Opinion
No. 27475.
January 28, 1929.
1. GUARANTY. Guarantors were not liable if induced to sign guaranty because of false representations that principles owed nothing.
In action to recover on an open account sold to one defendant by virtue of a letter of guaranty signed by other defendants, a demurrer was erroneously sustained to plea containing statement that guarantors were induced to sign the writing on the statement of plaintiff's agent that the principal at that time did not owe the plaintiff anything, which statement was false and known to be false by the agent, but not known by the guarantors, and that they were induced to sign guaranty because of said representations.
2. EVIDENCE. Parol evidence is admissible to show that contract was procured by fraudulent representations.
Generally parol evidence is permissible to show that the making of a contract was procured by fraudulent representations, in that such evidence does not change the contract, but destroys and avoids it.
3. GUARANTY. Fraud vitiates contract of guaranty.
Fraud in connection with contract of guaranty vitiates the contract.
4. EXECUTORS AND ADMINISTRATORS. Law requiring claims to be probated within one year applies only to claims on which suit was not brought during decedent's lifetime ( Hemingway's Code 1927, sections 1836, 1851).
Hemingway's Code 1927, section 1851 (Code 1906, section 2107), requiring all claims against estate of deceased person to be registered, probated, and allowed within one year, applies, when construed with Code 1906, section 2093 (Hemingway's Code 1927, section 1836), only to claims on which suit has not been instituted during lifetime of deceased.
APPEAL from circuit court of Newton county, HON. EARL RICHARDSON, Special Judge.
J.L. Byrd and C.E. Johnson, for appellants.
We recognize the rule long established in all of the courts of the land that parol, contemporaneous testimony is inadmissible to change, alter or vary the terms of a valid written instrument, but we do not conceive it to be the law that fraud practiced in the procurement of the signature of a person to a written instrument cannot be proven by parol testimony. See Ganley Bros. Inc. v. Butler Bros. Building Co., 56 A.L.R. 1; Arnhold v. Nat. Aniline Chemical Co., 56 A.L.R. 4. See also extensive note in 56 A.L.R. 13; Patten-Worsham Drug Co. v. Planters Merchantile Co., 86 Miss. 423, 38 So. 209; Howie Bros. v. Walter Pratt Co., 83 Miss. 15, 35 So. 216; Wren v. Hoffman, 41 Miss. 620; Hawkins v. Shields, 100 Miss. 739, 57 So. 4.
The special plea of the administratrix was demurred to and the demurrer sustained, the court holding that it was not necessary to probate and register a claim against the estate of a deceased person where such claim had been sued on prior to such person's death, following the case of Dillard Coffin Co. v. Woollard, 124 Miss. 677, 87 So. 148, which case holds that the statute requiring all claims to be registered does not require claims upon which suit has been brought to be registered and probated. Sec. 1851, Hem. Code 1927, provides that all claims against the estate of a deceased person shall be registered, etc., and the statute further says that "otherwise the same shall be barred and a suit shall not be maintained thereon in any court, even though the existence of the claim may have been known to the executor or administrator." This language is clear, positive and unequivocal, and for the above-reported case to be sustained something must be written into the statute which is not there, and the legislature in 1926 amended the very statute in question and did not except therefrom claims on which suits were pending at the time of the death of the deceased person. We respectfully submit that this case is not sustained by a careful examination of the statute, and that the plain mandate of the statute is that all claims must be registered, probated and allowed.
D.M. Anderson and G.H. Banks, for appellee.
The court did not commit error in sustaining the demurrer to the special plea of the administratrix. This was a pending cause of action against defendant, E.J. Pearson, at the time of his death and was, therefore, such a claim as was not required to be probated, allowed and registered under our statutes. The case of Dillard Coffin Co. v. Woollard, 124 Miss. 667, 87 So. 148, is squarely in point on this question and decisive of the matter. Also, the claim was a "contingent liability" and clearly one of that class not required to be probated under the rule announced by this court in Bobinette v. Starling, 72 Miss. 652, 18 So. 421, and in Savings Building Loan Association v. Tart, 81 Miss. 276, 32 So. 115. See, also, on this point Harris v. Hutcheson, 3 So. 34, 65 Miss. 9; Gordon v. Gibbs, 3 S. M. 473.
In Chicago Building Mfg. Co. v. Higginbotham, 29 So. 79, it was held that: "A written contract cannot be varied by a previous or contemporaneous oral agreement as to its scope and binding form." Lange Med. Co. v. Johnson, 197 S.W. 1168, (Ark.) it was held that a surety on a bond cannot avoid liability on the ground of fraudulent representations as to its scope, its terms being plain and unambiguous. In the case at bar appellants plead merely that appellee's agent at the time they executed the contract falsely represented that Henry owed the company "nothing." They actually signed a contract of guaranty which obligated them to pay what was due and owing at the time of the contract's acceptance, and what might become due and owing in the future. They were misled, as to the scope and binding form of the instrument and not as anything material in the contract. See Houck v. Wright, 23 So. 442. The appellants unconditionally guaranteed the payment of the amount due at the time of the acceptance of the contract and also what amount might become due in the future. The guaranty undertaking is unconditional and absolute. The engagement is "that any statement or representation made by any person as to the undertakings of the guarantor or guarantors other than as herein expressed . . . in order to become effective and binding upon the above-named seller shall be reduced to writing and delivered by registered mail to the office of the said seller at Memphis, Tennessee.
