tract by the agent, but for that purpose it must appear that the coal was generally unsalable. § 341. Same; Agency or Power Coupled with an Interest. Where the authority given to an agent under his employment amounts to a power coupled with an interest, it is not revocable at the will of the principal, whether so expressed in the contract or not, and if it is wrongfully revoked, the principal is liable in damages.144 But to render an agent's authority irrevocable because coupled with an interest, the interest must be an interest in the property itself upon which the power is to operate, and not merely an interest in the exercise of the power or in that which is to be produced by the exercise of the power.145 Thus, an agency to sell property and to receive a fixed commission, or to receive all the proceeds above a certain amount as a commission, does not create a power coupled with an interest, because the interest of the agent is not in the property itself but in his prospective earnings from its sale.146 And even a contract that a broker should receive a named percentage for selling land and should have a definite interest in the remaining lots after a sufficient number had been sold to satisfy a mortgage, he to pay all sale expenses and half the mortgage indebtedness, was held to create. merely the relationship of principal and agent which could be terminated at the will of the principal.147 On the other 144 Buffalo Land & Exploration Co. v. Strong, 91 Minn. 84, 97 N. W. 575; Montague v. McCarroll, 15 Utah, 318, 49 Pac. 418; Citizens' State Bank v. Tessman, 121 Minn. 34, 140 N. W. 178, 45 L. R. A. (N. S.) 606; Laux v. Hogl, 45 Mont. 445, 123 Pac. 949; Cloe v. Rogers, 31 Okl. 255, 121 Pac. 201, 35 L. R. A. (N. S.) 366. 145 Taylor v. Burns, 203 U. S. 120, 27 Sup. Ct. 40, 51 L. Ed. 116; Hunt v. Rousmanier, 8 Wheat. 174, 5 L. Ed. 589; Attrill v. Patterson, 58 Md. 226; Walker v. Denison, 86 Ill. 142; Schilling v. Moore, 34 Okl. 155, 125 Pac. 487; McKellop v. Dewitz, 42 Okl. 220, 140 Pac. 1161, 52 L. R. A. (N. S.) 255; McManama v. Dyer (Mo. App.) 176 S. W. 1101. 146 Chase v. Chapman, 89 Kan. 196, 131 Pac. 615; Butterfield v. Consolidated Fuel Co., 42 Utah, 499, 132 Pac. 559; Alexander v. Sherwood Co., 72 W. Va. 195, 77 S. E. 1027, 49 L. R. A. (N. S.) 985; Knudson v. Laurent, 159 Iowa, 189, 140 N. W. 392; Miller v. Wehrman, 81 Neb. 388, 115 N. W. 1078. 147 McKellop v. Dewitz, 42 Okl. 220, 140 Pac. 1161, 52 L. R. A. (N. S.) 255. And see Rusco v. Ryan (Okl.) 153 Pac. 1162. hand, there is a decision that where a broker employed to sell land has in good faith incurred expenses and expended time and labor in performing the agency, it becomes an agency coupled with an interest, which the principal will not be permitted to terminate at will.148 So, where the plaintiff was employed to negotiate an exchange of lands for the defendant, and afterwards employed to sell the lands received by defendant in such trade, the services rendered by him in making such trade being in part the consideration for the second employment, it was held that such engagement was coupled with an interest.149 And where a landlord has an interest in certain crops, and authorizes his tenant to sell the entire crop, to collect the proceeds, and to apply his portion thereof in satisfaction of an obligation due from him to such tenant, an agency coupled with an interest is created, which cannot be revoked at the will of the principal.150 § 342. Contracts of Suretyship and Guaranty.—Where one is induced by fraud, concealment, deception, or false representations to assume the liability of a surety, the fraud may give him a right to revoke or cancel his obligation as against the principal, but not as against the creditor secured, where the latter was not privy to the fraud, that is, where he neither instigated nor participated in it, and especially where he was ignorant of it.151 Thus, the fact that 148 McCray v. Pfost, 118 Mo. App. 672, 94 S. W. 998. 149 Bird v. Phillips, 115 Iowa, 703, 87 N. W. 414. 150 Big Four Wilmington Coal Co. v. Wren, 115 Ill. App. 331. 