Warren et al. v. Branch et al.

• Decision Date: 26 April 1879
• Parties: Warren et al. v. Branch et al.
• Court: West Virginia Supreme Court

15 W.Va. 21

Warren et al.

v.Branch et al.

Supreme Court of Appeals of West Virginia.

Decided April 26, 1879.

1. J. sold to C. seven and one-fourth acres of land, and was paid therefor: afterwards he sold to him about fifty acres more adjoining, at $40.00 per acre. J. agreed to 'make to C. a deed for the whole of said land upon his executing to him a bond for $2,000.00, payable in five years withR., H. andW., as his securities, nothing being said about the vendor's lien; and the vendor relied exclusively on the bond and on the personal security. The deed was to be executed as soon as the land sold was surveyed; and if on the survey it turned out to be less than fifty acres, the difference was to be credited on some cattle J. had previously sold to C. The bond was drawn for $2,000.00; and on its face stated the consideration to be for land purchased. The securities R., H. and W., who signed this bond, made no enquiries of the vendor J. When surveyed, the land turned out to be forty-six acres, and the price of it $1,840.00. The difference, $160.00, was credited on the purchase of the cattle. The deed was made as soon as the survey was completed, and did not reserve the vendor's lien. It was recorded shortly afterwards. The principal died insolvent some three years afterwards, having paid only $500.00 on this bond. When it was executed he was a man of large property, and in good credit. After this bond was executed, these sureties signed with others his bond as sheriff, and one of them endorsed notes for him as first endorser, amounting to more than $2,000.00. Held:

This bond was binding on the securities to its full amount.

When with the knowledge and assent of the creditor there is a misrepresentation with regard to material facts, and had the real facts been known and not misstated, they might reasonably have prevented the security from entering into his contract of suretyship, suoh contract will not be binding on the surety, though such misrepresentation was not made with a fraudulent purpose.

Unless enquired of by a surety, a creditor is under no obligation to disclose facts in no manner connected with the business which is the subject of the suretyship, though such facts would probably have a decided influence on the surety in determining whether he would enter into the contract.

4. If a material fact connected with the contract of suretyship, which might influence the surety in entering into the contract, is fraudulently concealed with a view to benefit the creditor, such concealment, though no enquiry is made by the surety, would discharge him.

5. But though the simple failure of a creditor to communicate to a surety a fact material for the surety to know, and though this fact be connected with the contract of suretyship, will not generally vitiate the contract, unless the concealment by the creditor was fraudulent, even though the principal in procuring the security to enter into the contract acted fraudulently; yet if the dealings are such as fairly to lead the creditor, if a reasonable man, to believe that the principal must have used fraud by suppressing facts or otherwise, in procuring the surety to enter into the contract, and such fraud has been used, it will vitiate the contract as to the surety, though no actual fraud be traced to the creditor.

6. If a contract is made for the sale of land, and nothing be said in the contract about the vendor's lien being reserved, and bond and personal security be taken for the purchase-money, this alone will not amount to a waiver of the vendor's lien; but if it be shown by direct evidence, or by the circumstances of the case, that the vendor relied only on the bond and personal security, the vendor's lien is waived, and he would be required to execute a deed without relserving the vendoi*'s ien. Before the passage of our statute requiring an express reservation of this lien on the face of the deed, the execution of a deed and the taking of personal security would amount to a waiver of the vendor's lien.

Appeal from and supersedeas to a final decree of the circuit court of Monroe county, rendered on the 17th day of October, 1877, in a chancery cause in said court then pending, wherein S. J. Warren and others were plaintiffs, and Thomas Branch and others were defendants, granted on the petition of said Warren.

Hon. Homer A.Holt, judge of the eighth judicial circuit, rendered the decree appealed from.

