McNeill v. Bay Springs Bank

Whitfield, C.

The appellee sued appellants on a promissory note for fwo thousand dollars, dated June 9, 1905, payable Jan*276uary 1, 1906, to the Bank of Bay Springs. The appellee introduced 'the note and rested. The appellants, set up two defenses. First, that there was a total failure of consideration; and, second, that the note was procured by fraud. The evidence showed that McPherson and Geo. D. McNeill were engaged in grading, and that they had at that time a contract with Bowles & Hemmingway — a contract to do considerable grading work. At that time they owed the Bank of Bay Springs seven thousand, one hundred dollars, and had certain other debts, not important to mention. Being at that time indebted to the Bay Springs Bank in the sum of seven thousand, one hundred dollars, and needing more money with which to complete the contract with Bowles & Hemmingway, McPherson went to see Dr. G. H. McNeill in his office in the town of Newton, and stated to him, as testified to uncontradictedly, as follows: ‘1 That he (McPherson) would make a note for two thousand dollars to the Bank of Bay Springs, and that he wanted Dr. McNeill, the father of Geo. McNeill, to execute with Geo. McNeill another note for two thousand dollars payable to the Bank of Bay Springs; that McPherson & McNeill were abundantly solvent, and that Dr. McNeill would never be troubled about the note; that the four thousand dollars would be used for completing the grading contract with Bowles & Hemmingway; that that contract would be completed by the 1st of January, and that therefore he wanted the note payable on that date, January 1, 1906; and never once mentioned to Dr. McNeill the fact that McPherson & McNeill then owed the Bank of Bay Springs seven thousand, one hundred dollars, and owed other persons, nor that there was any contemplation of selling one-half the outfit of McPherson & Mc-Neill, composed of mules, scrapers, etc., to anybody. Not long after this note was executed, on the 9th of June, 1905, McPherson & McNeill, in the prosecution of their grading contract for Bowles & Hemmingway, struck dis*277■astrous quicksands, and in about three months from the date of said note abandoned the contract completely and sold out one-half their entire outfit to one Johnson; McPherson receiving the consideration. It is more than probable that this sale was in pursuance of some previous negotiations with Johnson, though there is no positive evidence clearly showing this. The note -falling due was not paid, and this suit was brought.

In the fourth special plea filed by the appellants it was not only stated that the signature of Dr. McNeill was secured by positive misrepresentations, but that it was also procured by a fraudulent concealment of the ¡seven thousand, one hundred dollars owed to the bank, and that Dr. McNeill would never have signed the note, liad he known of this indebtedness. It is proper to note that the replication to the fourth special plea seems to ■deal alone with the positive misrepresentations. There is no direct denial of any fraudulent concealment. This, however, by the way. On the defense of failure of consideration it is only necessary to say, without incumbering this opinion with a detailed statement of the facts, which the reporter will set out fully, that we are satisfied that the real agreement, on the faith of which Dr. McNeill signed the note, was that the note he signed, and the note that McPherson made, or, rather the proceeds of those two notes, were to be applied in payment of the work done in completing by January 1, 1906, the grading ■contract with Bowles & Hemmingway. This clearly is the real agreement between the parties — the consideration of the contract evidenced by the note. One other most important fact is that McPherson was the cashier •of the Bay Springs Bank.

This being the statement of the case on the evidence and pleadings, the court gave for the plaintiff the following instructions:

“No. 6. The court charges the jury that, in order to establish the charge of fraud as made in defendant Gr. H. *278McNeill’s third special plea, it must appear to the jury by a clear preponderance of evidence, first, that some person acting for the plaintiff bank, in the negotiations which resulted in the execution of the note sued on, intentionally misrepresented to him, before signing and delivery of said note, some matter or matters of fact, materially affecting his liability as one of the joint makers of said note; second, that such statement or representation of facts so made to him was at that time false and untrue; third, that he, the said G. H. McNeill, was then ignorant of what the truth was as to such matters of fact; and, fourth, that he signed and delivered the note sued on, in reliance upon the truth of the statements of fact so made to him by said bank representative.” Given.
“No. 7. The court charges the jury that unless they believe, from all the testimony in the case, that at the time of executing the note sued on McPherson was cashier of the plaintiff bank at the time the note sued on was executed, and that he did at that time make statements touching the solvency of McPherson & McNeill to G. H. McNeill, and that said statements were at that time untrue, within the knowledge of the said McPherson, then the jury will find that said note was not procured by fraud. ’ ’ Given.
“No. 8. The court charges the jury that the plaintiff bank cannot be. held responsible for the words or acts of any person or persons not acting for it in the transaction which resulted in the execution of the note sued on; and even though the jury may believe that the defendant G. H. McNeill was ignorant of the true condition of the affairs of the firm of McPherson & McNeill, and that he would not have signed said note had he known all the facts in reference thereto, and that the condition of said firm was concealed from him, or even that he was misinformed in reference thereto, still such facts are not a defense to said note, unless it further *279appear from the evidence that the said bank, or someone acting for it, actively misrepresented the facts as to-the condition of the said firm to him before the signing of said note.” Given.
“No. 9. The court charges the jury that, even though, they may believe G. H. McNeill was at the time of the execution of the note sued on ignorant of the fact that. McPherson & McNeill were indebted to the plaintiff' bank, and that he would not have signed the note had-he known that fact, still these facts are no defense to the-note sued on, unless the jury further believe from the-evidence that McPherson was at the time of the execution of the note the cashier of plaintiff bank, and that he-fraudulently and intentionally concealed the fact of the-indebtedness of said firm to said bank for the purpose of inducing G. H. McNeill to sign said note.” Given.

It will thus be seen that the ease for the plaintiff was-, put to the jury by the court in these instructions so as to. distinctly inform the jury four times in succession that the defense that the note was procured by fraud could not be made out unless the misrepresentations and concealments of McPherson were intentionally false — known to him to be false when made. This is not the law. If" Dr. McNeill acted on these misrepresentations and on. these concealments, and executed the. note on the faith-of them, the damage to him is just the same, whether-McPherson made misrepresentations and concealments, of the facts intentionally or not. Learned counsel forappellee feel the force of this, and attempt to avoid it by-saying that this flagrant error running through the plaintiff’s charges was cured by instructions Nos. 3 and 5 for-the defendant, which are as follows:

“No. 3. The court charges the jury that if, from the evidence, the jury believe that the defendant G. H. Mc-Neill was induced to sign the note sued on by false representations or fraudulent concealments of material facts,. *280then the defendant G. IT. McNeill is not liable on said note. ’ ’ Given.
“No. 5. The court charges the jury that if, from the evidence, the jury believe that the said O. S. McPherson was cashier of the plaintiff bank at the time the note sued on was signed, and made representations to the defendant G. IT. McNeill to induce him to sign the note sued on, and that by said representations made the defendant G. IT. McNeill believed that the firm of McPherson & McNeill was solvent, and that O. S. McPherson represented to said G. H. McNeill large amounts of valuable property as owned by said McPherson & McNeill, and that said representations were made to induce him to sign said note, and that said firm was then insolvent, it was the duty of said McPherson also to state the amount of the debts due by said firm, and that if he fraudulently concealed from said McNeill the amount and existence of said debts, and thereby induced him to sign said note, then the defendant G. H. McNeill is not liable ■on said note.” Given.

But it is manifest, upon a mere inspection of the opposing charges, that the charges for the defendant are not such as cure the error, but are such as are in irreconcilable conflict with the four charges named for the plaintiff. In other words, the four charges for the plaintiff told the jury the defense was not good unless McPherson intentionally misrepresented and concealed the facts. The two charges for the defendant told them that the defense was good if representations were made and concealments indulged in with respect to material facts, which representations and concealments were false in fact, whether McPherson knew them to be false or not. 'One who fraudulently misrepresents materials facts, or fraudulently conceals material facts, and thus procures a note to be signed, cannot hold the party executing such a note on the ground that, though the representations were false, and the facts concealed not as he stated, or *281rather that, though the representations were false and material facts were concealed, he did not intentionally make the misrepresentations and concealments, or did not know the representations, etc., were false. It was, therefore, fatal error to give the instructions pointed out for the plaintiff. The jury were left without any guide whatever, as to the vital principle affecting the defense, that the note was procured by fraud.

We think, also, that instruction No. 2, asked' by the defendant, should have been given. If the jury believed the facts set out in that instruction, there was manifestly a failure of consideration. Reversed and remanded*

Per Curiam:. The above opinion is adopted as the opinion of the court, and for the reasons therein indicated the judgment is reversed, and the cause remanded for a new trial.