Cresap v. Furst & Thomas

• Decision Date: 16 November 1925
• Docket Number: 25030
• Citation: 141 Miss. 30,105 So. 848
• Parties: CRESAP v. FURST & THOMAS. [*]
• Court: Mississippi Supreme Court

105 So. 848

141 Miss. 30

CRESAP v. FURST & THOMAS. ^[*]

No. 25030

Supreme Court of Mississippi

November 16, 1925

Division B

1 GUARANTY. Guarantor not released by fraud of principal unknown to guarantee. Guarantor is not released from liability by fraud of principal in obtaining his signature guarantee not having participated in or known of the fraud.

2 GUARANTY. Guarantee's agent held not shown to have known of fraud of principal in obtaining guarantor's signature.

Evidence in action on guarantee held not to show that guarantee's agent, though present when guarantor's signature was obtained, participated in or knew of principal's fraud (forgery of signature of another guarantor), by which guarantor was induced to sign.

3. PRINCIPAL AND AGENT. Knowledge of special agent held not notice to principal.

Knowledge of agent of plaintiffs, with mere limited authority to solicit and recommend selling agents with guaranty of their accounts, whose contracts of agency plaintiffs would accept or reject at their place of business, that signature of guarantor to recommended agent's guaranty had been obtained by fraud, would not be notice to plaintiffs of the fraud.

HON. C P. LONG, Judge.

APPEAL from circuit court of Tishomingo county, HON. C. P. LONG, Judge.

Action by Furst & Thomas against G. W. Cresap. Judgment for the plaintiffs, and the defendant appeals. Affirmed.

Affirmed.

Cunningham & Berry, for appellant.

This record discloses a case which should have gone to the jury. The jury should have been permitted to say, under the evidence of this record, which shows all the intimate relations the agent Wolfe had and bore to the whole transaction from beginning to end, whether or not he had guilty knowledge of such fraud, and practiced it upon appellant.

The chain of circumstances and surroundings was ample to justify the court in submitting the question to the jury as to whether or not Wolfe had sufficient knowledge of the fraud, or under the circumstances, ought to have had, to prove in all good conscience the statement to Cresap of the signatures he already had, and of the presentation of this instrument as the genuine instrument, when in fact it bore the forged signature of a guarantor. Hilliard v. Cagle, 46 Miss. 338; Robertson & Co. v. Columbus Ins. & Banking Co., 38 So. 100; Anderson v. Bellinger, 6 So. 83; Klein v. Richardson et al., 8 So. 204; 21 R. C. L., sec. 3839, Principal and Surety; 12 R. C. L., sec. 91-92, Fraud and Deceit; 20 Cyc. Fraud, pages 122-123.

We do not attempt to assail the general doctrine that fraud must be proved. We have proven fraud by all the evidence. Everything in the record shows that this was a forged signature of J. A. Lomineck. No one contradicts the appellant's statement that he relied upon it as the genuine signature, and we have proven by the agent Wolfe's acts and conduct that he is so inseparably connected with this fraud and that he so persistently put it over on Cresap, for the interest of his principal, that he cannot escape the guilty knowledge of its existence.

II. Authority to bind. The proof shows that appellee's agent, Wolfe, had been delegated authority to look after this very business.

"They (Furst & Thomas) said that he was the solicitor and their agent and whatever instructions he gave me for me to accept, and that he had the right to make contracts, etc." The evidence shows that he was the central figure and "after preparing the contract," he carried it the whole rounds in his pocket and was the person to present it to all parties, including the appellant, Cresap. Under this evidence he had all authority to make these contracts, and it was his duty to see that the guarantors were genuine. Furst & Thomas cannot send out a man and clothe him with this authority, and allow him to practice a fraud and forgery, and then escape the responsibility of his acts. Mitchell v. Campbell, 72 So. 232; Birdsong v. W. C. Craig & Co., 72 So. 136.

