text:
    SAUER v. McCLINTIC-MARSHALL CONSTRUCTION CO.
    1. Partnerships — Names—Fictitious Name.
    Under Act No. 101, Pub. Acts 1907 (1 How. Stat. [2d Ed.] § 2626), requiring persons doing business under assume,d names to file a certificate in tbe county clerk’s office showing who are the members and their true names, a firm name which contains the surnames of the persons composing it is not within the provisions of the statute.
    2. Same — Parties.
    Where a copartnership consisted of three brothers, in business as Chas. A. Sauer & Company, and the senior member of the firm was Charles A. Sauer, and it appeared that before entering into the contract sued upon one of the brothers retired from the firm, which had previously filed a certificate as required by said act, the partnership was entitled to bring an action, although a new certificate was not filed until some months after executing the agreement.
    3. Pueading — Contracts—Precedent Conditions.
    When the consideration of a contract is executory, or performance depends on some act to be done or foreborne by the plaintiff or on some other contingency, the plaintiff must allege the fulfillment of such condition precedent, whether the same is affirmative or negative or to be performed or observed by him or by defendant, or plaintiff must excuse his default or nonperformance.
    4. Same — Conditions Precedent — Waiver op Objection.
    A declaration based on a contract to manufacture and deliver structural steel, the buyer to provide the manufacturer with complete information for doing the work, was fatally defective as a pleading for failure to allege performance of the conditions precedent: and defendant did not waive the defect by pleading the general issue.
    5. Contracts — Saces.
    Where defendant agreed to furnish material to a contractor “within eight or ten weeks after receipt of complete information for detail drawings” but no date was specified prior to which it was necessary to furnish information for such drawings, and plaintiff furnished the required data within thirty days from the time of entering into the contract, so that sufficient time remained in which to carry out the agreement, plaintiff could not be held to be in default, having complied with the conditions within a reasonable time.
    6. Damages — Mitigation—Diminishing Loss.
    In case of a breach of contract the injured party must make every reasonable effort to diminish the damages suffered.
    7. Same.
    Where plaintiff, in an action for breach of contract, had supplied itself with material at an increased price after defendant’s default in delivery, and it was not shown that defendant made general inquiry as to market prices, but paid more than the current market price, the verdict for an amount in excess of the difference between contract and market price was contrary to the weight of evidence and should be reversed on error.
    Error to Washtenaw; Kinne, J.
    Submitted January 9, 1914.
    (Docket No. 6.)
    Decided March 27, 1914.
    Rehearing denied June 4, 1914.
    Assumpsit by Charles A. Sauer and others against the McClintic-Marshall Construction Company for breach of a contract of sale. Judgment for plaintiffs, and defendant brings error.
    Reversed.

      Cavanaugh & Burke, for appellant.

      Robert E. Bunker, for appellees.
   Steere, J.

Plaintiffs recovered a judgment of $1,026.34 against defendant in the circuit court of Washtenaw county for breach of a contract by the terms of which defendant agreed to furnish plaintiffs a quantity of structural steel for use in constructing a building at the University of Michigan, in Ann Arbor, at the price of $1,450. Plaintiffs were a firm of contractors and builders doing business under the firm name of Chas. A. Sauer & Co., having offices in the cities of Detroit and Ann Arbor. Defendant was a large company engaged in the fabrication of structural steel at Pittsburg, Pa., having an office at Detroit in charge of a designing engineer. In preparation for bidding on a contract for the construction of a storehouse and shop building for the University of Michigan, upon which the regents of that institution were about to receive bids, plaintiffs obtained estimates from various sources for material which would be necessary in the construction of said building, the cost of which it was essential to ascertain before bidding. Defendant’s representative at Detroit entered into communication with plaintiffs upon that subject, with a view to furnishing them whatever structural steel would be required for the building under consideration in case they were the successful bidders. These negotiations resulted in a proposal in writing, dated July 6, 1912, to furnish the structural steel according to certain drawings referred to, for $1,450, further providing:

“Shipment to be made in ten weeks. * * *
“Two hundred dollars will be added to the above price if shipment is made in five weeks.
“Terms of payment and details of contract to be as we may mutually agree.
“We trust you will find this price attractive and that it will be of assistance to you in landing this order.”

In their competitive bid for the erection of said building plaintiffs made use of and relied upon said proposál. They were the successful bidders and obtained the contract, which by its terms required that the building should be completed on November 1, 1912. In pursuance of their previous negotiations the contract in question in this case was made by letter of proposal from defendant dated July 22, 1912, accepted by one from plaintiffs the following day. The proposal was to furnish at a stated price the structural steel for said building “in accordance with drawing No. 7412 — 1, prepared by the Trussed Concrete Steel Company and approved by Mr. James H. Marks, architect.” Amongst other things it stated, “All materials to be delivered f. o. b. cars, Ann Arbor, within eight to ten weeks after receipt of complete information for detail drawings,” which were to be made by defendant subject to the approval of the engineer, or architect, who was Mr. Marks. The acceptance concluded as follows:

“We are to furnish you with the pattern for holes to be punched in the lintels for our bolts. Kindly prepare your shop drawings at once and submit your copy for the O. K. of Mr. Marks, and also one copy for his files. Please arrange to make your delivery within the specified time and prevent any delay.”

The shop drawings mentioned in the acceptance were the detail drawings named in the proposal, which are made by the fabricator of structural steel from the general plans of the architect and such other and more complete information as is necessary in preparing accurate drawings for steel construction, relative to patterns of holes to be bored, etc. Under the contract this “complete information” was to be furnished by plaintiffs. Correspondence was had upon this subject, with requests for information and answers claimed not sufficient or complete, giving rise to some controversy as to when and how the complete information was obtained. It is clear, however, that it had been furnished defendant as early as August 6th. Mr. Walker, defendant’s agent at Detroit, testifies:

“On August 6th I got the information from Mr. Sauer and Mr. Flook * * * which was sent to Pittsburg, where our detail drawings were made up. * * * I came out to Ann Arbor on August 6th and went to Mr. Sauer’s office and from there to the architect’s office. From the architect’s office I got complete information and took it with me. We did not think we had complete- information and we got that on August 6th.”,

On August 15, 1912, defendant wrote plaintiffs, inclosing prints of the shop drawings, asking for their approval. These were approved by the architect and received back by defendant on or before August 19th. On August 26th defendant sent plaintiffs prints of certain sheets “for your files.” On September 11, 1912, plaintiffs wrote defendant, calling attention to the fact that under their contract the building must be completed by November 1st, stating that they could not be held up waiting for steel, and if defendant could not fill its contract, entered into on July 23d for delivery in from 8 to 10 weeks, it was necessary for plaintiffs to be advised at once, saying further:

“If you find that you cannot furnish this material from your own mill or stock on hand then go out into the open market and procure it, but do not delay the shipment of this material under any condition.
“Should you fail to make arrangements for the shipment from your own mill or market, then we request that you instruct us to protect our interests in the way of going into the market and procuring some at the best price possible and charge your firm the difference in price, if any. This is very much against our wishes, but the situation demands some immediate action. You must appreciate the fact that since the signing of this contract July 23d seven weeks have elapsed with nothing being accomplished. Kindly advise us at once your wishes in the matter and greatly oblige.”

Nine days later, on September 20th, defendant replied :

“At the request of our Detroit office we telephoned you today, stating that the best promise we have been able to secure for delivery of unpunched material required for storehouse and shop building for the University of Michigan, was delivery complete November 20th to 30th. On this account there is no prospect that we can ship you all this material prior to December 15th.
“There are a variety of sections requiréd for this work, and, although orders were placed promptly, the above is the result. We do not consider ourselves entirely at fault for this state of affairs on account of the delay in furnishing us with information absolutely necessary to get out the work.
“We will continue to do everything in our power to hasten this work, and if by any means we can anticipate the dates given above, we will do so, but we cannot find reason to hope that we can ship it much earlier.”

On September 27th plaintiffs answered, stating they could not be delayed, that to permit the building to go ahead they were obliged to pay in excess of defendant’s contract price $1,002 for the steel, and to that end were placing an order for the same with another company in a position to furnish it in three weeks, closing with a discussion of the subject unimportant here. The material specified in the contract was furnished by the Toledo Wire & Iron Works, and delivered f. o. b. at Ann Arbor within a month from the time of receiving the order, but the building was not completed on time according to contract. Plaintiffs’ witness on that subject testified he thought the building was ready for occupancy in December, but did not know when it was accepted by the architect; that if defendant had furnished the steel October 28th, the last day for its delivery, he thought they could have had the roof on by November 10th. Defendant having refused to make good to plaintiffs the increased cost of the steel above its contract, this action was brought to recover the same.

The questions raised by defendant’s various assignments of error are briefly summarized as follows: Plaintiffs cannot recover because they were carrying on business under an assumed or fictitious name, in violation of Act No. 101, Pub. Acts 1907 (2 How. Stat. [2d Ed.] § 2626) ; the special count upon which they rely in their declaration is defective; they themselves rescinded the contract and breached the same by delaying to furnish complete information for detail drawings, which excused the defendant from furnishing the material within the 8 or 10 weeks specified, it being shown that market conditions had so changed that defendant could not get the material and perform within that length of time; the verdict was contrary to the weight of evidence and instructions of the court, and the court erred in refusing defendant’s request to charge that, if the jury found the amount of steel called for in the contract could have been purchased in the open market, and at an advance of $8 per ton above the contract price, that would be the measure of damages.

