12 S.W. 663 (Mo. 1889), Henry v. Sneed

Citation:12 S.W. 663, 99 Mo. 407
Opinion Judge:Sherwood, J.
Party Name:Henry et al. v. Sneed et al., Appellants
Attorney:John Montgomery, Jr., for appellant, R. C. Sneed. Smith, Silver & Brown for appellant, Salmon Falls Bank. W. S. Shirk and E. J. Smith for respondents.
Judge Panel:Sherwood, J. Barclay, J., concurs in the result.
Case Date:December 21, 1889
Court:Supreme Court of Missouri

Page 663

12 S.W. 663 (Mo. 1889)

99 Mo. 407

Henry et al.


Sneed et al., Appellants

Supreme Court of Missouri

December 21, 1889

Appeal from Pettis Circuit Court. -- Hon. J. M. Strother, Judge.


John Montgomery, Jr., for appellant, R. C. Sneed.

(1) The court erred in admitting the testimony of both Mr. and Mrs. Henry, the respondents, they being husband and wife, as to conversations had between themselves, or by them in connection with Shobe. Holman v. Bachus, 73 Mo. 50; Moore v. Moore, 51 Mo. 118; Spradling v. Conway, 51 Mo. 53; Buck v. Ashbrook, 51 Mo. 540; Willis v. Tommell, 67 Mo. 731; Moore v. Wingate, 53 Mo. 409; Berlin v. Berlin, 52 Mo. 152; Miller v. Miller, 14 Mo.App. 419; Vogel v. Vogel, 13 Mo.App. 588; Cannon v. Moore, 17 Mo.App. 99; Waddle v. McWilliams, 21 Mo.App. 298; Hoffman v. Parry, 23 Mo.App. 30. (2) Mrs. Henry, by the execution of the deed of trust securing the notes of her husband, occupies simply the relation of surety for him. She being incompetent to contract, except by deed, can make no other contract than that shown by the deed, and the law will not give her any other or greater rights or privileges than it accords any other surety. Kelly on Contracts of Married Women, 191; 1 Jones on Mortgages, sec. 113; Brandt on Suretyship, sec. 22, and authorities cited; Wilcox v. Tvdd, 64 Mo. 389; Simons v. Kleeburg, 56 Mo. 200; Bank v. Burns, 46 N.Y. 170; Christian v. Brown, 16 Iowa 131; Dennison v. Gibson, 24 Mich. 199. The husband, the principal in the notes secured by the deed of trust of the wife, having compromised and adjusted all defenses which he had on the notes, cannot now question their validity. Story's Equity [11 Ed.] sec. 132. He cannot be heard to say the reaffirmance of the same false statements were a fraud which induced him to make the compromise, especially since he has stood upon it so long, and retained the property secured thereby. Adams v. Sage, 28 N.Y. 103; Gould v. Bank, 86 N.Y. 75; Gifford v. Carvil, 29 Cal. 592; Field on Damages, sec. 709; Negley v. Lindsey, 67 Pa. St. 217; Lindsey v. Ferguson, 49 N.Y. 625; Campbell v. Moulton, 30 Vt. 669; Fitzpatrick v. Flanagan, 16 Otto, 659. Nor can Mrs. Henry, who occupies through her property the relation of surety, question the validity of the debt secured by the deed of trust, it being binding upon her husband, the principal. Evans v. Keeland, 9 Ala. 46; Ross v. Woodville, 4 Mun. 324; Mead v. Merrill, 30 N.H. 474; Mead v. Merrill, 33 N.H. 437; Lillard v. Puckett, 9 J. Baxter, 568; Brandt on Suretyship, secs. 94, 201 and 359; Benjamin v. Hillard, 23 How. (U. S.) 162; Brown v. Wright, 7 T. B. Mon. 396; Com. in Equity v. Ex'r Robinson, 1 Bailey, 153; Lathrop v. Masterson, 44 Texas, 527; Dillingham v. Jenkins, 7 Smedes and M. 485. (3) Plaintiffs cannot rescind the contract on the faith of which they procured the property of defendant, and at the same time retain property acquired thereby. Pomeroy's Equity, secs. 915-917; Parker v. Maguire, 64 Mo. 41; Matteson v. Holt, 45 Vt. 336; Field on Damages, sec. 709; Negley v. Lindsey, 67 Pa. St. 217; Hazard v. Irwin, 18 Pick. 102. If he repudiates the contract and seeks to rescind, he must do so promptly. If he continues to treat the property as his own, he will be held to waive the objection. Thomas v. Barton, 48 N.Y. 200; Flint v. Wood, 9 Howe, 622; Lyod v. Brewster, 4 Paige, 537; Saratoga v. R. G., 24 Wend. 74; Mintinn v. Main, 3 Seld. 220. If he cannot return the property he cannot rescind, but must seek his remedy at law. Barge v. Cedar Rapids, 32 Iowa 101; Parker v. Marquis, 64 Mo. 38; White v. Thayer, 121 Mass. 227; Barfield v. Price, 40 Cal. 535; Benj. on Sales, page 386, sec. 452.

Smith, Silver & Brown for appellant, Salmon Falls Bank.

