10 Colo. App. 27 | Colo. Ct. App. | 1897
Lead Opinion
delivered the opinion of the court.
In 1892 and prior thereto, Hyde & Yedder were the proprietors of a gambling house in the city of Denver. Younker, defendant and appellee, was a frequenter of such place and at various times lost money to the proprietors at games of chance, and borrowed money from them for the purpose of gambling. For the sum so lost and borrowed, defendant gave his checks at various times. On December 21, 1892, a settlement was had between the parties, Hyde & Vedder surrendered defendant’s checks and received from him in place thereof, two promissory notes, payable to themselves, each for the sum of $1,250, and due from one to two years after date. In April, 1898, Hyde & Yedder borrowed $320, from the plaintiffs, appellants in this case, gave their note therefor and, as collateral to secure this loan, assigned to
The evidence was sufficient to support the finding of the trial court that the consideration of the note came within the provision of sec. 860, Gen. Stats. This statute is very broad in its scope and unequivocal in its language. It has been in force in this state for many years and is similar in its character to statutes existing in nearly, if not entirely, all of the states in the union. By its terms all contracts, promises, agreements, conveyances, securities and notes made, given, granted, executed, drawn or entered into, where the whole or any part of the consideration thereof shall be for money or property won by gaming or money or property loaned for the purpose of gaming, “ shall be utterly void and of no effect.” And this is true although the instrument may be in the hands of an innocent purchaser for value.
“ The language employed is open to no other construction. The protection which the law extends to an innocent holder, who, for value, in the usual course of trade, has received negotiable paper, is of no avail when the statute in terms or by unavoidable implication has pronounced the instrument absolutely void. Stricken with nullity at its birth, it can thereafter gain no validity.” Boughner v. Meyer, 5 Colo. 73.
It appears from the evidence that at the time of the execution of the notes by defendant, Hyde & Yedder promised, that they would hold and not dispose of the notes, but upon their suggestion that they might wish to use them as collat
' It is admitted that plaintiffs at the time of their loan to Hyde & Vedder, knew nothing of defendant’s consent that his note might be assigned as collateral-, and that neither Hyde nor Vedder said anything to them about it and it does not appear from the evidence that at such time plaintiffs had any knowledge of any fact affecting the validity of the note.
Upon this statement of facts plaintiffs invoke the doctrine of estoppel and claim, that defendant having consented to the transfer of his note to an innocent purchaser for value, cannot now be heard to assert that it is invalid. This principle rests upon the broad ground that a party shall not be permitted to take advantage of his own wrong, that, if by his misrepresentations or concealment of a material fact or silence when he should speak, he induces another party to act, he shall not thereafter be allowed to assert a different state of things from that which he induced the other to believe existed. The intent is to restrain fraud and compel good faith and fair dealing.
In order to constitute an estoppel by conduct, however, certain elements are essential and necessary. These have been clearly expressed and well settled by the law writers and by the highest judicial authority in the state. Patterson v. Hitchcock, 3 Colo. 536 ; Griffith v. Wright, 6 Colo. 250; Bigelow, Estoppel, p. 570; 2 Herman, Estoppel, § 1115; 2 Pomeroy, Eq. Jr. § 805.
Of these essential requirements the only one necessary to be considered in tins case is that the innocent party must have been induced to act upon the representation or concealment. That this condition must exist, all the authorities agree, for the reason, that, if it did not, then the party was
There are many instances however, in which an estoppel does not arise from silence. The true test is whether or not the circumstances are such as to impose upon one in equity and good conscience the duty to speak. As to when this duty devolves there is not and, from the nature of the case cannot be any established or uniform rules. It depends, to a great extent, upon the circumstances attending each particular case and it is rare that two are alike. Generally
Again there are cases wherein it would be incumbent upon a person, being informed that a transaction was about to take place, to seek out the innocent party and speak. For instance the accommodation maker of a negotiable note would be estopped to plead want of consideration, as against the assignee, if it were shown that he had previous knowledge that it was to be negotiated and to whom, and had failed to notify the assignee prior to the transfer.
In the application of the doctrine of equitable estoppel, we think there is very clearly a distinction between the cases in which the act or instrument sought to be avoided was one tainted with legal or moral turpitude and expressly declared by law to be “ utterly void and of no effect,” and one which, though voidable, was free from such taint or legal prohibition. In the former case it should certainly require stronger and more positive evidence to sustain a plea of estoppel than in the latter. In the latter case the party urging the plea is solely concerned, in the former, the state or public has an interest. Surely it cannot be claimed that the plain provisions of a public statute should be disregarded, set aside and nullified unless the facts, relied upon to take the act or thing in question without its inhibition should most clearly appear.
In the case at bar, defendant executed a negotiable promissory note, perfect upon its face and with nothing in its contents to indicate in the slightest degree any taint of illegality or invalidity. He said thereby that he was legally bound to pay the sum of money specified, to whomsoever should be the lawful holder of the note at its maturity, without any offset or claim of defense. At the instant, however, of the execution of the note the statute applied and declared it to be “utterly void and of no effect,” whether in the
Holding these views we do not think that the evidence as to the representations or conduct of defendant, discloses facts sufficient to estop him to plead the statute as a defense to this action. It does not appear that plaintiffs had any knowledge of his representations, and hence they were not misled by them nor were they acted upon at all. No statements of defendant, whether expressed verbally or implied from Ms silence, could have added to the force and effect of those, solemnly set forth in the note in writing. If he had been present and remained silent when the transfer of the note took place, or if plaintiffs had been informed prior to the time when they took the note, that defendant had been notified of the intended transfer and had consented thereto or acquiesced by his silence, then a different case might be presented — one from which the court might presume a new promise free from the taint of the statute. To hold that an estoppel would arise under the circumstances of this case as shown by the evidence would be to establish a rule, by which, it can be readily seen, the operation of the statute could be easily defeated in all cases. The only representations of defendant relied upon, whether express or implied, were made to the payee of the note, the beneficiaries of the gamblrng transaction and were never communicated to or acted upon by the plaintiffs. Under tMs view of the law, as applied to the facts of this case, we do not think that the authorities cited by counsel for appellants are in point. They are M cases arising upon accommodation paper, executed expressly for the purpose of enabling the payee to secure a loan, or where the representations relied upon, were made by the obligor directly to the assignee, or were communicated to him under such circumstances as to create the reasonable inference at least that they were acted upon.
