SURETYSHIP--FRAUD OF PRINCIPAL ON SURETY--PRINCIPAL AS AGENT OF CREDITOR

Authors

Abstract

The plaintiff manufactured medicines, selling to peddlers who operated as independent contractors. Menning, a peddler, signed a new contract with plaintiff for operations for the ensuing year, the contract also covering payment of existing debts ($1,794) to plaintiff. The defendant, induced by Menning and relying on his statement that there was no existing debt, signed the contract as surety, the guaranty reciting a consideration of $1 received by defendant and an extension of time on any debts. This contract was terminated after seven weeks, and plaintiff sued for $1670, the balance due. The defendant claimed that Menning was plaintiff's agent in procuring the guaranty, at least as to the existing debt, and plaintiff should be precluded by the fraud. Held, plaintiff could recover; Menning was not his agent so as to take the case out of the general rule that fraud by a principal debtor on his surety, without any knowledge or participation of the creditor, is no defense for the surety. Watkins Co. v. Beyer (Wis. 1930) 233 N.W. 442.

Recommended Citation

SURETYSHIP--FRAUD OF PRINCIPAL ON SURETY--PRINCIPAL AS AGENT OF CREDITOR, 29 Mich. L. Rev. 945 (1931).
Available at: https://repository.law.umich.edu/mlr/vol29/iss7/34