Sager v. W. T. Raleigh Co

Citation150 S.E. 244
PartiesSAGER . v. W. T. RALEIGH CO.
Decision Date14 November 1929
CourtSupreme Court of Virginia

Error to Circuit Court, Rockingham County.

Proceeding by the W. T. Raleigh Company to obtain judgment against George W. Sager, guarantor, after worthless judgment had been secured against Prank Martin, principal. Judgment for plaintiff, and defendant brings error. Affirmed.

D. O. Dechert and Ralph H. Bader, both of Harrisonburg, for plaintiff in error.

John Paul, of Harrisonburg, for defendant in errer.

HOLT, J. The W. T. Raleigh Company, plaintiff below, is an Illinois corporation, engaged in the manufacture and sale of merchandise. George W. Sager is a citizen of Virginia, and a successful business man and orchardist, whose home is Timberville, Va.

During the year 1924, one Martin contracted with this manufacturer for the purchase of its products, and in 1925 a similar contract was made. As a condition precedent to any extension of credit, Martin was required by the plaintiff to secure a guaranty from three substantial citizens. That guaranty is in writing, appears in the record, and takes up a full printed page. It contains these, among other provisions:

"We, the undersigned, do hereby jointly and severally enter ourselves as sureties and do hereby unconditionally promise and guarantee the full and complete payment of the balance due or owing said Seller for goods previously sold and delivered to the Buyer as shown by its books at the date of the acceptance of this Contract of Surety by the Seller and also promise and guarantee the full and complete payment of all moneys due or owing or that may become due or owing said Seller and all indebtedness incurred by the Buyer under the terms of the above and foregoing instrument by the Buyer named as such therein; and to all the terms, provisions and agreements contained in said instrument we fully assent and agree."

This contract of guaranty was sent on to the plaintiff and accepted by it in good faith and without knowledge of any wrong perpetrated in its procurement. Credit based thereon was afterwards extended to Martin, in consequence of which he now owes $797.25. Judgment was obtained against him, but it is apparently worthless; hence this motion for judgment against the guarantor, Sager. He pleaded fraud in the procurement of the contract, and said that he was guilty of no negligence.

In lieu of evidence, this certificate of facts appears in the record:

"That the guarantee forming a portion of said contract was signed by R. T. Thornton, D. J. Campbell and Geo. W. Sager, each in person; that the said Sager is unable to read and can write only sufficiently to write his own name and that of one other person, namely, John W. Gordon; that about seven months prior to the signing of the guaranty Involved in the action, said Sager, Thornton and Campbell had signed a similar paper, in like words and figures, except that the same was to cover the purchases of Frank Martin from the plaintiff during the year 1924; that the signature of each of said Thornton, Campbell and Sager to said first guaranty was obtained by said Martin by the representation to each of them that the same constituted a recommendation of said Martin asto his good character (and in the case of said Sager, as having done satisfactory work in the laying of a pipe line for him); that each of said Thornton, Campbell and Sager was assured by said Martin at the time of and immediately prior to his so signing said guaranty that the same would in no wise involve the signer in any liability financially, and that said guaranty was limited in its scope to the matter of the character of said Martin, and in the case of Sager to the matter of such good character and to the satisfactory laying of said pipe line; that said Martin was, at the time of the execution of said guaranty, and during the prior acquaintance of said Sager with him, in good repute, in the community in which they both lived, as a man of good character; that from Soger's testimony Martin read to Sager the paper, which testimony Sager afterwards modified by saying that Martin read to him 'a couple of lines' of the paper with the statement that the rest of it, 'I got to fill up, you have nothing to do with that'; and that the portion as read conformed to Martin's previous representation as to its contents, that no third person, able to read, was immediately at hand, and that only two other persons were near by, in Sager's orchard, who were employees of said Sager, as to whom did not know whether they could read; that the second paper was tendered to said Sager, who signed the same relying on the representation of said Martin that its contents were exactly like those of the first guaranty, which he stated had been lost by him while on a visit to relatives; that said Martin was in no sense an agent of the plaintiff, but bought merchandise from it for the purpose of reselling the same; that said Sager is a successful business man for his community, Timberville, Virginia; that said Sager has habitually had all papers and correspondence executed and had with him read by third persons, and all letters from him written by third persons; that during the period referred to in the contract sued on, and guaranteed by said Thornton, Sager and Campbell, said Martin became indebted to said plaintiff in the sum of $797.29, which remained unpaid and for which plaintiff heretofore obtained a judgment against said Martin in a court of competent jurisdiction in the State of Illinois; that plaintiff, as testified by its witnesses, upon the acceptance by plaintiff of said contracts, promptly notified each of said guarantors by letter, that the same had been accepted, but the guarantors testified that none of them received such letter."

