W. T. Rawleigh Medical Co. v. Wilson

60 So. 1001, 7 Ala. App. 242, 1912 Ala. App. LEXIS 11

• Court: Alabama Court of Appeals
• Decided: December 7, 1912
• Status: Published

Opinion

THOMAS, J.

The reporter will set out count No. 4 of the complaint, which fully states plaintiff’s case; also' pleas No. 1 and No. 2 of defendant A. M. Sullens, together with the demurrers to said two pleas. The overruling of these demurrers by the trial court, and an overruling by it of like demurrers to like pleas filed by the other defendants O. E. Harris and Geo. M. Burleson, which are not necessary to be set out, raises the ques-. tion as to the only erorrs here assigned.

It will be observed that in the pleading as set out both sides — plaintiff and defendants — treated the defendants Sullens, Harris, and Burleson as sureties for the defendant Wilson on the contract set out in said count No. 4 of the complaint; whereas, they were only guarantors as decided by this court on a construction of a like contract in the case of W. T. Rawleigh Medical Co. v. Tarpley et al., 5 Ala. App. 412, 59 South. 512. However, so far as the principles of law involved on this appeal are concerned, we discover no substantial differ; ence between sureties and guarantors, and will treat the case — as the respective parties to the litigation and their counsel have done all through the proceedings, including briefs filed liere — on the theory that said named defendants are sureties for the defendant Wilson on said contract.

We shall deal first with the sufficiency of the second-plea as a defense, tested by the demurrers. In Smith v. Kirkland, 81 Ala. 350, 1 South. 277, Judge Somerville, speaking for our Supreme Court on the same question differently raised, says: “It has been long settled in this state by a line of decisions which seem to be supported by the weight of authority that it is a good defense to an action on a bond that a defendant, who is a surety, intrusted the bond to the principal ob-ligor as an escrow, with authority to deliver it only on the express condition that other named persons should join as sureties in its execution prior to such delivery, and that the instrument was delivered to the obligee in violation of this condition. — Guild v. Thomas, 54 Ala. 414 [25 Am. Rep. 703], and authorities cited, there; Bibb v. Reid, 3 Ala. 88. There are two established modifications of this rule: (1) It does not apply to commercial paper which has come into the hands of a bona fide purchaser before maturity, who is without notice of the condition.- — Marks v. First Nat. Bank, 79 Ala. 550 [58 Am. Rep. 620]. (2) It does not apply where the surety having knowledge or notice of the delivery of the bond suffers the principal to act under it to the prejudice of the obligee, so as to waive the condition, and thus estop the surety from insisting on the defense.— Wright v. Lang, 66 Ala. 389.”

In a latér cáse — White Setting Machine Co. v. Saxon, 121 Ala 404, 405, 25 South. 784, 787 — McClblooan, C. J., enlightened lis as to-the reasons which support the main proposition, to-wit: “The Surety is under no obligation to sign the bond at all. His signature is his voluntary act. : Nor is he under any obligation to deliver a bond after.having signed it. Signing for the accommodation of the principal obligor,'he may put such limitations and conditions upon his favor as seem to him proper or to his interest. The whole matter is at large with him; and, having constituted the principal obligor his agent to deliver the bond, he may impose whatever conditions •he may choose upon the act of his agent. The condition may be quite onerous, it may be very difficult of performance, it may involve uncertainty as to what is necessary to performance; but, whatever it is or may involve, its imposition is within his clear and unfettered right. The thing to be done not being at all obligatory on him, he can decline to do it absolutley, and he may do it upon whatever conditions, capricious or otherwise, he may elect to impose. As he may subscribe upon condition'that A. B. and C. D. shall also subscribe, he may make the obligation of his signature depend upon the subscription of a hundred or a thousand other named persons. Such a condition would be more difficult of performance than a condition that four or five good men should subscribe as sureties, and more unreasonabie, if either could be said to be unreasonable. If any condition is deemed -too onerous, or unreasonable, or impossible even of performance, the holder in escrow is not thereby authorized to deliver to the obligee. He has no authority whatever to deliver until the condition, whatever it may be, has been complied with; and the obligee who knows.that the' principal is acting as agent of the surety in making delivery is put on notice that the condition was imposed and has not been performed. And he, the obligee, will- not be heard to say that the surety should not have imposed such a condition, *. * since the surety, having the undoubted right to- decline to sign at all, must.have an equally undoubted right to determine under what circumstances, and to what extent he will bind himself.” See, also, Sharp v. Allgood, 100 Ala. 183, 14 South. 16.

Whatever may he the rule in other jurisdictions, under these authorities, which have never been questioned, so far as we can find, by any later adjudications of our own Supreme Court, we are bound to hold the second plea of the sureties, as set out in the report of the case, sufficient, as against the demurrers aimed at it. It is clear that in such a plea it is not necessary to allege that Wilson, the principal obligor, was the agent of plaintiff, the obligee, in order to excuse the sureties from liability for his acts. He was, as the plea imports, the agent of the sureties to deliver the bond or contract, hut that only upon certain conditions named in the plea. As such agent for them he dealt with the plaintiff in delivering such bond or contract; and plaintiff in thus dealing with the known agent of another party was acting at its peril — at least as to a non-commercial paper, as this here involved is — and was bound to inquire and ascertain the extent of that agent’s authority to deliver. Hence, it was also not necessary to allege in said plea that plaintiff had knowledge or notice of the conditions upon which the instrument was to he delivered to plaintiff, the obligee, because the law, as said, imposed upon it the duty of finding out, and imputes to it such knowledge or notice as it would have gained by proper inquiry.' Authorities supra; Sharp v. Allgood, 100 Ala. 183, 14 South. 16, and authorities there cited.