In reference to the plea of estoppel by recital, based upon the fact that the note itself recites a valid consideration— “for value received” — it is only necessary to say that the statute, in plain and unmistakable terms declares such notes, if in fact affected with a gaming consideration, to be “ utterly void and of no effect.”
Neither can it be successfully maintained that because checks were originally given for the gambling indebtedness, and thereafter these were taken up, and the note in suit given therefor, a new promise arose, whose consideration was free from taint attaching to that of the checks. The note was simply a substituted security for, or evidence of the same indebtedness, and partakes of the same infirmity and is open to the same defense as were the checks. Chapman v. Black, 2 B. & A. 591; Cutler v. Welsh, 43 N. H. 498; Holden v. Crosgrove, 12 Gray, 217.
The transaction was between the same parties and no additional consideration appears.
Counsel urge with great vigor and force that if this judgment be permitted to stand plaintiffs would suffer serious loss and injury without any fault or negligence on their part. The enforcement of the statute invalidating gaming contracts, and evidences of indebtedness, whose consideration was a gambling debt, declaring them to be, not voida
The judgment will be affirmed.
Affirmed.
Dissenting Opinion
dissenting.
I find myself unable to accept the conclusion reached in this case by a majority of the court. I agree with them that the evidence showed that the consideration of the note in suit was a gambling debt; and I also agree that such a note is
The learned author of the opinion has adopted some defi
“ In the much and well considered case of Preston v. Mann, 25 Conn. 118, 128, Storrs, J., delivering the opinion of the court says, ‘ The doctrine of estoppel in pais, notwithstanding the great number of cases which have turned upon it and are reported in the books, cannot be said even yet to rest upon any determinate legal test which will reconcile the decisions, or will embrace all transactions to which the general principles of equitable necessity wherein it originated demand that it should be applied. In fact, it is because it is so peculiarly a doctrine of practical equity, that its technical application is so difficult, and its reduction to the form of abstract formulas is still unaccomplished.’ This was said in 1856, and little has since been done towards extricating the doctrine from the confusion and conflict of authority with which it was then embarrassed. This, I think, has been
The theory of the opinion in the case at bar seems to be, that because the defendant made no direct representations to the plaintiffs by which they were misled, and because their investment in the note was not immediately influenced by his conduct or speech, therefore there can be no estoppel in their favor. Something like this has been said by courts ; but it was said in cases where the estoppel claimed depended upon direct representation or immediaté influence, and therefore amounted only to a statement of the law to be applied to the facts under consideration. It was never intended as a formula which would embrace every possible 'variety of transaction. I think it may be stated broadly, as a principle underlying all technical definitions of the doctrine, that if one by his declarations, or conduct, or silence, is willfully, or negligently, instrumental in causing another to change his position disadvantageously, he assumes a responsibility, which, as against that other, he will not be permitted to gainsay ; and it is immaterial what the method may be by which the result is accomplished.
“In Winter v. Hart. 39 Conn. 16, a firm doing business in Goshen, by representing to the plaintiff, a wholesale dealer in Bridgeport, that the defendants were interested with them in their business, purchased goods from time to time on the defendants’ credit. The bills were made out to the defendants, and mailed to the firm, by whom they were paid. This was all done without the knowledge of the defendants, who as a matter of fact were not interested with the firm at all. Before the last purchase, the defendants accidentally saw the previous bills, but supposed they were the result of a mistake, arising from inadvertence. The bill for the last purchase was not paid by the firm; and the defendants were held for the amount, because, having seen bills from which it appeared that their credit was being used, they neglected
The defendant did not say to the plaintiffs that the note was good, nor did. he stand by in silence while it was being transferred to them; so that in paying their money on the note they were not directly influenced by either his words or his conduct. But he gave Hyde & Vedder authority to take the note to the plaintiffs, and pledge it with them as something of value. Hyde & Vedder kept the note in their possession in accordance with their agreement, until the trans^ action with the plaintiffs. When they found that the plaintiffs were willing to advance them money upon the note, they applied to the defendant for permission to use it, naming the parties from whom they proposed to obtain the-money; and, with full knowledge that those parties, in parting with their money, would rely on the validity and collectibility of the note, he authorized its use as security for the loan. It is needless to speculate upon what his liability would have been, if he had merely ascertained that the plaintiffs were about to advance money on the faith of his paper, and had neglected to notify them that it was worthless. His attitude towards the negotiation of the note was not negative or passive. The transaction by which the money was obtained, was the result of direct authority given by him for that special purpose. While the plaintiffs did not know that he had given the authority, and were therefore, not
The note being void originally, its transfer to the plaintiffs did not impart vitality to it; but I think that in so far as may be necessary to protect them from loss, and no further, the defendant should be adjudged estopped to deny its validity; and that they are entitled to judgment against him for the amount loaned with legal interest. It is my opinion that the judgment ought to be reversed.