"Whereas, the said Linderman has promised that he will return to the said Baglin the aforementioned securities, on or before September 25, 1907.

"Now the condition of this obligation is such that if the said Garrett B. Linderman, his heirs, executors, and administrators shall and do return to the said George Baglin, his executors, administrators, and assigns, the said above-mentioned securities, on or before said 25th day of September, 1907, then this obligation shall be void; otherwise to remain in full force and effect."

On July 17th, after the bond in suit had been given, and shortly before the government bonds were delivered, a further agreement was entered into between plaintiff and Linderman, providing that plaintiff, instead of lending $75,000 in cash, as provided in the previous agreement, should invest that sum in "Old 4" government bonds, Linderman to furnish whatever money was necessary over and above $75,000 to purchase the bonds up to that par value. It was agreed that the bonds should thereupon be loaned by plaintiff to Linderman upon repayment of the $15,000 previously loaned to Linderman. It was also provided that Linderman should return to plaintiff the "Old 4's" or other bonds of the description and par value above referred to on September 26, 1907, Linderman to furnish surety company bonds conditioned for such return on that date, and to pay contemporaneously with the execution of the agreement the $15,000 loaned to him pursuant to the terms of the agreement of June 19th. At the time of the execution of this new agreement, the bond in suit had been executed by the defendant company for seven days, and had been examined by plaintiff and his counsel, and was there present and ready for delivery.

It appears to have been the plan of the parties to convert the bonds into money to pay the $15,000 loaned by plaintiff to Linderman, and to permit Linderman to get the remaining $60,000. Linderman seems to have been unwilling to sell the bonds without some authority from plaintiff, whereupon it was further stipulated by another contract executed by plaintiff

and Linderman, among other things, as follows: "Mr. Baglin also represents hereby to Mr. Linderman that it is his desire and intention at the time when said bonds would be returnable pursuant to the aforementioned agreements to accept from Mr. Linderman the face value of said bonds in cash, with interest at (6%) per cent, in lieu of the return of the bonds themselves."

It further appears that immediately upon receipt of the government bonds, which were sent to Heinze's office, where the parties were, plaintiff and Linderman went to the cashier of the Mercantile National Bank, of New York, of which Heinze was president. Plaintiff introduced Linderman to the cashier, who was requested by them to collect the government bonds, but they were told that it was too late to make the collection that day. The cashier was then asked to advance $30,000 to Linderman, and to account to plaintiff for the residue of the proceeds of the bonds. Whereupon the cashier gave Linderman a check for $30,000, and the following day gave plaintiff a check for the balance received on the bonds, which was applied toward the payment of the $15,000 loan originally made by plaintiff to Linderman.

On September 26th, the parties and their counsel had an interview at the Mercantile National Bank at which a demand was made upon Linderman to either pay the loan of $75,000, with accrued interest, or to return the bonds, when Linderman admitted his inability to comply with either demand. Papers indicating what occurred at this meeting were prepared and signed, and at the same time notice was given the defendant company of the default of its principal.

On trial below, when the evidence had been submitted, counsel for plaintiff moved the court to strike out all evidence of fraud, misrepresentation, and deception practised upon defendant to induce it to execute and deliver the undertaking in suit. This motion was granted by the court. Counsel for plaintiff then moved the court to instruct the jury to return a verdict for plaintiff. This motion was likewise granted, and a

verdict instructed accordingly. From the judgment entered thereon the case was brought here on appeal.

Messrs. McNamara & Hüderkoper and Mr. J. J. Darlington for the appellant.

Mr. Dean Emery and Mr. Henry P. Blair for the appellee.

Mr. Justice VAN ORSDEL delivered the opinion of the Court:

The sole question necessary to the determination of this appeal is involved in the granting of the motion to strike out the evidence of fraud. This motion was granted in response to the general rule of law that evidence of fraud affecting the execution of a contract under seal is inadmissible as a defense in an action at law upon the contract.