151 Stiewel v. American Surety Co., 70 Ark. 512, 68 S. W. 1021; Williams v. Morris, 99 Ark. 319, 138 S. W. 464; A. S. Ripley Building Co. v. Coors, 37 Colo. 78, 84 Pac. 817, 11 Ann. Cas. 269; Jacobs v. Curtiss, 67 Conn. 497, 35 Atl. 501; Lieberman v. First Nat. Bank, 8 Del. Ch. 519, 45 Atl. 901, 48 L. R. A. 514, 82 Am. St. Rep. 414; Broughton v. Jos. Lazarus Co., 13 Ga. App. 153, 78 S. E. 1024; McCrea v. Murphy, 90 Ill. App. 434; Sebree Deposit Bank v. Clark, 105 Ky. 212, 48 S. W. 1089; Lovelace v. Lovelace, 136 Ky. 452, 124 S. W. 400, 136 Am. St. Rep. 271; Fuller v. Dupont, 183 Mass. 596, 67 N. E. 662; Town of Hudson v. Miles, 185 Mass. 582, 71 N. E. 63, 102 Am. St. Rep. 370; Atlas Shoe Co. v. Bloom, 209 Mass. 563, 95 N. E. 952; Blaney v. Rogers, 174 Mass. 277, 54 N. E. 561; Lee v. Wisner, 38 Mich. 82; Saginaw Medicine Co. v. Batey, 179 Mich. 651, 146 N. W. 329; Linn County v. Farris, 52 Mo. 75, 14 Am. Rep. 389; Ward v. National Surety Co., 167 Mo. App. 579, 152 S. W. 397; the principal in a bond induces the surety to sign the same by causing the name of a cosurety to be forged thereto will not release the surety from liability to the obligee in the bond, if the latter did not know of the fraud, but supposed the signature to be genuine.152 But it is far otherwise when the creditor or obligee is guilty of fraud towards the surety. The creditor owes to the surety the duty of exhibiting the utmost good faith, and any fraud or false representations, even the slightest, practised on the surety by the creditor will release him from liability.153 Thus, a surety is released by the fact that he was induced to enter into the contract by the fraudulent concealment of material facts, which would have affected his decision had he known them, provided such concealment was practised by the creditor or obligee or with his knowledge and connivance.154 So, if any material part of the transaction between the debtor and creditor is misrepresented to the surety, by the creditor or with his knowledge and consent, the misrepresentation being such that but for the same having been made either the suretyship would not have been entered into at all, or, being entered into, the extent of the surety's liability might be thereby increased, the surety is in such cases generally not bound by his obligation.155 And the creditor may make himself a party to the fraud, in such sense as to release the Dunfee v. Dunfee, 145 App. Div. 108, 129 N. Y. Supp. 142; Shepard 152 Wheeler v. Traders' Deposit Bank, 107 Ky. 653, 55 S. W. 552, 49 L. R. A. 315; Kansas City Terra Cotta Lumber Co. v. Murphy, 49 Neb. 674, 68 N. W. 1030; United States v. Boyd, 8 App. D. C. 440; Cimini v. Zambarano, 36 R. I. 122, 89 Atl. 295. Compare Southern Cotton Oil Co. v. Bass, 126 Ala. 343, 28 South. 576. 153 Haworth v. Crosby, 120 Iowa, 612, 94 N. W. 1098; Deposit Bank v. Hearne, 104 Ky. 819, 48 S. W. 160; Hancock v. Bank of Tifton, 6 Ga. App. 678, 65 S. E. 784; Putney v. Schmidt, 16 N. M. 400, 120 Pac. 720. But compare Whitcomb v. Shultz, 223 Fed. 268, 138 C. C. A. 510, as to the degree or measure of good faith required. 164 Springfield Engine & Thresher Co. v. Park, 3 Ind. App. 173, 29 N. E. 444; Fassnacht v. Ensing Gagen Co., 18 Ind. App. 80, 46 N. E. 45, 47 N. E. 480, 63 Am. St. Rep. 322; Goebel Brewing Co. v. McLean, 15 Pa. Super. Ct. 38. 155 First Nat. Bank v. Mattingly, 92 Ky. 650, 18 S. W. 940; Powers Dry-Goods Co. v. Harlin, 68 Minn. 193, 71 N. W. 16, 64 Am. St. Rep. 460; Whitcomb v. Shultz, 223 Fed. 268, 138 C. C. A. 510. surety, where it is committed in his presence and with his knowledge, and he silently acquiesces. Thus, it is a good defense for one who became surety for the payment of a debt that false and fraudulent representations were made to him by the debtor, concerning his financial ability, and that the creditor, being present at the time and knowing the falsity of the representations, kept silence and permitted the surety to be thus led into making the contract.156 And fraud practised by the creditor upon the debtor may in some cases be available to the surety. Thus, there can be no recovery upon a guaranty of payment of the price of articles sold, where the seller was guilty of false and fraudulent representations in making the sale.157 But as to the rule to be applied in cases where the obligee or creditor, without any active misrepresentations, and not