.20Fed .. Irwin v. Willi4r., 110 U. S.,507, 4 Snp. Ct. Rep. 160., So it amounts to this: If the deposition of Lester was properly fide was proven; if 'it was improperly adll).itted, there is no testimony to show any wrong on. the part of Lester & Co., and the law does not presume a wrong. Counsel for defendant say that it is the absolute duty of the court to denounce this transaction, unless it clearly appears that it was a valid and honest one. I think the duty of the court is precisely' the reverse, and that it is the , duty of the court to it, 'UDless it appears that it was an and dishonest one. The ,defendant has given his note. The law presumes that there was a consideration, and an honest one,and unless he has shown, the contrary he $hould abide by the contract he has made. Further, this is not a case where defendant,as principal on the one side, was dealing with Lester & Co. as principal on the other. There was no contract of purchase or sale, real or pretended, between them. They were simply brokers,-agents to do his bidding in transactions, real or pretended, elsewhere. There is no presumption that an agent does not obey the instructions given, or that he does not intend to obey them; and, it matters not what the intent or suppositi9n of the principal maybe, the law will presume that the agent obeyed the instructions that were given and as they were given; and, iithe contrary be alleged, it must be proved. Bartlett v. Smith, 13 Fed. Rep. 263; Kirlcpatrick v. Adam8, 20 Fed. Rep. 287. . And,stillfurther, the present plaintiff was not a member of the firm of Lester & Co. at the time of these transactions. For some reason he assumed the payment to Lester & Co. of the amount claimed by them, to be due' from' the defendant. He not only assumed, he in fact paid it. Knowledge of this was brought to the defendant, and thereupon he gave a note to the plaintiff, of which the one in suit is a renewal. Now, if A. pays to B. a debt which B. claims is owing from C., and C., being made aware of this payment, gives his note for the amount to A., can he thereafter repUdiate that note on the ground that he did not in fact owe B. anything? Beyond any doubt in my mind, the verdict was right, and must be sustained.
TAYLOR v. FLECKENSTEIN and another.
(Oircuit Oourt, D. Oregon. February 21,1887.)
CONTRACT TO PAY THE DEBT 011' ANOTHER-RELEA$E 011' DEBTOR Il'ROM ARREST.
, B., being under arrest· in a civil action, the defendants, at his request, and .without any demand from or communication with the officer having him in custody, executed a writing under seal for his discharge, in whic'h they underother things. that, in case a judgment lJassed against B., and he failed to satIsfy the same, they': WOJlld;' in consideratlOn of which the plainti1'f directed him to be discharged, which was done. Afterwards judgment was
given against B., which he failed to pay, being insolvent; whereupon the plaintiff brought this action on the undertaking for the amount of the judgment, and the jury, under the instruction of the court that, if the agreement to pay the judgment was knowingly and voluntarily entered into by the defendants, it was valid and binding, having found a verdict for the 'plaintiff, the defendants move!l fora new trial tor, error in the instruction. Held, that the contract, not being prohibited by lltatute nor c:llltraryto public policy, was valid. (a) The discharge of R"frottl arrest, without the delay allowed by statute for the justification of bail for his appearance, was a sufficient consideration and (b) the writing:Col)taining tlle agreemcJ;lt, bejng under seal, imported a sufficient consideratioI1..for the same until the contrary was shown. 1
1t;is no defense to an acfi0110na writing that the defendant was misled or mi.sinformed as to the effect of the same" unless it also appears that, by reason of ,some dillability,he was incapable of reading and qomprehending the writing for himself; orthat he was imposed on ,by some fraudulent device, as the substi:tl1ti'()ll' of one writing for another. 1
READING I T . '
Action to Recover Money. Frederick V.Holman, for plaintiff. Rufus MaUory, for defendants.
