Citation Numbers: 1 S. & M. 563
Filed Date: 12/15/1840
Status: Precedential
Modified Date: 9/9/2022
The question presented in this case by the pleadings and proof for decision, is, can a maker of a promissory note, who assures one about to deal for it, when called on by the intended purchaser, to ascertain if there is any objection to the validity of the note, that it will be paid at maturity, set up any defence that might exist between himself and the original payee ?
I incline to the opinion that he cannot. As between the assignee of the note and the maker, a new consideration has arisen in favor of him to whom the assurance is made. I will illustrate my meaning by a supposed case. A. verbally assumes to pay to B. a debt due by C. to B., in consideration that C. would give A. a horse; here the consideration moving between A. and B. is the horse, that C. has undertaken to give A. ; a consideration with which B. has nothing personally to do, and yet which influences and controls the payment by A. So in the case before me ; the makers of the notes agree with the assignee, that, in consideration of the agreement by the assignee and their creditor, they will pay the amount of their note to the assignee. The consideration of the note, as between the payee and the makers, is one thing; but the consideration, as between the assignee and the makers, a wholly different thing. It is true, the literal contract of the maker is not that which I have just detailed; but the legal effect of their contract is no other. By operation of law, the indorsement of the note is a contract between the maker and the assignee to pay the note, according to its tenor and effect; not that any actual consideration has passed between the assignee and maker, but the law transfers the original consideration to the new contract, made by the assignment. This is a contract
It has, I am aware, been held in Pennsylvania, that where the maker of a note has a good defence against the original obligee, and acknowledges his liability to the assignee, after the assignment has been made, he is, nevertheless, not bound by the acknowledgment; and the reason is obvious, because it did not enter into the consideration of the assignment to the new assignee, it formed no inducement with him to take the note, for it was made after he became the holder of it, and so far as it was evidence of any agreement at all on the part of the maker, it was a mere nudum pactum, without consideration, and of course not at all obligatory. But in the same State, it has been held, that if an innocent assignee is induced to take an assignment, by reason of a promise on the part of the obligor to pay the note, the taker is concluded from setting up any defence to it. See 2 Yeates’s Rep. 464 ; 14 Serg. and Rawle, 304.
But independent of any express adjudication on the subject, I think the unconditional liability of the complainants to the defendants, upon the1 note, can be sustained upon general principles. Where a party represents a particular fact, upon the faith of which he induces another to deal, he is bound to make that representation good, and it is immaterial whether the party making it knew it to be true .or false. The rule is extended so far, that if a party innocently misrepresents a fact by mistake, it is equally conclusive, for it operates equally as a surprise and imposition. 1 Story’s Eq. 202, 203. Even ignorance of a party’s rights will not excuse him, if he misleads the purchaser by his own misrepresentations, though innocently. The maxim is justly applied to him, that, where one of two innocent persons must suffer, he shall suffer, who, by his own acts, occasioned the confidence and the loss. 1 Story’s Eq. 377; 3 Peere Will. 74 (Cox’s note) ; Com. Dig. Ch. 4 W. 28; 6 Ves. 173; ib. 182, 183, 184 ; 1 Vernon, Rep. 136. It is a settled maxim of chancery jurisprudence, that where the equity of the parties is equal, the law must prevail, and a court of chancery will not interfere. 1 Story’s Eq. 75. The equities of parties is said to be equal, where both are equally innocent, and have been equally diligent, ib. 75. Test this case by the application of these principles, and it must be at once apparent, that the maker of the note cannot, without doing violence to them all, escape from his liability to the assignee. He represented to the assignee, that he might trade for the notes with safety; such, at least, is the fair inference from his express promise to the assignees to pay them the notes at maturity, in view of the assignee’s intention to trade for them. He has, then, represented that the notes were good valid and binding notes, and
It is unnecessary to investigate the case further; the complainants cannot escape the effect of their own conduct. To permit it, would be to enable them to commit a wrong, and then profit by it. One or the other of the parties must lose the amount of the note. I think, upon any and all the grounds I have stated, the complainants must bear the loss. The injunction must, accordingly, be dissolved.