
    Hamer, Appellant, v. Johnston et al.
    
    AVhere a party about to purchase a promissory note went to the maker to ascertain if he would bo safe in so doing, and was answered, that the note was good; that there was no difficulty about it, and that it would be paid at maturity, it was held that, the maker could not set up a failure of consideration as against an innocent holder receiving the note upon such promise, although the maker was ignorant of such failure of consideration at the time he gave the assurance of payment.
    It seems the making of enquiries of the drawer of a note, in relation to the consideration, is sufficient to put him upon his guard, and that it may be shown from circumstantial evidence, that such enquiries are instituted with a view to the purchase of the paper.
    APPEAL from Chancery.
    The judgment in this case applies to another suit growing out of the same transaction, the case of Marshall v. Morton et al.
    
    Complainant filed his bill in chancery to enjoin proceedings at law, and the injunction being dissolved by the chancellor, an appeal was taken to this .court.
    The bill stated that Willie Davis proposed to sell to complainant ten sections of land, claimed by said Davis, as assignee of certain Choctaw Indians, who claimed by virtue of the 14th article of the treaty of Dancing Rabbit creek; and that relying upon the repeated statements of said Davis, that he was in truth an assignee claiming directly from the said Choctaw Indians, the complainant agreed to purchase said ten sections for the sum of nine thousand, sis hundred and sixty-nine dollars, to secure which he gave him his two promissory notes; that said Davis at the time executed a bond to convey said ten sections, which is as follows:
    
      “ This instrument of writing witnesseth, that the undersigned has this day sold thirty sections of land which he claims as as-signee of certain Choctaw Indians, who are, or were entitled to said lands, by virtue of the 14th article of the treaty of Dancing Rabbit creek.
    
      
      “ That ten sections of said number have been sold to John R. Marshall, ten to M. B. Hamer, five to P. B. Pope, and five to Edward C. Wilkinson. That said-sections are of an undivided interest in a number of sections which said Davis claims, and that after the above claims shall have been ratified by the government of the United States, that the said parties are to divide their interests from the said Davis’s residuary interest, should he have any after satisfying the claims of the said vendees in the premises, and from that of each,' by casting lots for the different locations.”
    The said Davis also executed to said Hamer, a bond with the following condition. “ The condition of this obligation is such, that if the said Willie Davis, his heirs, executors, &c. shall make or eause to be made to the said Malachi B. Hamer, a good and valid title to ten sections of land, claimed by the said Davis as assignee of certain Choctaw Indians, who claim by virtue of the 14th article of the treaty made between the Choctaw Indians and the United States, at Dancing Rabbit creek, whensoever the said Davis shall obtain a title to any of said lands himself, or whenever any other person shall obtain a title for his use, then this obligation shall be void: otherwise, to remain, in full force and virtue.”
    The bill charged that said Davis was not the assignee of the Indians as he represented, and that he had no title or pretence of title, which he agreed to sell. But that an individual named Johnston was the purchaser of a large body of lands from the Indians, and that he took an assignment of the right of said Indians directly to himself and. in his own name; and that shortly after his said purchase, the said Johnston verbally agreed with the said Davis to let him have a limited interest in said purchase, provided the said Davis would advance a certain sum of money, to enable the said Johnston ultimately to secure the titles by sanction from the government of the United States. That Davis never did comply with said conditions, and said Johnston now disclaims any interest on the part of said Davis: that Davis has died, &c. The bill further stated, the trotes have been assigned, and suit instituted by the assignees, and prays an injunction.
    The answers state they know nothing of the consideration of the notes, or any fraud of Davis, and requires full proof The answer. of - the -assignees further stated, that said notes were' assigned to Granville S. ¿Pierce, by. said Davis in'his fife-time, before they were due, for a valúable consideration, to wit: for eighteen valuable slaves sold to said Davis for said notes, .by said Pierce. That. said Pierce had no ■ notice of any .equity between the parties at the, time of said transfer. That said Pierce with a view to be perfectly safé, before he agreed to receive said notes, and before he traded for them, went to Hamer and Marshall with a view to ascertain whether he could trade for the notes with safety, and asked them if. the notes were good, or would-be paid by them. They assured -Pierce, there would be no difficulty about the notes; that they were good, and would be punctually paid when they fell due: that thereupon Pierce upon the assurances so made to him, purchased the notes. It further appeared in proof, that Pierce kept the trade open, and did not close it with Davis until he. could see’Hamer- and Marshall, and receive the above stated 'assurances, and. that upon said assurances he closed his contract with Davis.. 1 ■
    There was no affirmative allegation or proof that Hamer was informed that Pierce was about to purchase the notes at the time the assurance of payment was given. Complainants alledged that at the time they, made their assurances and promises to Pierce, they did not know of their defence against the notes, and that it had' subsequently come to their knowledge. That said assurances were, made in good faith, and without any intention to' .defraud or deceive. > ,
    It was further proved by Pierce, that 'the notes were, assigned to him.before they were due, for the above stated consideration, and without notice of any defence. The answers further alledged, that the present holders of-the notes took them upon, the representations of Pierce . of the assurances of. the makers, that the notes were good, and would be paid.
    Pierce >vas examined as' -a witness, and stated, that he thought, the ■ assurances of payment Avere the inducement with the present holders of the notes to take them, but also thought the notes would have been' purchased by. the present holders without said assurances. ,
    
      Holt, for appellants.
    The fraud charged to have been committed by Davis, upon complainant, is fully established by the testimony, and if the holder of the note occupies no stronger position in this controversy, than Davis himself, would, had he never transferred the paper, complainant is certainly entitled to a decree perpetuating the injunction and rescinding the contract.
    ' Complainant, under the statute, has the same right to impeach the consideration of the note in the hands of Morton, that he would have, were it held by Davis. Has he done any act, Avhich in law, will amount to a waiver or forfeiture of this right? It is confidently insisted that he has not.
    It is true that Pierce, the assignor of Morton, and assignee of Davis, when about to purchase the note, asked complainant, if it was good, and was assured by him that it was, and Avould be punctually paid, and that he afterwards traded for the note-on the faith of this assurance. But it is denied that this assurance, thus given, Avill deprive complainant of that protection against fraud and overreaching, which the statute referred to, has thrown over the makers of commercial paper. Before such a representation can work a forfeiture of his rights under the statute, it must be shown affirmatively by the party insisting on such forfeiture:
    1. That complainant, Avhen he made the representation, knew it to be false, Avas conusant of the fraud which Davis had prac-tised upon him and concealed it.
    