At the trial, one instruction was given for the plaintiff:

"The court instructs the jury that even if they believe that the signature of the defendant was obtained to the contract of guaranty by the misrepresentation of Martin, if they believe that the plaintiff company had no knowledge of this misrepresentation and accepted the contract in good faith, then they must find for the plaintiff."

This was tendered on behalf of the defendant and refused:

"The court instructs the jury that if they believe from the evidence that the paper writing sued on in this case at the time of the signature was represented to the defendant, Sager, by Frank Martin to constitute only a recommendation of said Martin as to character, and not as in any way binding said Sager for any financial liability, and if they further believe from the evidence said Sager was unable to read, and that said Sager signed said writing relying upon said representation of said Martin; then they must find that the signature of said Sager was fraudulently procured, and said paper writing not binding upon said Sager."

To all of which proper exceptions were duly taken.

In due course, plaintiff took judgment. There are three assignments of error, based upon:

(1) The refusal of the instruction tendered by the defendant.

(2) The granting of that tendered by the plaintiff.

(3) The refusal of the court to set aside the verdict returned for the plaintiff as contrary to the law and the evidence.

All involve the same questions, and for convenience will be considered together.

The law in England appears to be with the defendant. Carlisle Cumberland Banking Co. v. Bragg, 1 K. B. 489. These facts there appear:

"The action was upon a document which purported to be a continuing guaranty by the defendant, up to the amount of 150£, of the payment of one Rigg to the plaintiffs of any sum which might at any time thereafter be or become due from him to the plaintiffs on the general balance of his banking account with them.

"The defendant in his defense denied that he signed the guaranty upon which the action was brought, and alleged that, if he did, his signature to the same was fraudulently obtained by Rigg, who falsely represented to him that the said guaranty was an insurance paper."

The jury, in answer to interrogatories propounded, found that the defendant was induced to sign the guaranty by the fraud of Rigg; that he did not know the document which he signed was a guaranty; that he was negligent in signing it; and that Rigg was not agent for the bank.

Williams, L. J., said: "It seems to me that on those findings alone the defendant would be entitled to say in respect of this guaranty that it was not, in contemplation of law, signed by him. His signature was obtained by fraud, and it is manifest, on the evidenceand the findings of the jury, that he was not intending to sign any such document. What he was intending to sign was some document with reference to insurance. It appears to me that under the circumstances of this case the mere fact that the jury have found that there was negligence on the part of the defendant does not raise such an estoppel as prevents the defendant from setting up the defense that he never signed the guaranty and that his signature to the document was obtained from him by fraud; that he did not know of its nature, or intend to sign a document of that description."

Kennedy, L. J., said: "The principle involved, as I understand it, is that a consenting mind is essential to the making of a contract, and that in such a case as this there was really no consensus, because there was really no intention to make a contract of the kind in question." See, also, Thoroughgood's Case, 6 Eng. Rul. Cas. 229.

It thus appears that in England a guaranty signed by one who was ignorant of its contents and did not know that he was signing a guaranty at all is void, for the reason that there was no consenting mind.

In this country this issue in some states turns upon the question of negligence. When there is no negligence, there is no liability. Griffiths v. Kellogg, 39 Wis. 290, 20 Am. Rep. 48; Schuylkill County v. Copley, 67 Pa. 386, 5 Am. Rep. 441; Page v. Krekey, 137 N. Y. 307, 33 N. E....

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