced to sign the renewal note which otherwise he would not have signed. But as we have already said — this must be regarded as a volunteer falsehood of Mills, to which the defendants were not privy, have not contributed or given credit, and for which they are not in any way responsible.

The defendants acted in good faith, and must have supposed that Mills would either say nothing to Adams, or else would tell the truth. They could not have anticipated or prevented the falsehood. They knew nothing of this falsehood when they signed. It must also be understood that the defendants knew that Adams and Boynton were merely sureties for Mills.

The case then is this. Adams and Boynton sign as sureties upon the erroneous supposition (springing from the deceit of Mills and in no way imputable to the defendants) that the defendants would sign as co-sureties with them. The defendants in good faith, and without any knowledge of what the plaintiff supposed as to their signing, signed the note, when presented to them by Mills with the signatures of himself, Boynton and Adams attached to it, upon the distinct and express understanding with the principal, and with the payee, that they signed as sureties for Adams and Boynton and not as co-sureties with them. Do they thereby, by operation of law, become joint sureties with Adams.and Boynton and liable to contribution?

If they are so liable it is not upon 'the ground of fraud, negligence, or the misleading of the other sureties. All that the other sureties can claim on the ground of good faith and fairness, they can claim also. They have no more deceived the other sureties, than the other sureties have them. Indeed if there is a balance of negligence imputable to any, it is to Adams and Boynton, who entrusted the principal with the note after they had signed it and thus gave him the appearance of an arffhority to use the note with their names attached, as he might see fit. The defendants might well assume that the names attached were there pursuant to the condition they had imposed as precedent to their signing of the note.

If they are liable it is not by virtue of an agreement to become so, or through silence in the execution of the note from which such an agreement could be implied ; but in spite of their express refusal to assume such liability, — such refusal known to the principal before he got the other sureties to sign, and accompanied with the express condition that the other sureties, who were then liable for debt, should sign first, and that the defendants would sign only as sureties for and not with them.

‘They were under no obligation to the principal or- sureties to sign the note. They might have changed the form in which they assumed their liability, so as to preclude all pretence of their being co-sureties with the plaintiff. They might have executed a separate instrument and thus have evidenced conclusively their intent, by a separate bond, or guaranty. Craythorne v. Swinbourne, 14 Ves. 160 ; Keith v. Goodwin, 31 Vt. 268.

The case last cited was of a guaranty on the back of the note.

So if they had appended to their names as signed to the note these words — “ sureties for the above signers” — this would have been sufficient evidence of their intention apparent upon the instrument. Such was the case of Harris v. Warner, 13 Wend. 400, and that decision is approved in Norton v. Coons, 3 Denio, 130, and same case in 6 N. Y. 33. But it is said by Ch. J. Bronson that “ if the last surety thus refuses to take the burden of a co-surety he renounces the benefit of that relation. If he will not contribute when the other surety pays the debt, he shall not have contribution when he pays it himself. 3 Den. 132. This supposes of course that the last surety thus signing as “ surety for the above” does so without the consent or knowledge of the former surety; and that he can not claim the benefit of the maxim that “ equality is equity” so long as he refuses to bear the burden it imposes.

It is urged by the plaintiff that as the defendants signed the note without annexing any such restriction to their liability, — as they thus appear on the face of the note as co-sureties with the plaintiff, they are bound by the form of the instrument, and cannot be permitted to show any different understanding or relation by parol. Is parol evidence admissible to show that the defendants signed not as co-sureties with the plaintiff, but with th e intent to be Sureties for him?

As between the makers and the payee the note excludes all parol evidence. It was made for the very purpose of being the proof, the sole and exclusive proof of the contract.

But as between the signers to it, it was not made or intended to be the exclusive proof of their agreement and relations. • It is well settled that it is open to parol evidence to show the true relations of the signers and the real nature of the contract between them.

The makers, though all appearing to be joint'principals, may be shown to be — some principals and some sureties. An apparent principal maybe shown to be .a surety — an apparent surety a principal. Harris v. Brooks, 21 Pick. 195 ; 23 Maine 156 ; Lapham v. Barnes 2 Vt. 220 ; Flint v. Day, 9 Vt. 345 ; Keith v. Goodwin, 31 Vt. 268 ; Robinson v. Lyle, 10 Barb. 512.

This rule as settled in this state is clearly and fully stated by the present Chief Justice in Lathrop v. Wilson, 30 Vt. 604: “ The word surety being added after the plaintiff’s name, and defendant’s name being first on the paper with no such addition, we think the legal presumption from the paper alone is that the plaintiff was principal and the defendant surety. But this was not by any means conclusive, and the real purpose and object of-the paper and the real relation of the parties might be shown, notwithstanding the addition of ‘ surety! to the plaintiff’s name.”

Without going into any minute examination of the case, Norton v. Coons, 6 N. Y. 33, cited by the plaintiff, we deem it sufficient to say that the reasons for that decision a¡s stated in the opinion of Judge Gray, are not satisfactory to us. He admits that parol evidence is admissible to rebut the presumption arising from the face of the note that all are principals; — he seems to consider that proof by “ extrinsic facts ” that the signers were not co-sureties is admissible ; but proof of an express declaration or agreement by the signers at the time the note was signed that they were not co-sureties he considers inadmissible.

