13 Wend. 114 | Court for the Trial of Impeachments and Correction of Errors | 1834
The following opinions were delivered:
The offer to prove that Kneeland had'exceeded his authority, in selling the cotton by sample contrary to the express direction of the Morgans, was properly rejected. Such a defence might have been valid, if the suit had been brought against the Morgans upon an implied promise to indemnify Kneeland against a recovery by An-
But the principle question in this case arises under the statute of frauds, which I will now proceed to consider. The object of that statute was to prevent a person from being charged or made liable upon a supposed promise, which promise, if actually made, was merely collateral or in the nature of a suretyship for another, but where in fact no such promise was made or intended to be made. In some cases of this kind there was reason to apprehend that actual perjury was committed, for the purpose of establishing such a collateral promise. But in much the greatest number of cases of this description a third person was made liable as upon a contract of suretyship, which contract he never intended to malee— from the misrecollection of the witnesses, or a misunderstanding by them as to what was said or intended to be agreed upon by the parties at the time of the making of the supposed promise. The object of the legislature, in passing this act, would therefore have been fully accomplished, if a construction could have been given to the statute requiring only the promise itself to be in writing, and subscribed by the party who was to be charged thereby; leaving the adverse party to establish a sufficient consideration to support such promise, by any kind of legal evidence within his power. It is to be regretted that the courts have felt themselves bound to give a construction to this statute by which it is made, in many cases, to operate as a fraud on those who have acted upon the faith of a written promise of a third person, but which, unfortunately, had no sufficient consideration actually appearing upon the face of the writing. A lawyer might know that the consideration was a material part of a written agreement, and that such consideration must be proved, un
I cannot agree with the counsel who last addressed the court in behalf of the defendant in error, that the contract on the part of the Messrs. Rogers was not a collateral promise to answer for the debt, default or miscarriage of the Morgans, within the meaning of the statute of frauds. I apprehend the object of the statute was to reach every case of mere surety-ship, whether the agreement of the surety was collateral to a previous promise or liability on the part of the principal debt- or, or only collateral, to apromise or agreement made at the same time with the promise of the surety to indemnity against a future default or liability of such principal debtor. Where the whole credit is not given to the person who comes in to answer for another, the promise is collateral; and in all such cases there must be an agreement in writing, containing a sufficient consideration to support it—in other words, it is a
For these reasons I shall vote for an affirmance of the judgment of the supreme court.
I have examined the prillcipies involved in this case, and the authorities cited in support of the positions taken on the argument, with minute attention, and the investigation has convinced me that, in deciding the controversy upon established principles of law, and in unison with the equity of the case, it will not be necessary to follow the skilful arrangement of the points proposed, or the nice distinctions which were drawn by the ingenuity and experience of learned counsel.
The cause arises out of a letter written by L. Morgan & Sons to N. Rogers & Sons, with the terms or requests contained in which, Messrs. Rogers, by an endorsement thereon, engage promptly to comply. After mentioning a suit as having been commenced against Henry Kneeiand, relative to a sale of cotton belonging to them, and made for their account, the letter asserts their liability for any damages that may be recovered in the suit, in unequivocal language, and concludes by authorizing and requesting the Messrs. Rogers to pay Mr. Kneeiand the costs, charges and counsel fees that he may necessarily incur, and the damages that may be recovered against him. It is an order accepted to pay money, contingent upon the occurrence of certain stipulated events. In its essential properties it is not dissimilar to an order drawn on time, by a purchaser, on his agent or business friend, in payment for goods, or by a debtor in liquidation of an account; the delivery of the property fixes the liability of both the drawer and acceptor in the one case, and the discharge of the account is a valuable consideration to bind the parties in the other. It is a contract equally obligatory, so far as the acceptors are concerned, with the plain acceptance of a bill of exchange. In relation to a bill of exchange, the motive or consideration which passed between the drawer and drawee is not a subject of inquiry for the acceptor; neither can he have any right to invalidate his own act, except his defence be fraud; and though it may be admitted that the distinction taken in the books between the acceptance of a bill of exchange and of an order not amounting to a bill of exchange is founded in wisdom ; yet the closeness of the resemblance between them, in may cases, induces persons engaged in trade, to look for a
