Whitehouse v. Hanson

Whitehouse v. Hanson.

Presumptively, the parties to a promissory note stand to each other in the relations in which their names appear. As between themselves and as against the holder who took the note with knowledge of their true relations, the facts may, for some purposes, be shown.

To make one surety upon a note a principal as to another surety, it must be shown that the latter became surety at his request.

One who signs a note as surety, but without the addition of surety to his name, and leaves it in the hands of his principal, does not thereby make the principal his agent to request others to sign as sureties for him as a principal.

Assumpsit, to recover $405.25, money paid, laid out and expended by tbe plaintiff, Nicholas Y. Whitehouse, for the defendants, John P. Hanson and John Trickey, and interest thereon from the 27th day of September, 1858. The plaintiff alleged that he signed as surety a promissory note for one Moses Place and the defendants, as principals, dated August 12, 1856, payable to the Savings Bank for the County of Strafford, or order, for $1500, in six months: signed Moses Place, John P. Hanson, John Trickey; N. Y. Whitehouse, surety; Thomas Stackpole, surety.

The plaintiff testified that he paid $405.25 to the attorney of the Savings Bank, September 27th, 1857, being one quarter of the amount due on the note. When he signed the note he was at Dover. Place asked him to sign the note as surety for himself, Trickey, and Hanson, whose names were on the note as principals. He delayed signing till afternoon, in order to ascertain Trickey’s ability; ascertained he was responsible, and told Place if he would get another good man on the note he would sign it, and named Staekpole. He signed, adding surety to his name. He did not know that Hanson and Trickey were sureties, or he would not have signed. He did not know the purpose of procuring the money.

Objection was made to the admission of Place’s statements, and overruled.

Staekpole testified that he signed the note as surety, at the request of Place. He could not state the time, but had a memorandum of it. He was permitted to produce it, and read from it: “ August 12, 1856, signed note as surety, with N. V. Whitehouse as surety, with Moses Place, Hanson and Trickey, to Savings Bank, payable in six months.” Place asked if he would sign the note with himself, John P. Hanson and John Trickey. He told him he would, if Whitehouse would sign. He did sign it after Whitehouse. After Place’s death, he. told Hanson he and Trickey were principals, and he had better see to it. He said he would attend to it, and started toward the Savings Bank, remarking half a loaf would be better than no bread. Place asked him if he would sign with Hanson, Trickey and himself, as principals, and Whitehouse as surety with him.

The declarations of Place, and the conversation with Hanson, were objected to, but admitted.

It appeared a suit was brought on the note against all the signers. Place died, and the judgment and execution were against the other four.

Trickey testified he signed the note as surety for Place, had none of the money, nor any benefit out of it. Place asked him to sign with J. P. Hanson, N. Y. Whitehouse and himself. Place and Hanson signed before he did. He had paid one fourth of the debt and costs.

Hanson testified he signed the note at the request of Place, and as his surety, Place saying that Trickey and Whitehouse would also sign it. He paid one fourth of the note.

The court charged the jury that this note, without explanation from parol or extrinsic evidence, would fairly represent Place, Hanson and Trickey as all alike principals, and the plaintiff might well have presumed them to be so from the face of the note alone. It was competent to show by parol testimony the true relation in which the parties stood to each other, and who were principals and who surety. If the plaintiff, when he signed this note as surety, knew, or had good reason to believe that Trickey and Hanson were sureties, he could not recover. The jury might examine the acts and declarations of Place, when he procured the signatures, whether made to the plaintiff or to the defendants, and determine how Place held himself out, and how the defendants held themselves out, and whether the plaintiff was induced thereby to sign without notice or knowledge that Place was the principal. If the defendants, having signed their names with Place in the manner they did, allowed him to take the note and go out into the market, or to the Savings Bank, for the purpose of raising money on it, they thereby, by legal intendment, made him their agent for that purpose, and adopted his acts and declarations, and would be bound by them. Hence the representations, made to the plaintiff by Place, in order to obtain his aid to raise the money, became evidence for the jury to consider; and if they believed they were thus made, might justify them in charging the defendants. The memorandum of Stack- pole, as read to refresh his memory as to the time of signing the note, was evidence only for that purpose.

A new trial was moved for by the defendants, on exceptions to the rulings and charge of the court.

Wheeler Hall, for the defendants.

