Flint v. Craig

By the Court, Johnson, J. The case presents but a single point, which arises on exception to the charge of the judge to the jury. The action was for the wrongful conversion, by the defendant, of a certain' promissory note, made by the two firms of “ Bradley & Horton,’’ and “ Hart & 0-lass,” for. $1500, payable to the plaintiff's, or bearer, as alleged in the complaint. The plaintiffs claimed, and gave evidence tending to prove, that they turned out this nóte to the defendant as collateral security for the payment of $500 borrowed by them of the defendant. The $500 was paid and the note demanded of the defendant, who refused to deliver it, claiming that he had purchased it of the plaintiffs. Evidence, was given by the defendant — 328 — tending to prove that the note was purchased by him, absolutely, of the plaintiffs. The defendant also gave evidence tending to prove that the note, when made and delivered by the makers to the plaintiffs, was payable “to the order of” the plaintiffs, and that after its delivery by the makers, the plaintiffs, without the knowledge or consent of the makers, or either of them, erased the words “ the order of” and inserted the wordsor bearer.” The plaintiffs gave evidence tending to prove that the note was, at the time of the trial, in all respects as it was when delivered to them by the makers, and that no alteration had been made by them. The judge charged that if the note, after the execution and delivery to the plaintiffs, had been altered by them, in the respect claimed, without the knowledge or assent of the makers, the plaintiffs could not recover, and their verdict should be for the defendant. The jury found for the defendant, and the plaintiffs move for a new trial on their exception to this portion of the charge. If the charge was erroneous, the plaintiffs have the right to assume that but for the erroneous charge they would have succeeded in obtaining a verdict in their favor; and the case is to be examined in that aspect. The exception properly raises two questions: 1. Whether the alteration, if made, as claimed by the defendant, vitiates the note entirely, and renders it void and worthless ; and, 2. Whether the defendant can set up this defense against the plaintiffs in this action, either as a bar to the action, or on the question of damages. Ho case has been cited:, and from my examination I am confident that-none can be found, either in this country or in England, upon the precise point of an alteration like this, assuming it to have been made as claimed. And whether it would avoid the note, so that no action could be maintained upon it, against the makers, must depend upon the general principles established by the numerous — 329 — decisions in respect to the alteration of such instruments, after delivery, without the maker’s consent. It is not every alteration that will destroy an instrument. In order to produce that effect the alteration must be material. ' It has been held, very properly, that the insertion of the words “bearer” or “ order” in a note, after delivery, which were not there before, was a material alteration, which would render the note void, because it changed the nature and character of the instrument, and might deprive the maker of his right of set-off against the payee. (Bruce v. Westcott, 3 Barb. 374, and cases there cited.) But an -alteration or addition to supply, or declare the intention of the parties, will not have that effect. Thus a bona fide holder of a bill accepted, payable to-or order, may insert his own name as payee, without rendering the bill void. So a mistake may be corrected, and words inserted which express what the law implies. (Atwood v. Griffin, 2 C. & P. 368; 12 E. C. L. 176. Chitty on Bills, 206, 207, ed. of 1836. 2 Pars, on Notes and Bills, 562, 563.) The general rule deducible from all the authorities seems to be, that any alteration which, in any event, may alter the promissor’s liability, is material and vitiating, if made without his' consent at the time, or approval afterward; otherwise not. (2 Pars, on Notes and Bills, 564.) This is certainly a reasonable and sufficient test, and I think may be safely laid down as the true one. Tried by this test it is certainly difficult to- see how the promissors in the note in question could by any possibility be injured, or their liability be affected by this alteration. They are both words which import negotiability, and without which, or some equivalent term, an instrument would not possess that quality. Eo one, I suppose, would contend that where a note was given payable to “ bearer,” the erasure of that word and the insertion in its place of the word — 330 — holder, without the maker’s consent, would vitiate it. They are equivalent terms, in such instruments, and have in law precisely the same meaning. And so the word “order” confers upon the' instrument the same quality. It imports and expresses negotiability, the same as either of the other terms, and is in law a contract with any lawful holder. The only difference is in the form of the transfer to third persons so as to give them a good title. But this form or manner' of negotiating the instrument by the payee does not, as I conceive, affect in any manner or degree the interests or liability of the promissor. After the payee has indorsed such a note in blank, it passes from hand to hand by delivery, the same as though it was originally payable in terms to bearer. And he may avoid all personal liability by adding “without recourse to me,” to his signature. In that condition it is a note payable to bearer, to all intents and purposes. And unless it can be seen that the liability of the makers may possibly be affected prejudicially, by the alteration, it does not vitiate and destroy the nóte. The intention of the promissors to have it a negotiable instrument has not been frustrated, or in any degree affected by the alteration. But in the view I have taken of this case, it is unnecessary to decide the question above considered.' It may be assumed, for the purposes of this point, that the alteration was in fact made as alleged, and is material; still it is not necessarily a forgery. That depends upon the intention with which the alteration was made. Unless it was made with a fraudulent or felonious intent, it does not