The testimony disclosed that on July 6, 1912, when the first proposal was made, the firm of Chas. A. Sauer & Co. was composed of Charles A. Sauer, Adam J. Sauer, and John J. Sauer, three brothers, who had, on April 22, 1912, filed a certificate stating who composed said firm, under the provisions of Act No. 101, Pub. Acts 1907, and on July 16, 1912, John J. Sauer retired from the firm, his interest being purchased by the other members. On December 3, 1912, Chas. A. Sauer & Co. again filed a similar certificate, showing the then members of the firm to be Charles A. Sauer and Adam Sauer, the plaintiffs herein. It is urged upon these undisputed facts plaintiffs are barred from recovery, under Cashin v. Pliter, 168 Mich. 386 (134 N. W. 482, Ann. Cas. 1913C, 697). As pointed out in that case, the manifest object of said Act No. 101 is to protect the public against imposition and fraud, greater opportunity for which is afforded to parties who, choosing not to do business in their own names, conceal their identity and avoid legal responsibility by dealing with the public under a false and fictitious name which furnishes no clue to who the real and responsible parties are. Such was the name assumed by plaintiffs in the Cashin Case, no name of any one connected with the concern being even suggested, but a fanciful, pretended and fictitious name assumed. Construing this statute with the evil sought to be corrected in mind, the courts have inclined to the view that a firm name which gives the true names, or surnames, of its members is not assumed or fictitious, within the meaning of such a statute, even though the baptismal name of each member may not be stated. Axe v. Tolbert, ante, 556 (146 N. W. 418), and cases there cited. In the case before us the identity of C. A. Sauer, the head of the firm, is directly pointed out by the firm name; both members of the firm are named Sauer; a certificate then filed under the statute gave their names in full. It is true that it also gave the name of a brother who, when this contract was made, had retired from the firm, and who by reason of that certificate might possibly be yet held responsible, but the firm business as an entirety was continued as before, with no new members, with the same head, in the same name, and occupying the same offices. Under the circumstances shown we do not find that plaintiffs are barred from their right of action, under this objection.

Plaintiffs declared specially upon the contract, with the common counts added. The proofs would not support recovery under the common counts. Plaintiffs’ claim was under the special count for breach by anticipation of the contract there stated and declared upon. It was an executory contract. The written contract as alleged and set out imposed upon plaintiff a condition precedent, the furnishing of “complete information” for shop drawings. The declaration is defective in failing to allege performance of this condition on plaintiff’s part, which is an essential averment under such a contract, in order to show breach on the part of defendant and state a cause of action. This is an elementary rule of pleading. In 1 Chitty on Pleadings (1879), p. 329, it is said:

“But when the consideration of the defendant’s contract was executory, or his performance was to depend on some act to be done or foreborne by the plaintiff, or on some other event, the plaintiff must aver the fulfillment of such condition precedent, whether it were in the affirmative or negative, or to be performed or observed by him or by the defendant, or by any other person, or must show some excuse for the nonperformance.”
“Where conditions precedent to the right of action exist, their performance must be alleged by plaintiff in order to state a cause of action, or where there has been no performance and plaintiff intends to rely upon matter excusing performance such matter must be alleged.” 31 Cyc. p. 107.
“A special count that states no cause of action supports no proof.” Mitchell v. Scott, 41 Mich. 108 (1 N. W. 968).

Omission of the requisite allegation referred to evidently arose from counsel’s construction of the contract declared upon, with which the trial court correctly, we think, appeared to disagree. The question being raised by a motion of defendant for a directed verdict because the count did not state a cause of action, counsel for plaintiffs replied to the court’s inquiry why it was not plaintiff’s duty to aver that they furnished the complete information and defendants then failed to complete the contract: “Because we were not bound to do that. They were bound to get it.” The court further said, “As a matter of pleading, I have considerable doubt whether or not that may not be a good and complete and fatal objection to this declaration,” and after further discussion finally suggested that an amendment would be granted if desired, to which counsel replied, “We do not care to amend our declaration.” The court decided “to hold this matter in court and finish it upon its merits if the plaintiffs see fit to take their chances.”

Defendant pleaded the general issue with special notice that plaintiffs had rescinded the contract and first breached the same, and it is urged that defendant waived all defects in the declaration by pleading the general issue and going to trial upon the merits. The authorities are abundant that by so pleading and going to trial on the merits a defendant waives all technical defects in the declaration, and the courts view with disfavor any attack on pleadings made by motion or objection to evidence during the trial; but a plea of the general issue does not waive the essential allegations of a cause of action, and a declaration which will not support a judgment, and does not state a cause of action, cannot be made good by not demurring. Stoflet v. Marker, 34 Mich. 313; Rowland v. Superintendents of the Poor, 49 Mich. 553 (14 N. W. 494); Schindler v. Railway Co., 77 Mich. 136 (43 N. W. 911). When confronted by such conditions the courts are properly prone to freely exercise the authority conferred by our liberal statute of amendments, thus preserving the substantial rights of the parties without sacrificing all fundamental principles of pleading. This is well stated in Barton v. Gray, 48 Mich. 164 (12 N. W. 30), as follows:

“Objections which appear upon the face of the pleadings, and which are fatal in any stage of the case, should be taken at the earliest opportunity, and before unnecessary expense has been incurred; and if the party entitled to take them fails to observe this reasonable and just rule, all intendments should be against him, and if possible to save the case by amendment, the necessary permission should be given.”

In the instant case the necessary permission was given, but declined, and no amendment made to the declaration which now stands as a basis of this judgment, destitute of any averment of an essential fact which, is a prerequisite to the right to recover. Under such conditions, where the question has been timely raised and properly preserved, the judghient cannot be sustained.

We are unable to accept defendant’s contention that the contract should be construed as requiring plaintiffs to furnish complete information for shop drawings at the time of making the contract or promptly thereafter. The contract is in writing, and does not so specify. It was, of course, made- with reference to the university building which was to be finished November 1st. Defendant agreed to deliver all material at Ann Arbor f. o. b. within 8 or 10 weeks after receipt of the information desired, and had offered to deliver within 5 weeks for $200 additional price. Correspondence on the subject not resulting in obtaining all the information desired, defendant’s agent visited plaintiffs’ office on August 6th, and from there went to the architect’s office. As a result the defendant was then furnished with complete information, just how or by whom is unimportant. The condition precedent imposed upon plaintiffs was complied with in all essentials within a reasonable time. Assuming that after this it was their duty to see that defendant’s shop drawings for its workmen were approved by the architect, this was done by August 19th, which yet gave defendant the maximum contract time before the building was to be completed. Defendant had already received drawings for the structural steel on July 6th, and the architect’s plans on July 23d. We find nothing in the contract to suggest that it was made with reference to subsequent market conditions affecting defendant’s ability to perform, and the testimony shows it was possible to perform it within a month after receiving the order.

Much space in plaintiffs’ brief is devoted to the question of breach by anticipation in substantiation of the rule, early declared in the English, case of Hochster v. De La Tour, 2 E. & B. 678, that refusal or inability of one contracting party to perform on his part discharges the other from further responsibility and entitles him to an action for damages at once, a rule upon which the American courts are somewhat at variance; but this question was not raised by defendant on the trial, nor fairly presented by any assignment of error; the position of defendant’s counsel being that the rule has no application here because the contract was first breached by plaintiffs.

A motion for a new trial was made and urged by defendant on the ground, amongst others, that the verdict was against the evidence and contrary to law. It is a well-established rule of law that in case of a breach of contract the injured party must make every reasonable effort within his power to diminish the damages suffered. 13 Cyc. p. 73; Harrington-Wiard Co. v. Manufacturing Co., 166 Mich. 276 (131 N. W. 559). The contract price of the material to be furnished by defendant was $1,450. Plaintiffs bought the same material of the Toledo Iron & Wire Co. at an increased price of $1,002, without obtaining quotations from other competitors or making any inquiries elsewhere as to the condition of the market or possibility of securing a more favorable price. The contract required 34 tons of steel, and it was shown that such steel could have been bought in the open market during August, September, and October of that year at an advance of $8 per ton, and the usual price for quick delivery was about $4 per ton extra. As the testimony stands in this record, it appears by the weight of evidence, and in some particulars by the undisputed evidence, that plaintiffs made no such general inquiry and effort, and exercised no such diligence to secure the material at the fair market price and thus diminish the damages, as the law requires, and that, had they done so, a substantial reduction from

the price paid might and probably would have been obtained. In that particular we conclude that the verdict was against the weight of evidence and contrary to law.

For the errors stated, the judgment must be reversed, and a new trial granted.

McAlvay, C. J., and Brooke, Kuhn, Stone, Ostrander, Bird, and Moore, JJ., concurred.


source: Caselaw Access Project

author: Moore, J.

license: Public Domain

text:
    REYNICK v. ALDINGTON & CURTIS MANUFACTURING CO.
    1. Appeal and Error — New Trial — Exceptions—Necessity.
    Exceptions are requisite to the review, on error, of the refusal of the trial court to grant a motion for new trial, as well as to the refusal to direct a verdict.
    2. Corporations — Evidence—Record op Proceedings.
    It is competent to show by parol any action of the board of directors of a corporation which has not been properly entered of record in its minutes.
    3. Master and Servant — Hiring—Term.

      Held, that plaintiff’s evidence sufficiently tended to establish the disputed fact that defendant’s directors had assented to his employment by the year.
    4. Frauds, Statute op — Contracts.
    Having made a contract to enter'the employ of defendant for a year, and after performing sérvices for that period, and continuing over without objection, plaintiff was entitled to go to the jury under a presumption that both parties consented to the continuance of the contract for another year; the contract was not within the statute of frauds.

      5. Corporations — Officers—Good Faith.
    Officers of a corporation may deal with, it in good faith if their acts are fair, open, and known to directors and stockholders.
    Error to Saginaw; Gage, J.
    Submitted January 21, 1914.
    (Docket No. 104.)
    Decided March 27, 1914.
    Assumpsit by Charles J. Reynick against the Allington & Curtis Manufacturing Company for breach of a contract of employment. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      Humphrey, Grant & Humphrey, for appellant.

      WeadoeJc & WeadoeJc, for appellee.
   Moore, J.

Plaintiff commenced work for defendants in 1900, and worked continuously to March 1, 1908. In December, 1908, and in the same month in 1909, he worked some by the day in the preparation of statements and the annual accounts. He was a stockholder, and one of five directors in the company. In the records of a meeting of the board of directors held December 30, 1909, appears the following:

“Board decided to employ Mr. C. J. Reynick, commencing January 1st, 1910, at a salary of $200 per month.”