The appellee, the W.T. Rawleigh Company, filed its declaration in the circuit court of Newton county against the appellants, W.C. Henry and others, on the open account of W.C. Henry for goods sold him by virtue of a letter of guaranty signed by E.J. Pearson and T.C. and A.E. Butts, in which these named parties guaranteed unconditionally the payment of Henry's account with the Rawleigh Company, then due or owing, or any sum that might become due or owing, and all indebtedness incurred by Henry in the course of the contract between the Rawleigh Company and Henry, as seller and buyer.
In addition to this, the following clause was in the letter of guaranty, exhibited as part of the declaration, and as part of the ground of this suit: "It is hereby mutually understood and agreed that this contract of guaranty is conclusive and binding on the party or parties who sign it, whether the same is signed by any other party or parties or not, and that any statement or representation made by any person as to the undertakings of the guarantor or guarantors other than as herein expressed, or as to who or how many parties are to sign this guaranty, shall in no wise affect the rights of the company; and it is mutually understood that this is to be a continuing guaranty."
The declaration sets forth an itemized statement of indebtedness of Henry to Hawleigh Company in the sum of eight hundred sixty-seven dollars and five cents.
The appellants plead the general issue, and, in addition thereto, filed four special pleas, two of which were based upon fraud, and the third undertook to set up that there had been no acceptance by the company of the guaranty of these defendants.
The fourth special plea was on behalf of Pearson's administrator, and sought to interpose as defense that the claim upon which the suit was based had not been probated against the estate of E.J. Pearson.
Demurrers were interposed to all of the special pleas, evidently upon the ground that parol evidence was inadmissible on a charge of fraud, to contradict, vary, or alter the valid written instrument upon which the suit was based.
We here set out special plea No. 1 in haec verba: "Come defendants T.C. Butts, E.A. Butts and Lea Pearson, Administratrix, of the estate of E.J. Pearson, deceased, by their attorneys, and file this first special plea, permission of the court first having been obtained to do so. They say actio non, because, they say, they were induced to sign the guarantee sued on by the wilful, wanton and fraudulent misrepresentations made to them at the time they executed said guarantee by the agent of the plaintiff. That said agent stated to these defendants that W.C. Henry, the other defendant herein, owed plaintiff nothing at the time; which said statement was made by said agent for the purpose of inducing these defendants to sign the guarantee sued on, which statement said agent knew to be false and fraudulent; that by reason of said false and fraudulent statement these defendants were induced to sign said guarantee; that at the time said false and fraudulent statement was made as aforesaid, the said W.C. Henry owed the plaintiff more than five hundred dollars, which was then and there known to said agent, and was unknown to these defendants, and this these defendants were ready to verify."
We think the court was in error in sustaining the demurrer to this plea.
It will be noted that the plea contains the statement that they were induced to sign the writing on the statement of the agent that Henry at that time did not owe the Rawleigh Company anything, when the truth was he at that time owed this company more than five hundred dollars; that this statement was false, and was known to be false by the agent, but was not known by the defendant; and that they were induced to sign the guaranty because of said representation.
The general rule is that parol evidence is permissible to show that the making of the contract was procured by fraudulent representations. Evidence of this kind does not change the contract — it destroys and avoids it. When fraud is established, the validity of the contract is impeached; and the mere writing in a contract that it contains all the provisions does not add anything to its strength, because presumably all complete contracts contain all the things which the parties desire therein when they execute same.
This plea presented squarely the issue of whether or not this contract was procured by fraud. A party might be perfectly willing to guarantee another man if he were clear of debt, when he would not consider signing a guaranty for the same party, already owing a considerable sum to the party who is securing the guaranty; and the rule that fraud vitiates such a contract seems to be quite general. See Elliott v. Connell, 5 Smedes M. 91; Wren v. Hoffman, 41 Miss. 616; Hirschburg Optical Co. v. Jackson, 63 Miss. 21; Patton-Worsham Drug Co. v. Planters' Mercantile Co., 86 Miss. 423, 38 So. 209.
This case is not in line with the case of J.B. Colt Co. v. Odom, 136 Miss. 651, 101 So. 853, wherein the contract stipulated that the agent was not authorized to make any representation, and had not made any representations, and so that case is not persuasive here.
We think the court correctly sustained the demurrer to the other plea, and we especially note the plea filed by the administrator of Pearson.
While the suit was pending, Pearson died, and his administrator filed a plea to the effect that the claim had not been probated, and therefore the suit could not be maintained, the time having elapsed for the probation of the claim; insisting that section 1851, Hemingway's Code of 1927 (section 2107, Code of 1906), required that all persons shall register their claims, etc. This precise point has been settled in the case of Dillard Coffin Co. v. Woolard, 124 Miss. 677, 87 So. 148, in which case this court held that the section cited supra, requiring all claims against the estate of a deceased person to be registered, probated, and allowed within one year, otherwise the same to be barred, applies only to claims upon which suit has not been instituted during the lifetime of the deceased, and that this section should be construed in the light of section 2093 of the Code of 1906 (section 1836, Hemingway's Code of 1927).
For the reason that we are of the opinion that the court erred in overruling the plea above set forth, this case must be sent back for a trial upon the issue raised by that plea.
Reversed and remanded.