      2. That complainant at the time he made the representation, was fully aware that Pierce was about to purchase the note upon the faith of it.
    3. That not merely Pierce, but that Morton, the present holder of the note, confided in the assurance of complainant, that it Avas good, and was induced thereby to purchase it.
    Judge Tucker, in his “ Commentaries,” lays down the principles contended for, in the folloAving clear and forcible language:
    “ If before the assignee takes an assignment, he applies to the obligor; informs him of his design to buy, and requests to be informed, if he has any objection to payment; if the obligor is aAvare of his equity, and conceals it, he cannot afterwards set it up against the assignee, who has been thus induced by his representation and fraudulent conduct to pay his money for.the bond. In the case put, the obligor is supposed to know of his equity, and to have concealed it. -Suppose, however, he did not know it, shall helóse his equity (previously existing) by his promise of payment? I think not. - He loses his equity only by reason of his fraudulent concealment, and where he did not lrnow of it, he can have been guilty of-rio fraud and shall come to no loss.” . 1 vol. Title Assignment, c. 25. ■ '
    In - Honoré v. Dougherty et al. 4 Bibb, 2S0, the.assignee of a promissory note sought'to recover against Pope, the surety, on the ground that he had made to him,'when about'to "purchase the note, assurances that it was good. It was shown, on the part of Pope, that when this assurance was given, he was.ignorant,ofthe fraud which had been practised upon his principal.' It was held that a representation, made under these circumstances, although it superinduce.d'the purchase of the note, could nót be made the basis of a -liability. «It is,” say the court,in fact nothing short of an attempt to charge a' man for' telling what he knew when requested’, because he did not know more.” . -
    Shreve v. Olds, 2 Marshall, 141-42, is a leading, case in Kentucky. The obligor in the bond had induced the assignee to purchase it, had renewed it to a creditor of the obligee, and had made repeate'd promises of payment; -never disclosing that the consideration of the -instrument was vicious, although this fact was well known to -him. It was determined that he could not be relieved, and the court in giving its' 6pinion,-base it upon the ground that the obligor “with full consciousness of his legaLex-emption froip liability, promised payment.”
    Buckner .-y. Smith, 1 'Wash. 296, Hoomes, executor of Elliot v. Smock, 1 Wash. 389, are to the same effect; and all subsequent adjudications in Virginia, have conformed to them. In the first, the obligor not'only, gave assurances of payment to the assignée, and thereby induced him to purchase the bond, but he concealed from hinxthe légal.'objections which existed to its payment, and persevered in such concealment until after there had been a judgment at law by confession. The court held him bound because of this fraudulent concealment at a time when common honesty required that he should have' disclosed his defence. In the other casé, there was the same concealment by the obligor of his de-fence to the bond. He influenced the assignee to^ buy it, renewed it without making known his objection, and aftérwards suffered a judgment to pass at law. As a previous knowledge of his de-fence was brought home to him, his conduct was very properly held to be fraudulent, and relief denied him.
    In Lomax v. Picot, 2 Rand. 271, where the drawer of a note had induced another to take an assignment of it, assuring him it ■Would be paid, and it turned out that the title to the property for which the note was given was defective, the drawer was held liable, because he made the assurance with a full-knowledge of all the facts connected with his title, and he was bound to know the law arising upon those facts. “ If the appellee knew at that time that the title might prove defective, and notwithstanding, gave- the promise, it would be a waiver of his equity, as that promise induced the purchase of the note.” All the judges in delivering their opinions, trace the drawer’s liability to his knowledge of the facts which rendered his title defective; and although it is not declared in so many words, yet the inference is irresistible," that he would have been discharged had he been ignorant o'f these facts, at the time he made the promise of payment. The case of De Costa v. Shrewsbury, 1 Bay. 211, is a stronger authority in favor of the position assumed, than any which has •been cited from Kentucky or Virginia.
    The extent to which third persons shall be held responsible for representations made by them in regard to the subject matter of contracts in progress between others, has been a fruitful source of discussion and adjudication in England and America. The case at bar is obviously of that'character. So far as I have had access to the decisions upon this subject, they uniformly hold that a party making such representations is not liable, unless he made them fraudulently, and with a knowledge of their falsehood.
    In the great case of Pasley v. Freeman, 3 T. R. 51, this question was elaborately argued by the judges, and settled upon grounds which have never since been disturbed. That was an action against the defendant for having given a false representation of the credit and circumstances of a third person to the detriment of the plaintiff. It was determined that the ground of such an action is the intention to injure and deceive the plaintiff, and that to entitle him to recover, it-must be proved that ,the representation was falsethat the defendant making-it knew- it to be so, and that he made it with a .fraudulent intent.,.- The principle of this decision applies without qualification to the case at bar. Pierce finding-the note of complainant in the market, and being-desirous of purchasing it from Davis, applies to complainant to know whether it is good.' Complainant assures him that it is: and he buys upon the f&ith of this assurance. ' Complainant .was no party to -the contract in progress between Pierce and Davis; he sustains to them' and to the .transaction, the relation Of a neutral third person; precisely the relation sustained by the party who made the representation in Pasléy v. -Freeman. It is not enough then for Pierce-or his assignee to urge that the representation of complainant has been confided in, and that great loss must ensue if the contract be ■ cancelled. The same, argument was pressed in vain in the case referred to. Defendant must-go one step'further before liability, is made out., To credit, given, and loss suffered, the all important ingredient of fr.aud, alledged and proved, must be added¡ 2 Stark. Ev. Title Deceit. 7 Vermont R. 70. 13 Vesfey, 131. 6 J. R. 18Í. 6 CoWen, 346. 2 Wend. 385. 7.1b. 1. 2 East’s R. 92. Irwin y. Sfiirrell, Taylor’s R. 1. 3 Rapd. 410. 3 Bos. & Pulían, 367. 8 John. 23.
    Equally analogous to the' one under -dis'cussion,'is that numerous class of cases, where a man having title to, or a mortgage upon an estate, stands by and either, encourages, or does not forbid, its .purchase, or the predication of loans, or erection of improvements upon it; he is bound by such conduct, as a just punishment for his concealing his1 right;, by which an ■,innocent man is drawn in to lay oirt his money. '- All the cases however, when examined, will be found to fix the party’s liability upon this basis: that he knowingly, and fraudulently concealed.his title 'or mortgage, at a time when it was his duty to have, disclosed it. Fonb. Eq. b. 1. ch. 3., spc. 4. (note.) In Dyer.w. Dyer, 2 Ch. Ca. 108, Lord Chancellor Finch held, that if the party be ignorant:i)f his title, his silence under such circumstances, will not compromit his rights. > <
    , Ainslié v. Medlycolt, 9 Vesey, 13, was á bill filed by a husband 
      to have his wife’s portion, part of which was in stock, made up money, on the ground either of express contract, or representation. The bill was dismissed, because the representation though untrue, and probably the inducement to the marriage, proceeded not from fraud, but mistake.
    In Burrows v. Locke, 10 Yesey, 474-75, the defendant had expressly represented to complainant that C had an undoubted right to make an assignment to the amount of two hundred and eighty-eight pounds, well knowing that he had no such right. Complainant acted upon the faith of this representation. The defendant sought to excuse himself by alledging that although he had received information contrary to what he had represented, he did not recollect it. By the chancellor: — “ To make out a case of this kind, it is necessary to prove only, 1st. that the representation is false. 2d. That the person making the representation had a knowledge of a fact contrary to it.” See also 6 Yesey, 181-2-3, Evans v. Bicknell, where the position insisted on, is laid down with singular clearness and force. Dolbair v. Dolbair, 18 Yesey, 125.
    Ill De Mannville v. Compton, 1 Yes. & B. 355, a party to a marriage settlement was sought to be held responsible for a note of her’s, of two thousand pounds, which it was' alledged had; been fraudulently cancelled, after it had been represented as constituting a part of the wife’s fortune, on the treaty for the marriage. Relief was denied, because it did not appear that the marriage took place on the faith of the representation, and because there was no ground to infer fraud.
    In Pearson v. Morgan, 2 Bro. C. R. 389, A. the owner of an estate charged with eight thousand pounds in favor of B, was. applied to by C, who was about to lend money to B, to know if the eight thousand pounds was still a subsisting charge on the estate. A replied that it was; and C lent his money accordingly ; it appearing afterwards that the charge had been satisfied, it was held that the money lent was a charge on the lands in the hands of A. But upon what principle? Upon the ground that A, when he represented the charge as subsisting, had express notice that it had been satisfied. The learned judge in delivering his opinion, uses this language :
    
