Eldred v. Hazlett's Administrator , 33 Pa. 307 ( 1858 )

The opinion of the court was delivered by

Thompson, J.

The first assignment of error on this record is, the refusal of the court to assent to the plaintiff’s first point. We think it is not sustained. A defence to the whole or a portion of the consideration of a bond may be made upon any grounds which may show that, ex cequo et bono, it should not be paid. This, resulting from the nature of the instrument, being non-negotiable and under seal, a party about to purchase such a security is bound, as a requisite to holding it discharged of existing equities between the original parties, to inquire of the obligor, if he have any defence or set-off to it; receiving a negative answer to the inquiry, he will be protected against anything of the kind. I know of no exception to the rule of the right of the obligor, to defalcate or set up equities as against an assignee, unless he has inquired of the obligor and ascertained that there is nothing to be set up. The party pretermitting this caution could, notwithstanding this, undoubtedly, resist a fraudulent or covinous defence; for being fraudulent, it would be no defence whatever. The point put, however, prayed the application of the principle to what they claimed to be a fraud in law. That the mere existence of notes and obligations, held by the obligor against the obligee, of simultaneous date, of nearly an equal amount with the bond, were per se fraudulent. This instruction the court refused to give, and we think rightly so. A party may take the risk of defences to be set up, and assuredly, if he meet them with proof that they were contrived to defraud and impose upon him, or any assignee who might purchase, he would defeat the attempt. But the arrangements between'the parties for satisfaction of the security, whatever it may be, if not intended as a means to defraud others, would be as effectual against an assignee, who has not guarded himself against it by inquiry, as between the original parties.

The second specification of error is, the refusal of the learned judge of the court below, to charge as requested in the plaintiff’s second point. Whatever might have been the effect of the paper dated the 13th of February 1854, if genuiue, under clear proof of knowledge by the agent of plaintiff, that it existed before he purchased the security, and that the investment was made upon the faith of it, regarded as an estoppel, that proof was wanting in the case. The agent testified that William C. Friend, the attorney for Patricks & Friend, told him that they “ had a letter from Hazlett, acknowledging that the judgment was right. This was before the transfer to my mother.” This was insufficient, even if the paper had been such as to operate by way of estoppel. It showed neither inducement by, nor reliance upon it. The rule announced in Dezell v. Odell, 3 Hill 215, is a very clear embodiment of the doctrine of the books on this point; that to estop a party it must appear, “ 1. That he has made an admission which is clearly inconsistent with the evidence he proposes to give: 2. That the othér party has acted upon the admission: 3. That the latter will be injured by allowing the truth of the admission to be disproved.” And this is the spirit of the decision in Weaver v. Lynch, 1 Casey 449. To have the effect of an estoppel in pais, all these elements are essential. One of them, at least, as already noticed, was absent in this case, even, if otherwise, it was to operate as an estoppel — and hence we perceive no error in the answer of the court to this point. But as the paper itself was, in fact, res inter alios acta, if genuine, we think it would not so operate as between the parties to this suit; and that the learned judge of the court below was right in so ruling.

The fourth and fifth specifications of error will be considered together. A refusal, simply, to charge as requested in the plaintiff’ s fourth point, would not have been error, but the instruction accompanying the refusal, and adopted as an answer to the sixth point, was error, we think, in both. Transposing it for greater perspicuity, the charge was, that “ there is no evidence tending to rebut or impair this presumption,” “ that they,” the papers signed by Eldred, bearing even date with the bond of Hazlett, to him, “were executed on the day they bear date,” “ arising out of the appearance of the papers themselves, or any other facts in the case.”

The letter of the 13th of February 1854, if genuine, taken as an admission, was evidence against the defence set up, that at the date of the bond the defendant’s intestate owed the obligor nothing. If not impeached, it was powerful evidence. It was an admission against his interest, which certainly is not very usual, unless true. Its genuineness should have been submitted to the jury, with the instruction, that if a true paper, and voluntarily given, it was evidence tending to rebut the existence of papers bearing date anterior to it, showing a contrary state of facts.

In addition to this, the form, conditions, and stipulations in the bond itself, were proper to be considered on this branch of the case. True it is, that every bond is evidence against alleged equities and defalcations at its date — but the form may, in some cases, more distinctly evince this, than in others; and in this case, is this not so ? It contains a power of attorney to enter up judgment, a waiver of inquisition and the exemption laws in case of execution, and also a provision for the payment of interest. These were indications against the existence of the obligations relied on by the defendant, which should have been considered in deciding between the antagonistic positions of the parties in regard to the counter-indebtedness of Eldred to Hazlett. It certainly was evidence in the case on that point. It might be such as to give the preponderance to other evidence, if thought not to be sufficient of itself. But the learned judge charged, that there was no evidence on this point. If the papers were antedated, they should have been held inoperative as to the assignee, unless they represented a bond fide indebtedness, which was ascertained and fixed before the assignment by Eldred.

We think the court erred in answering these points for the reasons here stated, and the judgment must be reversed.

Judgment reversed, and a venire facias de novo awarded.