Bruce v. Westcott

By the Court, Hand, J. The most important question in this case is, whether the insertion of the words “ or his order,” in a note, after its execution and delivery to the payee, without the maker’s knowledge or consent, and where there is a blank or space sufficient to do so without creating suspicion, invalidates the note in the hands of an innocent holder ? It is well settled that the alteration of a note in any material part, as against a party not consenting thereto, renders it wholly invalid, even in the hands of an innocent holder. (Chitty on Bills, 182, et seq. Woodworth v. Bank of America, 19 John. Rep. 391. Clute v. Small, 17 Wend. 242. Nazro v. Fuller, 24 Id. 374. Goodman v. Eastman, 4 N. Hamp. Rep. 455. Cowie v. Halsall, 4 Barn. & Aid. 197. Bayley on Bills, 90.) That the insertion of words making a note negotiable, which before was not so, is a material alteration, cannot, I think, be doubted. It is a different instrument, and may materially change the rights and liability of the maker. True, there are some dicta that such an alteration is “ innocent.” (See Clute v. Small, 17 Wend. 243, per Cowen, J.) In that case Cowen, J. cites Chitty on Bills. Chitty cites Kershaw v. Cox, (3 Esp. Rep. 246;) Knill v. Williams, (10 East, 435, 437;) Cole v. Parkin, (12 East, 471;) Bathe v. Taylor, (15 Id. 412;) Robinson v. Touray, (1 Maule & Sel. 217.) Neither of which cases in fact treats this alteration as immaterial, but the reverse. (And see Cowen’s Tr. 165.) Nor does Chitty so state. His language is: “ so the insertion of the words ‘ or order,’ in a note intended to be negotiable, but which had been omitted by mistake, will not render it inoperative against the parties.” The questions arising in the above cases, were upon the stamp [377] acts. In Kershaw v. Coso, Le Blanc, Justice (at nisi prius) decided that, as the omission was a mistake, it did not require a new stamp; and as to the alteration, he thought the defendant had consented, but he left that to the jury. This was not necessary if the alteration was immaterial. And in Knill v. Williams, (10 East, 436,) the same judge said, “ the opinion I delivered in Kershaw v. Cox, can only be supported on the ground that the alteration there made in the bill the day after it was negotiated, was merely the correction of a mistake made by the drawer of it, in having omitted the words “ or order,” which it was inténded at the time should be inserted; for the alteration there was a very material one? And this explanation is repeated in Bathe v. Taylor, (supra.) It was, as stated by Lord Ellenborough in Bathe v. Taylor, and in Cole v. Parkin, (supra,) a mere correction of a mistake, in furtherance of the original intention, and with the consent of all parties. The addition of these words to an endorsement, it seems may or may not be material, as the note is or is not originally negotiable. (Story on Prom. Notes, §§ 128, 139 and notes. Edie v. East India Co.. Burr. 1216.) But this question does not arise here. In the present case the defendant offered to show that the words “ or his order,” had been added to this note without his knowledge or authority. This would make it void as to him, unless he is estopped because the addition was written upon a blank space left in the note; upon which ground it seems the plaintiffs recovered. But I have not been able to find any case that goes so far. Where there is a blank which renders the bill imperfect, the holder in some special cases has been allowed to fill it. As, to insert a payee, (Cruchley v. Clarance, 2 Maule & Sel. 90; Crutchly v. Mann, 5 Taunt. 529; Atwood v. Griffin, 2 Car. & Payne, 368;) or the sum, according to the fact, (Boyd v. Brotherson, 10 Wend. 93; Clute v. Small, 17 Id. 238;) or the date, (Mitchell v. Cidver, 7 Cowen, 336;) and, perhaps, the time of payment, by the maker after endorsement, (Mechanics’ and Farmers’ Bank v. Schuyler, Id. note) “The defendant by leaving a blank,” says Lord Ellenborough in Cruchley v. Clarance, “ undertook [378] to be answerable for it when filled up in tbe shape of-a bill.” In Clute v. Small, Cowen, J. inclined, with some hesitation, to the opinion that where the real amount due was stated in the margin, the sum in the note might be corrected by it. He had doubts, however, and said the court had gone quite far enough to sustain an altered note as a genuine one, in Boyd v. Broth-erson, where the note was on its face incomplete in sense. And I find no case that decides that a space may be filled up in a bill already complete, without any mistake, omission or authority being shown. It is already “ in the shape of a bill.” After the instrument is completed and delivered, no alteration can be made but by consent of parties. Many persons use printed blanks, and if the payee may bind all prior parties by filling them up so as to deceive, and then pass them to subsequent holders, it would be dangerous to issue a bill or note unless perfectly and completely drawn and filled up. (Hall v. Fuller, 5 Barn. & Cress. 750.) Filling an original blank space, in an instrument already perfect, with material words, and with intent to defraud, is no less criminal, than altering by expunging and filling, with like intent. The fair and un-suspicious appearance of a note, of course imposes the burden of proving' the alteration upon the defendant, but does not estop him from proving that the instrument has been altered. The rule that where one of two persons must suffer by the act of a third, the one who innocently afforded the means to the wrongdoer must sustain the loss, it is believed does not apply to such a case. (Goodman v. Eastman, 4 N. Hamp. Rep. 455. And see Sentance v. Poole, 3 Car. & Payne, 1.) The owner cannot look to those who were parties prior to the unauthorized alteration. There may be hard cases, but so far, the holder must be considered as giving credit to the intermediate parties, who warrant the genuineness of the note. (Jones v. Ryde, 5 Taunt. 488. Herrick v. Whitney, 15 John. Rep. 240.) The fact that there was room for the words “or his order,” did not alone, and as matter of law, authorize their insertion by Averill; and consent or authority, after that, must be shown to sustain the note. Where the note is suspicious on [379] its face, the plaintiffs must explain. And iff all these cases the questions whether the note has been altered — or whether an omission was by mistake — or whether any correction that has been made was made by consent — if the facts are disputed, are questions for the jury. (Herrick v. Malin, 22 Wend. 394. Boyd v. Brotherson, 10 Id. 93. Bishop v. Chambre, 3 Car. & Payne, 55. Taylor v. Mosely, 6 Id. 273. Henman v. Dickinson, 5 Bing. 183. Kershaw v. Cox, 3 Esp. Rep. 246.) If the jury find the note was delivered by the defendant to the payee with authority to fill the blank, or if these words were omitted by mistake, and afterwards inserted in furtherance of the original intention of the parties, and certainly if with the defendant’s consent, he is liable. But as the note was already perfect, the law will not imply an authority to make such an alteration as is said to have been made here. I cannot agree to the point taken by the defendant, that this is not a note. Though inartificially drawn, I think it is an original and entire contract, and in no sense collateral or conditional. It names no one for whom the defendant stands guarantor. On the contrary, he says, “ I guaranty to pay,” which I take it means that he himself will pay. (Luquere v. Prosser, 1 Hill, 256 and cases there cited. Lovell v. Hill, 6 Car. & Payne, 238. Morris v. Leo, Ld. Raym. 1396.) The defendant was wrong, too, in his proposed explanations. The meaning of these words could not be qualified or explained by the proof offered, to show that the original parties intended something different from their legal effect. But there must be a new trial on the ground of alteration. New trial granted.