      
      “ It is always considered as a constructive fraud wlien the party knows the truth and conceals it. • I think that here' James Butler (the owner of the estate,) knew of the proviso and advancements, and that in this court, he was bound to take notice of them; in fact he had express notice, and' it is not like the case of a latter deed referring to a former - one.. He -having' admitted the lien to be in existence, is'bound by his admission, as .he had full notice, and induced the plaintiff to lend his money.” ' •
    The'cases examined above are cited by Judge Story in his treatise on Equity, 1 v. -202, as supporting the proposition “ that it is wholly, immaterial whether a party misrepresenting a fact knew it to be false, or made the misrepresentation innocently, by "mistake.” - ’ .- _
    'With deference to'the learned author, these cases and the reasoning upon which they proceed, fall far short of sustaining the position'which he has assumed. Instead of treating the scienter as immaterial,, they invariably, present it as the only legitimate basis of responsibility. In 9 .Mod. R: ..36, it .was held, that Vhere-ever any thing in order to a purchase is - publicly .transacted, and a third person knowing thereof, and of his own right to the lands intended to be purchased, and doth not give the purchaser notice of.-such fight, he'shall-never afterwards, be permitted to set up such right to avoid the purchase.
    ' In Evans ¶. Llewellyn, 2 Brq. C. R. 150, it was determined, that a conveyance obtained from a person uninformed of his rights) will be set.aside, though there is no actual fraud or imposition. In, Neville v. Wilkinson, 1 Bro. C. R.,543,".also cited by Judge Story, Neville was deeply embarrassed,' and being about to marry an heiress, to whose father he had, represented that his debts did not exceed1 eighteen thousand pounds, he prevailed oh the defendant, a large creditor of his, to conceal from the father the amount of his claim; alledging that if it should become known to him, the match would be broken off, and he himself involved in ruin. The defendant, accordingly, though present- when the articles of settlement were drawn up and executed,- actively concealed the existence of his debt.-' He. afterwards attempted' to have it satisfied- out of the fund provided by the settlement for the payment of Neville’s debts, it was held that he was entitled to no relief. He was conusant of his claim, and deliberately suppressed it, at a time when in common honesty, he was bound to have made it known. What countenance does this decision give to the position that misrepresentations made by mistake and those made by design, stand upon the same footing ?
    The same question may be asked in relation to Carr ex parte, 3 Yesey & B. 110-11-12, where the whole train of the chancellor’s argument presupposes on the part of him making the representation, knowledge of its falsehood.
    In Stewart v. Luddington, 1 Rand. 405-6-7, Luddington, under a mistaken supposition, that a particular slip of gro.und was vacant, located a warrant upon it. Lockhart, under patents after-wards claimed the land, and upon running his lines, the surveyor gave it as his opinion that they could not be extended, so as to embrace the slip entered by Luddington, whereupon Lockhart abandoned all claims to the land in question, and Luddington, on the faith of this abandonment, went on to perfect his title, procured a patent and sold to Perkins, who sold to C, who sold to N, It was afterwards discovered that Lockhart was mistaken in supposing that his patent did not cover the strip of land, entered by Luddington, and suit was brought to recover it. Held that neither Lockhart nor his assignee, was bound by an abandonment of his claim, thus made’under a mistake. “The transaction,” says the court, “ has nothing of the character of a contract, there, being no consideration passing between the parties, and if there had been a contract, under the circumstances, it would not have been binding, being made upon an erroneous opinion of Lockhart, in relation to his rights.” “Nor on the,ground of fraud, was he bound; no concealment or misrepresentation can have that effect, unless it be collusive or fraudulent, or the negligence be so gross, as to amount to proof of fraud.”
    Misrepresentation, without design, is not sufficient for an action ; it must be made in bad faith. 2 Kent Com. 490. Green v. Price, 1 Munf. 449. 1 J. C. R. 344. 7 J. C. R. 201.
    The distinction between representations made by parties to a contract, and those made by third persons, should never be lost sight of. The former may, with much show of justice, be required to make their representations good; whether innocently or fraudulently uttered, because they are paid, for doing so. A valuable consideration passes to them,-on the faith of such representations; and if they prove untrue, in making compensation, they do but' return that which in conscience belongs to another. Not so with third persons. .They act without consideration; have no. connection with the contract, which may be influenced by their representations, and are without motive to fraud or falsehood. Thus circmhstanced, no principle of. law, sound morals,, or of public policy, will hold them responsible, for mere mistakes,• honestly committed. To establish a different rule, would be to place a padlock on every mouth in the land. Men -would fear to answer the most ordinary inquiries touching their business and interests, lest they should’ incur pecuniary liability.
    ’The only authority cited by Judge Story, which seems to sustain his position is Marshal- Ins. b. 1, c. 10, s. 1. The author, however, is treating, not of representations made by third persons, but of those made by the parties to the contract of insurance. “ The contract of insurance/’ says Ch. J, Kent, “ is formed upon ■principles peculiar to itself, and the.common law maxim of caveat emptor has no application, and professes to have none. . The insurer is essentially passive, a.nd is known to act, and professes to act, upon the information of the assured.” Volume 2, Com. 488, {note.) • '
    It is only in insurance cases, that even parties to contracts, are generally held responsible for misrepresentations made by mistake, and their responsibility in that class of cases, rests upon grounds, distinct arid anomalous in their character. But third persons would not be held liable, for representations, innocently, though untruly made, in regard to -the subject matter of a contract, even of this favored class. ■ .
    No effort, it is supposed,'will be made to give to complainant’s representation, the character of a.contract. If a contract, it is void, for want of consideration, and because made in utter ignorance of the all important fact, that he then stood legally discharged. Ignorance of the law, will not impair the obligatory force-of contracts,'but ignorance of facts, always will. .« To make a receipt in full of all demands, a conclusive bar, it must be given with full knowledge of all the facts.” Esp. N. Pri. 156,174. Com] plainant, if his representation amounted to a contract, would stand in the situation of a party to a bill of exchange or promissory note, who being discharged for want of notice, but is ignorant of such discharge, and promises to pay. It is held in all the authori ties that such promise cannot be enforced. It is not for the defendant, when sued on such a promise, to show that when he made it, he was ignorant of his discharge, but it is for the plaintiff to prove affirmatively, that he had knowledge of it. 16 Johns. Rep. 152-3-4. The reason why such promises are not binding, is, that the defence resulting from want of notice is sufficient, unless it has been waived, and that the party cannot be construed to waive that of which he has no knowledge. A contract implies necessarily the assent of at least two minds. Can the mind, upon any principle of interpretation, be supposed to assent to that of which it was utterly ignorant? Complainant did not promise to pay the note to Pierce; he merely assured him that it would be paid. The note upon its face said as much. How could complainant be regarded as promising payment specially to Pierce, when he was not even apprised of his intention to buy the note? Must not contracts be mutually obligatory, to be valid? If complainant was bound by his promise to pay, what was Pierce bound to do, in return? Nothing. He might buy the note or not, as he chose.
    No decision (the nisiprius dictum in 2 Yeates, deserves not so respectful an appellation,) has attempted to place representations of 'the kind under discussion, on the footing of contracts.
    We think it fully established by the authorities, that complainant cannot be deprived of his rights of defence under the statute, unless it be proved affirmatively by the defendant, that the assurance of payment was given to Pierce, with a knowledge that the consideration of the note had failed. Defendant has not attempted to fix upon complainant any such knowledge. Fortunately, however, complainant has been enabled to show, that he remained in ignorance upon this subject, up to the maturity of the note, that he went to the bank for the purpose of paying it, and was then, for the first time, apprised by the cashier, Hughes, of the fraud which Davis had practised. The note fell due 1-4 January, 1838, and-the assurances to Pierce, were given some time in the month of February, 1S37. It does not appear that complainant had any notice of the transfer of the note, until its maturity; nor is it clear that even then, he was apprised of it, as it is not stated that the note was exhibited, during the conversation between him and the cashier of the bank. He may not have had notice of -the assignment, until the institution of the common law suit.
    2nd. It must be shown that complainant, at the time he made the representation, was fully aware that Pierce was about to purchase the note, upon the faith of it.
    Until the person interrogated is informed of the purpose of the inquiry, he is not bound to make, nor is the other party entitled to claim a full and faithful representation. If the inquiry be prompted by idle curiosity, the person addressed may remain silent, may answer evasively,, or even untruly, without incurring legal responsibility. The law in requiring that the person interrogated shall be distinctly advised of the object for which the information is sought, intends not merely to protect the interests of him who asks, but of him who answers the question. It intends he shall be informed that credit is about to be given, and contracts entered into upon the faith of the representation he shall make, in order that being thus admonished, he may respond with deliberation, with caution, and with scrupulous regard to truth. In this requirement there is great wisdom. It proceeds upon the idea that the citizen shall not be entrapped into a sacrifice of his rights in an unwary moment, by words which though lightly and heedlessly spoken, may be artfully treasured up; but that on the contrary, if those rights are sacrificed, it shall be in a moment of consciousness, and be the result of a deliberate design formed in the midst of solemn and prescribed warnings. It is not the naked language to which the court look, but the intent of the party speaking.
    The Court of Appeal of Kentucky, in Casey v. Montgomery and Allen, 1 Marshall, 467, has condensed the law upon this subject with great force and accuracy. “Expressions,” says the learned judge, “of that sort, which may have escaped an individual in relation to his contracts or transactions of any kind, should be cautiously received, where they are to be niade the basis of liability. It is the deliberate will and intention of the person uttering words, and not their naked verbal import, that ought to subject him. In such case, the person making the representations should be apprised by.the person to whom they are made, of the purpose for which they are required. They should be madé deliberately, and with a consciousness on the part of the person making them, that they will be confided in by the person to whom they are made.”
    We may safely defy the production of a single case in which the drawer of a note, or the obligor in a bond has been deprived of his - legal rights of defence, in consequence of representations made, unless he was distinctly informed by the party applying to him for information, that the note or bond was about to be purchased on the faith of his statement. Judge Tucker in his Commentaries, as already quoted, says : “ If before the assignee takes an assignment, he applies to the obligor, and informs him he is about to take an assignment of his bond,” &c. So in the favorite. case of defendant’s counsel, 16 S. & Rawle, 18, the court say : “ It has been held that if the assignee calls on the obligor, and informs him he is about to take an assignment of his bond, if the obligor acknowledges that it is due, without any allegation of defence, &c.”
    In Sugden on Vendors, 10, we are told that if a purchaser suspects any person has a claim on the estate which he has contracted to buy, he should inquire the fact of him, at the same time stating that he intends to purchase the estate, and if the person of whom the inquiry is made has an encumbrance on the estate and deny it, equity would not afterwards permit him to enforce his demand against the purchaser.
    The rule which holds a third person liable for assurances given in relation to the subject matter of a contract in progress between others, supposes such person to be present at or conusant of the treaty.in which the fraud is practised, and encouraging the purchaser either in express terms, or by silence and concealment of his own title, to proceed in the purchase. 5 Call, 471. In 1b-bottson «. Rhodes, 2 Vernon, .554, a mortgagee being asked ,by the agent of a person about to lend money on an estate, whether he had any incumbrance on the estate, answered that he had not. The Lord Keeper directed an issue at law to try whether the agent told the mortgagee his employer was about to lend money on the estate. This issue would have been wholly superfluous, if the bare naked falsehood had been a sufficient ground for postponing the demand of the mortgagee.
    In 9 Mad. 36, already cited, it was expressly adjudged, that the party concealing his right, to be bound by such concealment, must have notice, that third persons are contracting in reference to the subject matter of such right. Until this notice reaches him, the duty of disclosure does not arise.
    In 1 Bro. C. R. 357-8, Lord Thurlow made this emphatic declaration: “ This court never binds a third person, but where there is notice of a treaty. There is no case in the books, but where the party to whom the fraud is imputed, was conusant of the treaty in which the fraud was practised.”
    If the party sought to be charged, in consequence of a representation made, was not conusant of the treaty in which the fraud was practised, nor in any manner, nor for any fraudulent purpose, confederating with the person committing the fraud, he cannot be held liable. 'Fonblanque’s Equity, 137-8, ed. 1835.
    We ought not to take for a consent of the creditor to the alienation of his pledge, the knowledge which he may have of it, nor the silence which he keeps after he knows it, or if he knows that his debtor is about selling a house, which is mortgaged to him. But in order to deprive him of his right, it is necessary that it appear by some act, that he knows what is doing to his prejudice, and that he consents to it. And a creditor does not lose his mortgage by his consent, except when it appears, evidently, that his intention is to release it, or that there be grounds to charge him with dishonesty, for not having declared his right, when he was under an obligation to do it. Domat’s Civil Law, 1 vol. 364, B. 3, T. 2, sec. 15. “ Now, I take it, that nothing will amount to a confirmation of a fraudulent transaction, but an act done by the party, after he has become fully aware of the fraud that has been practised. He must be aware that the act he is doing, is to have the effect of confirming an impeachable transaction.” Schoale & Lefroy, vol. 2, 486. Complainant was not aware of the fraud practised upon him by Davis, and of course could not have intended to ratify it. His representation should, therefore, not have that “ effect.”
    