It is well settled that by the execution of a bond, and its return to the principal, for delivery to the obligee, the surety becomes estopped from setting up any condition not known to the obligee, upon which the surety's signature was obtained. United States v. Boyd, 8 App. D. C. 440; Dair v. United States, 16 Wall. 1, 21 L. ed. 491. But that is not this case. The defense here relied upon is that plaintiff, the obligee, knew of the misrepresentations made to defendant by Linderman, and was a co-conspirator in securing the bond under such false representations. Plaintiff's guilty knowledge of the methods employed by Linderman to induce defendant to execute the bond is the basis of the defense interposed by defendant. It matters not that the bond was not in fact formally delivered to plaintiff until after all his contracts had been made with Linderman. There is evidence that plaintiff and his attorney examined the bond before the last agreement was made, whereby he waived the return of the government bonds, and, pursuant to which, he looked after the negotiation of the government bonds,. placing them beyond the power of Linderman to return.

It is contended by counsel for plaintiff that the false representations alleged to have been made by Linderman only affected

the consideration for the giving of the bond, and that the defense is not available as a defense in an action at law on the bond, since the bond was executed under seal, which, at law, imports a good and valid consideration. On the facts disclosed, we are not impressed with this contention. The fraud disclosed by the answer, and of which there is evidence, does not go to the consideration alone, but more directly to the instrument itself. If the evidence is to be believed, the instrument in suit is one upon which the minds of the parties never met. Linderman, by his conspiracy with plaintiff, was in fact procuring a bond to secure the payment of money by Linderman to plaintiff, while defendant executed a bond to secure the return of certain described government bonds. The deceit of Linderman, with the full knowledge and consent of plaintiff, did not involve the consideration for the execution of a valid contract, but it extended to the fraudulent securing of a contract which defendant had refused to make.

The court below based its holding upon the decisions of the Supreme Court in Hartshorn v. Day, 19 How. 211, 15 L. ed. 605, and George v. Tate, 102 U. S. 364, 26 L. ed. 232. In those cases the defense of fraud related solely to the consideration, and not, as in this case, to the thing to be done. In George v. Tate, the instrument was a bond for the release of property about to be attached. The defense was the fraudulent misrepresentation that the property had been attached, and that, by reason of the false representation, the surety had signed the bond.

It is not difficult to distinguish that case from the one at bar. The alleged fraud there amounted only to misrepresentation to induce the surety to sign a bond which in fact recited the truth, not that the property had been attached, but "was about to be attached." The following rule announced in that case, we think, clearly distinguishes it: "It is well settled that the only fraud permissible to be proved at law in these cases is fraud touching the execution of the instrument, such as misreading, the surreptitious substitution of one paper for another, or obtaining by some other trick or device an instrument which the

party did not intend to give. Hartshorn v. Day, 19 How. 211, 15 L. ed. 605; Osterhout v. Shoemaker, 3 Hill, 513; Belden v. Davies, 2 Hall, 433; Franchot v. Leach, 5 Cow. 506. The remedy is by a direct proceeding to avoid the instrument. Irving v. Humphrey, Hopk. Ch. 284."

In Pacific Mut. L. Ins. Co. v. Webb, 84 C. C. A. 603, 157 Fed. 155, 13 A. & E. Ann. Cas. 752, the distinction is stated as follows: "The conclusion from all the cases in the Supreme Court is that the only fraud which may be availed of in an action at law to avoid a formally executed release of the claim sued on is misrepresentation, deceit, or trickery practised to induce the execution of a release which the signer never intended to execute, and upon which the minds of the contracting parties never met, and does not include any of those misrepresentations of fact which may be resorted to in order to persuade the claimant to agree to the release as actually made."

In the present case, the alleged fraud consisted in inducing defendant to become a surety on a bond for the return of certain government bonds which it was stated in the instrument plaintiff had delivered, or was about to deliver, to Linderman, when, in fact, if certain of the evidence is to be believed, the bonds had not been delivered, and never were to be delivered. In other words, defendant was induced by these alleged misrepresentations to secure the performance of an act which plaintiff had, as the logical result of the alleged conspiracy, rendered impossible. By this alleged misrepresentation and trickery, defendant was induced to guarantee the return, not of the bonds, but of the money. It therefore gave a contract which it did not intend to give.

This is not a case where the alleged false representations are dehors the record, and might be treated as a consideration for securing a bond valid on its face. But here the false representations appear on the face of the instrument, and constitute the thing to be done. It has been held by this court that where a release executed under seal had been procured by fraud and deception, the facts might be shown in evidence to avoid the effect of the instrument in an action at law. Lyons v. Allen,