11 Wheat. 184; Insurance Co. v. Holway, 55 Iowa, 571, and cases there cited. (3) The third line of decisions is that where the principal has discovered or has a well-grounded belief, based upon reliable information, that his agent is a defaulter and a dishonest person, and then either requires se.curity for his fidelity in the future, retains him in his service, holds him out to the public as a trustworthy person or conceals the misconduct and defalcation of his agent, either by his silence or false statement of facts which tend to increase the risk, and thereby the agent secures sureties who were ignorant of the true character of the agent, then the sureties becoming so under such circumstances are not bound.

We are of the opinion that the case at bar falls within the class of decisions last above stated. Gilbert had been the agent of the express company at Albuquerque for a number of years, and had been regarded and held out by it to the public as a trustworthy and efficient agent, and by the public of that city as an honest and trustworthy man. On December 14th, the express company's route agent, Hatch, checked his accounts up, and found them correct, and he was placed in the line of promotion, with additional responsibilities as route agent; and this fact was by Hatch given to the reporter for the Daily Citizen, who printed it as an item of news in his paper, and it is but fair to presume that the item which occurred in the Daily Times was obtained from some of the agents of the express It is not contended that these newspaper notices company. were given out under the authority of the express company, or that it is bound by them, even if made by its agents, but they went out, and were read by the public. Walker says he read and believed them, and Young said he read them, and it is not denied but that these items stated the facts as they then existed; and the public do, and they have a right to, rely upon statements printed in the public press as substantially true. The newspaper man, as a rule, makes a special effort to state in his news items facts only as they exist, and it is admitted that these statements were then true. But these newspaper items contain only a small part of the circumstantial facts, and

while these statements stood for four or five days before the public uncontradicted, and with the full knowledge of the express company's agent Young, holding Gilbert out as a trustworthy man, and still in the service of the company, and then in the line of promotion, yet the true and substantial fact was that Gilbert was a dishonest man, and wholly untrustworthy, and that he had been dismissed or indefinitely suspended, and was no longer in the service of the company, after December 15th, the very day the last item appeared in the public press. And no person but Young knew that Gilbert was a thief and a defaulter, unless it was Stubbs and Linton, who had been notified of Gilbert's defalcation. Young says he did not consider it his duty to "sound any warning" of Gilbert's true character to the public. Walker says that, if he had known the facts and the true character of Gilbert, he would not have signed the note. Young knew that Gilbert was making efforts to procure some one to aid him in this matter. He remained silent, kept the fact of Gilbert's dishonesty to himself, which no one but himself, Stubbs and Linton knew. Walker says the indemnity company and the express company are "almost one and the same," and it is not denied. Then Young says: "We didn't wish to take any action through his surety if the amount due the company could be settled by other means." Before the note was signed, and in the presence of Linton, Gilbert asked Walker if he would let the certificate of stock go as security for a few days; and then, in the absence of Gilbert, Walker told Linton that the certificate was pledged, and they went to the express company's office, and Young let Linton have the $100 with which the certificate was redeemed. It is contended on the part of the appellee that Walker knew that Gilbert was a defaulter, because he testified that he knew that, whether Gilbert was accused wrongfully or not, he would have to go to the penitentiary if he did not account for the shortage. This position is untenable, because it is the merest conclusion of Walker's, and is without any foundation, a mere statement. Gilbert stated to Walker positively that he had not received the money, and gave as a reason that the wrong vouchers had been

sent to Young, and Walker says he "relied implicitly upon his statements." And this he had a right to do from the actions and conduct of the agents of the appellee at the time.

It is perfectly manifest from the record that the express company, through its agents, Young and Stubbs, remained silent, and studiously concealed from the public the dishonest and untrustworthy character of Gilbert, and thereby inferentially, if not expressly, held out to the public that he was an honest man, and worthy of trust and confidence; and by such acts and conduct on their part, while acting as the agents of the express company, this defendant, Walker, was induced to sign the note and deliver the certificate of stock sued upon in this case; and their acts constitute a fraud in fact and a fraud at law. The inference to be drawn from all the testimony in this record runs to the irresistible conclusion that there was a complete understanding existing between Young and Stubbs, as agents for the express company, and Linton, as agent for the indemnity company, to remain silent and conceal the embezzlement of Gilbert and his dishonest character from the public, for the purpose of enabling him to obtain security for the shortage, and shift the risk from the indemnity company to some one else. True, Young says he had no intention to deceive the public; but his acts and conduct from the fifteenth to the evening of the nineteenth of December spoke louder and were of more force than the mere intent silently inclosed in his breast. It was the duty of Young, when he discovered that Gilbert was a thief, and guilty of a felony, under the law, to have him arrested, and, by so doing, proclaim to the public Gilbert's true character, and not permit him to go free for four or five days, with full knowledge that he was then seeking other innocent people, whomsoever he might impose upon, deceive and rob and for the express benefit of his principal, the express company, and to save the indemnity company from making good the embezzlement.