      Tested, by this rule, so well established by reason and authority^ the conduct of complainant commits him to no responsibility. Davis perpetrated a fraud upon Pierce by selling him a note which had its origin in the grossest swindling. But was complainant, at the time he gave the assurance of payment, apprised that a treaty was going on between Davis and Pierce for the purchase of the note? Did Pierce, when he asked him if it-was good, inform him that he was about to buy it? We answer in the negative. No such fact appears in the record, by averment or proof; and de non apparantibus, et de non existen-tibus, eadem est lex. Pierce who alone testifies to this point, seems to have had but one interview with complainant, and to have' asked but a single question, “was the note good, and would it be paid ?” He was assured in reply, that it was good, and would be paid. This is all that appears to have transpired between them. No explanations were made on either side. Had complainant been approached in the manner required by law, had he been distinctly informed of the object of Pierce in making the inquiry, how different might have been his response! Instead of answering flippantly and carelessly what he probably considered an idle, if not an impertinent interrogatory, he might have paused, reflected, reviewed the whole transaction, advised Pierce of the consideration of the note, and in the spirit of caution and circumspection, which he would doubtless have felt, might have so qualified his answer as to have protected at once Ms own interests and those of Pierce, from the fraudulent machinations of Davis.
    The record furnishes neither allegation nor proof that complainant was aware of the intention of Pierce to buy the note, or that a contract for that purpose was in progress. A representation thus made, ought not and cannot bind.
    3d. It must be shown that not merely Pierce, but that Morton, the present holder of the note, confided in the representation made by complainant, and was induced thereby to purchase it. Fraud and damage must concur to give a right of action. 3 T. R. SI, Pasley v. Freeman. The party must be misled by the representation and act under its influence, or he cannot complain, 1 Story’s Eq. 212. The contract must have taken place on the faith of the representation. 1 Vesey & JB. 355.
    In 16 S. & Rawle. 18, a case relied on by defendant, the court say: “ The question is, was Ann Fox induced to purchase the bond under the representation made by Werner (obligor) that he had no defence, and that he was willing and desirous that the bond should be sold in the neighborhood ? If this should be the opinion of the jury, they will find against the obligor.”
    In Co wen v. Simpson, 1 Esp. C. 290, the defendant was held not liable for a fraudulent representation made by him, because it was shown that plaintiff had not acted upon it, but upon a similar representation made by another. 2 Starkie’s Ev. Title Deceit. All the cases without exception, proceed upon the ground that the drawer of the note, by his representation and assurances of payment, induced the assignee to purchase it. Unless this influence was successfully exerted, there can be no responsibility. Has Morton shown that he purchased the note on the faith of complainant’s assurance to Pierce ? It is true that this assurance was communicated to him, but this may have been done and yet the assurance not have constituted the coatrol-ling motive to the purchase. The only witness who speaks to this question is Pierce himself. Having deposed that when about to sell the note to Morton, he stated to him complainant’s assurance “that it was good and would be paid;” he is asked, whether Morton was not influenced by that statement to buy the note ? His answer is so unique that we cannot forbear quoting its very words. “ I think,” says the witness, “ the statement alluded to was the inducement to the taking of said note. I think he would have taken the note any how.”
    The witness does not undertake to make any positive declaration in relation to the motive which operated upon Morton. He gives us his impressions; his thoughts. He thinks Morton was induced to buy by the statement, and he thinks he would have bought “ any how.” These thoughts are in direct conflict, and neutralize each other. It is a matter of demonstration that if Morton would have bought the note “any how,” he acted under some other influence, probably some pre-existing determination, and not under the influence of the statement referred to. Perhaps he was a “shaver,” a speculator in commercial paper; and perhaps complainant’s note was offered to him at so tempting a discount, that his cupidity could not resist the bait. Perhaps his eagerness and resolution to buy, running all hazards, may have been manifested to Pierce, who may have availed himself of this feeling to pass the note off “ without recourse.” Doubtless the feelings of Morton upon the subject were well known to Pierce, and in full view of them, his opinion is, that the note would have been purchased without any statement as to complainant’s assurances. We insist therefore, there is no proof whatever that Morton became the holder of the note on the faith of complainant’s representation. The law, however, requires that the proof to this fact should be most distinct and conclusive, because it is the gravamen of the defence.
    Even if the testimony to this point, were clear and irresistible, there is no allegation in the pleadings, under which it could be received, or considered of. It is worthy of all remark, that Morton no where avers or intimates,- that he purchased the note on the faith of complainant’s representation or assurance of payment. It-was obviously an all important averment, and would doubtless have been made, could it have been done with safety or with proper regard to truth. He well knew that he concluded the trade under other influences, and hence, he endeavors to shelter himself under the confidence reposed, not by himself, but by Pierce, in the assurances of complainant.
    In 12 Wheat. 181, Chief Justice Marshall lays down the rule contended for, in this explicit language: “ That a decree must be sustained by the allegations of the parties, as well as by the proofs in the cause, is too well established to be disregarded.”
    In 1 Bibb, 316, it was held that evidence to merit the attention of the court, must be relevant and illustrative of some point presented by the pleadings.
    It was adjudged in Morrison’s Executor v. Hart, 2 Bibb, 6, 7, that “a fact not alledged, can no more in a court of equity, than in a court of law, constitute a basis upon which an adjudication may be made, it being equally true that the chancellor, as well as the judge, must decide according to the allegations and the proof.”
    