DEADY, J. This action is brought on a writing executed by the de· fendants" nn':1er seal, ,on 2, 1883, for the discharge of Joseph arrest in a civil action, brought by the plaintiff herein against said Bachman, in this court, to recover the sum of $1,000, with intei"est and,c()sts, whereby they undertook and themselves, not onlythat,eaid Bachman would render himself.amenable to the process of during the pendency of the actioll , ,and to such other process as might be issued to eRforce any judgment given therein, but also that said Bachmau woulq., pay any such "in default of pay to said plailjtiff the sum of $1,050, which we,[the defendants] with interest, on $1,000 thereof from September 28, 1883, at 10 per centum per, annum, and,the costs and disburserpel1tsof this action." It is in the complaint that, upon of this instrument, Bachman was discharged from arrest, and that on November 19, given in said action against said Bachman for the sum of $1,098.38; that on November 28th an execution .issued
1 The legal effect of an instrument cannot be avoided by showing that it was signed in ignorance ofits contents, when the person who signed it did not read it, or, if unable to read, did not ask to have it read, in the absence of some fraud or deceit or misKeller v. 71i: Eo Rep. 195; representation, having been practiced upon Wallace v. ChlCago, St. P., M. & O. R. Co.,.(Iowa,) 25 N. W. Rep. 712, McR-mney v. Herrick, (Iowa,) 23 N. W. Rep. 767; Gulliher v. Chicago, R. I. & P. R. Co., (Iowa,) 13 N. W. Rep. 429; Burroughs v. Pacific Guano Co., (Ala.) 1 South. Rep. 212. Such an instruni'entis void when the signature thereto is ohtained by misreading it to a person who ,is unable to re,ad, Bowers v. Thomas, (Wis.) 22 N. W., Rep. 710; First Nat,' Bank v. Deal, (Mich.) 22 N. W. Rep. 53; or by any trick or device }Vhereby the signer is induced to believe that he is signing a different paper, McGinn v. Tobey, (Mich.) :18 N. W. Rep.B18 ; and it has been held to be void if the signature is obtained by a mere misrepresentation as to its CQntents., Burroll/ihsv. Pacific Guano Co., (Ala.) 1 South. Rep. 212. ,." " , But negotiable in the hands ofa bona fide holder is valid, thpu,gh the signature thereto was obt!i.lped by such means,if the maker is chargeable with negligence. Soper v. Peck; :(Mich.) 17 N. W. Rep. 57; Fayette Co. Sav. Bank ·v. Steffes, (Iowa,) 6 liT. W.Rep.267.' .
thereon, which was returned nulla bona,. and that said Bachman is and has ever since the date of said judgment insolvent; and that the defendants, though often requested, have not paid said judgment according to the tenor alid effect of their undertaking, and to do so still refuse. . llitheir answer the defendants admit the execution of the instrument for the purpose of procuring the discharge of said Bachman from arrest, but deny that they executed the same to secure the payment of the plaintiff's demand in the action; and aver that the plaintiff caused said instrument to be prepared, 'and "exacted" of the defendants the execu'..ion of the same, contrary to law, as a condition for said discharge; that the defendants executed the same without reading or hearing it read, and without any other knowledge of its contents than was derived from the representations of the plaintiff's attorney in whose office the instrumerit was executed; that said attorney falsely represented to the defendants that said instrument contained no condition' or stipulation other than those required by section 109 of the Code of Civil Procedure to procure the discharge of a party from arrest in a civil action, and that, relying on such representations, they executed the same; and that said instrument was "extorted" from the defendants by the plaintiff, and the marshal in whose custody said Bachman then was, contrary to said section 109. The new matter in the answer is controverted by the replication. It is also alleged therein that the instrument, and every part thereof, was truly read to the defendants by the plaintiff's attorney before the execution of the same, and that they thereupon voluntarily executed the same, with full knowledge of its contents and effect. On December 23, 1886, the cause was tried with a jury, who gave a verdict for the plaintiff in the sum of $1,309.64, on which judgment was given accordingly. On the trial, the defendants contended that the instrument was void for the following reasons, and prayed instructions to the jury to that effect: (1) The undertaking ofthe defendants to pay any judgment that might be given against Bachman, in case of his failure to do so, is contrary to law and pilblic policy, and therefore void. (2) The instrument was extorted from the defendants by the marshal colore officii, a'nd is therefore void. They also asked the court to instruct the jury that, ifthey believed from the evidence that the defendants were induced to sign the writing in question by the false representations of the plaintiff's attorney as to its contents and effect, their verdict should be for the defendants. The court instructed the jury, in effect. that, if the defendants knowingly and voluntarily executed the instrument, they were bound by the undertaking therein to pay the judgment against Bachman, and their verdict in such case must be for the plaintiff; but otherwise not. The defendants now move for a new trial on the ground of an error in the instruction to the jury. On the argument counsel attempts, notwithstanding the verdict, to maintain that the undertaking of the defendants was, in <'ontemplation
