It was a material if not the controlling question on the trial of this action, whether the certificate and declaration of the defendant, Howell, that the bond and mortgage in question were given for a good and valid consideration, and that the same were subject to no offset or defence whatever, were so given to the mortgagee, to enable him to make a sale thereof to the plaintiff. Jacob Picard, a brother of the mortgagee, and who was his agent in the negotiations with the said defendant, which resulted in the execution of the said bond and mortgage, and the sale and assignment thereof to the plaintiff, testified that after the watches were delivered, he and the defendant went from the store of the *Page 406 mortgagee to the office of Mr. Delano, the attorney who drew the papers, to close the transaction in reference to the bond and mortgage, and on the way, he said, the following conversation took place: "Going from the store to Delano's, I told him he must give the statement or certificate to enable him to sell the mortgage. Howell asked him why I wished the certificate; I told him Mr. Wilcox would probably buy the mortgage of me, and required a certificate. We went to Mr. Delano's office; the certificate was drawn, and signed by Mr. Howell. During the day I sold the mortgage to Mr. Wilcox. I was doing business for my brother in the whole transaction. I procured the execution of the assignment; it was handed to Mr. Wilcox; I handed him the bond and mortgage, assignment and certificate."
To rebut this evidence, Howell testified that one Arndt Rosenthall acted with Jacob Picard for the mortgagee, in the negotiation relative to the giving of the bond and mortgage, and that he, on the defendant stating that the amount was larger than he had calculated, stated to him that he would keep the mortgage, and would give him all the time he wanted, if he was not prepared to pay when due; that then he, witness, and Picard, went to Delano's office; that he and his wife there signed the bond and mortgage, and Picard handed him the certificate for execution. He then said, "I took it and read it over and asked what it was for; he said it was nothing, only a mere matter of form; Delano said the same thing; it was nothing but mere form; I asked Picard again if he would not keep the mortgage if I could not pay when due; he said he would; on that I signed the paper; that is all that was said about the paper; I relied upon that; on the way from Picard's store to Delano's I had no conversation with Picard." * * * "Nothing was said about such a paper; Wilcox's name was not mentioned; I did not know him; when Picard and I first went to Delano's office, nothing was said about such a paper; nothing was said between me and Picard or any one about signing such a paper; nothing was said to me about such a *Page 407 paper by anybody till I saw it at Delano's office; I did not know the object of it; had never seen such a paper before; the paper was signed immediately after the bond and mortgage was signed."
Howell's wife was then examined, and corroborated her husband's testimony. Jacob Picard, on being recalled, denied that he had told Howell that the certificate was mere matter of form and did not amount to anything, or made any such statement.
I have detailed, with particularity, the preceding statement of Picard and Howell to show that the credibility of Picard had become a very important and controlling element in determining the question whether the certificate was given for the purpose of influencing the plaintiff in the purchase of the bond and mortgage; and as bearing on such credibility, Frederick J. Durand, the defendant's attorney, was called and examined as a witness for the defendant; who, in speaking in reference to a conversation with Jacob Picard, subsequent to the execution of the bond and mortgage and after his agency in relation to it had ceased, was permitted to give the following evidence against the plaintiff's exception, viz.: "I saw Jacob about the same time and told him a great fraud had been committed on Howell and wanted him to undo the thing and make it all right; he put a roll of bills in my pocket and said if it was not enough he would give me more." The plaintiff was not present, and it is clear that these declarations, made after the commission of the alleged fraud, were not admissible to prove that fact; and the counsel of the defendant does not attempt to sustain it on that ground, but claims it to be proper evidence, on the ground, as stated in his fifth point, that "the fact bears directly upon the credibility of the witness, and as such was material to the issue and properly received." It is true that it bore on the credibility of Picard. It was indeed damaging in its tendency and effect. It not only was an admission of the original fraud, but showed that he wished to influence and silence the defendant's counsel by bribery, and it doubtless injuriously affected and *Page 408 impaired, if it did not entirely destroy his evidence, and the findings of the learned justice show that he did not credit or believe it. The testimony was not as to the general character of the witness, but it related to a particular transaction and a specific fact, of which the plaintiff could not be supposed to have any knowledge, and was not given to contradict any statement that had been made by the witness. It was therefore inadmissible.
Evidence was also permitted to be given, against the plaintiff's exception, of a conversation between the defendant and Rosenthall, previous to the negotiation for the bond and mortgage in question, in relation to the sale of some jewelry to Rosenthall which the defendant had obtained of one Strassburger, which was "offered to show that Rosenthall pretended to be a friend of witness and said that Strassburger had cheated him." The only effect of this testimony was to show that Rosenthall thereby obtained so far the confidence of Howell, as to influence him in giving credit to his representation in reference to the watches sold to him by the plaintiff. This was not admissible as against the plaintiff.
It may be proper to refer briefly to the decision of the learned justice.
After finding that the plaintiff made the execution of the statement or certificate, above referred to, "a condition of his purchasing the bond and mortgage, and would not have purchased or taken an assignment without it," and that it was, at the time of the assignment, delivered to him, he adds; "But the plaintiff did not rely upon the truth of the statement in said certificate, in purchasing said bond and mortgage."
I cannot reconcile these findings. The fact that he would not have made the purchase, or taken the assignment, without the certificate, shows that he relied, in consummating the transaction, on what was stated or certified therein.
The justice also has found that the plaintiff's knowledge, at the time of such purchase, that the defendant was largely in debt (having, in addition to two mortgages, one for $1,000, and the other for $5,000, on his real estate, judgments to the amount of $700 against him), and that a consideration of the *Page 409 said bond and mortgage was in part a sale of watches, was, in connection with the terms of the said bond and mortgage, and the fact that they were offered to him, on the day of their execution, at a discount of $900, sufficient to put him on inquiry, and make him chargeable with notice of the fraud in the transaction.
I cannot concur in this conclusion, as a legal result or consequence from the facts. There was nothing peculiar or unusual in the terms of the bond and mortgage. They were made payable three years from their date, with interest, half-yearly, and contained a clause or provision that, if the interest should remain unpaid and in arrear, for ten days, after it became due, then the principal, with all arrearages of interest, should, at the option of the mortgagee, become due and payable immediately thereafter. The other facts showed that the defendant was embarrassed in his pecuniary circumstances; that his personal credit was not good; and that he was not able to give such security as lenders of money required on loans upon bond and mortgage, and that he was willing, for the purpose of raising the money he wanted, to take the watches and obtain what cash he could on the sale of them; and they, with the additional fact that the payment of the amount secured could not be demanded, if the interest was promptly paid, within three years, afforded or gave the plaintiff at least a plausible reason or pretext for asking the deduction claimed and allowed, in taking the assignment, and the production of the defendant's certificate warranted a belief of the truth of the statements therein contained; and I see no ground for holding that the plaintiff was bound to make further inquiry necessary, or that he was properly chargeable with notice of the fraud.
My conclusion is, that the judgment must, for the reasons above stated, but especially on the ground of the erroneous admission of the evidence referred to, be reversed, and that a new trial should be granted; costs to abide the event.
For reversal, LOTT, Ch. C.; for affirmance, EARL, HUNT, GRAY, and LEONARD, CC.
Judgment affirmed, with costs. *Page 410