The Northern Trust Company, a Corp. v. Havelock Equity Exchange, a Corp.

Decision Date28 July 1924
Citation199 N.W. 763,51 N.D. 346
CourtNorth Dakota Supreme Court

199 N.W. 763

51 N.D. 346

THE NORTHERN TRUST COMPANY, a Corporation, Respondent,
HAVELOCK EQUITY EXCHANGE, a Corporation; Joe Shauf; C. L. Rafferty, J. C. Miller, Theo. Guthensohn, and John Adams, Appellants

Supreme Court of North Dakota

July 28, 1924

From a judgment of the District Court of Hettinger County, Berry, J. defendants appeal.


Jacobsen & Murray, and Harvey J. Miller, for appellant.

To constitute legal deceit and fraud by the use of language, the language need not affirm the existence or nonexistence of something which is untrue; it is sufficient if the language of one party misleads the other party as to the existence of fact, and thereby induces him to enter into the contract. 26 C. J. 1066, § 8.

The gist of a fraudulent representation is the producing of false impression upon the mind of the other party, and if this result is actually accomplished the means of producing it are immaterial. Henry v. Collier (Okla.) 169 P. 636.

But it is generally held that a deliberate failure to correct a delusion may constitute fraud. National Cash Register Co. v. Merrigan (Minn.) 181 N.W. 585.

Insertion of an unauthorized provision in a mortgage, held fraud. Muller v. Rosenblath, 157 A.D. 513, 142 N.Y.S. 602.

The signing of a paper does not make a contract. Mathias v. State Farmers Mut. Hail Ins. Co. 168 N.W. 664; Bean v. Pioneer Min. Co. (Cal.) 6 P. 86; Megowan v. Peterson, 173 N.Y. 1, 65 N.E. 738; Birmingham Iron Foundry v. Regnery, 33 Pa. S.Ct. 54; American Trust Co. v. Canevin, 107 C. C. A. 543, 184 F. 657.

Pierce, Tenneson, Cupler & Stambaugh, for respondent.

The defendant strenuously contends that but for such alleged fraud he would not have signed the note or the contract. According to his own testimony and answer, however, he did sign a contract which contains all the terms precisely as arranged between himself and the agent while the oral negotiations were pending, except in the single particular that the agent assured him that all papers would be returned in the event of cancellation, while the written agreement as signed stipulated for a refund of the purchase price, but not a return of the identical note.

It seems to be elementary that a party to a written agreement is bound thereby, and it is no defense to show that he neglected to read it before signing the same, unless he can prove that he was prevented from reading the instrument by fraud, artifice, or design of the other party, or his authorized representative. Rokusek v. Nat. Union F. Ins. Co. (N.D.) 195 N.W. 300; Little v. Little, 2 N.D. 175, 49 N.W. 736; 13 C. J. 370; Embden State Bank v. Shea, 196 N.W. 307.

False representations as to the legal effect of an instrument are no bar to an action thereon, as a party signing such an instrument is presumed to know its contents and has no right to rely on the representations of the other party as to its legal effect. 13 C. J. 387, § 286, and cases cited in note 58, among which are the following applicable to the facts in the case. Upton v. Tribilcock, 91 U.S. 45, 23 L.Ed. 203 (representation as to legal effect of a stock subscription); Clem v. Newcastle, R. R. Co. 9 Ind. 488, 68 Am. Dec. 653 (representation as to legal effect of stock subscription); Thompson v. Phoenix Ins. Co. 75 Me. 55, 46 Am. Rep. 357.

That a representation as to the legal effect of an instrument is not within the definition of fraud under our statute, see also: Hellebust v. Bond (N.D.) 172 N.W. 812; also cited in 26 C. J. p. 1207, note 87. See also to the same effect, 26 C. J. p. 1210, and cases cited in note 26.



[51 N.D. 348] CHRISTIANSON, J.

The plaintiff is a surety company organized under the laws of this state. The defendant, Havelock Equity Exchange was (during the time involved in this controversy), a corporation, organized under the laws of this state, and engaged in the business of a public warehouseman; and as such it operated an elevator for the storage, handling and marketing of grain. The individual defendants are the directors of the Havelock Equity Exchange. In order to be licensed to carry on its business as a public warehouseman, the Havelock Equity Exchange was required to furnish a bond in the sum of $ 5,000. On or about September 29th, 1919, there was transmitted to the plaintiff an application for such warehouseman's bond. The application was signed by the Havelock Equity Exchange by its president and secretary and also by the individual defendants named in the title of this action. The concluding portion of the application, including the signatures, was in...

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