Vliet v. Eastburn , 64 N.J.L. 627 ( 1900 )

The opinion of a plurality of the court was delivered by

Gummere, J.

The plaintiff in error, together with her husband, was sued upon a joint and several promissory note for $2,080, made by them to the order of one Cowenhoven, and endorsed by him to Vliet, the defendant in error. The note in suit was the third or fourth renewal of an earlier one of like character, which had been made for the accommodation of Cowenhoven, and upon which he had received from Vliet, before its maturity, the face amount less a proper discount. No part of the proceeds of the note went to Mrs. Eastburn’s benefit or was received by her. She was, however, paid a bonus of $80 by Cowenhoven, for the use of her name, at the time of her signing the first note, and a like amount at the time of signing each renewal. She now seeks to escape liability upon the ground that she is a married woman, and, so, cannot bind herself by a contract such as that in suit. Whether she can succeed in her attempt must depend upon the effect of the Married Women’s act, section 5, as amended in 1895, and which reads as follows :

“Any married woman shall, after the passing of this act, have the right to bind herself by contract with any person in the same manner, and to the same extent, as if she were unmarried, which contracts shall be legal and obligatory, and may be enforced at law or in equity, by or against such married woman, in her own name apart from her husband; provided, that nothing herein shall enable such married woman to become an accommodation endorser, guarantor or surety, nor shall she be liable on any promise to pay the debt or answer for' the default or liability of any other person ; provided further, however, that if, on the faith of any endorsement, contract of guaranty or suretyship, promise to pay the debt, or to answer for the default or liability of any other person, any married woman obtains, directly or indirectly, any money, property or other thing of value, for her own use, or for the use, benefit or advantage of her separate estate, she shall be liable thereon as though she were unmarried, anything herein contained to the contrary notwithstanding.’’ Gen. Stat., p. 2017.

Under the provisos of this statute a contract of suretyship entered into by a married woman is altogether void unless, ivpon the faith of sueh eontraet, she obtains money, property or other thing of value for her own use or for the benefit, Ac., of her estate. Although, in form, Mrs. Eastburn became an original debtor by signing the note in suit, she was in fact merely a surety for Cowenhoven, having put her name to the paper for his accommodation. Jackson v. First National Bank, 13 Vroom 177; Van Deventer v. Van Deventer, 17 Id. 460; Woolverton v. Van Syckel, 28 Id. 392.

Ordinarily, in an action at law upon a promissory note made by two persons, one of them cannot set up as a defence that he was, to the knowledge of the payee, an accommodation maker, and therefore entitled to the privileges of a surety, the reason being that his right to have his status as surety respected does not pertain to his contract as an implied incident, but is a mere equity, which it is irregular to enforce in a court of common law. Anthony v. Fritts, 16 Vroom 1; Shute v. Taylor, 32 Id. 256. But, as was pointed out in the latter case, this is a matter which concerns not rights but only remedies, and consequently has no application where the ability to make stick a contract is denied by positive-law. If it was otherwise the validity of a contract of this character would depend upon the form rather than its substance, and the prohibition of the statute would be rendered entirely ineffectual merely by a representation on the-part of a married woman that she contracted as a principal and not as a surety. Where the law prohibits the making of a contract, a false representation of the fact which avoids the contract will not render it obligatory. Cannam v. Farmer, 3 Wels., Hurls. & Gor. 698; Loan Association v. Fairhurst, 9 Id. 422; Den, Hopper v. Demarest, 1 Zab. 525; Lowell v. Daniels, 2 Gray 161.

Although the right to set up such a defence in a case like the present has never received discussion in this court, it was necessarily involved and assumed to exist in the case of Woolverton v. Van Syckel, supra. In that case plaintiff brought suit on a joint and several promissory note given by Woolverton and his wife to plaintiff’s decedent. At the trial both of the defendants were called to show that the-wife signed the note for the accommodation of her husband, but were not permitted to do so by the trial judge on the-ground that they were incompetent to testify upon the subject. It was declared by this court, all the judges concurring, that it was admissible for the wife “ to show that no-consideration passed to her for her signature, and that when she signed it she was a married woman, and her signature-was affixed for the accommodation of her husband.” The reason given for considering the testimony admissible was that “such a cóntract was one of suretyship, which, on the part of a married woman, is unlawful.” Obviously, this-testimony could only be admissible on the theory that a married woman is entitled to set up as a defence to a note, of which she is one of the makers, that her contract, although in form that of a principal debtor, is in fact one of surety-ship.

We conclude that, notwithstanding the contract of Mrs. Eastburn was not in form one of suretyship, she is not, for that reason, precluded from showing that such was its nature in fact. Her liability, consequently, depends upon whether the contract is within the second proviso of the act of 1895-In other words, whether she obtained for her own use any money or other-thing of value “on the faith of the contract.”

