Ham v. Greve and Others.

suit, and prior to the interview between him and the plaintiff Greve, as related by him, the defendant McNett was indebted to him in the sum of twenty-five hundred dollars, and had agreed, after the creation of said debt, to execute to him as security therefor, a mortgage of all his stock of furniture. then on hands, and of such additions thereto as should from time to time be made; which agreement was in force, and said indebtedness unpaid, at the time of said interview and at the time of the signing of said note," but the court, on objection being made, excluded the evidence as to the agreement to execute a mortgage, and admitted it as to the indebted

ness.

On the further trial of the cause, the defendant Ham propounded to McNett, who was on the stand testifying as a witness, the following question: "At the time of the interview between Ham and Greve, and at the time of the execution of this note, what was your condition as to solvency or insolvency?" But the court sustained an objection to the question. The defendant further offered to prove by McNett, that at the time of the execution of the note, he was insolvent, and that his whole stock in trade was taken, within six weeks thereafter, on attachment, for debts created before the execution of the note, to more than the value of the whole stock; but objection being made to the evidence, it was excluded.

The court gave to the jury the following charges, to which the defendant excepted.

"I. This suit is brought on a note signed by Jason Ham as security for James G. McNett. Ham is liable on the note, and a verdict should be returned against him, unless he shows, by a fair preponderance of evidence, that he was induced to sign the same by the false and fraudulent representations of the plaintiffs."

"2. If the jury believe from the evidence that the plaintiffs, in a conversation with Ham, prior to the execution of the note sued on, said to Ham that McNett was doing a good business and was getting along well, but that he needed.

Ham v. Greve and Others.

some more stock, and that they would furnish him some more goods if the defendant would become security on McNett's note for the same; and if the jury believe that said Ham, relying on said representations, afterwards signed the note sued on; and if the jury further believe from the evidence that the plaintiffs afterwards refused to let McNett have furniture on said note, but kept the note and applied it in payment of a pre-existent debt due from McNett to the plaintiffs, then the jury should return a verdict in favor of the defendant."

"3. If the jury believe, from the evidence, that McNett told Ham at the time he signed the note sued on, that the same was to be used in payment of a debt that McNett then owed the plaintiffs, then Ham is liable, though the jury believe, from the evidence, that the plaintiffs made the representations alleged, if they also believe from the evidence that said note was received by the plaintiffs in satisfaction of a pre-existing debt of McNett."

The defendant asked, but the court refused, the following instructions:

"I. If the plaintiffs or either of them, before the execution of the note, were notified that McNett was indebted to Ham, and that they or either of them, with intent to induce Ham to sign this note from McNett to them, represented to Ham that McNett was doing well in business, but that he needed more stock to enable him to carry on business successfully, and that they would furnish more stock if Ham would go on his paper as security, and if Ham then agreed to sign a note as security for the stock so to be furnished, and if Ham did shortly afterwards, relying upon said representations, sign the note sued on as security for McNett; and if the jury believe from the evidence that Ham was justified from said representations in believing that he was signing said note as security for goods furnished to McNett, and if he had no knowledge that said note was given for a pre-existing debt of McNett, and if, in fact, no goods were so furnished to McNett by plaintiffs, but that the only consideration of said

Ham v. Greve and Others.

note was a pre-existing debt of McNett, then and in that case, the plaintiffs cannot recover against Ham on said note."

"2. If before the signing of the note by Ham, the plaintiffs, with intent to induce him to sign it, represented to him that McNett was solvent, and was doing well in business, and if Ham was ignorant of the fact, and relied upon such representations, and signed the note, and if, in fact, McNett was at the time insolvent and in failing circumstances, and was known to be so by the plaintiffs, then the plaintiffs could not recover, as against Ham, on said note."

Whether or not error was committed in the exclusion of the evidence offered, or in giving or refusing the charges given and refused, must depend upon the legal effect of the fourth paragraph of the answer. That paragraph states, as we think, two grounds, and only two, which, if established, entitle the defendant to be discharged. First. It is alleged that the plaintiffs, "intending to deceive the defendant, and induce him to sign the note as surety, represented to him that McNett was doing a good business, and getting along well," &c.; whereas he was at the time not prospering in his business, as the plaintiffs well knew. Second. That the defendant signed the note upon the understanding that it was for goods to be furnished by the plaintiffs to McNett, but that it was applied to the payment of a prior debt which McNett owed the plaintiffs. These are the substantial allegations of the pleading, and the residue might have been stricken out as surplusage.