      It not being alledged in the answer or in any part of the pleadings, that the purchase of the note was made by Morton, under the influence of complainant’s representation, there is no issue made upon that point, and however convincing might be the testimony, it would have to be rejected as irrelevant. The decree in this cause, resting upon the assumption, that there was not only averment but proof to this point, cannot be sustained.
    This is not a technical or formal objection, but one supported by a rule of practice and pleading, as ancient as the common law itself.
    It will however be conceded, we presume, that Morton did not purchase on faith of complainant’s representation, and his right to a recovery will be based on the ground, that Pierce, his assignor, thus bought, and that he is entitled to Pierce’s equity against complainant. Had Pierce transferred the note in the ordinary way, remaining liable as endorser, it might be urged with some plausibility, that to make his equity available as a protection to him, it should enure to the benefit of Morton, who might under its cover, have judgment and satisfaction of the drawer, thereby discharging Pierce from his responsibility. But the assignment is made “without recourse,” and Pierce states that he has no interest whatever in the note or in this suit. Let the decree be for or against complainant, Pierce is saved harmless. The equity of Pierce, if it existed at ail, was personal to himself, it arose out of the fact that he purchased the note and laid out his money, because of complainant’s assurances of payment. It might be against conscience for complainant to insist on a failure of consideration against Pierce, but certainly as against Morton or others who purchased the note without trusting to or being influenced by these assurances, he might impeach the note with perfect propriety. For between them and complainant, there exists no such relation, as obtains between Pierce and complainant, and the equity, to which this relation could alone give rise, must be wanting. If Morton bought the note upon his own judgment, and upon his own calculation of the chances of payment and profit of the trade, unpersuaded and uncontrolled by complainant, or his conduct, neither law, nor good morals, would require that the latter should be deprived of his statutory rights of defence.
    