being questioned, merely conceals damaging facts which are within his knowledge, the authorities are not in harmony. Some of the cases hold that if he knows of facts which would deter the surety from entering into the contract, such as the previous dishonesty or financial irregularity of the principal or his present insolvency, and keeps silence, though not interrogated, it is such a fraud on the surety as will release him from liability.158 But other cases maintain that the obligee or creditor is not bound to disclose facts within his knowledge, however material or discouraging, unless he is asked about them.159 Thus, it is 156 First Nat. Bank v. Terry (C. C.) 135 Fed. 621; Selma Sav. Bank v. Harlan, 167 Iowa, 673, 149 N. W. 882. 157 Webster v. Metropolitan Washing Mach. Co., 29 Ind. 453. 158 Belleview B. & L. Ass'n v. Jeckel, 104 Ky. 159, 46 S. W. 482; Town of Hudson v. Miles, 185 Mass. 582, 71 N. E. 63, 102 Am. St. Rep. 370; Lauer Brewing Co. v. Riley, 195 Pa. 449, 46 Atl. 71; Indiana & O. Live Stock Ins. Co. v. Bender, 32 Ind. App. 287, 69 N. E. 691; Capital Fire Ins. Co. v. Watson, 76 Minn. 387, 79 N. W. 601, 77 Am. St. Rep. 657; United States Life Ins. Co. v. Salmon, 157 N. Y. 682, 51 N. E. 1094; Connecticut General Life Ins. Co. v. Chase, 72 Vt. 176, 47 Atl. 825, 53 L. R. A. 510; Lingenfelter Bros. v. Bowman, 156 Iowa, 649, 137 N. W. 946; Damon v. Empire State Surety Co., 161 App. Div. 875, 146 N. Y. Supp. 996. For general discussion of the subject of concealment as equivalent to fraud, and circumstances imposing the duty of disclosure, and when silence is justifiable, see, supra, §§ 58-60. 159 Watertown Sav. Bank v. Mattoon, 78 Conn. 388, 62 Atl. 622; Coats v. McKee, 26 Ind. 223; Lake v. Thomas, 84 Md. 608, 36 Atl. said that the fact that the payee of a note knows when it is made that the principal maker is insolvent, and does not inform the surety thereof, does not discharge the surety, since it is presumed that the latter has informed himself as to the principal's general character or reputation, or, if not, that he is willing to take the risk involved with such knowledge as he may have.100 It seems clear that no concealed knowledge on the part of the creditor should affect the obligations of the surety where he had no opportunity to communicate his knowledge to the latter,161 and also that the creditor can scarcely be held to the duty of warning the surety of the risk he takes, where all the facts are equally accessible to the information of the one as of the other.1 And it has been said that, whenever a duty arises to disclose facts to one about to become a surety for an agent, it is only as to facts affecting the risk in respect to the subjectmatter of the agency that the duty arises, and it does not extend to facts known as to the personal habits of the agent.168 But when the surety inquires of the creditor respecting the principal for information which the creditor may properly give, and the creditor withholds the same without sufficient cause, or misleads the surety, it is the creditor who should suffer the loss occasioned thereby.164 162 Any actual fraud or misrepresentation on the part of the creditor will release the surety or guarantor, or give him at defense to an action against him, as, where it is falsely. stated to him that the instrument which he is asked to sign is merely a recommendation of a third person, whereas it is a guaranty that such person will perform a contract made by him.185 And it is a good defense that the paper 437; First Nat. Bank v. Johnson, 133 Mich. 700, 95 N. W. 975, 103 Am. St. Rep. 468; Title Guaranty & Surety Co. v. Baglin, 178 Fed. 682, 102 C. C. A. 182; Atlantic Trust & Deposit Co. v. Union Trust & Title Corp., 110 Va. 286, 67 S. E. 182, 135 Am. St. Rep. 937. 160 Sebald v. Citizens' Deposit Bank, 31 Ky. Law Rep. 1244, 105 S. W. 130, 14 L. R. A. (N. S.) 376. 161 Julius Winter, Jr. & Co. v. Forrest, 145 Ky. 581, 140 S. W. 1005. 162 Sherman v. Harbin, 125 Iowa, 174, 100 N. W. 629. 163 Etna Indemnity Co. v. Schroeder, 12 N. D. 110, 95 N. W. 436, 164 Benton County Sav. Bank v. Boddicker, 105 Iowa, 548, 75 N. W. 632, 45 L. R. A. 321, 67 Am. St. Rep, 310. 165 Shores-Mueller Co. v. Lonning, 159 Iowa, 95, 140 N. W. 197. |