What is such proof but the proof of an “ extrinsic fact?” If parol evidence, is admissible to show that all are not joint principals when they appear to be, we think it equally admissible to show that all are not co-sureties when they so appear. The note is not made to show the contract and relations of its makers as between themselves ; hence as to them and their relations growing out of it parol proof is admissible..

In Norton v. Coons, Judge Gardiner seems to rest his opinion upon the ground that the evidence offered did not tend to prove the agreement claimed by defendant. Judge Foot dissented. In the opinion of the', supreme court in the same case, 3 Den. 130, we think the language of Ch. J. Bronson may be fairly interpreted as resting the case on the same ground as Judge* Gardiner.

Flint v. Day, 9 Vt. 345, is clearly an authority for the plaintiff. Upon the point applicable to this case we cannot but doubt whether it was well considered. It has been questioned since by some of the judges who participated in the decision—23 Vt. 164, 31 Vt. 276. Williams, Ch. J., in the decision, regards that case as coming within the principle of Lapham v. Barnes, in the 2d Vt.; but in that case there was no evidence to show that Hitt & Lapham were not co-sureties. He says the declaration made by Day, the co-surety, when he endorsed the note, was not made either to the principal or surety, and therefore could have no effect. This certainly recognizes the principle for for which the plaintiff here contends ; and if the suit had been by Day to recover of Flint upon the ground that he was surety .for him and not with him, there would have been great force in the objection. But there, as here, the suit was by a surety against a subsequent signer for contribution, when the subsequent signer at the time of signing stipulated he would not be co-surety. It may well be said that, by renouncing the liability to contribution. as a co-surety, he must be held to renounce the right to it; but to go further and hold that he, who refused the liability of a co-surety when he signed, by making claim to the rights of one afterwards, shall not only lose the right he claims, but shall also' be bound by the obligation he refused .to enter into — this seems to us to be unjust, so long as the claim has in no way influenced another’s action or affected his rights. The more reasonable rule is that the surety, at the time he enters into the obligation of suretyship, may make such stipulations as he sees fit in regard to his liability — may extend or restrict it, as ho pleases. He must of course do this in good faith. He must not allow his signature to appear to be what it is not, and thus appearing, entrust it to the principal, and so enable him to mislead others and induce them to sign upon the belief that he is a co-surety for the principal without restriction, when in fact his liability is restricted. But, as we have before said, nothing of that kind appears in this case. Subject to such obligations, the right of the surety to stipulate so as not to be liable to contribution with those who have signed before him seems unquestionable. In the recent case of Keith v. Goodwin, 31 Vt. 268-275, this subject has been very fully considered. Ch. J. Redeteld says, it is universally admitted that “ a surety may so stipulate at the time of entering into the obligation as not to be liable to contribution with the other sureties who have signed before him.” He says : “ The form of doing this is not important. Nor is it important that it should appear on the contract, nor that former sureties should be made aware of the terms upon which subsequent sureties become holden.” It is unquestionably true, that much that is there said by the learned Judge was not necessary for the decision of that case ; and that his remarks, so far as applicable to this case, are not.to be regarded as entitled to the same weight as a decision. But, we think, they are founded in equity and good sense, and, as applicable to this case, are sustained by authority. Even the cases cited by the plaintiff from the N. Y. courts recognise the right of the surety to so stipulate, but hold that the stipulation should appear on the face of the instrument.

In the 1 L. Cas. in Eq. 68-72, many of the cases are collected, and are shown to recognise the principle which the defendants contend for. It is consistent with the natural right which every man has to make his own agreements. Its proper exercise injures no one’s rights. It harmonizes with established principles of law. In this respect, therefore, we seem the charge erroneous.

2. It is claimed that the depositions should have been excluded because the caption describes the defendants as “ H. C. and N. B. Flanagan.” This is not like the cases in 10 Vt. 282, and 17 Vt. 263, where the names of some of the defendants were wholly omitted, “ John Dean and others,” “ Seneca Smith and others.” Here the names appear and the only alleged error is that the Christian name is not set out in full, the initials only being prefixed to the surname. We are not disposed in mere matters of form to overlook errors that tend to uncertainty and confusion ; but we think it would be over-nice to exclude a deposition on this ground. It is hardly conceivable that the use of initial letters for Christian names in this -respect, can bring any practical mischiefs in its train. The decisions that the omission of an initial letter of a middle name is no defect, being an actual error in the description of the ñame, would seem to stand on more questionable ground. Yet it has long been so held in this state, and we know of no evil attendant upon the practice.

3. As the defendants declined to go to the jury on the question of the authority of H. C. Flanagan to sign the partnership name to the note, we must assume that all the facts referred to in the instructions of the court on this point are true. If the authority to sign the note was not intended to be limited to a twenty days note, if the difference in time was immeterial, so that when Noble C. Flanagan authorized H, C. to sign the note it was not in his mind whether it was to he a twenty or a thirty days note, then the authority to sign might reasonably he considered as not restricted to,a twenty days note. In construing an authority of this kind, where it is given verbally, is silent upon the controverted point, and is attended by conversation and circumstances which must necessarily be regarded in order to determine the meaning of the language used, and the extent of the authority conferred, there the judge may well direct the jury to consider all the surrounding circumstances in order to ascertain the real intention of the parties. This was in substance the charge of the court in this case.

Judgment reversed.