Rogers v. Kneeland

10 Wend. 218

Opinion

By the Court,

Nelson, J.

The first question presented in this case, viz. whether the evidence offered by the defendants below, that the plaintiff below had acted without authority and contrary to instructions in selling the cotton by sample, was admissible, depends upon the relations and transactions existing between the principals and their agent, and their respective rights and duties growing out of them, in which the defendants are not particularly interested, because there can be no doubt that the Morgans, the principals, are bound to keep the defendants harmless. It is said the Morgans are bankrupts, but their inability to reimburse cannot vary the legal rights of the parties; the defendants chose to risk their responsibility, and it is not for them to set up their misfortunes in this respect to influence the just right or claims of third persons. Under the circumstances of this case, then, would it have been competent or tolerated in the Morgans to have interposed, as a defence to an action directly against them, that the agent had exceeded his instructions in selling their cotton by sample, and that the recovery against him by the purchaser was the consequence of his own fault 1 They not only received the proceeds of the sale, which was no doubt enhanced considerably by the warranty, but after the suit against Kneeland was commenced, and as is fairly to be inferred, both from their letter to the defendants and from the record of judgment in that suit, after the declaration was served disclosing the grounds upon which damages were claimed, they honestly acknowledged their liability, and take, as they suppose, effectual measures to indemnify him. They say, “ The sale having been 'made for our account, we are of course liable for any damages that may be recovered in the suit; and being desirous of providing a full indemnity, &c. we hereby authorize and request you to pay him all such sums of money as he may be required to pay, as well for damages that may happen to be recovered against him in the suit above mentioned, or otherwise, in relation to the cotton,” &c. The acknowledgment of their liability to keep the agent harmless was unconditional, and the engagement with the defendants to indemnify him absolute, and all this after the means were in their power to ascertain the grounds upon which the damages were claimed against him. Even if it bad been proved on the trial that the sale by sample was without authority, we could not for a moment have doubted but that the subsequent transactions between the parties were decisive to establish the approbation and ratification of it. The only pretence urged against this conclusion is, that the principals may not have known that the agent had sold by sample when they acknowledged their liability to indemnify him. The answer to this is, that they had within their power ample means of ascertaining the facts, not only from their agent, but from the adverse party, whose attorney resided in the city where this acknowledgment was made and indemnity given ; and if we are at liberty to presume ordinary attention on their part to their own interests, we are bound to believe that the arrangement to save the agent harmless was made with a full knowledge of all the facts. If they had not authorized the sale by sample, and intended only to be responsible to the agent for liabilities incurred while acting strictly within the scope of his powers, they should have so qualified their engagement. There can be no doubt, if the defendants had paid the judgment against Kneeland, and the costs of the defence of the suit against him, the Morgans would have been immediately accountable to them. The defendants are voiunteering a defence for the Morgans which, as may justly be infened from their letter, would be disclaimed by lliemselves. If the guaranty had been obtained through false representations of the terms and character of the sale of the cotton to Andrews, the question would have been different; but it is conceded that the guaranty was demanded as a right by the plaintiff, after the suit was brought against him, freely given by the Morgans, and fHriy obtained ; and it is not for them now, under the circumstances, after the liability is incurred, to qualify it ; much less can the defendants do so.

The next and probably (he material question intended tobe presented is, whether the written guaranty is sufficient to take the case out of (lie statute of frauds. The construction of that statute by the court in Wain v. Warlters, 5 East, 10, was adopted by this court in Sears v. Brinks, 3 Johns. R. 210, and has been followed in all subsequent eases, 8 Johns. R. 29, 11 id. 221, 13 id. 175 ; and it requires not only that the promise should be in writing, but that there be a consideration also in writing to take the case out of the fourth section of the statute. It is said in this case that there is no consideration for the promise of the defendants, or at all events, none appearing upon the face of the instrument. A consideration implied or inferred from the terms of the instrument is as effectual as if expressly appearing on its face. 19 Com. L. R. 55,272. 7 id. 414. 1 Peters, 501. It is a general principle, applicable to all instruments or agreements, that whatever may be fairly implied from the terms orlanguage of an instrument is in judgment of law contained in it. The letter of the Morgans and the guaranty of the defendants must be taken together as constituting the whole of the written agreement entered into with the, plaintiff; the latter refers to and adopts the foimer as remaining the stipulations for the benefit of Kneeland, with which the defendants say they will ‘'promptly comply.” The Morgans being the only parties in interest in defence of the suit against Kneeland, their agent, and of course legally liable to keep him harmless against any expease or damages recovered, this original legal liability would constitute a good consideration to support any express promise or engagement by them for that parpóse; but I admit, with the counsel of the plaintiffs in error, that this existing liability would not constitute a sufficient consideration to support the promise of the defendants, if there was nothing else in the case. That view of the case, however, is not warranted by the facts and circumstances. Though the Morgans were under obligations to indemnify the plaintiff, was he bound to trust to their sole responsibility for the expenses in defending the suit to be thereafter incurred, and the hazard of a recovery against him 1 I think not. After the}7 were advised of the existence of the suit, and acknowledged themselves bound to defend it, in judgment of law all the trouble and expense of such defence devolved immediately upon them. If the plaintiff consented to assume this upon himself in the first instance, he had a right to fix his terms. It is true, he had an interest in the defence, because he would be primarily liable to the plaintiff, and must trust to the ability of the Morgans for reimbursement ; and if they had denied their liability, and stood upon their strict legal rights, the plaintiff might have been under the necessity of defending the suit in the first instance at his own expense, to enable him to resort back to his principals; but they acknowledged their liability, and that the defence was a business of their own and for their exclusive benefit. Under these circumstances, the charge of it, with the consequent trouble and expense and payment of the judgment recovered, constituted a sufficient consideration to give effect to the promise of the defendants. It was a service performed and money advanced upon their credit, as well as upon that of the Morgans, and for the benefit of the latter. It is not the consideration, arising from their original obligation to save the plaintiff harmless, that is relied upon to sustain the defendants’ promise—that, Í admit, would be insufficient, because it is in no way connected with if, and existed before it was made—but it was care bestowed and money advanced in and about the defence of the suit, and the payment of the judgment finally recovered, (for performing all which the plaintiff had a right to ask security, and for which expressly the guaranty in question was given) that create a legal and valuable consideration within all the cases on the subject. It is said in the argument of the counsel for the plaintiffs in error that the liability of the plaintiff to defend the suit had been already incurred when the guaranty was given. That fact no .where appeal's in the case. It does not appear, except by inference, that he had even retained an attorney. If he had been already subjected to a portion of the expenses, or had advanced them, it would not impair the force of the argument or affect the result. The subsequent liabilities and advances would still have been a.sufficient consideration to maintain the promise to its full extent. 7 Com. Law Rep. 414.