The holder of a negotiable note has a right to treat all the signers as principals, if no other relation appears upon the face of the note. But, as between the promisors themselves, a different rule prevails; where one of them is sued, he may prove that he was a co-surety, though that fact does not appear upon the note, and was not communicated to a subsequent surety. Grafton Bank v. Kent, 4 N. H. 224; Nichols v. Parsons, 6 N. H. 30; McGee v. Prouty, 9 Met. 547; Wilson v. Foot, 11 Met. 285. The law respecting sureties, and their obligations to contribute proportionally, does not arise out of contracts between them, but is founded on principles of equity, and the obligation is enforced as a legal liability, growing out of mutual relation. McGee v. Prouty, 9 Met. 547; Warner v. Price, 3 Wend. 397; Fletcher v. Grover, 11 N. H. 368. There was never any contract between the plaintiff and the defendants in this matter. They have no relation to each other, except what arises out of their mutual relation to the principal. The question, then, is, in what character each signed, and what relation they had to Place, the acknowledged principal. In other words, did these defendants sign as principals with Place, or as his sureties, and what evidence was proper to bear upon that point ? Then how can the mere naked statements of Place, made to Whitehouse and Stackpole, be competent evidence, or the thoughts, motives and actions of the two Jast, of which these defendants were entirely ignorant ? The remark Stack-pole made to Hanson was not competent evidence against Trickey, and the jury should have been so instructed. The memorandum of Stackpole should not have been read. If it was competent for Mm to look at it, to refresh his memory, it was not competent for him to read it against objections. The effect of such evidence is not destroyed by a remark of the judge, in the course of a charge. If it is not competent it should not be heard. I G-reenl. Ev. sec. 565; 1 Phill. Ev. 289 (1 O. & H., note 528). Ve are not able to understand how, from the facts in the case, by any intendment of law, the defendants made Place their agent, and were bound by his acts and declarations. "We submit that there are no facts in the case to call for such instructions; that their tendency was to prejudice and mislead the jury, and they are not correct in point of law.

Christie, for the plaintiff'.

On the face of the note, the plaintiff' was surety for the defendants and Place, and entitled to recover against them, unless they showed a defence, which, we conceive, they failed to do. The only thing proved as a defence was, that as between them and Place, they were his sureties. This was not enough. They must show that the plaintiff' knew they were sureties when he signed, and not principals, as Place and the note represented them to be. This they did not do, and the plaintiff proved he did not know they were sureties, and believed them to be principals. In Grafton Bank v. Kent, 4 N. H. 224, the court say: “ The rule is, where a maker of a note, who has signed as surety, does not appear, on the face of the paper, to be a surety, he is to be considered and treated as a principal, with respect to all those who have no notice of his real character; but the defendant may show by extrinsic evidence that he made the note as surety only, and that it was known to the plaintiff that he was only a surety.” See, for the same doctrine, Nichols v. Parsons, 6 N. H. 23; Fernald v. Dawley, 26 Me. 470. See, too, Wilson v. Foot, II Met. 285, where it is said by the court: “ The defendant can not prevail in th is defence, because the fact that the three signers were sureties does not appear to be known to the plaintiff, and knowledge is not to be presumed in favor of the defendant. If he relies upon it, he must prove it. The parties are to be treated as they have represented themselves, as joint principals.” The defence was, that the plaintiff had extended the time of payment, but the doctrine equally applies here, though there is an obiter remark of the judge, that, in a case like ours, the rule does not apply; but no good reason can be given for such a distinction. The remark must have been made on an imperfect recollection of McGee v. Prouty, 9 Met. 448, where the question was left open. The evidence shows that the plaintiff’s agreement was to sign as surety for the defendants and Place, all as principals, as the note and Place both represented, and he believed they were, and not as surety for Place alone. The verbal agreement was the same as was expressed in the note. The defendants, by signing the note as they did, and intrusting the same to Place to be negotiated, constituted him their agent to procure other s'gnatures on such terms as he could, if needed to procure the discount and obtain the money, and are bound by his arrangements, as if present and assenting to them. Warner v. Price, 3 Wend. 397; Harris v. Warner, 13 Wend. 406; where Nelson, J., says, in the former case, the plaintiff knew when he signed who was the principal, which should be borne in mind in examining that case. By signing as they did, and intrusting the note to Place, they enabled him to deceive the plaintiff as to their real character on the note. And as a loss must fall on the defendants or the plaintiff, it ought to fall on those who have afforded any facility or means of confidence to another to effect a fraudulent purpose. The defendants did this, by not disclosing their real character on the note, and holding out a false one. The plaintiff and Stackpole, instead of signing as sureties for the previous signers, might have guaranteed the note, and thus have given the bank the security of their names; and then, if they had paid, they could have collected the amount of the defendants. Langley v. Griggs, 10 Pick. 121. What they did in this case was, so far as the defendants were concerned, the same thing as though they had guaranteed the payment of the note. In neither case are the defendants prejudiced, as they were willing the note should be discounted with only their names and Place’s on it. The plaintiff, signing the note as surety for the defendants and Place, did them no wrong, and put them in no worse condition than they had voluntarily placed themselves in, if the bank had taken the note with their names and Place’s alone, or if the plaintiff and Stack-pole had guaranteed the payment of it. The representations of Place to the plaintiff, when he applied to him to sign the note, as to the defendants being principals on the note, were not offered or admitted to prove that they were so, but to' show under what understanding and agreement the plaintiff agreed to sign, and did sign the note, and for that purpose it was admissible.