(1) The purchaser of a promissory note, on the statement of the maker that it is good and valid, may recover the full amount of the maker, although it is purchased at a discount. The maker is estopped from availing himself of any defense he had against the payee. Elliott v. Callace, 1 Penrose & Watts [Pa.] 24; Sloan v. Richmond, 6 Blackf. [Ind.] 175; Honore v. Dougherty, 4 Bibb [Ky.] 280; Sargeant v. Sargeant, 18 Vert. 371; Paul v. Baugher, 8 Ind. 501; Vanderpool v. Brake, 28 Ind. 130; Tobey v. Clupman, 13 Allen, 123; McMullen v. Warner, 16 S. & R. 18; Crout v. Dewolf, 1 R. I. 369; Harner v. Johnson, 1 S. & M. Ch. [Miss.] 563; Ingham v. Vaden, 3 Humph. [Tenn.] 51; Preston v. Mann, 55 Conn. 118; Smith v. Stone, 17 B. Monroe, 168; Grace v. McKissock, 49 Ala. 153. (2) And the above principle applies where there is fraud in the execution of the notes. Carnes v. Fields, 2 Yeates [Pa.] 541; Sloan v. Richmond, 6 Blackf. [Ind.] 175; Honore v. Dougherty, 4 Bibb [Ky.] 280; Simpson v. Moore, 5 Lea [Tenn.] 372; Sargeant v. Sargeant, 18 Vert. 371. (3) Or even where the declaration is made under a mistake or ignorance of facts. Sargeant v. Sargeant, 18 Vert. 371; Preston v. Mann, 25 Conn. 118. (4) The maker's declaration operates as a new contract between himself and the assignee. Elliott v. Callace, 1 Pen. & Watts [Pa.] 24. (5) The rule has been held to apply even in the case of a forged note. Crout v. Dewolf, 1 R. I. 393. (6) And any act of the principal which estops him from setting up a defense personal to himself operates equally against and concludes the surety. Whittemore v. Obear, 58 Mo. 280; McCabe v. Ramsey, 32 Ind. 310; Dillingham v. Jenkins, 7 S. & M. 479; Com'r v. Ex'rs, 1 Bailey [S. C.] 151; Lillard v. Ruckett, 9 J. Baxter, 568; Wilders v. Bennett, 18 Vert. 670; Lathrop v. Masterson, 44 Tex. 527; Harwood v. Kiersted, 20 Ill. 367. (7) The defense of fraud cannot be set up by the surety on a note against a bona fide holder for value before maturity, and the mortgage passes as incident to and on the same footing with the note. Hagerman v. Sutton, 91 Mo. 521; Goodfellow v. Stillwell, 73 Mo. 17; Logan v. Smith, 58 Mo. 455; Carpenter v. Longan, 18 Wallace, 271; 2 Randolph Com. Paper, sec. 919. (8) It is now the settled law of this state, that the consideration of negotiable paper in the hands of a bona fide holder for value before maturity cannot be inquired into. Mala fides alone can open the door to such inquiry; gross negligence even is not sufficient; but actual knowledge of the facts which impeach the validity of the note must be brought home to the holder. Mayes v. Robinson, 93 Mo. 122; Johnson v. McMurray, 72 Mo. 278; Edwards v. Thomas, 66 Mo. 497; Hamilton v. Marks, 63 Mo. 167. (9) A surety will not be discharged in any case by the act of the creditor in releasing a part of the security for the debt, where the act of the creditor has worked no real injury. And he is discharged only to the extent that he would be required if held bound. 2 Daniel on Negotiable Ins., sec. 1311; Saline Co. v. Buie, 65 Mo. 63; Payne v. Bank, 6 Smedes & M. 24; Neff's Appeal, 9 Watts & Serg. 36; Ward v. Vass, 7 Leigh. 135; Bank v. Baker, 4 Met. 164; Holland v. Johnson, 51 Ind. 346; Kirkpatrick v. Howe, 80 Ill. 122; Story on Prom. Notes, sec. 485. (10) A court of equity will not rescind a contract for fraud even as between the original parties thereto, unless it can place the parties in statu quo. This the plaintiff in her bill concedes her inability to do. Jarrett v. Morton, 44 Mo. 275; Estes v. Reynolds, 75 Mo. 565; Hart v. Handlin, 43 Mo. 171; Adams' Equity [5 Am. Ed.] p. 350, note; Snell's Equity [Lawson's Ed.] p. 302. Besides on discovering the fraud, a party must elect to rescind the contract and must do so promptly, otherwise he will be held to it. Estes v. Reynolds, supra; Hart v. Handlin, supra; Jarrett v. Morton, supra. The evidence in this case shows ratification on the part of both Mr. and Mrs. Henry. (11) The supreme court will reverse the finding of the lower court when it is not supported by the evidence. Muenks v. Bunch, 90 Mo. 500; Forrester v. Scoville, 51 Mo. 268. And will do so even in an action at law where there is failure of proof of a material averment. Groll v. Tower, 85 Mo. 249. (12) Fraud cannot be presumed, but must be proved, and where circumstances are relied on to prove it, they must be such as to raise a strong...

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