This plea, as well as the first plea, was in effect a special plea of non est factum, and each was-, therefore, defective in not being sworn to, but this point seems not to have been raised as to either of them.- — Code 1907, § 5332; Campbell v. Larmore, 84 Ala. 502, 4 South. 593.

If the sureties had knowledge of the delivery of the bond or contract to plaintiff, in violation of the conditions imposed by : them upon its delivery, and with such knowledge or notice suffered the principal to act under it to the prejudice of the plaintiff obligee, they would, of course, as hereinbefore shown, be estopped from pleading the facts relied on in their plea. Bnt such matters of estoppel do not have to be negatived in their plea. The plaintiff could only get the benefit of such an estoppel by a replication setting it up in avoidance of the sureties’ plea.

As to the first plea and demurrers thereto, it is sufficient to say that the rule of law, long established in this state and followed by an unbroken line of authorities, both new and old, is: “Where a person signs an instrument without reading it, or if he cannot read, without asking to have it read to him, the legal effect of the signature cannot be avoided by showing his ignorance of its contents, in the absence of some fraud, de: ceit, or misrepresentations having been practiced upon him; but the rule is otherwise, and the instrument will be held void, where its execution has been obtained by a misrepresentation of its contents — the party signing a paper which he did not know he was signing, and did not really intend to sign. It is immaterial, in the latter aspect of the case, that the party signing had an opportunity to read the paper, for he may have been prevented from doing so by the very fact that he trusted to the truth of the representations made by the other party with whom he was dealing.” — Burroughs v. Pacific Guano Co., 81 Ala. 258, 1 South. 213; Leonard v. Roebuck, 152 Ala. 315, 44 South. 390; Folmar v. Siler, 132 Ala. 303, 31 South. 719; Western Ry. of Ala. v. Arnett, 137 Ala. 425, 34 South. 997; Tillis v. Austin, 117 Ala. 262, 22 South. 975; Bank of Guntersville v. Webb, 108 Ala. 132, 19 South. 14; Beck v. Houppert, 104 Ala. 503, 16 South. 522, 53 Am. St. Rep. 77; Kinney v. Ensminger, 87 Ala. 340, 6 South. 72; Campbell v. Larmore, 84 Ala. 501, 4 South. 593; Pacific Guano Co. v. Anglin, 82 Ala. 497, 1 South. 852; Johnson v. Cook, 73 Ala. 537; Foster v. Johnson, 70 Ala. 251; Goetter v. Pickett, 61 Ala. 387; and other authorities of this state cited in the above cases.

The counsel of appellant, plaintiff below, practically concede this general rule; but insist that it applies to exempt from obligation on the instrument the parties who signed it on false representations as to its contents only when those false representations were made by the payee or obligee in the instrument or his agent or some one in collusion with such payee or obligee, and that if such false representations Avere made by any other person than such payee or obligee or his agent, or some one in collusion with such payee or obligee, and neither had any notice or ImoAvledge of them, as contended in this case, then the payors or obligors are liable, notAvith-standing they Avere induced and deceived into signing it, Avithout reading it, upon the false representations made by some other party (the principal obligor, in this case) as to its co'ntents. We have carefully gone through all the cases we could find in .this state dealing at all with the general rule, and find that in none of them has the particular question ever been dealt with; but we do find that one exception to it has been recognized. This exception, however, is of such a class as to impliedly exclude or deny the exception here contended for. It has been held that, where a commercial paper has been transferred by the original payee to an innocent holder for value in due course, a surety on it, who signed it without reading it, induced thereto by false representation as to its contents made by the principal debtor, is bound thereby in favor of such bonda fide holder. — Pacific Guano Co. v. Anglin, 82 Ala. 497, 1 South. 852. And it may be that he would be bound even in favor of the original payee of such a paper, if the latter took it in good faith, for a valuable consideration, etc., without notice or knowledge of the fraud practiced by. the principal debtor on the surety in order to secure the surety’s signature. This question is now pending before us for decision in the case of Stone v. Goldberg & Lewis, 6 Ala. App. 249, 60 South. 744, on appeal from Shelby county; and Marks v. First National Bank, 79 Ala. 550, 58 Am. Rep. 620, is there urged upon us as an authority. Whatever may be the decision in that case, it cannot affect this; for the paper here in controversy is not a commercial paper.

The defense set up in the first plea, now being considered, is not different in principle from that set up in the second plea, which we have hereinbefore considered and held good as against the same demurrers aimed at this. The authorities cited as sutaining our view there, equally support it here — that the defense that the sureties signed the contract or bond, Avithout reading it, induced thereto by the false representations as to its contents made by the principal, Wilson, is available to them in a suit by the payee, notwithstanding the said Wilson Avas not the agent of the payee in so doing, notAvith-standing said payee Avas not in collusion Avith him, and notAvithstanding said payee knew nothing of said false representations at the time he accepted the bond or contract. — Sharp v. Allgood, 100 Ala. 183, 14 South. 16, and other authorities supra.

Hence, the lower court did not err in overruling the demurrers to the pleas.

The first plea was demurrable for failing to allege that defendants did not read the contract, but this point was not raised. — Tillis & O’Neal v. Austin, 117 Ala. 263, 22 South. 975.

The judgment of the lower court is therefore affirmed.

Affirmed.