Beland v. Anheuser-Busch Brewing Ass'n.

• Citation: 58 S.W. 1,157 Mo. 593
• Parties: BELAND et al. v. ANHEUSER-BUSCH BREWING ASS'N.
• Decision Date: 30 June 1900
• Court: United States State Supreme Court of Missouri

58 S.W. 1

157 Mo. 593

BELAND et al. v. ANHEUSER-BUSCH BREWING ASS'N.

Supreme Court of Missouri, Division No. 1.

June 30, 1900.

NOTES — CONSIDERATION — MISTAKE — CANCELLATION — RATIFICATION — PAYMENT AFTER DISCOVERY OF MISTAKE — ESTOPPEL — NEGLIGENCE IN DISCOVERING MISTAKE — DELAY IN REPUDIATION.

1. Plaintiffs executed a bond to defendant to pay for all the beer which K. might purchase and fail to pay for. K. failed, and defendant, through its agents, representing that K. was owing defendant a large sum, secured plaintiffs' notes and a trust deed for the amount. Plaintiffs paid defendant some money at the time, and afterwards paid more, and, when the note came due, secured an extension. They afterwards discovered that nearly the whole amount for which their note was given was indebtedness incurred by K. before they became sureties for him, and that the amount already paid exceeded the amount for which they were liable on the bond. There was no agreement to secure the other debts of K. Held, that plaintiffs were entitled to have the note canceled and the trust deed satisfied, since the note was given without consideration and through a mistake of the fact.

2. Where plaintiffs, who were sureties on a bond conditioned that they would pay for goods purchased by the principal which he did not pay for, through mistake and misrepresentation gave their note for debts incurred before they became sureties, their negligence in failing to discover the true state of the account between the principal and the defendant before giving the note is no defense in a suit to cancel the note.

3. Plaintiffs, who were sureties on a bond, had given their note in payment of a debt of the principal for which they were not liable under the bond, through mistake and without consideration. One of plaintiffs, in December before the maturity of the note, was told that the debt for which the note was given was not all incurred during the life of the bond. The principal also said that such was the fact. He was asked several times for a statement of the account between him and defendant, but could give none. In March plaintiffs paid the interest due, and asked an extension of time. In June they discovered the true condition of the account between the principal and defendant. Held, that there was no unreasonable delay in repudiating the note, since information to plaintiffs that the note was given for more than they were liable for was not information that it was wholly without consideration, and the information from the principal was not sufficient to justify a repudiation of the note at the time it was received.

4. Where plaintiffs paid interest due on a note after they were informed that it was given for a debt for which they were not liable, and that it was obtained by deception and without consideration, such payment was not a ratification of the note.

5. Implied ratification of a contract by failure to repudiate it within a reasonable time after discovery of the fraud which led to its creation has no application to an agreement made without consideration.

Appeal from circuit court, Greene county; James T. Neville, Judge.

Suit by Louis Beland and others against the Anheuser-Busch Brewing Association to have a certain note canceled, and to have satisfied of record a deed of trust given to secure the note. Decree for plaintiffs, and defendant appeals. Affirmed.

Charles Nagel and Jas. R. Vaughan, for appellant. R. V. Bowden, for respondents.

ROBINSON, J.