constitute a forgery. Such fraudulent or felonious intention is not to be presumed, but is to be proved, and this was not done, nor was any such question raised or passed upon by the jury. As the case stood upon the trial, it was simply the case of a note altered, without the' consent of the makers, in a manner deemed to be material. But .the — 331 — promissors had not been called upon to pay it; and for aught that appears, or that could properly be made to appear, in such a case, stood ready and willing to pay it, to any lawful owner and holder. It is to be presumed that the debt represented by the note was a just and honest debt-of the makers; and although the alteration was material, so that they might, if they should so elect, avoid payment upon the ground of the unauthorized alteration, yet they might well, upon inquiry into the facts and circumstances of the alteration, and becoming satisfied that it was made without any intention of injuring or defrauding them, or of committing a felony, ratify the alteration, and thus • render the note perfectly valid, or consent to pay it, without regard to such alteration. And as it would be but just that they should do so, in such case, the law will infer that they would. But this is a question which concerns them alone, and in which no person other than a lawful owner and holder has any interest or voice whatever. The defendant certainly had no interest in this question. He was not a party to the note, nor in privity with any one who was a party. He had no right to assume that the maker would refuse to pay on account of the alteration, much less, through his own wrong, place both maker and payee and owner; in a situation, through the judgment of the court, in which they could not lawfully pay the true owner, should they be disposed to do so. In this aspect of the case, the defendant is to be deemed, .and taken, as having no interest in' the note, any more than a person would have who had obtained possession of the property of another by any tort or larceny. He is neither lawful owner nor lawful holder. His possession is without right, and by means, tortious and through a breach of trust. Standing in this situation, it would be strange indeed if the law should be found to be, not only a shield to the defendant in his wrong doing, but a sword also in his hand, for further and more effective aggression — 332 — upon the plaintiffs' rights. Such is not the law. It is not justly subject to any such reproach. No person is allowed to defend an action upon a question which does not concern him, and in which he has no lawful interest. It does not follow, that because the makers of the note might defeat an action if brought against them, on such note, upon the ground of the alteration, the defendant can use it, either as a full defense or in mitigation of his tort. The alteration might be material to the makers, when required to pay, but would be wholly immaterial to one who bad no interest in the note, and whose possession was unlawful. This principle, which denies the right to a party to an action to defend on a question or matter in which he has no legitimate concern or interest, is fully illustrated in the cases of Campbell v. Erie Railway Co., (46 Barb. 540,) and the City Bank of New Haven v. Perkins, (29 N. Y. 554.) The exception noticed in the case last cited applies with fall force to the note in the defendant's hands, should he attempt to enforce it against the makers. Should he bring an action against them, they might defeat the action, even though the alteration had not affected the validity of the note, simply upon the ground that his possession was tortious, and that he could not by his own fraud or wrong, acquire a right of action against any one. It is said, however, in behalf of the defendant,, that this evidence of alteration, if not admissible as a strict defense or bar to the action, was competent by way of mitigating damages, and upon the value of the obligation. It was clearly put to the jury, as a defense in the nature of a bar to the action ; and in this respect the charge was clearly erroneous. But even upon the question of damages, by way of showing the value of the note, the matter was wholly inadmissible as between these parties. As has been already said, the question of the alteration was no test of the value of the note to the payees, or to any lawful holder. Non constat, the makers were willing: — 333 — to ratify the alteration and acknowledge their liability. They might do so, and then, confessedly, the note was worth the amount promised. And whether they would or would not, was a question which could not have been litigated upon the trial. It would have been incompetent proof, had it been offered, that the makers did not intend to pay. It would have been matter of speculative opinion merely, had the proof been offered. Even had the makers resolved and declared their intention to defend against the plaintiffs, on account of the alteration, it was of no consequence, as cooler reflection and a sense of their moral obligation might lead to a different frame of mind, and better resolutions afterwards. [Fourth Department, General Term, at Syracuse, May 1, 1871. My conclusion therefore is, that the whole matter and subject of the alteration of the note in question was, as between the parties to this action, wholly irrelevant and immaterial for any purpose. The makers of the note are presumed to be able to pay it; and if they are willing to do so, as they will also bé. presumed, as between these parties, to be, the note is, as matter' of. law, worth, what it promises to pay; and if the defendant has no right or title, except what he gets by his tort, the measure of damages should be the amount promised, with interest. It is plain that the market value would afford no just measure of compensation, after the defendant has by his wrongful acts and conduct thrown discredit upon the note. If he persists in wrongfully withholding the note from the true owners, it should be, as an obligation of good name and credit, as when he received it from the plaintiffs, to hold as a security. And he must be required to respond upon that basis. A new trial must therefore be granted, with costs to • abide the event. Hew trial granted. Mullin. P. J., and Johnson and Talcott, Justices.]