It is in proof that the Morgans received from'Kneeland the balance of the account of sales at the time they gave the letter of indemnity. The payment of the money¡and the engagement to defend the suit were evidently considered by the parties as an equivalent for the security obtained by the guaranty, and certainly upon the assumption that the suit was at the risk of the Morgans. Whether Kneeland had a right to retain the money is not a question here; if it were determined that he had no such right, it would not effect the consideration for the promise, for the consideration to be given was consequent upon the recognition of the sales, and of their liability in the suit; and, if the paper had said no more than to acknowledge this liability, Kneeland might have retired from the defence of the suit without reproach. But by receiving the indemnity or order, with its conditional provisions respecting the sums of money to he paid to him for costs, charges and counsel fees in the suit, he came under a moral, and, I think, a legal obligation to attend to the business of its defence in their behalf, and if it had been lost in consequence of his abandonment of it, he might have been held liable for the injury which had thereupon ensued—it would have been justly said, you have forfeited your implied engagement. The agreement is prospective in its operation as to the duties and responsibilities which, by fair and necessary inference, it imposes upon Kneeland, for it provides for the damages that may happen to be recovered against him; and not only so, but for the costs, charges, and counsel fees to the counsel to
The reciprocal engagements and liabilities which are plainly expressed in or deducible from the agreement, and the respective interests it involves, constitute a mutuality of interests quite as distinct and satisfactory as the consideration itself. The existence of mutuality necessarily grows out of the establishment of a consideration; they are .the same conditions of an agreement. Pothier says, vol. 1 p. 24, § 6, “In contracts of mutual interest, the cause of the engagement by each of the parties is the thing given or done, or engaged to be given or done, or the hazard incurred by the other.” And in 2 Kent's Comm. 365, 1st edition, though the language is different, yet the principle is the same; it is there said, “ A valuable consideration is one that is either a benefit to the party promising, or some trouble or prejudice to the party to whom the promise is made. A mutual promise amounts to a sufficient consideration, provided the mutual promises be concurrent in point of time,” &c. Now here was a promise on one side to carry on the suit, and on the other to pay the expenses. The payment of the expenses by the Morgans was the inevitable consequence of their being “ of course liable for any damages that may be recovered in the suit.” And the obligation on the part of Kneeland to continue the defence of the suit resulted from the condition by which he was bound to employ counsel, and to do whatever else might be properly required of him in its management.
But as it has been strenuously urged that the promise is void for want of consideration, we must look at this point more nearly. The obvious intention of the Morgans was to furnish an indemnity to Kneeland, against the risk he ran in the suit, and the intention of the guaranty was to sustain the sufficiency of the Morgans. The language of the writings will bear no other interpretation. The hazard of the suit, the expenses to be paid, or the labor .to be done, would, either of them, constitute a valuable consideration; and however small the risk to be taken, or the labor to be performed, the
As the consideration appears on the face of the contract, independently of the payment of the money, it is not necessary
But it is objected that the judge erred in rejecting the offer to prove that the cotton was sold by sample, contrary to orders. From the record it appears that this testimony was shut out because the Morgans had received the proceeds of the sale. In a case in which the receipt of the proceeds had been involuntary, and accompanied with even a slight degree of imposition, I should consider the objection fatal; but the letter of indemnity being before the court, and the voluntary receipt of the proceeds not disputed, I think the judge was right in excluding the testimony. But suppose the proof had been admitted, it would not, in my opinion, have helped the case of the defendants in the court below; for I should view it in this light: Among merchants the receipt of the account of sales, and the subsequent voluntary and unqualified receipt of the proceeds is considered an acquiescence in the price of the goods, and the conditions of sale, in cases where orders have been departed from. The point here is somewhat different, and goes a step further, being a warranty as to the quality of the merchandize, contrary to orders. As a common sense question, I think the indemnity is in justice and reason sufficient to cure the error; and I have found no principle of law or morality, in my study of this case, to countervail that conclusion. In the absence of all proof against Mr. Kneeland of unfairness or concealment, and with the letter of indemnity in his hand, was he bound to prove affirmatively that the Morgans had knowledge of a violation of their orders ? The cases cited to support this proposition are not to the purpose. Trimble v. Thorn, 16 Johns. R. 153 and Miller v. Hackley, 5 id. 375, arise—the one upon a protested note, the other upon an inland bill. There the notice of protest is a legal prerequisite to hold the endorsers. The waiver of the notice must be proved, to fix the endorser upon a subsequent promise to pay. It was a loose, verbal promise in the one case, and a verbal admission of liability in the other, and to third parties. There was no written paper, with attendant circumstances, from which it might be inferred that the parties had received all the information they desired, or had done an act to preclude
My opinion is that the judgment of the supreme court ought to be affirmed.
And such being the unanimous opinion of the Court, the judgment below was accordingly affirmed.