Mr. Reynick commenced work January 1, 1910, and continued to work until in 1912. The minutes of a meeting of the board of directors held May 23, 1912, read in part as follows:

“Present: Messrs. W. H. Gilbert, H. T. Wickes, W. E. Allington, C. J. Reynick, R. M. Boyd.
“The minutes of the last meeting were not read, as the secretary did not have a copy of them, owing to the fact that it was a special meeting held at the East Saginaw Club, at which there were present Messrs. W. H. Gilbert, H. T. Wickes and W. E. Allington. These gentlemen confirmed the action of the’ board at this meeting, at which time Mr. C. J. Reynick was asked to hand in his resignation effective June 1, 1912.
“There was a general discussion, and Mr. Reynick asked that the action of the board be confirmed at this meeting, which it was unanimously. ■
“Mr. Reynick demanded that his salary be paid until January 1, 1913. This matter was to be referred to the attorney of the company, and action to be taken at a later date.”

Mr. Reynick, claiming that he was employed by the year, and that his discharge was unlawful, brought this suit to recover damages. At the close of the testimony defendant requested a verdict in its favor, which request was denied, and the case was submitted to the jury, which returned a verdict for the plaintiff. A motion was made for a new trial, which motion was overruled. From a judgment rendered in favor of the plaintiff the case is brought here by writ of error.

Upon the oral argument counsel for appellant abandoned all assignments of error based upon the denial of a motion for a new trial because no exceptions were taken. See Hotchkiss v. Weinmann-Matthews Co., 175 Mich. 652 (141 N. W. 568), and cases there cited.

Counsel for appellee insist this court should not consider the assignments of error relating to the refusal of the court to direct a verdict because no exceptions were taken. A reference to the record shows no exceptions were taken, and the contention of counsel for appellee must be sustained under Bills v. A. W. Stevens & Co., 146 Mich. 515 (109 N. W. 1059), and Priebisch v. Ottenwess, 176 Mich. 476 (142 N. W. 762).

The following assignments of error raise the important questions in the case:

(1) The refusal of the court to charge as follows:

“I charge you that it appears from the record of the proceedings of the board of directors of the Allington & Curtis Manufacturing Company, of which the plaintiff was a member, that the plaintiff’s employment and the terms thereof was made by action of the board of directors of the company; and I charge you that no change or modification of the original contract of employment from a hiring by the month could be made by any director or officer of the company, except by' action of the board of directors authorizing such change in a regularly called and held meeting, and that the plaintiff is not entitled to recover in this action, and your verdict must be for the defendant.”

(2) The charge as given:

“If this talk was outside, and it did not occur in the board meeting, which as I recollect is testified to by all of the directors, why, then it would not be binding on the company, in view of what Mr. Reynick knew about the by-laws of this company. If he had not known anything about that, they would not protect themselves by the by-laws. He was a director of the company, knew and understood that those by-laws were such that the employment should be made by the board of directors. _ But notwithstanding a contract made by a corporation is invalid, or an agreement made by a corporation, or by the directors of a corporation, is invalid at the time when it is made, still the corporation officers can ratify that, and the contract therein.”

Counsel say in the original brief:

“There are but few questions presented in this case' to this court for review. The primary question at the outset is as to whether the plaintiff in this case was ever employed by the defendant company by the year. It is beyond all dispute that his employment, at the time when he started to work, was an employment by the board of directors of the company, acting under their by-laws, and was by the month, or from month ■ to month, and not by the year. * * * Was this employment from month to month changed to an employment from year to year?”

To this query they answer no. It is also contended that the arrangement plaintiff claims was made in March, 1911, for an increase of his salary was simply a continuation of the hiring by the month, and that in any event the contract would lapse by its own limitations with the year 1911.

In the reply brief it is claimed (we now quote from the supplemental brief):

“We insist that the question before this court is one of law as to whether or not there is any evidence in this case showing or tending to show a definite hiring by the year. We have not quoted the evidence in this brief for the purpose of having this court pass upon the weight of the evidence. This quotation is simply for the purpose of showing that there is no evidence in the case tending to show that the minds of the parties met upon any agreement for a definite time or period of plaintiff’s employment. We submit there is no such evidence, and the lower court should have so held, and we ask this court to hold that the defendant had a perfect right to discharge the plaintiff from its employment, and that plaintiff had a perfect right to quit the employment at any time when he saw fit. We shall not repeat our argument with regard to the new contract made in March, 1911, which we claim absolutely abrogated and terminated, all agreements preceding that date, and that in such employment in March, 1911, the term of employment was made definite, that is, from April 1, 191.1, to December 31, 1911, and the compensation fixed at $250 per month.”

In view of these contentions it will be necessary to state more in detail the claim of the plaintiff. When Mr. Reynick entered upon his employment in January, 1910, he was the general agent of the Equitable Life Assurance Company, and it is his claim that he was not willing to enter into this employment unless he could be assured of work for at least a year, and that he called the attention of the board of directors at their first meeting in January to that fact. His claim is that such action was taken as resulted in his employment being by the year. He testified in part as follows:

“The date is January 10, 1910. On that day I had a conversation with, some of the gentlemen representing the Allington & Curtis Manufacturing Company with reference to employment. * * *
“Q. With whom was the conversation had?
“A. Why, the conversation was had at the directors’ meeting, held directly after the annual meeting, and the four directors, other directors, and myself were present. * * *
“Q. State what that conversation was, and with whom it was?
“A. Well, after the election of officers by the board of directors — first the election was over, and in accordance with, my talk with Mr. Allington, I stated that I was unwilling to accept employment with the company for a term of less than one year. That was said to the four gentlemen who were present, Mr. Gilbert, Mr. Allington, Mr. Boyd, and Mr. Wickes. I said I couldn’t for a shorter period afford to give up the business in which I was engaged. I don’t know whether I mentioned then about what that business was or not, but I guess they knew.
“Q. Then what did they say in answer to your statement that you couldn’t accept employment for less ' than a year?
“A. Well, I can’t give their exact words, but Mr. Wickes stated, in effect, that they wouldn’t expect anything different. Mr. Allington said, of course, that was understood, and I can’t recollect that Mr. Gilbert or Mr. Boyd said anything.”

On cross-examination:

“Q. Now, that is the time you say that you said something about the length of time of your employment, was it?
“A. It is.
“Q. At that time, Mr. Reynick, wasn’t it after the board adjourned?
“A. It was not. The whole board was present when I had my talk. I talked to the whole board with regard to it — that is, the balance of the board — addressed the meeting, board of directors.
“Q. Well, was any resolution or motion offered or adopted or passed in any way?
“A. No, sir; not that I know of. * * *
“Q. Yes. What did you say about the length of time of your employment?
“A. I said that I wouldn’t take- up that work for a less period than a year. * * *
“Q. Was there anything said at that time about that it was understood you would stay as long as it was satisfactory to the board?
“A. There was not; that wasn’t mentioned.
“Q. Was there anything said by you to this effect: ‘I don’t want to come here and stay a short time, and then to be turned out?’ Was that said?
“A. I think so.
“Q. Did you mention the time, a year, or any length of time, in any way?
“A. I did.”

On redirect examination he testified as follows:

“ * * * Q. Mr. Reynick, in giving your testimony yesterday as to the conversation, you said that you could not afford for a shorter period to give up the business in which you were then engaged. What period was meant?
“A. One year.
“Q. You may state whether or not that conversation with those gentlemen — what was the tone of your conversation as to whether or not it was heard and understood by all of them? State whether or not the conversation of January 10, 1910, between yourself, Mr. Gilbert, Mr. Wickes, Mr. Boyd, and Mr. Ailing-ton was in a tone or conversation that could be heard by the men present.
“A. I should say it was.
“Q. You may state whether or not you heard any dissent.
“A. There was not. * * *
“Q. What, if anything, did you say to those gentlemen at that time, on January 10, 1910, as to whether or not you would discontinue your services, if the period was or was not fixed at one year, and what did you say on that subject? * * *
“A. I stated I couldn’t accept this employment for less than one year. I so stated that before.”

The other directors give a different version of what occurred.

Vice President and General Manager Allington testified in part as follows:

“Q. Now, when, if ever, did Mr. Reynick say anything to the members of the board respecting his employment?
“A. After the meeting adjourned and they were standing around, the question was raised about his employment. Mr. Reynick raised it. And he was talking to the gentlemen standing around there, all except Mr. Wickes. He said that he didn’t want the employment for a short period, or just to fix up our books and then have the term ended, because he wouldn’t want the position under those circumstances. And it was stated that that wasn’t the intention; that we wanted him to run the office and remain in the employment of the company as long as it was satisfactory, and we hoped that that would be a long time.”

On cross-examination he testified in part as follows:

“Q. That conversation was substantially this, wasn’t it, Mr. Allington: Mr. Reynick said to you' that he could not continue in that employment for $200 a month; he said that, didn’t he?
“A. Except under certain conditions.
“Q. He said to you at that time he couldn’t continue in the work for the company at $200 a month?
“A. No, not just that way he didn’t; he stated unless certain things were complied with he couldn’t.
“Q. What he said to you was he couldn’t remain at $200 a month for a short period?
“A. That is right. I am referring to the meeting in January, 1910. * * * The conversation of
January 10, 1910, the substance of the talk, was he said he wouldn’t stay for a short period for the $200; it must be a longer period than a month.
“Q. You said it wouldn’t be by the month; it would be continuous?
“A. You mean a longer period than a year?
“Q. Yes, you claim when you first employed him, December 30th, it was then for $200 a month?
“A. Yes.
“Q. In that conversation he said he wouldn’t remain by the month at $200, remain for a short period?
“A. That is right.
“Q. In answer to that you said to him you didn’t contemplate it to be a short period of employment, but to be substantially continuous?
“A. Y.es; as long as satisfactory.
“Q. Whatever that conversation was, it was disposed of, and you all went about your business?
“A. Yes, sir.
“Q. Now, you were then acting manager of the plant, weren’t you, of the business?
“A. Yes, sir, and I continued to act as manager from that time down to the present time. * * *
“Q. Going back to the year 1910, January, and you then expected that Mr. Reynick’s employment would then continue from year to year?
“A. I hoped for many years.”