As has already been stated, she received at the time of signing the original note, and again upon signing each of the renewals, the sum of $80 from Cowenhoven, the person for whose benefit she made the contract. Counsel contends that' this does not bring the case within the proviso, that, in order to have that effect, the money or thing of value must be obtained by the married woman from the person to whom the-note is assigned by the payee. But this is equivalent to saying that, in order to render her liable as accommodation-maker, she must receive a part of the consideration of the note, which is manifestly not the intention of the statute, for if she should share in the proceeds of the note she would be a principal debtor and not a surety at all.

The evident intent of the legislature, in adding this second proviso to the statute, was to enlarge the scope of a married woman’s contracting power, to enable her to become an accommodation endorser, guarantor or surety, or to bind herself for the debt, &c., of another person, provided that she should receive, from the person for whose benefit she made the promise, or on his behalf, money or other thing of value as a consideration for her undertaking.

With the wisdom of so increasing the capacity of a married woman to contract we have nothing to do. That is a matter which rests altogether with the legislature, and they have dealt with it. If it shall be found to be objectionable, that branch of the government may be relied upon to remedy the evil.

It is further argued that the liability of a married woman, upon a contract such as that under consideration, if it exists at all, exists only to the extent of the money obtained by her. But this contention can ■ only be permitted to prevail by disregarding the plain and unambiguous language of the statute, which declares that the liability of a married woman on a contract of suretyship, under the conditions mentioned, shall be the same “ as though she were unmarried.” If an unmarried woman had made such a contract as the plaintiff in error, the extent of her liability would be measured by the terms of her undertaking without regard to whether the consideration received by her for doing so was great or small.

The judgment under review should be affirmed.

Dixon, J.

The circumstances which present the real question in this ease are sufficiently stated in the opinion of Mr. Justice Gummere. That question is, whether the contract on which the plaintiff sued was within the proviso of our Married Women’s act, which confers on married women a general power to contract, “ provided, that nothing herein shall enable such married woman to become an accommodation endorser, guarantor or surety, nor shall she be liable on any promise to pay the debt or answer for the default or liability of any other person.”

The obligations specified in this proviso are all of a nature well defined in the law, and each of them implies, as well in the legal as in the common acceptation of the terms, a principal liability of a third person to the creditor. The nonexistence of such a liability in the contract into which the plaintiff entered, excludes that contract from the proviso.

■When Mrs. Eastburn delivered to Cowenhoven her promissory note payable to his order, and gave him unlimited authority to negotiate it, the transaction did not, of itself, impose upon her any obligation for the payment of money, but it created an agency in Cowenhoven by which he was empowered to contract for her to any extent within the terms of the note. When he endorsed the note to the plaintiff, receiving therefor the amount of money named in it, then first did Mrs. Eastburn enter into a contract, and that contract was not, either in form or in substance, that she would be surety or guarantor far Cowenhoven or would answer for him in any way, but was, both in form and in substance, that she would unconditionally pay the note at maturity to the plaintiff or his assigns, and would be primarily and originally liable therefor.

In addition to this contract thus entered into by Mrs. East-burn, through Cowenhoven as her agent, Cowenhoven also contracted for himself as endorser, but his contract with the plaintiff was secondary, and in nowise affected the contract of Mrs. Eastburn. If Cowenhoven had endorsed the note without recourse, his act would still have been within the scope of his authority from Mrs. Eastburn, and the nature of her contract with the plaintiff would have been precisely the same as it is now. Such an endorsement would perhaps have made the situation simpler, since her contract would then have been the only one to which the plaintiff was a party, and the absence of any third person responsible to the creditor might render it clearer that her contract was not within the proviso of the statute, but her contract would not have differed in any respect from that now subsisting between her and the plaintiff.

If, under the present endorsement, the plaintiff had omitted to give Cowenhoven due notice of the non-payment of the note at maturity, the situation would have become the same as if Cowenhoven had endorsed without recourse; Cowenhoven would have been under no responsibility to the plaintiff, but the obligation of Mrs. Eastburn to the plaintiff would have remained, and clearly it could not have been secondary.

What I regard as the incorrectness of the views of my .associate’s results, I think, from one of two sources: either they confuse, with the contract between Mrs. Eastburn and the plaintiff, the contract between Mrs. Eastburn and Cowenhoven, by which the latter was bound to repay to her whatever she paid to the plaintiff, an obligation of which the plaintiff had no knowledge and which had no place in the contract between him and Mrs. Eastburn; or else they regard the note as showing only the form, and not the substance, of Mrs. Eastburn’s contract with the plaintiff, when, in truth, it shows both form and substance, since it embodies all there was of contractual material between them. The fact that an extraneous, independent contract between Mrs. Eastburn and Cowenhoven bound the latter to the former in the same manner as if he had been the principal debtor to the plaintiff, and she, the surety, could not make Cowenhoven really a debtor to the plaintiff, and so could not make Mrs. Eastburn really a surety to the plaintiff.

In riiy opinion, Mrs. Eastburn’s contract with the plaintiff falls within the general purview of the statute authorizing married women to contract, and not within the proviso limiting their power, and therefore the judgment in favor of the plaintiff should be affirmed.