National Union Fire Ins. Co. v. Peck

• Decision Date: 08 May 1927
• Docket Number: (No. 7117.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 296 S.W. 338
• Parties: NATIONAL UNION FIRE INS. CO. v. PECK et al.
• Court: Texas Court of Appeals

296 S.W. 338

NATIONAL UNION FIRE INS. CO. v. PECK et al.

(No. 7117.)^*

Court of Civil Appeals of Texas. Austin.

May 8, 1927.

Rehearing Denied June 15, 1927.

Error from District Court, Dallas County; Royall R. Watkins, Judge.

Suit by the National Union Fire Insurance Company against E. N. Peck, A. M. Armstrong, and W. Hoy Wray. Judgment for plaintiff against the two defendants first named only, and plaintiff brings error. Reversed, and judgment rendered in plaintiff's favor against the last-named defendant.

Locke, Locke, Stroud & Randolph and A. S. Johnson, all of Dallas, for plaintiff in error.

J. L. Lipscomb and Cockrell, McBride, O'Donnell & Hamilton, all of Dallas, for defendants in error.

BLAIR, J.

The National Union Fire Insurance Company, hereinafter designated appellant, sued on an agent's fidelity bond signed by E. N. Peck and A. M. Armstrong, as principals, and W. Hoy Wray, hereinafter called appellee, as a surety, to recover for premiums collected by Peck and Armstrong as local agents of appellant, and recovered judgment against Peck and Armstrong for $755, but was denied a recovery against Wray as surety on the bond. The appeal is from the judgment in favor of Wray who both pleaded and admitted signing the bond, but claimed that he did so without reading it, believing it to be a character recommendation for his friend, Peck; Peck having represented to him that such was the nature of the instrument he signed; and he further pleaded and testified that when he signed the bond it contained no penal sum, but that the penal sum of $3,000 was later inserted by appellant or some person unknown to appellee. Over appellant's objections, these alleged defenses were submitted to the jury on special issues, and they found that when Wray signed the instrument he did not know it was a bond, and that at the time he signed the bond it did not contain the penal sum of $3,000, and the judgment is based upon these findings. Appellant's request for an instructed verdict against appellee Wray should have been granted under the terms of the bond and the undisputed evidence. Wray testified:

"Peck handed me a piece of paper and said he needed this thing; a bond; that he needed some references. * * * I didn't read the bond over, but I glanced over it and saw no amounts or nothing filled in; just a lot of printed matter; no typewriting; no longhand. I relied on the statement of Mr. Peck that it was just a character recommendation. * * * I was busy with another man at the time he handed it to me; I asked him what it was and he said he wanted to get a bond, and that he needed a few names as reference; that there was nothing to it but a lot of red tape. I was busy and carelessly signed it without knowing what it was; I took his word for it because I was on a deal with another man when he handed it to me."

The portion of the bond involved, omitting the matters which Wray contends were filled in after he signed it, reads as follows:

"Know all men by these presents, that we, ____, as principal, and ____ and ____, as sureties, of the county of ____, and state of ____, in consideration of $1, the receipt of which is hereby acknowledged, are held and firmly bound unto the National Union Fire Insurance Company, of Pittsburgh, Pa., in the sum of ____ dollars, lawful money of the United States of America, to be paid to the said company or its successors or assigns, for which payment, well and truly to be made, we jointly and severally bind ourselves, our heirs, executors, administrators, and assigns firmly by these presents.

"The condition of the above obligation is such that the above bounden, ____, as agent of the said company, shall faithfully and punctually pay over to the said company all amounts due or that may become due to it from time to time for moneys collected or received by ____ for premiums on policies of insurance and renewals thereof, or for any other account whatever * * * then this obligation to be void, otherwise to remain in full force and virtue."