"When a thief is detected, confidence ought to be withdrawn, at least until those who are likely to be injured by his larcenies have been warned. To persist in supplying him with

money after he has made up his mind to steal, and you know it, is contrary to sound morality, unless you mean to bear the loss yourself. Considerations, not of contract only, but of crime, are involved. A question of honesty is raised, and honesty and equity are one. You can not knowingly expose your own to the grasp of known dishonesty, at another man's risk, he being absent and unwarned. To do so, and make him bear the consequences, is to do, not equity, but inequity." Railroad Co. v. Gow, supra. And again it is stated: "Thus if a party, taking a guaranty from a surety, conceals from him facts which go to increase his risk, and suffers him to enter into the contract under false impressions as to the real state of the facts, such a concealment will amount to a fraud, because the party is bound to make the disclosure; and the omission to make it, under such circumstances, is equivalent to an affirmation that the facts do not exist. So, if a party, knowing himself to be cheated by his clerk, and concealing the fact, applies for security, in such a manner and under such circumstances as holds the clerk out to others as one whom he considers as a trustworthy person, and another person becomes his security, acting under the impression that the clerk is so considered by his employer, the contract of suretyship will be void; for the very silence, under such circumstances, becomes expressive of a trust and confidence, held out to the public, equivalent to an affirmation." 1 Story, Eq. Jur., 215. 1 Story, Eq. Jur., 215. The principle stated and the illustration given by this learned author, we think, apply with great force to the case at bar. That the facts concealed by the agent of the express company did go to increase the risk of the defendant is perfectly plain. the duty of the agent to disclose the facts which went to increase the risk, and if he had done so at the proper time, and when he had opportunity, even in the absence of Gilbert, the defendant would not have assumed the risk, and, if so, he would then have been bound; but, instead of making the disclosure which it was his duty to do, he remained silent, and, more, he advanced the money of his principal to redeem the VOL. 9 N. M.-13

It was

certificate of stock, that it might be transferred to him, for the benefit of his principal. He knew that Gilbert had been cheating his principal, and he aided him to the extent of the money necessary to redeem the certificate. While the rule stated by Judge Story has not been followed to its fullest extent by all the courts of this country, yet the principle remains unshaken; and it will be found on examination that, when the rule was not followed to its fullest extent, the facts did not justify it, and, when the rule was modified, it was so done to comply with the facts and circumstances of each particular case. Mr. Parsons, in his law on Contracts, states the rule to be as follows: "In general, concealment is not in law so great an offense as misrepresentation, whatever it may be morally. It is certain, however, that the doctrine of fraud extends to the suppression of the truth in many cases, as well as the expression of what is false; for, although one may have a right to be silent under ordinary circumstances, there are many cases in which the very propositions of a party imply that certain things, if not told, do not exist." 2 Pars. Cont. 776; Kidney v. Stoddard, 7 Metc. (Mass.) 252. The case of Dinsmore v. Tidball, 34 Ohio St. 411, was an action on a bond given by Tidball, as agent, and his sureties, to indemnify the Adams Express Company against loss from the unfaithfulness or dishonesty of the agent. It appears from the statement of the case that Tidball had been station agent of the company at Alliance for some months previous to the execution of the bond, during which period he had embezzled moneys of the company. After the embezzlements occurred, "one Damsell, who resided at Crestline, Ohio, a route agent of the company, who had supervision of local agencies, was at Alliance, looking after a collection of $700 made by Tidball, which had been delayed in reaching the consignee. At this time, Damsell, in pursuance of general instructions, demanded a bond, with sureties, from Tidball, and furnished him a printed form, to be executed by him and his sureties, without knowledge as to the parties who were to become sureties. This printed form was afterwards signed by the defendants