      A. sells a Horse to 13., representing it to be sound, and B. sells the same horse to C. without any such representation. It is after-wards discovered by C. that the horse is unsound, and was so at the time of the sale by A., and that A. had knowledge of the unsoundness. Will it be contended that C. could maintain an action against A. on this representation, not made to him and not influencing his purchase? To state the question, is to answer it in the negative. But to make the case more analogous to the one at bar: A. is about to sell the horse to B., but declines making any representation as to its soundness. B. inquires of C. who once owned the animal, as to its condition, and is assured that it is perfectly sound, upon the faith of which assurance, he makes the purchase. B. sells to D., who buys at his own risk, without exacting any representation of soundness. It is afterwards ascertained, that the animal is diseased, and was so when sold by A., and that C. was conusant of the fact. Upon what principle of law, or morals, could it be said, that D. the dealer at arms length in the market, might have his action against C ? There would be fraud in C., but no damage to D., resulting from that fraud; for C.’s representation was not addressed to him, and did not influence his purchase. Suppose that in each of these cases, instead of a representation, there had been a warranty based upon a valuable consideration, and the party to whom the warranty was made, had sold the horse without warranty. The principle would be the same, and the person buying without a warranty could not avail himself of the warranty made to others who had previously owned the property. For although covenants of warranty follow real estate, the rule is different in regard to personalty, because in relation to personalty there is no privity of estate as there is in the case of realty. Tucker’s Com. tit. Covenant, 124.
    This principle has a manifest application to the case at bar. Caveat emptor is a maxim of the common law, applying most strictly to a man who buys a chose in action, or in other words, a suit; and unless he has protected himself by a contract of warranty or a representation, on the faith of which he acted, he runs all hazard, and in the event of loss, is without redress. If others, more wily and cautious, had previously owned the property, and protected themselves by such contract or representation, it is no protection to him. Tucker’s Com. 336.
    The statute places the holder of a promissory note, in the shoes of the payee, not in the shoes of any intermediate assignee, who may have strengthened his position, by some equity, peculiar and personal to himself.
    For whose protection, is complainant to be deprived of his rights of defence under the statute? Pierce asks no protection, he is beyond the reach of loss, terminate this controversy as it may. Morton, a speculator in the market, buying without warranty, and influenced by no representation of complainant, is entitled to no protection, at least at the sacrifice of one who has committed upon him no fraud, made with him no contract.
    The statute authorising the makers of commercial paper to impeach its consideration, in the hands of bona fide assignees, is, it is confessed, anti-commercial in its spirit, but it is eminently adapted to the habits and pursuits of the people of Mississippi, who are not merchants, but tillers of the soil. They have displayed, in this enactment, an ambition above that of “ the shop-keeper,” an ambition which seeks the true glory of a state, in the advancement of principle and the interests of sound morals, rather than the miserable aims and selfish policy of mere trade. In thus wor-shipping at the shrine, rather of justice, than of mammon, they have chosen the better part, and in despite of the bribery of their spoils, have given to craft and fraud, a stern and sublime rebuke. No disposition should be felt to cripple or curtail the operation of this statute, nor should the rights which it solemnly and anxiously guards, be sacrificed to words, lightly and unconsciously uttered, and which, for aught that appears, passed by the holder of this note, as the idle wind, influencing him to no contract, and visiting upon him no loss.
    G. S. Yerger, for appellees.
    1st. The first point I make, and which independent of all others I consider conclusive, is this: that before Pierce purchased the notes, and with a view to ascertain whether they would be paid without difficulty, he went to Hamer and Marshall, and they assured him they would pay the notes, and there should be no difficulty about them, upon the faith of which he traded for them.
    In a case of this kind the authorities are numerous, that no defence which existed- at the time, will be allowed against the assignee, even in cases not negotiable; it would be a fraud to permit it. The statute always sets off, and does not apply to such case. See 2 Yeates’ R. 28, 476. Kemp v. McPherson, 7 Han. & Johnston’s Rep. 16 Ser. & Rawle, 17. "Wilson v. McLaren, 19 Wend. Rep. 1 Wash. Rep. 296. 2 Rand. 247. The above cases are precisely in point, and decide this case.
    But it is said that the complainants when they made the promises did not know of the failure of consideration and fraud. This makes no difference. They knew or ought to have known. The effect of their representations is the same; it induced Pierce to take the notes, and part with ,his property. In 1 Story’s Eq. 202, “It is an old head of Equity that when a man acts on the faith of a representation made by another, the other shall make the representation good.”
    It has been expressly decided on this identical point that know ledge or not of the existence of a defence, makes no difference. Thus in 2 Yeates’ Rep. 465, it is decided, “ that one having a good defence against his bond, promises to pay it, and thereby induces another person to procure the assignment thereof, he shall be concluded.” Miter, where ignorant of his defence he promises to pay after assignment. In same book, page 541, it is expressly decided, “that one having a good defence against his bond though ignorant of the same, promises to pay, in confidence whereof another obtains an assignment, the obligor is concluded thereby.”
    This last case is precisely verbatim like the one at bar. See facts stated at page 542. The court says, “the general rule of our law certainly is, that mistake, fraud, or want of consideration may be given in evidence, even against an honest assignee. But when the obligor represents the money thereon is justly due to a person desirous to take an assignment, and engages to pay the same, in faith of which the assignment is procured, the former takes on himself the risk and adequacy of consideration and the fairness of the original transaction, and relinquishes any objections 
      he might otherwise have on those groundssuch conduct is virtually a new contract, and forms an exception to the general rule.” This court has decided the same principle in McMurran v. Soria, 4 Howard’s R.154. .
    The cases cited on the other side of promises by endorsers to pay in .ignorance of their discharge, are not analogous. The promises were made to parties after assignment. But if the promise to pay in such case had been made to a' third person, iii' confidence, of which he took the note, it would present a different case. This very case and the distinction is faltón in the case in 3 Yeates, 464. ■ " ’
    ■ Believing-that this point is .conchisive, I have not. examined the other points. But if necessary, I can show clearly there -was -no failure of Consideration-or fraud,-as against the assignee.
    Anderson, on the same side.
   Mr. Chief Justice Shahkev

delivered the opinion of the court.