or exacted from them by the marshal colore officii. The verdict of the jury establishes the loot, fO,r all it is worth, that the defendants executed the instrument voluntarily, and there is even 110 to the contrary... The marshal does not appear to have had communication with the defendants, and had nothing to do with the transaction, except to take Bachman to the office of the plaintiff's attorneys, who had been and were his friends, and to accept the undertaking, and discharge the prisoner on the direction of said attorneys. The defendants, one of whom is the brother-in-law of Bachman, came to the office of these attorneys, so far as appears, at Bachman's request, to be sureties for his discharge from arrest, and the business was transacted in a room in which the marshal was not present. It also establishes the fact that the defendants executed the instrument knowingly; that is, with knowledge of its contents, and the liability they thereby assumed. On this question the evidence was conflicting, but,in my judgment, the verdict was according to the weight of it. It consisted of the testimony of the dedeposition of Bachman, now resident in New York, to the effect that the attorney for the plaintiff told them, before signing the instrument, that it was merely an undertaking for latter's appearance. The attorney, Mr. Henry Ach, testified directly to the contrary, and positively affirmed that he read the whole instrument to the defendants, and, particularly, the clause concerning the payment of the ment; which he said he had inserted in the instrument by direction of the seniQr partner of the firm, Mr. Marcus W. Fechheimer, because, as the latter then said, Bachman had be.en to see him, and promised to give him security for the debt as welT as his appearance.. :Mr. George H. Thurston, the notary public before whom the <iefendants qualified as bail, was present when the instrument was signed.. He also testified that it was read to the defendants; that his attention was attracted to the clause concerning the payment of the judgment as something unusual, on which account he asked them, before administering the oath to them, "If they understood the bond," to which they answered in the affirmative. On this evidence the question was submitted to the jury, and they found that the defendants executed the instrument knowingly. The point was not then made that this defense, if true, was immaterial. In Hazard v. Griswold, 21 Fed .. Rep. 178, (a very similar case,) the defendant, in an action on a bond given for of a person arrested on a ne exeat, in which he' was surety, set up that he executed the bond on the misrepresentation of the plaintiff and others, his agents and attorneys, as to its contents and effect, without averring that he was blind or illiterate, or otherwise incapable of reading the instrument for himself, or that any fraudulent device had been resorted to for the purpose of deceiving him, such as the substitution of one instrument for another. On a demurrer to this plea, Mr. Justice, GRAY, speaking for the conrt, said it was clearly insufficient. "A person capable of reading and understanding an instrument which he signs is boun<l in law to . know the contents thereof, unless prevented by some fraudulent device, such as the fraudulent substitution of one instrumentfor another. This
TAYLOR V. FLECKENSTEIN.
plea does not aver any fact to excuse or justify the defendant in relying upon the representations alleged to have been made in behalf of the plaintiff." Written instruments would often be not worth the paper on which they are written if the parties to them could escape their liability thereon, after having had the benefit thereof, on the plea that they did not understand the nature or extent of such liability, or thtJ,t the same was erroneously or falsely represented to them, or read to them by the other party thereto. This case is a good illustration of the wisdom of the rule laid down in Hazard v. Griwold. One of the defendants is a man of education, and at the time of signing the instrument was a law and has since been admitted to the bar. The other is a well-known liquor dealer, and a man of business experience. Between them and the plaintiff or his attorney, there was no relation of trust or confidence. They were capable of reading the instrument, and apprehending its contents, and the extent of the liability they assumed in signing it. And if there was any doubt on the last point, for which I see no room, and they desired advice on the subject, they should have sought it of some one who was under obligation to give it to them, and not the plaintiff's attorney. There was nothing in the circumstances to excuse the defendants from reading