The statements of the indebtedness of McNett to the defendant Ham, and the agreement between them as to the lien and the execution of a mortgage to secure the indebtedness, do not add anything to the legal effect of the other matters stated. They may be good reasons why Ham should feel justified in claiming the right of being discharged on the ground of the alleged misapplication of the note; but that right he would have without any such indebtedness or agreement. "If, in the contract between the principal debtor and the creditor, there is a departure from that which the surety

Ham v. Greve and Others.

stipulated for when he entered into the obligation, the surety will be released." White & T. Lead. Cas. 533 (3d Am. ed.), and authorities there cited. Where a person gave a promissory note as a surety, upon an agreement that the amount should be advanced to the principal debtor by draft at three months date, and the creditor, without the concurrence of the surety, paid the amount at once, instead of giving the draft, it was held that the agreement had been varied, and that the surety was discharged. Id. 534. So in the case of Stone v. Compton, 5 Bing. N. c. 142, the recital in the mortgage led the surety to suppose that the whole sum secured was advanced to the principal, and he was not informed to the contrary, and a part only was thus advanced, and the residue applied to a pre-existing debt; it was held that the surety was discharged. There can be no doubt that the alleged misapplication of the note, if established, would discharge Ham, without any reference to the indebtedness of McNett to him, or any agreement between them as to security therefor; and such seems to have been the view of counsel below, inasmuch as a special replication was filed to the fourth paragraph of the answer, denying simply the fraud charged therein, which was unchallenged by demurrer or otherwise.

If we are right in these views, it follows that the court committed no error in excluding the testimony as to the agreement to execute the mortgage, because it was a matter not material to the issues, and not necessary to be proved in order to make out the defense. Where immaterial matter is alleged in a pleading, with that which is material, it does not follow that, because it is alleged, it must, or can, be proved.

We are of opinion, also, that no error was committed by the court in excluding the evidence of the insolvency of McNett at the time of the execution of the note, &c., as offered. This was rightly excluded, because the allegations of the answer are not broad enough to admit it. His solvency or insolvency had nothing to do with the case, unless the plaintiffs made some representations to Ham on that subject.

It is alleged on this subject, in the answer, that the plain

Ham v. Greve and Others.

tiffs represented to Ham that "McNett was doing a good business and getting along well." This is not equivalent to a representation that he was solvent. We conceive it to be quite possible, and indeed quite common, for men who are utterly insolvent, and unable to pay a tithe of their debts, to be doing a good business, and to be getting along well. By doing a good business and getting along well, insolvent men are sometimes enabled to make themselves solvent, and to pay all their debts. The representation had reference to the business of McNett and his success at the time, and nothing more. The answer negatives this representation by saying that McNett was not prospering in his business; it alleges also that he was insolvent, but in the absence of any representation on that subject, the allegation is totally immaterial, and the proof offered to sustain it was correctly rejected.

We come to the instructions. Objection is made to the first given by the court, because it is too narrow and does not embrace the whole subject in issue. Standing alone, it might be objectionable, but in connection with the second, the objection loses its force. The two together embrace the substance of the whole case, and put it fully and fairly before the jury. The case, moreover, went to the jury on the theory that proof of the facts sought to be established by the rejected evidence was not necessary to the defense.

The third charge given we think was right. If Ham was told by McNett at the time of the execution of the note that it was to be used in payment of a pre-existing debt of McNett to the plaintiffs, he had no right to suppose that it was executed for the purpose of securing the plaintiffs for goods to be by them, in the future, furnished to McNett. Upon being thus told the object and purpose of the note by him whose surety Ham was about to become, he might well suppose that any previous arrangement for furnishing goods and securing the pay therefor had been abandoned, or if not abandoned, that the note in question was not executed in pursuance thereof.

As to the charges asked by the defendant and refused, we