The complainant filed his bill to enjoin proceedings át law, arid the injunction being dissolved by the Chancellor, this'appeal was taken. It appears that the notes on which the suits at law were brought, were given for ten sections of land, of which Davis, the vendor, represented himself as-the rightful owner, aB'assignee of certain Choctaw Indians, who derived title under the 14th Article of the Treaty óf Dancing Rabbit Creek. Confiding in these representations, the complainant ¿nade and delivered the notes, amounting to nine thousand six hundred and sixty-nine dollars, and took from the vendor a bond in the penalty of sixty thousand dollars conditioned to make title to the complainant so soon as it should be received by the obligor. It is alledged'that Davis had no right or title whatever, and that his representations were false and fraudulent.' The charge of misrepresentation and fraud is sustained by the’proof. The answers, however, set up'and rely on new and independent facts which transpired between the complainant, and the assignee of the notes, on which the Respondents insist they have a right to recover at law, although the consideration may have failed as between the véndor.aiid vendee. Shortly after the notes were made, they were transferred by Davis, the payee, to one Pierce, for a valuable consideration, in the course of trade. Before Pierce would purchase the notes, he went to the complainant to know whether he would be safe in doing so. He was answered that the notes were good and no difficulty about them, and that they would be punctually paid at maturity, in consequence of which assurance he purchased them. Pierce af-terwards transferred the notes to the respondents, stating to them what had passed between him and the maker, on the faith of which statement they took the notes without endorsement. To avoid the effect of this promise made to Pierce, the complainant by amended bill states that it was made before he discovered that Davis had no title to the land, and in utter ignorance of the de-fence to the notes.

Under the provisions of our statute, it is true as a general rule that the maker of a promissory note, after assignment, is entitled to the benefit of all want of lawful consideration, failure of consideration, payments, discounts and sets off, previous to notice of assignment, as fully as such defence could have been made against the payee; and this rule must prevail unless the facts here disclosed create an exception by operating as a waiver of the de-fence, or by creating an equal equity with the holders.

In several of our sister states, this question has undergone judicial consideration, and if these decisions are not repugnant to principle, they must of course have great weight in settling the present case. The case of Carnes, for the use of Olden, v. Field & Harlan, 2 Yeates, 541, was in every essential particular, precisely like the case at bar, and the court said “ when the obligor represents the money thereon as justly due, to a person desirous of taking the assignment, and engages to pay the same, in faith and confidence whereof the assignment is procured, the former takes on himself the risque of the adequacy of consideration, and the fairness of the original transaction, and relinquishes any objections he might otherwise have on those grounds.” In the case of McMullin, for the use of Rudy, v. Wemer, 16 Sergeant & Rawle, 18, the same question was again before’ the Supreme Court of Pennsylvania, and it was held that if the obligor promisés to pay the bond to one who is about to take an assignment, in consequence whereof the assignment is made, he is bound by such promise, although he might have been ignorant at the time that the consideration had failed. By the same court this question was decided a third time in the same way. 1 Penn. Rep. 24. These repeated adjudications give strength and force to the position, for it must be regarded as having been well considered.

The courts of Virginia have recognized this doctrine to its fullest extent. In the case of Buckner, Trustee, v. Smith et al. 1 Wash. Rep. 296, an assurance of payment to o,ne who was about to take an assignment of a bond, was held to be binding, although the bond had been given for a gaming consideration and was absolutely void by statute. In the case of Hoomis v. Smock, Ib. 389, it was admitted as a general principle that the assignee could not stand in a better situation than the assignor; but it was also said, that “ if an innocent man should be induced by the obligor to become a purchaser of the bond, it would be a deceit upon him, and he ought not to be subject to the same equity to which the obligor was entitled against the obligee.

This question was again before the Court of Appeals of Virginia in the case of Lomax v. Picket, and underwent a full investigation ; and the want of knowledge on the part of the payer of the failure of consideration at the time he gave the assurances of payment, was held to be an immaterial circumstance. In that transaction the assignee knew what the note had been given for^ but both parties it seems were ignorant of the failure of consideration. In this it goes even further than the case at bar, for there is no evidence that the assignee knew any thing of the consideration. On this ground of knowledge ol' the consideration in the case cited, it was insisted that the assignee took the note subject to the equity which existed between the original parties; but the court said that in order to make the defence available it ought to appear that he had a knowledge which the maker had not, and that the promise had been obtained under a concealment of such knowledge. The principles on which these cases were decided are distinctly recognized in Watson v. McLaren, 19 Wendell, 567, and in 4 Monroe.

These decisions may therefore all be considered as having been made directly on the point here presented, and they seem to comport with the principles of justice. In morals there can be no hardship in compelling him to bear the loss who has been the cause of it. The representations made to Pierce at the time he was about to purchase the notes, amount to a waiver of any de-fence which the maker might have. The defence was certainly a matter which he had the power to waive if he thought proper. -His representations, it seems by the averment in the answer, were the inducement to Pierce to take the assignment, and constituted an equity with the assignee as strong as that which had existed in favor of the maker against the payee. The maker had secured himself by a penal bond, taken at the time of giving the notes; that was as available to him, as Davis’s endorsement to Pierce. All paper of this description is negotiable: if it is purchased without proper precaution, then the assignee takes it subject to all the equities which originally existed. The only mode by which a purchaser can relieve himself from this difficulty, is to make the proper inquiry of the maker, who is supposed by the law to know the consideration and the defence. If he states that the money will be paid, this is calculated to inspire confidence, and justice requires that such representation shall estop him from resisting payment on the ground of failure of consideration. It is said to be good policy to encourage, rather than chock the negotiability of mercantile paper. Surely its circulation would be greatly embarrased, if the maker may be permitted in the face of his assurances to the contrary, to go into the consideration against an innocent holder, who has been induced to purchase by an honest reliance on the statement of the maker that it would be paid.

We are referred to the language held by Judge Story in the 1st volume of his Treatise on Equity Jurisprudence, and it applies with great force to. the case. He says; “If a representation is made to another person, going to deal in a matter of interest upon the faith of that representation, the former shall make that representation good, if he knows it to be false.” And he adds, “Whether the party thus misrepresenting a fact knew it to be false, or made the assertion without knowing whether it were true or -false, is wholly immaterial; for the affirmation of what one does not know, or believe to be true, is equally in morals and law as unjustifiable as the affirmation of what is known to be positively false. And even if the party innocently represents a fact by mistake, it is equally conclusive, for it operates as a surprise and imposition on the other party.” If these remarks be consistent with equity, then whether Hamer knew the consideration had failed or not, makes no difference. It was his duty to inquire into the title of Davis before he gave the notes. The omission to do so was the first act of negligence, and the representation made to Pierce was in relation to a matter about which it was Hamer’s business to be informed, and his statement was calculated to impose upon Pierce. Hamer undertook to make a statement in relation to his own liability to one who was about to purchase it, and the purchase having been made on the faith of that statement, he is bound in good faith to make it good. It is a rule at law and in equity, that whenever a loss must fall upon one of two innocent persons, it must be borne by the one who has been most negligent. Pierce was blameless in the matter, having used proper diligence to inform himself.

The complainant’s counsel, however, deny that these authorities are in accordance with principle, and have assumed three grounds in support of the bill. 1st. That complainant when he made the representation should have known that it was false; must have been conusant of the fraud practised on him by Davis and concealed it. 2d. That the promise is not binding unless the complainant was fully aware when he made it, that Pierce was about to take an assignment of the note; and 3d. That the assurance is not binding unless the present holder, as well as Pierce, took it on the faith of that assurance.

