Opinion
No. 30225.
November 7, 1932.
1. PRINCIPAL AND SURETY.
Sureties signing blank bond on request of principal's son held liable to obligee accepting it in good faith, irrespective of son's representations concerning principal and penal sum.
2. PRINCIPAL AND SURETY.
Fraudulent representations of principal and his son acting in their own behalf in procuring execution of bond by sureties held not chargeable to obligee.
APPEAL from circuit court of Pearl River county. HON. J.Q. LANGSTON, Judge.
Geo. W. and E.J. Currie, of Hattiesburg, and U.B. Parker, of Wiggins, for appellant.
Over the objections of the appellant the trial court permitted the appellees to testify that the bond had not been completely filled out at the time it was signed by them, and that they thought the young minor son of the principal debtor would be the principal in the bond, and that they informed him that they would not be responsible in excess of one hundred dollars. They admitted that they knew that the bond would be sent to the appellant at its office in New Orleans, Louisiana, and that credit would be extended upon the strength of it. Even if their testimony had been strong enough to establish fraud on the part of the person who procured their signatures, they made absolutely no effort to show that the appellant had any notice or knowledge whatever of such alleged fraud.
The fact that the guarantor is fraudulently induced by the principal debtor to enter into the contract does not defeat the guaranty, as where the person to whom the guaranty runs has no knowledge of the fraud and does not participate therein.
12 R.C.L., part of sec. 26, p. 1075; Anderson v. Warns, 22 Am. Reps. 83; Page v. Krekey, 33 Am. St. Rep., p. 731; 21 L.R.A. 409, and note; Cowan v. Roberts, 101 Am. St. Rep. 845; 65 L.R.A. 729.
The most that could be said in support of the alleged defense of the appellees is that they claim not to have understood the full contents of the obligation which they were signing, and claim not to have known the full extent of the liability which they were assuming. Their claims constitute absolutely no defense.
50 C.J. 45, Note, p. 45; White v. Duggan, 140 Mass. 18; 54 Am. Rep. 437; King County v. Ferry, 5 Wn. 536, 19 L.R.A. 500; 21 R.C.L., pp. 969-970; Pingrey on Suretyship (2 Ed.), sec. 56; Continental Jewelry Co. v. Joseph (Miss.), 105 So. 639; Watkins Co. v. Poag (Miss.), 122 So. 473.
Even if McQueen had misrepresented facts to the sureties in procuring their signatures, the appellant was not a party to such alleged misrepresentation and no defense could arise against the appellant.
Raleigh Co. v. Brown, 108 So. 720; Cresap v. Furst Thomas, 105 So. 848; Watkins Co. v. Poag, 122 So. 473.
This court has repeatedly and uniformly held that where the procurement of sureties is a condition precedent to entering into a contract between a company and a salesman, such salesman is not the company's agent in procuring sureties, and the company is not chargeable with the fraud, real or pretended of the salesman.
Cresap v. Furst Thomas, 105 So. 848; Rawleigh Co. v. Brown, 108 So. 720; Watkins Co. v. Poag, 122 So. 473.
J.E. Stockstill, of Picayune, for appellees.
The representations made by the agent Edwin McQueen that he himself was to be the principal debtor, and the amount of the contract to be guaranteed limited to one hundred dollars constituted material representations of the company's agent, by which it was bound.
The most striking thing about this lawsuit was the peculiar position taken by the appellants in the trial court below; they proceeded along the lines governed by the rule in the very cases they have cited in their brief that is, that they adopted the theory to show the written contract with Abe McQueen, and that these guarantors signed same, and that it was delivered to appellants through its manager, and that on the strength of that instrument credit was granted to Abe McQueen and then they rested their case even though the special plea of these two defendants alleged facts which show that Edwin McQueen was already the existing agent of the Times-Picayune Publishing Company, and that his representations were made as specifically set out therein, which taken as a whole, sets up fraud.
If the contract had been filled out with the name of Edwin McQueen, and for the sum of one hundred dollars, these defendants would of course be liable beyond question for a judgment of one hundred dollars but this instrument and the facts surrounding it falls in the rule laid down in the case of Watkins v. Fornea, and the instrument that was signed by these guarantors in blank becomes only an instrument affording a means of evidence of their liability, and a material alteration in the amount, and raising it to seven hundred fifty dollars is a material alteration and renders the instrument void.
Watkins v. Fornea, 100 So. 185.
The instrument was signed in blank, and when it was altered and changed as to the amount, and as to the principal debtor, it changed the purpose of the contract and enlarged the amount as an instrument of evidence, or means to establish their liability, and on such change it became void, and the defendants are not liable.
Bank of Lauderdale v. Cole, 71 So. 260.
The proof of the plea in the case is so completely made by the entire record that it discloses a plain case of fraud, and the bond becomes void.
Merchants Farmers Bank et al. v. Dent, 59 So. 805.
Argued orally by J.E. Stockstill, for appellees.
