18 Wis. 667 | Wis. | 1864
By the Court,
The case comes up on objections to evidence offered by the defendants, and turns upon the sufficiency of the defense set forth in the answers. The defense is an alleged fraudulent concealment of facts on the part of
The .counsel for the sureties quote and rely upon the first sentence in § 215 of Story’s Equity, which is in these words: “ Thus, if a party, taking a guaranty from a surety, conceals from him facts which go to increase his risk, and suffers him to enter into the contract under false impressions as to the real state of the facts, such a concealment will amount to a fraud, because the party is bqund to make the disclosure; and the omission to make it, under such circumstances, is equivalent to an affirmation that the facts do not exist.” The residue of the section is in these words: “ So, if a party, knowing himself to be cheated by his clerk, and concealing the fact, applies for security, in such a manner and under such circumstances as holds the clerk out to others as one whom he considers a trustworthy person, and another person becomes his security, acting under the impression that the clerk is so considered by his employer, the contract of suretyship will be void; for the very silence, under such circumstances, becomes expressive of a trust and confidence held out to the public, equivalent to an affirmation.” Here the plaintiff, not having been applied to
The law is correctly stated by Blackburn in Lee v. Jones, Eng. Exch. R., Nov. 1864 (4 Am. Law Reg., N. S., 487). He says : “It was decided in The North British Ins. Co. v. Floyd (10 Exch., 523), that the rule that all material circumstances known to the insured must be disclosed, is peculiar to contracts of insurance, and that it does not extend to contracts of guaranty; and I concur in this, which I think founded on principle as well as authority. It was pointed out by the Chief Baron in the argument of the present case, that a surety is in general a friend of the principal debtor, acting at his request and not at that of the creditor, and in ordinary cases it may be assumed that the surety obtains from the principal all the information he requires; and I think that great practical mischief would ensue, if the creditor were by law required to disclose everything material known to him, as in a case of insurance. If it were so, no creditor could rely upon a contract of- guaranty, unless he communicated to the proposed sureties everything relating to his dealings with the principal to an extent which would, in the ordinary course of things, be so vexatious and annoying to the principal and his friends, the intended sureties, that such a rule would practically prohibit the obtaining of contracts of suretyship in matters of business. This is well pointed out by Lord Campbell, in his judgment in Hamilton v. Watson (12 Clark & Finnelly, 109.) But I think, on authority and principle, that where the creditor describes to the proposed sureties the transaction proposed to be guarantied (as in general a creditor does), that description
Nor did the plaintiff, “ concealing the fact, apply for security.” This point has been already sufficiently discussed.
On the whole, we are of opinion that the defense set forth in the answers is not within any decided principle, and cannot be sustained. - '
Judgment affirmed.