By this equitable proceeding plaintiffs seek to have canceled a certain note executed by them to defendant on the 29th of September, 1893, and to have satisfied the record of a deed of trust covering certain real estate belonging to plaintiffs, given to secure said note. The petition averred that the plaintiffs had become sureties on a bond to pay for beer and other supplies bought by one Joseph C. Kennedy of the defendant; that Kennedy afterwards became insolvent and unable to pay his debts, and the defendant fraudulently represented to plaintiffs that the indebtedness of Kennedy, which he was unable to pay, accrued after they became such sureties on said bond; that the bond provided for the payment for beer, etc., which Kennedy should buy of defendant after its execution; that, on account of defendant's representations as to when the indebtedness accrued, plaintiffs were induced to give a note and deed of trust for said indebtedness, when in fact it all accrued, except a small amount, before they signed the bond; that, when plaintiffs executed the note and deed of trust aforesaid, they paid defendant $100 in cash, and that since then, and prior to the discovery by plaintiffs of the real facts of the case, they had paid defendant on said note executed by them the further sum of $180.84; that said two sums paid by them to defendant exceeded the amount of their obligation under the bond by $189.79. The petition contained a second count at law, setting forth the same fact as in the first count, and averred that plaintiffs had overpaid the amount they were obligated to pay for Kennedy in the sum of $189.79, for which they asked judgment. The answer filed by defendant was a general denial. The trial court found the issues in favor of plaintiffs, and rendered its judgment accordingly. Motions for a new trial and in arrest of judgment were filed by defendant, which being overruled, the case was taken on appeal to the St. Louis court of appeals, and by that court was ordered transferred here for final disposition, for the reason, as expressed in the order, "that title to real estate is involved."

The facts show that one Joseph C. Kennedy for some time prior to April 26, 1893, had been engaged in the saloon business in the town of Monett, in this state, and as such had been the agent and representative of the defendant herein, the Anheuser-Busch Brewing Association of St. Louis, for the sale of its beer in said town of Monett; that, on said 26th of April, Kennedy, as principal, and these plaintiffs, as securities, executed and delivered to defendant their bond in the penal sum of $2,000, conditioned that said Kennedy would pay for all beer and other merchandise of like kind ordered and bought of the defendant after the execution of said bond; that after said date, and prior to the 28th day of September following, Kennedy purchased beer and other goods of defendant to the amount of only $1,423.75; and that he paid on account of said purchase the sum of $1,302.70, which had been duly credited thereon. It also appears that, prior to the time plaintiffs executed the bond aforesaid with Kennedy, Kennedy had become indebted to defendant on account of beer previously purchased in the sum of $1,777.80. Of this last indebtedness the plaintiffs herein had no particular knowledge, although they say they heard that Kennedy was owing defendant at that time something on account. The evidence further shows that, during the month of August following, one B. S. Schoeffel, a local agent of defendant, residing at Springfield, called upon the plaintiff Louis Beland (who is the father of the co-plaintiffs, and who represented them throughout the entire transaction which resulted in the execution of the bond in the first instance, and afterwards the note and deed of trust in controversy) at the blacksmith shop of the Frisco Railway Company, in said city, where the said Louis Beland was then working, and then and there stated to him that "Kennedy had used up the full amount of his bond, or nearly so," and that the company wanted a settlement, and that he came to notify him (Beland), as one of the bondsmen, of the fact, and that the company would expect him to make it good. The plaintiff Louis Beland at that time stated that he did not think Kennedy had become indebted to defendant that much under plaintiffs' bond, to which Schoeffel replied that that was his information from the St. Louis office. It was then agreed that the matter should be deferred until the plaintiff Louis Beland should return from a contemplated trip to Chicago. After Beland's return he went to see the agent, Schoeffel, as he had agreed, and again expressed his doubts as to the amount of Kennedy's indebtedness to defendant since the execution of the bond by himself and co-plaintiffs with Kennedy; and again Schoeffel replied, "That is the statement they [meaning the defendant company] gave me, and I believe it is right." Schoeffel at neither of the two meetings above mentioned gave to Beland the exact amount claimed under the bond on account of Kennedy's indebtedness to defendant, but simply stated that "Kennedy had about used up the amount of the bond, and that there was nothing for him [Beland] to do but give a note and security for it." At the last interview Beland demanded that Schoeffel get a statement from Kennedy showing the exact amount of his indebtedness to defendant since the execution of the bond, and Schoeffel replied that Mr. Nicoud, the traveling auditor of the defendant company, would be in Springfield in a few days, and that he would have a statement from Kennedy. Within a few days Nicoud came to...