Appellant is the publisher and general distributor of a daily newspaper. On or about April 15, 1929, appellant entered into a local distributor's contract with one A.A. McQueen, of Picayune, Mississippi, under which contract said McQueen was to be appellant's distributor in that locality for the said newspaper. On the back of the contract, when completed and delivered to appellant, there was a bond or guaranty, executed by appellees as the two sureties, by which the sureties obligated themselves to pay to the publisher any sum or sums within the amount of seven hundred fifty dollars which might become in default of payment under said contract.
On October 3, 1930, appellant filed its declaration in the county of the residence of the said McQueen and of the sureties, and thereby demanded judgment for a principal debt of four hundred thirty-six dollars and forty-six cents which appellant therein alleged had become due in default of payment under the aforesaid contract, and the judgment was demanded against the principal, A.A. McQueen, and also against the two sureties. McQueen did not defend, and judgment by default was taken against him. Appellees, the two sureties, defended and alleged and proved the following facts: That the bond in question was presented to them by Edwin McQueen, the minor son of A.A. McQueen; that, when so presented, the bond was in blank as to the name of the principal obligor therein and as to the amount of the penalty; that appellees are the uncles of the said minor, Edwin McQueen, and that it was then and there represented to them by said Edwin McQueen that the bond was to be filled in for the sum of one hundred dollars with Edwin McQueen as principal, and that the sole purpose of the bond was that Edwin McQueen, who had theretofore been acting as delivery boy for said newspaper in said community, might continue in that employment; that appellees upon said representation and for said purpose signed the bond and delivered the same to said Edwin McQueen, with the understanding that the blank as to the principal should be later filled with the name of Edwin McQueen, and the blank as to the amount of the bond should be filled out in the sum of one hundred dollars and no more, and that, when so filled, should be sent to appellant as a basis of credit.
The undisputed proof in behalf of appellant was that it was required by appellant that the said bond should, after its execution be indorsed by a cashier or the postmaster certifying that in the opinion of the indorser the sureties were good for the obligation assumed. That this bond was presented to E.M. Walker, general merchandise cashier, at which time it contained the name of A.A. McQueen as principal, the signatures of appellees as sureties, and was filled as to the penalty in the sum of seven hundred fifty dollars. It is the further undisputed proof that, when the bond reached appellant at its general office in New Orleans, it was filled out and was complete in all particulars as last mentioned, and that appellant accepted the same without any notice whatever of the facts relied on by appellees. The further proof is that the bond was sent in the first instance by appellant to A.A. McQueen; that appellant did not know that the minor, Edwin McQueen, would have anything to do with said bond; that the minor, Edwin, was the servant or representative of his father, and not at any time of appellant; and that appellant had not authorized Edwin McQueen to make any statement or to take any action in respect to the bond.
Upon the close of the evidence, appellant moved for a directed verdict, which motion was overruled, and thereupon the case was submitted to the jury under instructions which told the jury in effect, if they should find from the evidence that the boy, Edwin McQueen, was the agent of appellant, and as such made the representations to the sureties which have been above set out, then the jury should find for the defendant sureties.
We are of opinion that every one of the several instructions granted at the instance of appellees which submitted the theory of agency in Edwin McQueen was erroneous; and further that appellant was entitled to a directed verdict in its behalf as requested. We think the facts demand the application in behalf of appellant of the following rule of law: "A surety who signs a bond in blank and intrusts it to his principal to be filled in and delivered to the obligee is bound by the instrument as delivered, although the principal, before delivery, inserts in the bond a larger penal sum than that agreed upon between him and the surety, if the obligee has no notice, from the face of the bond or otherwise of the unauthorized act of the principal." White v. Duggan, 140 Mass. 18, 2 N.E. 110, 54 Am. Rep. 437. See, also, 50 C.J., pp. 45, 46; 21 R.C.L., pp. 969, 970, 1075; King County v. Ferry, 5 Wn. 536, 32 P. 538, 19 L.R.A. 500, 34 Am. St. Rep. 880; Pingrey on Suretyship (2 Ed), sec. 56; Cresap v. Furst Thomas, 141 Miss. 30, 37, 105 So. 848.
Upon the contention that Edwin McQueen was the agent of appellant, and that appellant was bound by the representations made by him, any such contention is at once overruled by the law, which is that Edwin McQueen, whether acting for himself or for his father, could not be the agent of appellant in respect to the execution of the bond and in the procurement of sureties thereto, because in that matter he was acting in a capacity which may be termed as adverse or antagonistic to appellant. In that matter the McQueens were acting in their own behalf, and any fraudulent representation or other fraudulent conduct of either of them cannot be attributed to appellants. Watkins Co. v. Poag, 154 Miss. 222, 229, 122 So. 473. See, also, Cresap v. Furst Thomas, supra; Rawleigh Co. v. Brown, 143 Miss. 895, 108 So. 720.
Reversed, and judgment here for appellant.