President Willis H. Gilbert testified in part as follows:

“At that meeting of the board of directors, and while the board was in session, 1 did not hear Mr. Reynick make any claim in regard to the length of his employment by the company. I did hear talk by Mr. Reynick that day on that subject. It was after the meeting of the board, after it had been adjourned.
“Q. Now what did Mr. Reynick say, as you remember the conversation?
“A. Well, he was quite anxious to know that his employment was not to be what might be termed ‘temporary,’ if he would go on. At that time in what he stated he did not use the word ‘year’ or ‘eniployment by the year’ in any way.”

On cross-examination he testified in part as follows, viz.:

“Q. All you mean to say is that you recollect no such conversation at that time; you didn’t hear any such conversation at that time; that is what you mean to tell us?
“A. There was something said there at the office of the company in regard to his doing—
“Q. Now, tell us what that was?
“A. Mr. Reynick said he didn’t want to go in there without some assurance of its being permanent. * * *
“Q. State just what was said at that conversation you speak of in the office?
“A. He said he didn’t want to come in there and straighten out our books and then be let out, which might require a couple of months.
“Q. What reply was made to him?
“A. The reply was made that that was not our intentions.
“Q. Who made that reply?
“A. I think we all acquiesced in it.
“Q. And who was present at that time?
“A. Mr. Allington and myself, possibly Mr. Boyd.
“Q. Now that is the best recollection of all that took place at that time?
“A. Yes, sir.”
R. M. Boyd, secretary of the company, testified in part as follows, viz.:
“I was present at this meeting of January 10, 1910, shortly after Mr. Reynick’s employment, and acted as secretary of that meeting. * * *
“Q. At that meeting do you remember, or at any time that day do you remember, Mr. Reynick stating anything with regard to the length of time of his employment?
“A. Yes, sir; that was after the adjournment. He stated that he didn’t care to accept the position for a short period, as I remember, of two or three months.
“Q. And do you remember anybody making any reply to that?
“A. Yes, I think that both Mr. Allington and Mr. Gilbert made the statement that that was not the intention ; it was the intention to retain him as long as his services were satisfactory. That was practically the substance of the conversation.”

On cross-examination he testified as follows:

“Q. And you understood him at that time he could not afford to take an employment that was short, didn’t you?
“A. Yes.
“Q. And you heard Mr. Gilbert, the man that has just been on the stand, president of the company, and Mr. Allington, vice president, assure him they did not contemplate that he should take a short employment?
“A. Yes.'
“Q. Your memory is, instead of being fixed at a year, as Mr. Reynick states, that the employment was to be as long as satisfactory?
“A. Yes.”

It is the recollection of all the directors that when this matter was discussed, Mr. Wickes had put on his overcoat, and was not present, but it does appear from Mr. Allington’s testimony that Mr. Reynick was talking to all of the directors except Mr. Wickes, and that whatever arrangement was made, it had the sanction of all who were present. Mr. Gilbert testified: “I think we all acquiesced in it.” Mr.. Boyd’s testimony in that regard is to the same effect. We have a situation, then, where within 10 or 11 days after the resolution of December 30, 1909, and when he had been at work but a few days, the plaintiff was saying in effect to the board of directors that he was not willing to work under the resolution; that he must be assured, he says, of a hiring for the year; they say of more than a temporary hiring, and that they assured him he should stay as long as his work was satisfactory. It also appears that, as the result of the action (whatever it was) which was taken, plaintiff, instead of quitting work, as he said he would, if action was not taken, continued on for a long period of time.

This case is a striking illustration of the desirability of corporate action being at. once recorded in the minutes of a corporation, instead of being left to the recollection of interested parties, however honorable those parties may be.

It is clear that the subject brought to the attention of the board by Mr. Reynick was acted upon. It is not clear what that action was. Some correspondence, which will be referred to later, may have a bearing upon what the parties understood as to the effect of the action taken. The result of that action, whatever the action was, is not defeated by a failure to enter it upon the records of the meeting. Township of Taymouth v. Koehler, 35 Mich. 22; Ismon v. Loder, 135 Mich. 345 (97 N. W. 769); Wheat v. Van Tine, 149 Mich. 314 (112 N. W. 933). The question was a controverted one, which was submitted to the jury under proper instructions, and the jury found in favor of the plaintiff.

We now come to the effect of what was done in March, 1911, which resulted in the plaintiff receiving $250 a month instead of $200. We have already stated, by quoting from the brief of counsel, the claim of appellant in this regard. It is the claim of. the plaintiff that when he was hired he was allowed to continue his insurance business, but that the increasing demands made upon him by the defendant made it impossible for him to give the insurance business the attention it was expected he would be able to give it, and that in view of this situation an increase in salary was discussed between him and the general manager, Mr. Allington, who in turn conferred with his fellow directors; that Mr. Allington told him he had authority to pay him $250 a month for the balance of the year, and then the matter would be taken up further. His claim is that the new arrangement applied simply to the increase in pay, and did not affect the time for which he was employed. He further claims there was discussion about his being allowed $300 a month after 1911. It is clear there was such a discussion, because the president of the company sent to him the following letter, dated the next day after the annual meeting:

“Chicago, III., Jan. 9th, 1912. “Mr. C. J. Reynick,
“Saginaw, Mich.
“Dear Sir:
“Mr. Wickes, Mr. Boyd and myself took up the matter of your salary last evening. We do not feel that under the present state of business and earnings of the company that the company should pay the salary that you ask for.
“Our overhead expense is already quite large as you know and our earnings on the amount of business we do small.
“We have decided to make you the following proposition :
“If the profits of the company for the year 1912 amount to $25,000 or more net to the stockholders then we would be willing to pay $300 per month for year ending Dec. November 30th, 1912, for your services, if the profits are less than $25,000, we think the present salary is all that the company can afford to pay.
“Will you kindly advise me if this proposition is satisfactory to you.
“Yours very truly,
“W. H. Gilbert.”
To this letter plaintiff replied (written on Allington & Curtis Manufacturing Company stationery) :
“Saginaw, Mich., Feb. 7, 1912.
“W. H. Gilbert,
“Chicago, Ill.
“My Dear Mr. Gilbert:
“Your letter of Jan. 9th relative to salary was received some time since, and I have not replied earlier as I wished to see Mr. Wickes before doing so. He is such a busy man that I was unable to meet him until very recently.
“He advises me that he had only a brief talk with you over the telephone, and assented without knowledge of all the circumstances to a decision which he supposed you and Mr. Boyd had already reached. With his present knowledge of the situation, I believe he thinks the matter is entitled to further consideration, which I hope it may receive in the near future.
“The proposition contingent ■ on net earnings of $25,000 does not appeal to me.
“Very truly yours,
“C. J. Reynick.
“C. C. to H. T. Wickes.”

It is important to note the date of this letter. It was after plaintiff had entered upon his work in January, 1912. If the hiring was from month to month, or after April 1, 1911, was for a period which would lapse by limitation, with the end of the year 1911, as claimed by defendant, why was the president of the company on January 9, 1912, making an offer to the plaintiff:

“If the profits of the company for the year 1912 amount to $25,000 or more net to the stockholders then we would be willing to pay $300 per month for year ending Dec. November. 30th, 1912, for your services, if the profits are less than $25,000, we think the present salary is all that the company can afford to pay.”

If the situation was as claimed by defendant, why was it necessary, at the meeting of the board of directors, held May 23, 1912, referring to the meeting held May 1, 1912, to enter upon the minutes the following :

“These gentlemen confirmed the action of the board at this meeting, at which time Mr. C. J. Reynick was asked to hand in his resignation, effective June 1, 1912.”

We think it clear the question of the character of the hiring could not be decided as a matter of law.

As to the effect of entering upon another year’s work, we think what was said in Sines v. Superintendents of the Poor, 58 Mich. 503 (25 N. W. 485), is germane:

“It is urged by defendants that the contract claimed by the plaintiff is void by reason of the statute of fratids; that the talk with the president in September, to continue work until lie had laid the matter before the board, was a contract not to be performed within a year. But this is an erroneous view, of the testimony. The contract had been previously made for a year’s service, and under that contract defendant had gone on from year to year; and in such cases, if nothing is said or done by either party at the end of the year to terminate it, but on the contrary, the person performing service is allowed to continue on without objection, the facts raise the presumption from which the jury have found that both parties have assented to the contract continuing in force for another year. Tatterson v. Manufacturing Co., 106 Mass. 56. The case of Tallon v. Mining Co., 55 Mich. 147 [20 N. W. 878], as was said by us when the case was here on a former occasion, rules this case upon the point under consideration.”

See, also, Laughlin v. School District, 98 Mich. 528 (57 N. W. 571); Chamberlain v. Stove Works, 103 Mich. 124 (61 N. W. 532); Graves v. Lyon Bros. & Co., 110 Mich. 670 (68 N. W. 985); Wright v. Iron Co., 129 Mich. 543 (89 N. W. 335).

We again quote from the brief of counsel:

“It is also the claim of defendant’s counsel that Mr. Reynick, as a member of the board of directors of the defendant company, was acting in a fiduciary capacity as a member of said board, and that he had no right as such director, after an attempt to obtain a salary for himself in excess of what his services were reasonably worth, to try to force defendant company to pay him the compensation he had requested.”

We do not think there is any testimony upon which to base this contention. The record is clear that defendant’s offer was at the beginning $200 a month, and, when the increase was made to $250, there is nothing to indicate any want of good faith on the part of any one.

In Barnes v. Spencer & Barnes Co., 162 Mich. 509 (127 N. W. 752, 139 Am. St. Rep. 587), it is said:

“It is not the law that an officer of a corporation
cannot deal with the corporation if his acts are open and fair and known to the directors and stockholders. See 10 Cyc. p. 794; Ft. Payne Rolling Mill v. Hill, 174 Mass. 224 (54 N. E. 532); Africa v. News-Tribune Co., 82 Minn. 283 (84 N. W. 1019, 83 Am. St. Rep. 424); 2 Cook on Corporations (6th Ed.), § 652; U. S. Steel Corp. v. Hodge, 64 N. J. Eq. 807 (54 Atl. 1 [60 L. R. A. 742]); Ten Eyck v. Railroad Co., 74 Mich. 226 (41 N. W. 905, 3 L. R. A. 378, 16 Am. St. Rep. 633); Henry v. Benevolent Ass’n, 147 Mich. 142 (110 N. W. 523).”