Appellee by his pleadings only complained of the filling in of the blank with the words and figures "three thousand and no/100 ($3,000)." The filling of the blank space with the penal sum of $3,000 merely limited appellee's liability to that amount, because it appears from the defeasance clause of the bond that he promised to make good the agent's default or to "faithfully and punctually pay over to said company all amounts due or that may become due to it from time to time for moneys collected or received by them (Peck and Armstrong) for premiums on policies of insurance and renewals thereof, or for any other account whatever," etc. The suit is for premiums collected by the agents, and under the terms of the bond and the undisputed evidence Wray became liable on the bond by virtue of the following well-established principles of law which control the case:

1. A person who knowingly signs a written instrument cannot avoid its terms on the ground that he did not attend its terms, or that he did not read the document which he signed, or that he supposed it was different in its terms, or that he thought it was mere form, or that he was mistaken as to the nature and contents of the instrument which he signed. 13 C. J. 370, § 249, and cases cited in note 25. The following Texas cases sustain the rules stated: Nat. Equitable Soc. of Belton v. Carpenter (Tex. Civ. App.) 184 S. W. 585; Hurt v. Wallace (Tex. Civ. App.) 49 S. W. 675; Inner Shoe Tire Co. v. Williamson (Tex. Civ. App.) 240 S. W. 330; Coughran v. Alderete (Tex. Civ. App.) 26 S. W. 109; A., T. & S. F. Ry. Co. v. White (Tex. Civ. App.) 188 S. W. 714; Sov. Camp W. O. W. v. Lillard (Tex. Civ. App.) 174 S. W. 619; Parker v. Schrimsher (Tex. Civ. App.) 172 S. W. 165; Kansas City Packing Box Co. v. Spies (Tex. Civ. App.) 109 S. W. 432; Railway Co. v. Burns (Tex. Civ. App.) 63 S. W. 1035; Clack v. Wood, 14 Tex. Civ. App. 400, 37 S. W. 188; Self Motor Co. v. First State Bank (Tex. Civ. App.) 226 S. W. 428; Williams v. Rand, 9 Tex. Civ. App. 631, 30 S. W. 509; American Maid Flour Mills v. Lucia (Tex. Civ. App.) 285 S. W. 641.

In the case of Standard Mfg. Co. v. Slot, 121 Wis. 14, 98 N. W. 923, 105 Am. St. Rep. 1016, note A, 13 C. J. 372, the reason for the rules is well stated in the following language:

"* * * A person cannot sign a paper in ignorance of its contents and thereafter excuse such ignorance by the mere plea that he was busy or that he is habitually neglectful in such circumstances, and throw upon the courts the burden of protecting him from the consequences of his imprudence. The policy of the law is fixed to the effect that he who will not reasonably guard his own interests when he has reasonable opportunity to do so, and there is no circumstance reasonably calculated to deter him from improving such opportunity, must take the consequences. Courts do not exist for the purpose of protecting persons who fail in that regard."

Or, as said in Chicago, etc., Ry. Co. v. Belliwith (C. C. A.) 83 F. 437, note A, 13 C. J. 371:

"A written contract is the highest evidence of the terms of an agreement between the parties to it, and it is the duty of every contracting party to learn and know its contents before he signs and delivers it. He owes this duty to the other party to the contract, because the latter may, and probably will, pay his money and shape his action in reliance upon the agreement. He owes it to the public, which, as a matter of public policy, treats the written contract as a conclusive answer to the question, What was the agreement?"

Or, as said in Hawkins v. Hawkins, 50 Cal. 558, quoting from Chancellor Kent's Commentaries, vol. 2, p. 484:

"The common law affords to every one reasonable protection against fraud in dealing; but it does not go to the romantic length of giving indemnity against the consequences of indolence and folly, or a careless indifference to the ordinary and accessible means of information."

The reason for the rules is particularly applicable here, since Wray admits that he "carelessly signed it (the bond) without knowing what it was," although he had every opportunity to inform himself. He was, according to the record, an intelligent, capable business man, and carelessly failed to read the instrument because his trusted friend, for whose benefit he signed his name, misrepresented the nature of the instrument.

2. It is admitted that neither appellant company nor any of its agents connected with the transactions were privy to the misrepresentations and wrongdoings of Peck, which, Wray testified, induced him to sign the bond, nor did they have any notice of the same when the bond was accepted. The law is well settled that the fraud or misrepresentations of a principal...