Green, President, furnishes the following statement of the case:

In May, 1877, John M. Eowan and S. J. Warren filed their bill in the circuit court of Monroe county, in which they allege that on October 27, 1871, James W. Johnson sold to one Samuel A. Clark, deceased, fiftythree acres of land in that county for $2,000.00, payable five years after the sale, with interest from the day of sale, payable annually. That on the day of the sale Clarke applied to the plaintiff and one J. A. J. Hull, deceased, to execute with him and as his securities a bond to said Johnson for this purchase-money. And he stated to them that Johnson was to retain the title to the land till the purchase-money was paid. The bond, which he presented to (hem and asked them to sign with him as his securities, on its face stated it was given for the purchase of a tract of land. That four months afterwards Johnson executed to Clarke a deed for this land without retaining on the face of the deed a vendor's lien; and that Clarke had died insolvent. That on the day the bond was given, Johnson assigned it to Thomas Branch, who had brought suit in court for said bond, which was subject to credits endorsed on it amounting to $879.74. That Clarke died in July, 1875; and that the laintiffs did not know that Johnson had conveyed this and to Clarke till after his death. They pray an injunction to the further prosecution of this suit, and that the sureties in this bond be forever discharged from all liability arising from their having executed this bond; and for general relief. Johnson, Branch and the administrators of Clarke and Hull were made defendants. The injunction asked was awarded, but was not perfected till a judgment had been rendered in the common law suit.

Johnson filed his answer which states that before the date of this bond he had sold Clarke seven and one-fourth acres of land, for which he had paid; and on the day the bond was given he sold him adjoining this seven and one-fourth acres forty-six acres more at $40.00 per acre, which amounted to $1,840.00; and he proposed that if he, Johnson, would convey him the two parcels of land, he would give the plaintiffs and Hull as his securities.

Nothing was said about the vendor's lien being retained; and the security offered was satisfactory without the vendor's lien. He therefore accepted the proposition and agreed to make the deed as soon as the land could be surveyed; and the deed was accordingly made without the vendor's lien being retained, he, Johnson, having no idea that the securities in this bond relied on the vendor's lien being retained. And during Clarke's lifetime they never mentioned that they supposed such lien had been retained, or had been agreed to be retained. The balance to make up the $2,000.00 was a debt that Clarke owed him for cattle.

Branch filed his answer stating that the bond was assigned to him for value on the day it bears date.

The plaintiffs filed an amended bill in October, 1877, in which they state that Johnson pretends that this bond was given in part for land, and in part for cattle, for which Clarke owed him, and that when Clarke purchased the land, it was agreed between Clarke and Johnson that a bond should be executed to Johnson for $2,000.00 with the plaintiffs and Hull as his securities, and it was further agreed between them, that if upon a measurement of the land, sold at $40.00 per acre, it did not amount to $2,000.00, then said Johnson was to give Clarke credit for the difference upon the debt due from Clarke to him for cattle. This agreement the plaintiffs allege was a fraud upon them, and destroyed the validity of this bond as to the securities in it.

The answers of Johnson and Branch to this amended bill refer to Johnson's statements in his deposition as their answer. He states in his deposition, that he had sold to Clarke seven and one-fourth acres of land and made him a deed for it, which he did not have recorded; in the fall of 1871, he sold him a piece of land adjoining this, and Clarke proposed to him, if he would give him a new deed including both pieces of land he would give the plaintiffs and Hull as security for the purchase-money, which was $40.00 per acre payable in five years with interest from date of sale. The quantity of land included in the boundary of the land as sold was not known; and it was agreed he should give the bond for $2,000.00, that is for fifty acres, and if it should turn out less on its being surveyed, the difference would be credited on a debt Clarke owed him for cattle. The survey was not made for several months; and as soon as made the deed was executed without reserving the vendor's lien, nothing having been said during the negotiation or afterwards about the vendor's lien. The securities in the bond never mentioned the vendor's lien to him, or said anything to him about the transaction till after Clarke's death in 1875. The bond on its face stated its consideration to be land. Clarke up to his death was in good credit and had a large amount of property. Johnson says he had neither information nor impression that the securities in the bond relied on his retaining a vendor's lien on the land.

The securities prove that Clarke, when he asked them to sign the bond as his securities, said that it was for a piece of land he wanted very much, and that the land would stand for the purchase-money and was good for it, if he failed. From what he said they believed the title would be retained till the purchase-money was all paid; and they do not believe they would have signed...