In such extreme carelessness and disregard for what was the true state of the signatures on the paper, the agent Wolfe's principals are, in all good conscience, bound by the fraudulent consequences of the agent's statements and acts. Even if the agent did not have actual notice that it was a forgery, his connection with it made it his duty to know, and he should not have made the statements he did make to Cresap to obtain his signature in the interest of his principals, and in doing so the issue of fraud is clearly drawn, and ought to be decided by a jury.

We earnestly insist that this cause should be reversed and remanded.

W. C. Sweat and B. F. Worsham, for appellees.

The only question is that when Farris, the principal obligor or debtor, tendered the contract with his sureties to the company, and it was accepted by the company, the signature of J. A. Lomineck was on the bond, and J. A. Lomineck claims that he did not sign the bond. The record does not show in any way how J. A. Lomineck's name got on the contract; nor does the record show that appellee had any information other than that his signature on the contract was genuine when the contract was presented to the company for approval.

The procurement of the sureties on this contract in question was a condition precedent to entering into the contract between the company and Farris, and Farris was not the company's agent in procuring the sureties, and the company cannot be charged with his fraud; and even though he does misrepresent facts to sureties in procuring their signatures, no defense arises against the company, unless it is shown that the company is a party to such misrepresentation. Saginaw Medicine Co. v. Batey. (Mich.), 146 N.W. 329; J. R. Watkins Co. v. Coombes (Okla.), 166 P. 1072; E. A. Lange Co. v. Johnson (Ark.), 197 S.W. 1168; J. R. Watkins Co. v. Hargett (Ala.), 95 So. 811; J. R. Watkins Co. v. Montgomery (Ark.), 215 S.W. 638; W. T. Rawleigh Co. v. Deavours (Ala.), 95 So. 459; W. T. Rawleigh Co. v. Royall (Ga.), 119 S.E. 339.

The failure of the principal obligor to procure additional sureties is not chargeable against the company in an action against those signing as sureties, where the company is without notice of such failure, and acts in good faith. W. T. Rawleigh Co. v. Stroud (Wis.), 148 N.W. 875; Benton County Bank v. Boddicker, 105 Ia. 548; Comstock v. Gage, 91 Ill. 328; Furst & Thomas v. Sandlin, 94 So. 740.

We do not think that any fraud was practiced on Mr. Cresap. If Mr. Cresap has anything to complain of, it is his misplaced confidence in Mr. Farris. He said that he did not know Mr. Wolfe, and had never seen nor heard of him before, and certainly he did not sign this agreement on Mr. Wolfe's account. Furthermore, Mr. Cresap said that he signed the contract without reading it, or having it read to him. He did not ask any questions about it, did not have it explained to him; but says that he understood it was a guarantee for Mr. Farris, and that he signed it for Mr. Farris; and while he says that he did not know Mr. Farris very well, yet he did know him well enough to be willing without any question to sign the guarantee when it was presented to him.

The attorneys for appellant in their brief argue the case simply and solely from the standpoint that Mr. Wolfe was the man that forged J. A. Lomineck's signature to the contract, or at least knew all about it. They simply take this for granted, for the reason that the record nowhere indicates that Wolfe knew anything about J. A. Lomineck's signature being other than genuine.

Wolfe and Farris had the same jobs; that is, they were soliciting salesmen. Farris naturally knew what Wolfe's authority was and knew, as stated by him, that his authority was only to recommend, for Farris had the same authority that Wolfe had. All in all, we do not think the record presents a question of fraud. No fraud was practiced on Mr. Cresap. Furst & Thomas, without a question, are entitled to collect that which is justly owing to them by Mr. Farris and his guarantors.

The case of Mitchell v. Campbell, 72 So. 231 referred to by appellants is one where certain premises were rented for immoral and illegal purposes, and the negotiations were handled by the son of the owner of the property; the proof was clear that the son knew that the property was being rented for...