the instrument for themselves, and, if they signed it without doing so, they cannot now be heard to say that they misunderstood it, or were misled concerning it by the plaintiff's ;tttorney. See, also, on this point, Hawkins v. Hawkins, 50 Cal. 558. To hold otherwise would practically dispense with the statute of frauds· and perjuries. If a party to an agreement, which such statute declares invalid unless committed to writing, may, when called on to perform Or stand to the same, avoid it by alleging that it was misrepresented to him, and that he did not understand it, without giving any sufficient reason for not reading it himself, the terms and effect of the agreement will at last test on parol testimony, with strong temptation and great facilities for perjury,-the very mischief the statute was intended to prevent. The validity of the contract, then, is the only question open for consideration on this motion. Assuming, as we must, that the contract to pay the judgment against Bachman in case he made default therein was executed by the defendants voluntarily and knowingly, it is valid if founded on sufficient consideration, and is not prohibited by statute, or contrary to public policy. There is no statute prohibiting such an agreement or undertaking, and it would be very strange if there was. Nor does it appear to be contrary to public policy, so far as appears from the legislative or judicial acts or declarations of the state. An agreement to answer for the debt or default of another is as a lawful contract by the law of the state, provided it is in writing. Code Civil Proc. Or. § 775. In Paddock v. Hurne, 6 Or. 82, the supreme court oithe state expressly held such a contract to be The case was this: A non-resident, being arrested in a civil action, was released on the bond of a third per-
son, given to the plaintiff in the action, conditioned for the payment of any judgment which the latter might recover therein. The plaintiff recovered judgment, but prior thereto the ohligor in the bond surrendered the party in the mode provided by statute for the surrender of a defendant by his bail. The judgment not being paid by the'defendant therein, the plaintiff brought an action on the bond fOf the amount of the judgment, and stated, these facts in his complaint, to which the defendant demurred. The, court held the contract valid, saying that the instrument, being under seal,imported a consideration; and the same not being in contravention of puhlic policy, or contrary to any statute, it was gooq. as a common-law bond. In U. S. v. Hodson, 10 Wall. 395, a distiller, although only required to give bond to comply with certain provisions of the act regulating the distillation of spirits, voluntarily gave one conditioned that he would comply with all the provisions of the· act; or other acts on the subject then in force, or thereafter to be enacted. The court held the bond valid generally, saying (409) lithere is neither injustice-nor hardship in hold'ing that the contract, as made, is the measure of the rights of the government, and of the liability ofthe In Paddock v. Hume, supra, the point was made that it did not appear that there was any sufficient consideration for the agreement, but the court said that the instrument,being under seal,· imported a consideration, and; if there was none in faCt, the defense should have been made by answer. And the want of consideration is really the only point on which the validity of this agreement may be questioned. The statute of Oregon, (section 775, Oode Oivil Proc.,) corresponding to section 4 of the English statllte of frauds and perjuries, (29 Car. II. c. 3,) provides explicitly that the consideration for an agreement to answer for the debt or default of another shall be expressed in the writing containing the agreement. This is in accordance with the construction given by the English courts to their statute. Wain v. Warlters, 5 East, 10. As the consideration is an essential part of an agreement, it was held that the latter was not in writing unless the former was directly ,stated therein, or fairly to be implied therefrom. The courts of New York (Sears v. Brink, 3 Johns. 210) and other states followed the English ruling. Whart. Ev. § 869; 3 Kent, Comm. 121. And finally this ruling was incorporated into the Revised Statutes of New York, whence it found its way into the Oode of that state, and thence into that of Ore(gon. In determining, then, what isa sufficient consideration, properly expressed, to support such an agreement, the decisions of the English and New York courts are peculiarly in point. A mere promise to pay the already existing debt of another is a nude pact, and void for want of consideration. To constitute a valid agreement to pay the debt of another, there must be a consideration shown other than the existing liability of the debtor to his creditor. Leonard v. Vredenburg, 8 Johns. 29. But it is sufficient if the consideration can be fairly inferred or gathered from the whole writing, and the collateral facts and circumstances to which the agreement has reference may be
TAYI,OR V. FLECKENSTEIN.