The instant case was tried by able counsel, and was intelligently and carefully submitted by the trial judge to the jury.

Judgment is affirmed.

McAlvay, C. J., and Brooke, Kuhn, Stone, Ostrander, Bird, and Steere, JJ., concurred.


text:
    MINOR v. WALKER.
    Samis — Evidence—Warranty.
    In an action for the price of a horse which plaintiff warranted to be of excellent stock, sound, etc., as set forth in a written instrument, evidence that plaintiff also orally represented that the horse was a registered animal, while competent and properly receivable in evidence in support of the defense of breach of warranty that the animal was of excellent stock, could not be treated as a ground of defense or submitted to the jury as an issue of fact on the theory of breach of a distinct warranty.
    Error to Charlevoix; Mayne, J.
    Submitted January 27, 1914.
    (Docket No. 123.)
    Decided March 27, 1914.
    Assumpsit by Joseph Minor against Richard Walker and another on a promissory note. Judgment for plaintiff. Defendants bring error.
    Affirmed.

      Harris & Reugsegger, for appellants.

      William T. Yeo, for appellee.
   Moore, J.

This case was brought in justice’s court. The case was appealed to the circuit court. From a judgment in favor of the plaintiff the case is brought here by writ of error.

The suit was brought upon a note reading as follows:

“$275.00.
“East Jordan, Mich., Nov. 21st, 1908.
“On or before one year after date for value received we promise to pay to Joseph Minor or order the sum of two hundred and seventy-five dollars with interest from date at the rate of six per cent, per annum. _
_ “This note is given as part of the purchase price of one stallion, known as Hyland Dick.
“Should the said stallion prove to be unsound or not equal in ány part of the warranty made in an agreement entered by and between' the payees and the payor of this note on the 21st day of November, 1908, this note shall be deemed without consideration, otherwise good.
“R. E. Walker.
“Fred White.”

Defendants pleaded the general issue and gave notice that, under the general issue above pleaded, they will show that the said note is void and of no effect against the said defendants by reason of breaches of warranty in this: That the said horse was, at the time of the purchase, of greater age than 8 years, as represented and warranted, and was of the age of 12 years, and that the said horse was not, at the time of making said purchase, a registered horse, as represented and warranted, and is not now registered or entitled to registration.

At the request of defendants, the plaintiff produced a duplicate copy of the contract of sale and warranty made by the parties at the time of the giving of the note which was introduced in evidence. The only part of it which relates to the warranty reads as follows:

“The party of the first part warrants the said stallion to have been foaled during the spring of 1900 and that he ‘is of excellent stock’ and is a sure foal-getter, is sound in body and limb, of good disposition, well broken single and is sound in every particular; that there is no mortgage, claim or other incumbrance against the said stallion and that he has a good and lawful right to sell the same.”

The defendant sought to show orally that, when he bought the horse, it was represented to be a registered animal, and that a certificate of registry was left with him which he produced, but which was so illegible that it could not be read in the lower court, nor can it be •read here.

Plaintiff testified that the paper called the certificate related to the sire of the horse sold, and was not delivered until after the contract was made, and that the entire contract is contained in the papers signed by the parties.

The defendant White, on cross-examination, testified in part:

“When we had this contract made up between Mr. Minor, myself, and Mr. Walker, we were in the office of Clink & Fitch. The first time I ever met Mr. Minor was at the fair at East Jordan, about two months prior to that, I think. We made a bargain to buy this horse, I think, the 21st day of November, a day or two before that contract was drawn, and we went into Mr. Clink’s office and had that contract prepared, read it over, and signed it. We all went up there together, and that is where the note was made out which is referred to in this contract. So, when we went into Mr. Clink’s office to have this contract made, we stated to him all of the agreement between us in relation to this horse, and the contract was prepared there in the office, and signed by all the parties, and the horse was delivered to us there; we took him right there in town.”

Objection was made to the oral testimony and the certificate offered by the defendants, because it sought to vary or contradict a written agreement. The court admitted the testimony as bearing upon what the parties meant by the words in the warranty that the animal sold “is of excellent stock.”

When the case was submitted to the jury the judge said in part:

“This action is based upon a promissory note in the sum of $275. The plaintiff is the payee mentioned in the note, the defendants are the makers of the note. This note was given as the balance of the purchase price of one stallion. The contract is in writing, and only one provision of the contract is in issue in this case. The defendants have paid the plaintiff $500 already on this contract, and this is for the balance of the purchase as provided in the contract.
“I will now read the note, which is in usual form, and draws 6 per cent, interest. After the usual form this provision is included: ‘This note is given as part of the purchase price of one stallion known as “Highland Dick.” ’ And immediately following is this: ‘Should said stallion prove to be unsound or not equal in any-part of the warranty made in an agreement entered into by and between the payees and payor of this note’ — the payee and the payor are the parties to this suit — on the 21st day of November, 1908, this note shall be deemed without consideration, otherwise good. The plaintiff is entitled to recover on this note unless there has been a breach of the warranty contained in the agreement, and I will read to you what the warranty referred to in the note is: ‘The party of the first part warrants said stallion to have been foaled during the spring of 1900’ — that is not disputed at all — ‘and that he is of excellent stock, is a sure foal-getter, is sound in body and limb, of good disposition, well broken single and is sound in every particular, and there is no mortgage claim or other incumbrance against said stallion and that he has a good and lawful right to sell the same.’
“Now the issue in this case is based upon the phrase, ‘is of excellent stock.’ Considerable testimony was admitted bearing upon the question as to whether Highland Dick was registered or entitled to registration, and I admitted that testimony for this reason only: That it might aid you in determining what is meant by the phrase ‘excellent stock.’ Under the terms of this contract, defendants were not entitled to receive, nor to have it considered that they bargained for, a registered horse, nor a horse that was entitled to be registered. They did contract for a horse that was ‘of excellent stock.’ Now it is undisputed that there are horses of different breeds and strains — such as Clydesdales, Morgans, and others. It is undisputed in this case that this horse was what is known as a Shire horse, that is the breed, and this is not a trade-mark or a special phrase that has a peculiar significance or meaning to the trade; but it is a phrase that is to be considered in its ordinary and usual meaning as the English language is used. And I submit to you only this one question: Is this horse ‘of excellent stock?’ If he is of excellent stock, then there has been no breach of warranty, and the defendant must pay the note. If the horse is not of ‘excellent stock,’ then there has been a breach of the warranty, and your verdict will be: ‘No cause of action.’ And, if they paid too much for the horse, they are entitled to have, not to exceed $100, as a verdict in their favor.”

As before stated, a judgment was rendered in favor of the plaintiff.

It is claimed this charge is error and that the jury should have been allowed to decide whether it was represented the animal was registered.

We quote from the brief of counsel for appellant:

“When the writing does not purport to disclose the complete contract, or if, when read in the light of the attendant facts and circumstances, it is apparent that it does not contain all thé stipulations of the parties on the subject, parol evidence is always admissible to show what the rest of the agreement was. Otherwise the contract could not be brought before the court. 21 Am. & Eng. Enc. Law (2d Ed.), p. 1091. John Hutchinson Manfg. Co. v. Pinch, 107 Mich. 12. [64 N. W. 729, 66 N. W. 340]; Liggett Spring, etc., Co. v. Buggy Co., 106 Mich. 445 [64 N. W. 466].”

We do not think these authorities show that defendant has cause to complain of the ruling of the trial court. It already appears from the testimony of Mr. White, which we have quoted, that all of the agreement was stated to the scrivener. • It is not claimed that he made any mistake in preparing the papers.

We quote briefly from Hutchinson Manfg. Co. v. Pinch, supra:

“It is contended by defendant’s counsel that the case falls within the line of decisions holding that parol testimony may be admitted when there is a writing between the parties which does not embody all the terms of the contract. It is the accepted rule that, in such case, an additional agreement may be shown, and the rule was properly applied in the present case in admitting testimony _to the effect that plaintiff agreed to furnish millwrights to put the mill in order within ten days from-the time the repairs were commenced ; but this rule does not admit of contradicting the terms of so much of the agreement as is reduced to writing. In the present case, the order is not silent as to the requirements of this machinery. The machinery is to be paid for ‘when the mill is fixed and gives good results.’ This much the parties reduced to writing, and parol testimony of any agreement adding to this requirement, which is fixed in the agreement, is necessarily contradictory of the written instrument.’ McCray Refrigerator, etc., Co. v. Woods, 99 Mich. 269 [58 N. W. 320, 41 Am. St. Rep. 599]; Nichols, Shepard & Co. v. Crandall, 77 Mich. 401 [43 N. W. 875, 6 L. R. A. 412]; Rumely & Co. v. Emmons, 85 Mich. 511 [48 N. W. 636]; Seitz v. Machine Co., 141 U. S. 510 [12 Sup. Ct. 46]; Cohen v. Jackoboice, 101 Mich. 409 [59 N. W. 665]. While the warranty is somewhat vague, we think it is equally an invasion of the rule to permit parol testimony to show that it was in fact more definite. Stange v. Wilson, 17 Mich. 342; Harrow Spring Co. v. Harrow Co., 90 Mich. 150 [51 N. W. 197, 30 Am. St. Rep. 421].”

So far as this case is applicable to the instant case, it is directly against the contention of appellant. See, also, McCray Refrigerator, etc., Co. v. Woods & Zent, 99 Mich. 269 (58 N. W. 320, 41 Am. St. Rep. 599); Detroit Shipbuilding Co. v. Comstock, 144 Mich. 516 (108 N. W. 286); Nichols, Shepard & Co. v. Crandall, 77 Mich. 401 (43 N. W. 875, 6 L. R. A. 412); M. Rumely & Co. v. Emmons, 85 Mich. 511 (48 N. W. 636); Dowagiac Manfg. Co. v. Corbit, 127 Mich. 473 (86 N. W. 954, 87 N. W. 886); and Williams v. Manufacturing Co., 169 Mich. 676 (135 N. W. 954).

Judgment is affirmed.