In regard to the first ground, it must be borne in mind that the defendant said nothing of the consideration. His statement was that the note should be paid. This ground is therefore certainly too broad in asserting that complainant knew that he was making a false representation in promising to pay, and also that complainant concealed the fraud which had been practised. If he knew it and still promised to pay, whether he communicated it to the defendant or not, it was beyond all question a waiver of the defence. The several members of this proposition can therefore be regarded as presenting but the single question, did Hamer know of the failure of consideration ? 1 have already said that such knowledge was immaterial. The same question was raised in several of the decided cases, and expressly noticed in the decisions, and in none of them was it thought to be a material point.

In regard to the second ground, it does seem but reasonable that Hamer should have been apprised that Pierce was about to purchase the note; but must he not have been sufficiently aware of that fact to put him on his guard. This is a fact which might be proved by circumstantial testimony, and certainly the circumstances were such as to leave no other conclusion on the mind of Hamer than that Pierce was about to purchase the note. What other object could a stranger have had in making the inquiry ? It does not appear that Pierce knew any thing of the contract between Hamer and Davis, or that he could have had any other motive than to inform himself with a view to a purchase, and so Hamer must have understood. His answer shows this to have been his understanding. He' probably would not' have so answered any one whom he supposed to be a mere officious enquirer. A fair construction of his answer fully justifies the conclusion that he was apprised of the purpose for which the en-quiry was made. And as to the third ground, it is distinctly averred in the answer, so far as that is to be taken as true, that the holder took the note on the assurance which had been given to Pierce. Even if this was material, therefore, it sufficiently appears in the present aspect of this case.

In support of these several positions, we are referred to many authorities. The first is from Tucker’s Commentaries, for the purpose of showing that if the obligor does not know of his equity at the time he gives an assurance to one who is about to purchase, that the bond will be paid, then he does not forfeit his equity. The author has propounded the question, and answers that he thinks the obligor wouLd not lose his equity. His opinion or dictum does support the counsel in their first position, but the learned commentator does not seem to have been followed even in his own state. Plis position is in conflict with that of Judge Story, and the latter has the best support from precedents. The case of Honoré v. Dougherty, referred to, differed very materially from this case: There the assurance was given by a surety to the note? who Was known to be such. There was also reason to believe that tlie assignee knew when he took the note, that a recovery would be contested by the principal. The decision turned mainly on the ground that the assurance had been given by the surety, who was not presumed to know any thing of the equity of his principal. The surety was looked upon as a mere stranger. The more recent case of Morrison v. Beckwith, 4 Monroe, 73, decided in the same court, is conclusive authority against the position taken by the counsel for complainant. In the case of Shreve v. Olds, 2 Marshall, the court held it to be competent for the maker to waive the illegality and fiaud in favor of an innocent holder, and in delivering the opinion, it is true, the learned judge laid some stress on the fact that the assurance was given with a full knowledge of legal exemption, and yet it is apparent that this was mentioned as a circumstance which placed the matter beyond doubt. There is no indication that the decision would have been different even without this knowledge of legal exemption.

The leading case of Pasley v. Freeman, 3 Term Rep. is also referred to, and many others belonging to the same class, based upon that decision, both in England and the United States. The question there decided is, that false and fraudulent representations, made by one person to another, concerning the credit of a third person, on the faith of which credit is given to that third person, give a right of action against the person making such representations, whether he be benefited by them or not. The knowledge of the falsity of the assertion was held to be material; but the present case is clearly distinguished from the case of Pasley v. Freeman, and all others of that class. Here Hamer was not making a representation in regard to a third person, but in regard to his own liability, a thing in which he was directly interested; and in reference to which it was in his discretion to waive any defence he might have. In Pasley v. Freeman, the person making the representation had no interest; there was no existing liability, nor did he undertake to incur any. No other ground of recovery could exist, but for fraud. Fraud is not here the ground of action, but it is the note which gives rise to the claim. In the one case the action is ex contractu, in the other it is ex delicto. No assertion made in reference to the credit of a third person, but it was in reference to what he would not do in reference to a pre-existing contract. In the one case fraud must exist before the action can be brought; in the other case a recovery is allowed to prevent a fraud.

We are referred to another class of cases which fall properly under the equitable head of implied assent to a contract in which the party may have an interest, and in permitting which without urging his claim he is precluded if he knew of his interest; as if a prior mortgagee stand by and witness the execution of a second mortgage, in such case his silence is construed to operate as an assent. The rule does not apply to one who is ignorant of his rights, and hence it is insisted that Hamer, being ignorant of his defence, is not precluded. But these cases are also distinguished from the present. Hamer did not stand by and see the purchase made, but induced its consummation by a positive statement that it should be good to the assignee. The principle of these authorities has never been applied in a strictly analogous case. Hamer’s liability was a matter apparent. That was the subject of the contract, and he was necessarily aware of its existence, and when he undertook to give confirmation to that which was apparent evidence of a debt, he cannot be heard to gainsay it.

In’the decisions referred to, the object is to prevent fraud, by compelling every one who is conusant of his right, to disclose it and act in good faith towards the purchaser. In this case the law has the same object in view, and accomplishes it by compelling the complainant to make good his assertion; for although he had no such thing as fraud in view, yet a consequential injury would follow if he is to be permitted to set up a defence, after giving assurances that he had none.

The case of DaCosta v. Shrewsbury, 1 Bay. 211, has come under our notice, and although not referred to, it is an authority in point for complainant, but as it stands alone, opposed by all the decided cases, we cannot adopt the rule there laid down. The assignee of a bond, previous to the assignment, sent to the obligor to know if he had any discounts against it, or any objection to the assignment. He answered that the bond was justly due, and promised payment in work. He afterwards discovered that the land for which the bond had been given, was under mortgage, and refused payment. The court held that a recovery ought not to be allowed. The decision seems to be based on two grounds: First, that the assignee of a bond takes it subject to the equity between the obligor and the obligee. And secondly, that a mere parol promise was not sufficient to destroy the defence. The first as a legal proposition is true, but the exceptions to the rule are shown by the cases above referred to. The obligor may waive his equity, and this may be done either directly or consequentially; and as to the second ground, it is believed to have been an erroneous application of a legal rule. The promise was not relied on as the cause of action; not as an extinguishment of the bond, but as a waiver of an equity against it. As such it was as good by parol as otherwise.

In regard to the construction of our statute it is proper to observe, that promissory notes, so far as regards the defences, are placed on a footing with bonds at common law. The assignee takes them subject to all equities existing between the original parties, and as that equity may be waived as to bonds, so it may be as regards notes. The most of the decisions referred to, were on bonds, and as bonds and notes stand upon the same fopting, the decisions are applicable. The statute will not justify us in going further in the one case, than the common law would in the other.

The principle contended for by respondent's counsel, received a recognition by this court in the case of McMurran v. Soria, 4 Howard’s Reports, 154. The defence of the maker was let in, it is true, but it was because his language did not amount to an assurance or promise of payment to the assignee.

On a careful review of all the authorities, we do not think they would justify giving the relief prayed for. The decree of the Chancellor must therefore be affirmed.  