Stackpole’s memorandum was read by the witness without request, and before it was objected to. It was immaterial, and if not, the judge, in his charge, neutralized it.

The evidence as to Stackpole’s declarations to Hanson, was admitted as against Hanson, the plaintiff’s counsel admitting it was not evidence against Trickey.

If the plaintiff is held a co-surety, and not entitled to recover, it will be contrary to the express agreement, written and verbal, which he did make, and upon one implied by law, which he never made, nor intended to make. The maxim, expression facit cessare taciturn, and fair dealing between man and man, forbid this.

The language quoted in Bank v. Kent, 4 N. H. 224, was used in a case brought by a payee against the makers of a note, Avhere one claimed he was a surety, and-had been discharged by the conduct of the holder. It had no reference to a controversy between the makers. Nichols v. Parsons, 6 N. H. 30, and Wilson v. Foot, were like cases. In the last case the court say: “ As between the promisors themselves, a different rule prevails. "When one of them is sued, he may prove that he was a surety, though the fact does not appear upon the note, and had not been communicated to a co-surety, because the obligation to contribute is not the result of a contract between them, but rests on the legal liabilities growing out of such relation.” It was a solemn decision, and a proper qualification of the point decided, and entitled to full weight as authority. The same reason is stated in Fletcher v. Grover, and Boardman v. Paige, 11 N. H. 372, 431; see Currier v. Fellows, 27 N. H. 366. McGee v. Prouty, 9 Met. 532, is in point. The court say: “ B did not add ‘ surety’ to his name, and might, therefore, be held to a bond fide holder without notice as principal; but as between the sureties themselves, he may prove he was a surety. A want of knowledge of the fact, on the part of the plaintiff, does not alter his relation to B. They are all sureties.” Warner v. Price, 3 Wend. 397, is in point. It does not appear, as suggested, that the plaintiff there knew the character in which the parties signed, for the court say what passed between Price and the plaintiff does not appear. Harris v. Warner, 13 Wend. 402, recognizes this case, and they seem directly in point. The plaintiff must establish the fact, that, as to him, the defendants were principals, by showing that they intended to stand as principals as to subsequent signers. Cutter v. Emery, 37 N. H. 576, and Warner v. Price. We never solicited the plaintiff to be surety for us, and as he paid without our authority he can not recover of us. Tappin v. Broster, 1C. & P. 112; Child v. Mosley, 8 T. R. 610; Siles v. Laing, 4 Camp. 81; Stokes v. Laing, 1 T. R. 20. This plaintiff may not be a co-surety, so the defendant could compel contribution; but that is very different from the relation of principal and surety, which would render the defendants liable as principal to the plaintiff. Harris v. Warner, 13 Wend. 402. By intendment of law must be meant “fair and reasonable inference,” the term used in Cutter v. Emery; and this, by the charge, is made a legal inference, we say, erroneously. This legal presumption can not arise from omitting the word “ surety.” Our authorities before cited show that a signer may show that he was a surety only, though the fact does not appear on the paper. In Davis v. Barrington, the court say: “No doubt was ever entertained of it.” Intrusting it to Place to get it discounted was no unusual authority. It was payable to a particular bank, and could be discounted no where else. Place could not sell it, or pass it to any one else, so as to bind the sureties. Adams Bank v. Jones, 16 Pick. 574; Allen v. Ayers, 3 Pick. 297; Prescott v. Brinley, 6 Cush. 233; Marvin v. McCullum, 20 Johns. 288; Agawam Bank v. Sears, 4 Gray 95; Gardner v. Walsh, 85 E. C. L. 82. The defendants could have no intention to make Place their agent for any purpose, certainly not to deceive others, at their risk, for his own benefit. Whitehouse was bound to know that, by law, the defendants might be either principals or sureties; as between him and them they might show they were sureties, and the omission of sureties did not prove they were not such, nor prove them principals. It is his loss, if he relied on presumptions or Place’s representations. It is immaterial that the plaintiff might have guaranteed the note; he did not do that. If he had guaranteed without the defendants’ request, he could not have recovered of them.