McAlvay, C. J., and Brooke, Kuhn, Stone, Ostrander, Bird, and Steere, JJ., concurred.


text:
    SAGINAW MEDICINE CO. v. BATEY.
    1. Principal and Surety — Contracts—Agency—Fraud.
    Evidence that plaintiff’s salesman was required by it to obtain a guaranty signed by two sureties before it would ship goods to him, that in procuring two guarantors he made fraudulent representations as to the effect of the paper, which the defendant sureties claimed they did not examine, that the principal procured his goods of the plaintiff and acted as salesman on his own behalf, not as agent of the plaintiff, although the instrument recited that plaintiff paid the sum of one dollar as consideration for the execution of the guaranty, held, not sufficient to establish, an agency such as to charge the company for his frand.

    2. Same — Fraud.
    Even though sureties have been misled by the principal at whose request a bond or guaranty was executed, as to the character and extent of the obligation, the fact is not a defense to an action on the instrument unless it is made to appear that the plaintiff was a party to the fraud practiced upon defendants.
    3. Same — Guaranty.
    It is not the duty of the obligee to seek out the sureties and explain to them the nature of their undertaking; it is for them to ascertain for themselves.
    4. Same — Acceptance—Notice.
    Where plaintifE sent a letter to each of the guarantors stating that it had accepted the contract in which their names appeared as guarantors, the defense that they were misled as to the character of the guaranty and paid no attention to the letters, was insufficient as matter of law.
    Error to Ionia; Davis, J.
    Submitted January 27, 1914.
    (Docket No. 101.)
    Decided March 27, 1914.
    Assumpsit by the Saginaw Medicine Company against Joseph Batey and Jock Ruegseggar on a contract of guaranty. Judgment for defendants. Plaintiff brings error.
    Reversed.

      Hatch, McAllister & Raymond, for appellant.

      Powers & Shivel (E. M. Davis, of counsel), for appellees.

       The question of the liability on a guaranty or surety obligation obtained by fraud is treated in a note in 21 L. R. A. 409.

   Moore, J.

Plaintiff is a corporation located at Saginaw, and engaged in the business of manufacturing and selling household remedies, extracts, spices, toilet articles, etc. The manager is Frank D. McConnon. Prior to April, 1910, the plaintiff sold goods to one John R. Credit, who in turn peddled them in Ionia county. One George W. McLean assisted Mr. Credit for a week or two, and finally arranged to buy him out. This fact was communicated by Mr. Credit to the plaintiff company. As the result of this communication a contract was sent to Mr. McLean for him to execute, inclosed in a letter reading as follows:

"March 19th, 1910.
"Me. G. W. McLean,
"Belding, Mich.
“Dear Sir:
"We have your kind favor of March 18th, and we are pleased to have same. We are inclosing our contract for Ionia Co. as you requested and we hope you will have same executed promptly as it requires some time to get all matters adjusted properly before goods will be shipped to you, consequently we advise you to give the matter your prompt attention and return the contract properly executed soon as possible.
“This contract must be signed in ink by yourself and two responsible men before two witnesses. Kindly sign your full name on line directly beneath the signature of Louis Smith, Secretary. Your guarantors will kindly sign on back of contract on lines indicated. Witnesses should sign names and give post office address on lines indicated.
“When you send contract give names and addresses of your guarantors and all the information you can concerning their holdings, also state in what county or counties their holdings are located. Guarantors to be acceptable to us must be honest and reliable and have holdings over and above their debts and exemptions.
“The guarantee on this contract is a warranty of your good faith; no more, no less. It is a plain surety that we will receive, finally, the payment of the goods we advance to you.
"We do not divulge prices until the contract has been accepted, thereby protecting our salesmen from those who write to us out of curiosity. If after contract is accepted the prices are not satisfactory, we do not ask you to do any work or order any goods.
“We will be pleased to explain anything in this agreement you do not understand. Be careful in executing this contract for mistakes only cause delay in accepting.
“Thanking you for this favor and hoping to receive your contract by return mail, we are,
“Very truly yours, “Saginaw Medicine Company.”

The contract which was inclosed was signed by Mr. McLean and the defendants and returned to the plaintiff company. The arrangement made between Mr. Credit and McLean provided for the assumption by the latter of a debt Mr. Credit owed the plaintiff. In this contract nothing was said about Mr. McLean’s paying to the plaintiff the debt which Mr. Credit owed it. The contract, for that reason, was returned to Mr. McLean and a new one was sent him to be executed and returned. Signatures were obtained to this contract, and when it was returned to the plaintiff it read as follows:

“This agreement made this fourth day of April, A. D. 1910, between the Saginaw Medicine Company, a corporation of Saginaw, Michigan, party of the first part, and George W. McLean of Belding in the State of Michigan party of the second part, witnesseth, that for and in consideration of the promises and agreements hereinafter contained, to be kept and performed by the party of the second part, the party of the first part promises and agrees to sell and deliver to the party of the second part f. o. b. at Saginaw, Michigan, in such reasonable quantities as the party of the second part may from time to time require in his territory hereinafter described, all medicines, extracts, and other articles manufactured or sold by it, .such goods to be sold and delivered to the party of the second part at the usual and customary wholesale prices at which the same are sold and delivered by the party of the first part in other similar territories, such prices to be shown by invoices accompanying each shipment.
“The party of the second part hereby acknowledges that he is indebted to the party of the first part in the sum of three hundred fifteen dollars, the same being the balance now due from John R. Credit to the party of the first part under a certain agreement entered into between him and it on April 16th, 1908, which indebtedness the party of the second part hereby assumes and agrees to pay on or before the expiration of this contract in consideration of the execution of this agreement and the extension of the time of payment of said indebtedness by the party of the first part.
“The party of the second part agrees to sell goods delivered to him under this agreement in the county of Ionia, State of Michigan, or in such other territory as the party of the first part may direct, from the date hereof until the first day of March, .1911, when this agreement shall terminate.
“The party of the second part further agrees to keep a complete record of all goods disposed of in his said territory and on hand, and to make written reports of the same to the party of the first part at such times and in such manner as it may from time to time require, and to pay the party of the first part the wholesale price f. o. b. at Saginaw, Michigan, as aforesaid for all goods furnished to him from time to time as hereinbefore provided at the time and in the manner and in accordance with the provisions of the weekly report blanks of the party of the first part furnished to the party of the second part and further agrees that at the expiration of this agreement, he will pay to it the whole amount then remaining unpaid, but the time of making such payments or any of them may be extended by the party of the first part without notice to the guarantors hereon and without prejudice to the interests of said first party.
“In testimony whereof the party of the first part has caused this agreement to be executed in its corporate name by its secretary and its corporate seal to be hereunto affixed; and the said party of the second part has hereunto set his hand and seal, the day and year first above written.
“The Saginaw Medicine Company,
“By Louis Smith, Secretary.
“Geo. W. McLean [Seal.],
“In consideration of the sum of one dollar to us in hand paid by the Saginaw Medicine Company, the receipt whereof is hereby acknowledged, and the further consideration of the execution by it of the within agreement, the extension of the time of payment of the indebtedness therein mentioned, and the sale and delivery to the party of the second part of the medicines, extracts and other articles, as in said agreement provided, we, the undersigned, jointly and severally guarantee the full and complete payment of said indebtedness and all moneys now due and which may hereafter become due fi"om the party of the second • part to the party of the first part, under and pursuant to the said within agreement, at the time and in the manner therein provided.
“Joe Batey. [Seal.]
“Jock Ruegsec-gar. [Seal.]
“Witnesses:
“Mrs. Joe Batey, Smyrna.
“Jacob Ruegseggar, Lowell.”
After looking up the responsibility of the guarantors the following was sent to Mr. Batey:
“April 7th, 1910.
“Joseph Batey,
“Smyrna, Mich.
“Dear Sir:
“We are pleased to advise you we have accepted the contract of George W. McLean, Belding, Mich., on which your name appears as a guarantor.
“Trusting this is satisfactory to you, we are,
“Very truly yours,
“Saginaw Medicine Company.”
Mr. Batey receipted for the letter as follows:
“Registry Return Receipt.
“Received from the postmaster registered article, the original number of which appears on the reverse side of this card.
“Date of delivery April 9, 1910.
“Joseph Batey.”

A like letter was sent to the other defendant, who sent a like receipt. Plaintiff then began to sell goods to Mr. McLean. He did not pay for all of them, nor did he pay the debt of Mr. Credit, which, after the receipt by the plaintiff of the contract from Mr. McLean and the guaranty, had been charged to Mr. McLean on the books of the company, and discharged thereon as to Mr. Credit. Several letters were written by the plaintiff to the defendants, to which no attention was paid until March 21, 1911, when Mrs. Batey wrote for her husband a letter, saying he had simply signed a recommend, closing with the words:

■ “You go to George McLean and see what he is doing. I haven’t time to spare running after him.
“Yours respectfully,
“Joe Batey, Smyrna.”

May 29, 1912, this suit was begun by declaration, in which the contract and guaranty were set out in full and properly declared upon, followed by all the common counts in assumpsit. The defendants pleaded the general issue, but did not deny under oath the execution of the guaranty, but gave notice they would show the guaranty was procured by false representations and fraud. Mr. Batey claimed he was illiterate, and did not understand the words used in the contract and the letter sent to him later. The other defendant was born in Switzerland, and claimed he did not speak English well, and that what Mr. McLean said was explained to him by his 17-year old son, who also did not understand English or business very well. They both claimed they relied upon the statements of Mr. McLean, and that he made false statements to them as to what the contract contained. The case was tried before a jury, and from a verdict and judgment in favor of the defendants the case is brought here by writ of error.

The plaintiff preferred 18 written requests to charge. Among them was a request for a directed verdict for the plaintiff. There are 71 assignments, of error, and counsel say they rely upon each of them. In our view of the case it will not be necessary to discuss many of them. We quote from the brief of counsel for appellant:

“(1) It was error for the circuit judge to allow the defendants to call George W. McLean as a witness claiming the benefit of Act 307 of the Public Acts of • 1909. This was allowed, on the theory, as stated by the circuit judge, that McLean was plaintiff’s agent. He certainly was not their agent in any sense of the term, any more than any independent contractor is the agent of the other party to the contract.” ■

We will discuss this assignment of error and the question of whether there should have been a directed verdict together.