Does the consideration appear upon the face of the instrument 1 Since the decisions in the cases of Saunders v. Wakefield 6 Com. L. R. 531, in the K. B., and Jenkins v. Reynolds, 7 id. 328, in C. B., the case of Wain v. Warlters has been acknowledged in England, without stint or qualification, as giving the true construction to the 4th section of the statute, which requires the consideration as well as the promise to be in writing. Whatever may be the character of some of the cases decided there prior to this time, and I admit the difficulty in reconciling some of them with the leading cases, since those decisions which acknowledge to the fullest extent the doctrine of that case, we may refer with safety to the cases in those courts for applications of the rule. They frequently occur, and the books of reports are full of them. I will refer to two or three cases. In Rider v. Curtis, 16 Com. L. R. 335, the guaranty was as follows : “I do hereby agree to become security for Mr. R. G., now your traveller, in the sum of £500, for all the money he may receive on your account.” The consideration averred in the declaration was the continuance of the traveller in the employ of the plaintiff; and the whole court were clear that it sufficiently appeared upon the face of the instrument. In Newbury v. Armstrong, 20 Com. L. R. 272, the guaranty was in these words : “ To J. N.—Sir : I, the undersigned, do hereby agree to bind myself to be security to you for I. C., late in the employ of I. P., for whatever you may entrust him with while in your employ, to the amount of „£50, and in case of any default, to make the same good.” It was objected that the consideration did not appear upon the face of the instrument. The chief justice on the trial said : “ If by fair inference we can find it, that will be sufficient and gave the plaintiff a verdict. The case was afterwards moved at bar, p. 55, and the decision confirmed by the court, upon the ground taken at the trial, viz. that it was fairly to be inferred the consideration was the taking of J. C. into the plaintiff’s employ. There are numerous cases to this effect. The case of Stadt v. Lill, 1 Campbell, 242, was as follows : “ I guarantee the payment of any goods which Mr. I. Stadt shall deliver to Mr. Nichols of Bricklane.” Lord Ellenborough, at the trial, ruled that the consideration appeared upon the face of the instrument, which was confirmed at bar. 9 East, 348. That the thing (the delivery of the goods,) to be done by the plaintiff, which was the foundation of the defendant’s promise, appeared in the instrument, and that the delivery of the goods constituted a sufficient consideration, though no cross action lay for them ; the delivery consummated the agreement. The principal of these cases is decisive of the point now under consideration. It is not necessary to resort to inference, or in the language of one of the judges, “ to spell out the consideration” from the instrument, for it expressly appears in the letter of the 5th of August, which constitutes a part of the guaranty ; and the performance of the consideration when executory, must from necessity be proved by parol, and may be so proved within all the cases.

It is objected that all the counts in the declaration set out a different consideration for the defendant’s promise from the one here relied on, to wit, the defence of the suit, See. This is a mistake. The 7th count places the plaintiff’s right of action against the defendants upon this ground alone. The third and fifth counts would, I think, also sustain this view of the case ; it is one of the considerations relied on to support the promise, although the payment of the $463,31 is also stated ; but where two considerations are counted on, the one good and the other void, it is sufficient to prove the valid one, and whether the other is proved or not is immaterial. 1 Chitly, 296. Here, if both are good, they have been proved; and if one is inoperative, it will not vitiate the other. I have not deemed it important to examine the case with reference to the consideration of the $463,31 alleged to have been paid the defendants by the plaintiff; being entirely satisfied.the action can be sustained on sound and settled principles, upon the view already taken. There would be difficulties, I think, in the way of maintaining it upon any other ground. No doubt, if the $463,31 had been paid to the defendants as the consideration for their engagement to indemnify, no note or memorandum would have been necessary, as it would then not have been a case within the statute. 8 Johns. It. 39.

Judgment affirmed.