I have to agree with what Brit_Pair said. It sounds to me as if he knew what he wanted when he came over to see you. And I also agree that you bear some of the blame for the situation. But I would tell your husband about it. Secrets have a way of festering inside and coming out at the wrong times. More harm will come from not being honest with each other.
As far as telling the other man's wife, I don't know what to do about that. If he's done this with you, I'd bet he's done this with others before. Telling her is something you both need to talk about before acting.
Good luck. I hope all works out well. It sounds like you've found a good friendship with this other couple. Hopefully you can all ride out any rough water that might come from this incident.
DragonsLair
He is T. I am A.
