Hull, Lanier & Co. v. Carter , 86 N.C. 522 ( 1882 )

It is manifest that whatever wrong may have been done by the denial of the credit to the extent asked, and the breach of faith and fair dealing in the refusal, it was personal to the debtor, and the damage, if any, resulting therefrom to the defendants, indirect and remotely consequential. It was the unauthorized use of the plaintiffs' letter accompanied, as we must infer, with the debtor's representation of his ability, with the aid of further supplies of goods and the postponement of his existing debt, to bridge over his present embarrassments and ultimately meet all his obligations, which induced the defendants to come to his relief and accept the drafts. It is difficult to conceive how the withholding goods, in excess of the value of those sent, up to the limits specified in the letter could be the efficient and primary cause of the financial troubles that so soon after ended in total insolvency, and the seizure of the stock under process sued out by other creditors, or how the full promised supply could have averted the disaster and saved the defendants from loss by reason of their suretyship.

But whatever effect may be attributed to the plaintiffs' violation of the terms of their agreement, on condition of the security to be given for their claim, and whatever the expectations of the defendants founded upon their confidence in the capacity of their principal, thus assisted, to discharge the assumed obligation and relieve them of their liability, they were not induced to accept the drafts from any communications addressed to themselves, or any assurances intended to be communicated to influence their action in the premises. (526) There has been no transaction between the parties to this suit, in which is contained an element of fraud, the fruits of which in consequence the law will not permit the party practicing it to receive.

If the defendants have been misled by the representations made to their principal and shown to them, it was not the intention of the plaintiffs, so far as the evidence appears, that they should be; and an intention to deceive the party who is deceived is an essential element in a fraud, which vitiates the contract into which it enters, and releases from its obligations.

"Fraud cannot exist, as a matter of fact," remarks NASH, J., "where the intent to deceive does not exist, for it is emphatically the action of the mind which gives it existence." Tilghman v. West, 43 N.C. 183; Saundersonv. Ballance, 55 N.C. 322; Kerr on Fraud and Mistake, 55.

It was said in the argument that the ruling in the court below was controlled by an adjudicated case which the counsel were unable to cite, and in our researches we have been unsuccessful in finding. In the absence of authority and from our own reasoning, we cannot perceive sufficient legal grounds for the proposition maintained and necessary to the defendants' exoneration, that a violated promise to the debtor, communicated by him without the knowledge or assent of the creditors, can operate as a fraud practiced upon the defendants and made available to discharge them from their contract of suretyship. And it would be a singular result, that an assurance of a credit varying in value from $32 to $132, and its denial, should have the effect of destroying another contract, superinduced by it, for the payment of some $650. In our opinion the fact found by his Honor that the defendants united in their acceptances "upon the faith of that letter and upon no other consideration" is insufficient to discharge (527) them from their voluntary undertaking. If the plaintiffs' conduct and disregard of their promise furnish a cause of action and a claim for damages to the debtor or to his sureties, it is but a counterclaim, measured by the extent of the consequential injury, and does not annul the contract of the sureties.

There is therefore error in the ruling of the court, and the judgment must be reversed, and a new trial awarded. Let this be certified.

Error. Venire de novo.