considered for this purpose. Douglass v. HffWland, 24 Wend. 35. Any act of the person to whom the promise is made, from which the promisor or another derives any benefit, or by which the promisee is inconvenienced, is a sufficient consideration for the agreement. Whart. Ev. § 869. At the date of this agreement, Bachman, who appears to have been engaged in some kind of money business, had failed, and been arrested iuan action to .recover the .debt due the plaintiff, and was necessarily sufferingincorlvenience and annoyance from that fact. As he could not have been' arrested unless on some ground imputing moral turpitude to hiro, tPe.plp.re..fact of his arrest and its continuance for any length of time, however short, was damaging to his standing and' reputation as a business man, and calculated to embarrass him in any arrangement lle might desire to make with his creditors. By the ordinary process of giving bail for his appearance, he would have remained in custody at least 15 days from the date of the undertaking for his discharge, the time allowed by statute for giving notice to the plaintiff in the action of the ofthe undertaking, fl,nd for his serving notice of objection to the same 1fhedesired. Code Civil Proc. Or. § 114. In this state of things his friends, the defendants, come forward, and not only become bouml:·fo.r his appearance and submission to the process of the court, but actually undertake to pay the debt judgment may be rendered for,if Bachman did not; and the latter, in consideration of this undertaking, and by the direction and consent of the plaintiff, is at once released from imprisonment. Inniy judgment, the benefit to Bachman, in being immediately released fr6m custody, isa sufficient consideration for the defendants' agreement to answer for his default in not paying the judgmentin tion. But the validity of this contract.may also be maintained in this particular on another ground. This agreement is under seal, and from that fact a sufficient consideration for its execution is implied, even in this class of cases.. Douglass v. HffWland, 24 Wend. 45; Whart. Ev. § ,869. The general rule is declared in the Code of Civil Procedure, § 743, as follows: "The seal affixed to a writing is primary evidence of a consideration." And is implied or presumed by law of or concerning. il. 'writing is thereby sufficiently"expressed" in it. Rogers v. Kneeland, 10 'Vend. 249. The case was not contested, 11 this point, and the defense l)f a want of consideration is not set up in the answer. There is no direct testimony on this subject, and nothing appears in the circumstances of the case sufficient to overcome the presumption of a consideration Jor the execution oithe instrument from the fact that the parties affixed their seals thereto. The motion for new trial must be denied, and it is so ordered.
((Jircuit Oourt, D. Minne8ota. February 21, 1887.)
PROMISSORY NOTES-PuRCHASER FOR VALUE-TRANSACTION IN STOCKS.
Defendant agreed to t'ake from the treasurer of a corporation 100 shares of stock, and gave his note payable to the company for 'them. It was designed at tirst to give defendant stock belonging to the treasurer, who was obliged to raise some money in order to cC;>ntribute something to the funds of the company, but afterwards an arrangement was made between plaintiff; who was a director, and the treasurer, by which plaintiff advanced the necessary cash, and taking therefor the treasurer's own note and defendant's note as collateral, and part of his stock was issued to defendant. Defendant knew nothing of the transaction between plaintiff and the treasurer. The treasurer made misrepresentations to defendant in selling him the stock, of which plaintiff knew nothing. Held, that plaintiff was a 50na:fi:de purchaser for value of defendant's note, and could maintain an It.
W. E.'Hale. for plaintiff. Hart &: Brewer, for defendant.
BREWER, J. Action on a negotiable promissory note. Verdict for plaintiff. The only question is, was plaintiff a ,bonafide, purchaser before maturity of the note of whioh the one in suit .islJ,renewal? ,The testimony discloses the fact that, the original note, was ,obtained by false representations; so the plaintiff was called upon to prove that he was a bona fide purchaser ,before maturity. , The facts are these: In the fallof1883 the Pullman Iron &Steel Company was organized .with a capital stock of $500,000, divided into 5,000 for the manufacture shares of $100 each. The oompany was of lJ, patent railway spike. The patent was owned by J. W.Doane, JamesN. Smith, J. P. Perkins, anq Frank B. Felt. They transferred the patent to the company, receiving in pay therefor the full capital stock, each taking one-fourth, or 1,250 shares.. The company then had the patent, but no money, and each of the four stockholders held onequarter of the stock, the same issued as fully paid and 'non-assessable. In ordet to raise money there seemS to have been '8< agreement between the fOllr stockholders that 1,500 shltresshould be disposed of for cash, each stockholder contributing 375 shares. , :Mterwards, but after the transactions between defendant and the company were ended, by a formal 'resolution 2,500 shares were placed in the hands of Felt as trustee. It would seem that Doane and Smith. being men of means, retained their shares, and paid the fixed price, 66* centS, in cash into the company's treasury. Felt, who was the treasurer of the company, not having the money to pay in, was called upon by his associates to dispose of his shares for cash, and put the proceeds into the treasury. Among other parties he applied to the defendant, who agreed to take 100 shares. Not having the money therefor, after some delay, he gave his note to the company I and received his shares. But this note was not cash, and the company wanted cash; so the plaintiff proposed to Felt to discount his (Felt's) note, and take the defendant's note as collateral.