Mr. McLean was called by the defendants for cross-examination . under the statute after the manager of the plaintiff had been sworn. The manager denied in emphatic terms that Mr. McLean was the agent of the plaintiff company, but he was very ingeniously and skillfully cross-examined. We quote some of the cross-examination:

“Q. Did you at that time send to Mr. McLean $1 to pay to either Batey or Ruegseggar?
“A. No, sir.
“Q. This says paid to the guarantors by the Saginaw Medicine Company. Did you pay a dollar or more to either Ruegseggar or Batey?
“A. No, sir; it wasn’t necessary.
' “Mr. Hatch: I object to these questions regarding the consideration, on the ground that they are incompetent, immaterial, and irrelevant.
“The Court: It may be received.
“Mr. Hatch: Take an exception.
“Q. Why is it you are reciting here the Saginaw Medicine Company has paid a dollar to the guarantors as a consideration for the guaranty?
“A. To make the contract legal.
“Q. Then it was for your benefit on the payment of a dollar by you of consideration—
“A. State that again.
“Q. It was for your benefit, this guaranty?
“A. Benefit in what way, to whom?
“Q. To protect you, it was a benefit to protect you if this man McLean didn’t perform his contract?
“A. Yes, sir.
“Q. You were to pay the consideration and asked for a receipt of the consideration from you?
“A. Yes, sir.
“Q. For the payment of a dollar which is receipted here?
“A. Yes,, sir.
“Q. By you to Ruegseggar and Batey?
“A. Yes, sir.
“Q. They guaranteed to pay you if he didn’t?
“A. Yes, sir.
“Q. In what manner did you- transmit to them that consideration ?
“A. We didn’t transmit it.
“Q. Did you send it to McLean?
“A. No, sir.
“Q. He was the man that took it to' them, wasn’t he?
“A... Yes, sir.
“Q. This recites it was received from you?
“A. Yes, sir.
“Q. He then was the only person that was acting for you in procuring this for your benefit?
“A. Come to think about it, you are getting on thin ice.
“Q. Is thére any thin ice about this case?
“A. No, sir.
Q. What are you worrying about?
“A. I don’t hear clearly, I might misconstrue what you are telling me. [Witness was very deaf.]
“Q. This man was acting for your benefit, then, in procuring this guaranty — this man McLean?
“A. I never considered it that way.
“Q. Why is it you recite in this contract 'paid by you,’ isn’t he the one that is carrying the consideration from you?
“A. Yes, sir.
“Q. Acting as your agent in doing it?
“A. Acting as salesman.,
“Q. Was he selling anything at that time?
"A. No, sir.
“Q. He was acting as your agent in procuring this guaranty, wasn’t he?
“A. He was acting of his own free will.
“Q. Certainly, but at your request.
“A. We will concede the point then.
“Q. At your request he made, procured for your benefit as your agent — - At your request he might procure for your benefit as your agent, you not being there, that he would procure signers to this guaranty?
“A. Yes, sir; he procured the signers.
“Q. And as your agent in doing so?
“A. No, he never acted as our agent.
“Q. For whom was he acting then in paying $1 or any consideration to these .people for the Saginaw Medicine Company?-
“A. He was acting for himself.
“Q. Does it say so in the guaranty?
“A. No, sir.
“Q. It says in the guaranty he is acting for you, doesn’t it?
“A. Yes, sir.
“Q. For the Saginaw Medicine Company.
“A. Yes, sir..
“Q. And you were the people that were to pay the money?
“A. Yes, sir.
“Q. That was the consideration for the execution of the guaranty?
“A. Yes, sir.
“Q. Then he was acting for you?
“A. I presume it could mean that.
“Q. That is exactly what it does mean.
“A. I will concede the point to you.
“Q. When you say, T will concede the point to you,’ do you say it is true he,was acting for you?
“A. No, sir.
“Q. How do you mean to qualify it? It says by the Saginaw Medicine Company, the money is paid by them? -
“A. Let me explain myself. We don’t concede that this man was acting for us in that respect because there is no obligation—
“Q. I understand now, I know what you concede and what you don’t concede, I want to take you by your own recitals in your own paper here. If it had been for Ms benefit, it would have been $1 paid by McLean, wouldn’t it?
UA. Yes, sir.
“Q. And it says it was paid by you to them?
“A. Yes, sir.
“Q. He was acting as your agent in giving this paper to these people procuring signatures as guarantors?
“A. Yes, sir.
“Q. Then he was acting as your agent, wasn’t he?
“A. Yes, according to that contention.
“Q. At the time you asked him to do that you transmitted to him this letter, Exhibit 7?
“A. Yes, sir.”
On the re-direct examination the following occurred:
“Q. Did you have any understanding with McLean in regard to getting guarantors on this contract, except what is embodied in these articles that have been introduced in evidence?
“A. No, sir.
“Q. You gave him no instructions except what are contained in the letter of March 19, 1910 ?
“A. Yes, sir; that is all.
“Q. You gave him no instructions except what are contained in that?
“A. Yes, sir.
“Q. That is all?
“A. That is all.
“Q. You gave him no verbal instructions?
“A. No, sir.
“Q. No verbal understanding between you and him about getting guarantors?
“A. No, sir.
“Q. Whatever agreement or contract there was between you and him was embodied in these writings?
“A. Yes, sir.
“Q. Then when you stated in answer to Davis’ question when he was reading ' from this guaranty, ‘in consideration of the sum of one dollar to us in hand paid by the Saginaw Medicine Company,’ in getting that guaranty he was acting as your agent, that depended upon the construction of that writing?
“A. Yes, sir.
“Q. That is what you meant by that?
“A. Yes, sir.
“Q. There is nothing else indicating agency except what is in the writing?
“A. No, sir.”

This statement is not contradicted unless it can be said the cross-examination we have quoted is inconsistent with it.

We now quote from the appellees’ brief. Counsel quote the cross-examination we have referred to somewhat more in detail than we have, and continue:

“Counsel say on page 2 of their brief, in speaking of Exhibit 7:
“ ‘There is nothing in that letter which would constitute McLean plaintiff’s agent in procuring the guarantors.’
“This was a letter of instruction to McLean requesting him to get two guarantors to this contract. It reads:
“ ‘This contract must be signed in ink by yourself and two responsible men before two witnesses. * * * Your guarantors will kindly sign on back of contract on lines indicated. * * * Guarantors to be acceptable must be honest and reliable and have holdings over and above their debts and exemptions. * * * The guaranty on this contract is a warranty of your good faith; no more, no less.’
“We maintain that this refutes the argument in counsel’s brief to the effect that McLean acted as an independent contractor, and did not represent the plaintiff in any way. We maintain that he was acting as an agent of the plaintiff in the procuring of this instrument, and Exhibit No. 7 was a letter of instruction to this effect. It authorized McLean to go out and tell the defendants that the contract he wished them to sign was nothing more than a warranty of his good faith, no more and no less. * * *
“We maintain, that the fact that McLean was the agent of the plaintiff, its sending him out to procure this guaranty contract, which was for the benefit^ of the plaintiff, its sending- him a letter of instruction containing this clause as above referred to, the nondisclosure on the part of the plaintiff of the execution of the second contract, including the additional $315.00 liability — these facts bring these misrepresentations and fraud onto the plaintiff and connect it with them, and they are therefore binding upon the plaintiff.”

The learned trial judge seems to have thought that this cross-examination and the clause quoted from the letter required him to hold that Mr. McLean in procuring the guaranty was the agent of the plaintiff, and he continued to so rule, though Mr. McLean swore at the very outset:

“Q. You went on the road for the Saginaw Medicine Company?
“A. I didn’t go on the road for Saginaw Medicine Company; I went on the road for myself.
“Q. Got your medicines of them?
“A. I got my goods of them”

—and he was allowed to be cross-examined fully by defendants as to his procuring the guaranty, and after he had sworn he was acting for himself, and had stated truly to the defendants what the paper was, then the defendants, over the objection of plaintiff, were permitted to swear in detail that Mr. McLean had lied to them in procuring their signatures, and the jury were allowed to say whether such a fraud had been perpetrated upon them as to make the instrument a void one in the hands of the plaintiff.

Counsel cite the following cases as justifying the conduct of the trial: Gibbs v. Linabury, 22 Mich. 479 (7 Am. Rep. 675); Anderson v. Walter, 34 Mich. 113; Soper v. Peck, 51 Mich. 563 (17 N. W. 57); Haughton v. Maurer, 55 Mich. 323 (21 N. W. 426); McGinn v. Tobey, 62 Mich. 252 (28 N. W. 818, 4 Am. St. Rep. 848); Waterbury v. Andrews, 67 Mich. 281 (34 N. W. 575); Busch v. Wilcox, 82 Mich. 336 (47 N. W. 328, 21 Am. St. Rep. 563); Reeder Bros. Shoe Co. v. Prylinski, 102 Mich. 468 (60 N. W. 969); Alfred Shrimpton & Sons v. Netzorg, 104 Mich. 225 (62 N. W. 343), and other cases. These cases have gone a long way in the effort to protect the illiterate and the credulous. Without stopping to analyze each of them it may be said that none of them is like the instant case. It is not claimed here that defendants did not intend to sign the paper which was presented to them, nor that there has been any substitution of papers, or that the signers did not sign the specific paper he or she intended to sign and in the place he intended. The nearest approach to such a contention was made by Mrs. Batey when she testified; we quote from her testimony:

Cross-examination by Mr. Hatch:

“When McLean first came to our house with the paper, I saw it, he gave it to me; I had it in my hands and read it over; it was a printed paper, and contained the word 'recommend’ several times. That is the paper I signed. After I signed it, I gave it back to him. My husband signed it before I did. I explained to my husband what it was. That is the paper my husband signed. After I and my husband signed it, I gave up the contract to McLean; then he went away. After that he had a paper he asked me to sign at Belding. I had that paper in my hands and read it; it was a printed paper. Mr. Batey had already signed that when McLean handed it to me. I saw Batey’s name on the paper. I had it in my hand and read it and signed that paper. After I signed it I handed it back to McLean. I read it over at that time. I read both papers over. They were both printed papers. I was willing to sign a recommend. I was perfectly willing to recommend Mr. McLean, as I understood he was a man of good character. I knew he intended to buy goods of the Saginaw Medicine Company. I was perfectly willing to recommend that he was a good man for them to sell goods to. I signed two papers in all, these two papers. That is all I signed.
“Q. I show you plaintiff’s Exhibit 2. Look at that signature, is that yours?
“A. I sign my name Anna Batey.
“Q. Did you sign that?
“A. No, sir.
“Q. You didn’t sign that?
“A. No, sir.
“Q. Do you swear that is not your signature?
“A. Yes, sir.
“Q. Do you know your husband’s signature?
“A. Yes, sir.
“Q. Is that his signature?
“A. No, sir.
“Q. That is not his signature?
“AL. No, sir.
“Q. Sure about that are you?
“A. I am. * * * I got a registered letter from the Saginaw Medicine Company soon after I signed ■that guaranty. Mr. Batey signed the-registry receipt for that letter. * * * ”

Re-direct examination by Mr. Shivel:

“Q. You stated on cross-examination that you didn’t think that was your signature. I want you to take that contract again and look it over carefully and compare it with this letter which you say is your handwriting, and tell this jury whether that is your signature or not, whether you consider it to be your signature; look this letter over and look at your signature on here.
“A. My eyesight is rather poor— * * *
“Q. Compare that carefully, take your time, and tell the jury again; you say that is your letter?
“A. Yes, Sir; that is my letter.
“Q. Now examine this signature on the contract?
“A. Well, yes that does look like my handwriting.
“Q. You understand this to be the second paper, don’t you?
“A. Yes, sir. * * *
“Q. So that upon final — upon carefully looking at that signature you think it is your signature, do you?
“A. Yes, sir.
“Q. And you were mistaken?
“A. I do; I think I was mistaken.”

There is no competent testimony in the case from which the inference can be fairly drawn that in procuring the guaranty Mr. McLean was acting for the plaintiff, or that he was authorized by the plaintiff to make any statement which was .untrue. The testimony of Mr. McLean, and of the manager of the company taken in its entirety, is a clear denial of any such authority. The letter of instructions of March 19, 1910, sent to Mr. McLean, when read in its entirety is a complete answer to any such claim. It stated in language that cannot be misunderstood:

“The guarantee on this contract is a warranty of your good faith; no more, no less. It is a plain surety that we will receive, finally, the payment of the goods we advance to you.”

Mr. McLean and the manager both say that the only instructions given Mr. McLean about procuring the guaranty were contained in this letter, and there is no testimony to the contrary.

It will be noticed in the testimony 'we quoted that Mrs. Batey testified that when she signed the paper she knew Mr. McLean was to obtain his goods of plaintiff, and “I was perfectly willing to recommend that he was a good man for them to sell goods to.” We will refer to that subject later.

The plaintiff did not know Mr. McLean until their attention was called to him by Mr. Credit. The defendants had known him some time. We have referred to the fact that Mrs. Batey knew Mr. McLean was to obtain his goods of plaintiff, and that the paper was to be used to enable him to do so. The testimony of defendants discloses that they knew Mr. McLean was to sell goods that he was to procure from the plaintiff, and that before he could do so he must procure signers to the paper which he presented to them which was to be sent to the plaintiff. Knowing this fact, and knowing Mr. McLean, instead of making certain what the paper contained, they were willing to rely upon his statement as to what the paper contained, and signed it.

In this connection it may be well to quote from some authorities.

Western New York Life Ins. Co. v. Clinton, 66 N. Y. 326, was an action on a bond given by De Witt W. Clinton, conditional that Clinton, who had been or was about to be appointed agent for the plaintiff company, should faithfully account for all moneys collected, etc. It was claimed that the signatures of the sureties were procured by the misrepresentations of Clinton. The court said:

“Even if they [the sureties] were misled by the principal, at whose request the bond was executed, as to the character and extent of the obligation assumed, it is no valid defense to this action, unless it appears that the plaintiff was a party to the fraud practiced upon the defendants. * * * The position that the obligee in a bond is bound to seek out the sureties and explain to them the nature and extent of their obligation at the point of losing the security, or that he is to be held responsible for the fraudulent representations or concealment of the principal of any of the facts, is somewhat novel, and is not upheld by any adjudged case. It is the duty of the sureties to look out for themselves and ascertain the nature of the obligation embraced in the undertaking, and any other rule would not only work serious inconvenience, but render securities of this character of but little, if of any, value.”

In Casoni v. Jerome, 58 N. Y. 315, which was an action on an administrator’s bond, it was claimed by the sureties that they were deceived by misrepresentations made by the administrator when they signed the bond. The court said:

“The bond was given for the security of creditors [of whom plaintiff was one] and other persons interested in the estatp, and the ignorance of the sureties, when they executed the bond, of the real nature of the administration, or that they may have been misled or deceived by those at whose solicitation they executed it, as to the nature or degree of the responsibility they assumed, cannot avail them as a defense against the claims of persons for whose security it was taken, and who were in no way connected with the deception practiced upon them.”

In Powers v. Clarke, 127 N. Y. 417, 423 (28 N. E. 402), which was an action on á guaranty to pay for goods sold by plaintiff to a customer, the trial court directed a verdict for plaintiff. This was reversed by the judges of the general term. They based their order of reversal upon the theory that the defendant had been deceived; that the plaintiff knew it, and hence had no right to rely upon a guaranty procured by misrepresentation. Mr. Justice Vann, delivering the opinion of the court of appeals, said:

“While the law requires the creditor to act in good faith toward the guarantor, it does not hold him responsible for any deception practiced by the principal upon the latter without the knowledge of the former, nor require him to make any disclosure or explanation, the withholding of which would not amount to a fraud.”

In Howe Machine Co. v. Farrington, 82 N. Y. 121, 127, it is said:

“The evidence offered by the defendant [the surety in the bond] to show that Davis [the obligor], when he applied to him to sign the bond, represented that he was not in default to the plaintiff, was properly excluded. Davis, in procuring the defendant to execute the bond, was not acting as the plaintiff’s agent, and the plaintiff is not responsible for any deception which Davis may have practiced upon the defendant to procure his signature, of which it was ignorant.”

In Phoenix Mut. Life Ins. Co. v. Holloway, 51 Conn. 310 (50 Am. Rep. 21), the court approves of the rule laid down in Western New York Life Ins. Co. v. Clinton, 66 N. Y. 326, and says that in that case:

“It was held that it is no defense to an action against sureties on a bond given by an agent for the faithful performance of his duties, that the sureties were ignorant as to the extent of the obligation assumed, or were misled by the principal in reference thereto, in the absence of proof that the obligee was a party to the fraud; it is not the duty of the obligee to seek out the sureties and explain to them the nature and extent of their obligation, but it is for the sureties to ascertain for themselves.”

Even if McLean had been the agent of plaintiff to sell goods, that would not have made him its agent in furnishing the guaranty which would be a condition to his becoming agent, and would precede his appointment.

In Davis Sewing Machine Co. v. Buckles, 89 Ill. 237, it is said:

“A surety or guarantor cannot interpose the fraudulent or false representations of his principal as a defense to the payment of a note or bond, without connecting the payee with such representations.”

In Lucas v. Owens, 113 Ind. 521 (16 N. E. 196), the defendant, surety on a promissory note, claimed in her defense that she was induced to sign the note as surety “by means of certain false and fraudulent misrepresentations, which are particularly set out, and which she alleges were relied on by her.” The court said:

“A surety who has been misled by the principal as to the character'and extent of an obligation, signed and assumed at the request of the latter, cannot make the fraud of the principal available as a defense, unless he can also show that the payee or obligee participated in, or had knowledge of, the fraud or deception.”

In Atlantic Trust & Deposit Co. v. Union Trust & Title Corp., 110 Va. 286 (67 S. E. 182, 135 Am. St. Rep. 937), the court said:

“It is well settled that a person proposing to become surety for the conduct- or contracts of another has a right to be treated with perfect good faith. The law does not as a rule, however, require that the party taking the security shall seek out the surety and explain to him the nature and extent of the obligation; nor does it hold him responsible for fraudulent misrepresentations made to the surety by the principal or by a third party, unless such misrepresentations are made with his knowledge or consent.”

In Magee v. Insurance Co., 92 U. S. 93, 100, it is said:

“It is, perhaps, to be inferred from the plea that the fact was — as the record, aside from the plea, shows it to have been — that the bond was executed at Mobile, and sent by Voorhees [the obligor] by mail to the company [the obligee] in New York. If this were so, the company, upon receiving it, was under no obligation to make any communication to the sureties. The validity of the bond could not depend upon their doing so. The company had a right to presume that the sureties knew all they desired to know, and were content to give the instrument without further information from any source. Under these circumstances, it was too late, after the breach occurred, to set up this defense.”

See other cases cited in brief of appellant.

Before selling the goods the plaintiff wrote each of the defendants the letter, one of which we have before quoted. Defendants say they did not understand even then what they had agreed to do in the paper they signed, and did not understand the letter, and paid no attention to the letter. We have already shown that defendants knew the paper was procured to be forwarded to the plaintiff to enable Mr. McLean to get goods. This being so, we do not think defendants were excused from paying attention to the letters sent them by plaintiff, which characterized the paper which plaintiff had received, signed by them. See Tobias v. Morris & Co., 126 Ala. 535, 551 (28 South. 517); Bigelow on Estoppel (5th Edition), 588; Michigan Paneling Machine, etc., Co. v. Parsell, 38 Mich. 475; Harris v. Building & Loan Ass’n, 122 Ala. 545, 554 (25 South. 200); 16 Cyc. p. 681.

Plaintiff, relying on its contract with Mr. McLean and the defendants, furnished the goods and extended to Mr. McLean credit. We think it would be a travesty on justice if the defendants, under these circumstances, can be heard to say they are not liable. The circuit judge should have directed a verdict in favor of the plaintiff for the full amount of its claim.

Brooke, Kuhn, Stone, Bird, and Steere, JJ., concurred. McAlvay, C. J., and Ostrander, J., concurred in the result.