Kennedy v. Crandell

By the Court —Miller, P. J. It is insisted by the coun sel for the plaintiff that the finding of the referee, that the notes in suit were altered after their execution, is against the evidence. This was the main question ol‘ fact in controversy upon the trial, and upon this subject the evidence was conflicting. Henderson swears quite positively that they were drawn with interest, and the words “ after six months ” were added before they were finally signed. In opposition to this testimony, Crandell, the defendant, swears that the words “ with interest after six months ” were not in, according to his recollection, and that his recollection is very distinct about it. Upon his cross-examination, he testifies that he' will swear as positively as he can 'to anything, that the additions were made to the notes since their execution, and from all that occurred he.is able to state positively that the notes were without interest. White, who was Henderson’s clerk, testifies that he saw the. notes and entered them in the bill book at Henderson’s request, and the words “ with interest after six months ” were not there. He does not know that he can swear positively that these words were not in the notes outside of the entries made by him, but he can swear positively that interest was not in the notes when he entered them. Perhaps some stress may be properly put upon other circumstances, which tend to establish that Crandell and [5] White are both mistaken, especially the fact that the words “ after six months ” appear to be crowded or contracted in the body of the notes; but suggestions are made on the other side which look in the opposite direction, particularly the transfer of these notes to different persons and the long and unexplained delay in bringing this suit. All of these facts presented considerations which were "properly addressed to the referee, who heard the testimony and saw the witnesses, and it is by no means clear that the conclusion at which he arrived is so entirely against the weight of the evidence and so entirely erroneous as to justify this court in setting aside his decision. • It is further urged that the referee erred in admitting in evidence the entries made by White in the bill book. These entries were made at the time when the note was given, and tend strongly to corroborate the testimony of White, who relied upon the entries, and who would not swear positively that the words were not in the notes independent of them. They were not in the nature of naked hearsay evidence or statements in writing of third parties, but entries of transactions made at the time by the clerk of the party in the regular course of business. In Marcly v. Shults ( 29 N. Y., 346 ) it was held to be competent to read an entry made by a witness of any fact material to the issues, if made at or near the time when the fact occurred, and he can swear that it was made correctly. (See, also, Guy v. Mead, 22 N. Y., 462; Halsey v. Sinsebaugh, 15 N. Y., 485; 1 C. and H.’s notes, 756, etc.) Within the rule laid down in the authorities last cited, the bill book introduced contained an original memorandum made by the witness when the facts stated transpired, and was clearly admissible evidence. It is insisted that the referee erred in admitting evidence of representations in respect to the property. Ho false representations are alleged in the answer, except as to the value of the property, and the defendant upon the trial proved under objection that other alleged false representations were made, to the effect that the inventory footed up over $8,000; [6] that certain parties offered to pay that sum and were unable to raise the money, and make the payments as required; and thereupon Henderson offered the plaintiff the goods at that price, which he stated was much less than the real value or real cost of the goods. Mere representations as to value are immaterial, where their accuracy might, by the exercise of reasonable diligence be discovered, and do not, if false, vitiate the contract. (Smith v. Countryman, 30 N. Y., 681.) And therefore, evidence of this alone could be of no avail. In this respect, the allegations in the answer were defective. They were not sufficiently definite as to the particular kind of false representations made; but as there was no allegation of surprise on the part of the plaintiff, I think the referee was justified in treating the answer as amended, so as to embrace the facts proved, and to disregard the variance. Even upon appeal, the court may treat the pleadings as having been amended in conformity with the evidence nunc pro tumo, in any respect in which the court ought clearly to allow an amendment at Special Term. (Wright v. Whiting, 40 Barb., 235, 242, and authorities cited. See, also, Code, §§ 169, 170; Coleman v. Playsted, 36 Barb., 27; Lounsbury v. Purdy, 18 N. Y., 515; Yates v. Alden, 41 Barb., 176; Voorhees’ Code of 1864, 352.) I think that no error was committed by the referee, in holding that by the alteration, the notes were vitiated and destroyed, and that the plaintiff could not recover on the original consideration. The referee found that after the notes were altered, and after they became due, they were indorsed by Henderson, and were transferred to the plaintiff before the commencement of this action. The notes having been transferred after maturity, the plaintiff stands precisely in the same position in which Henderson stood after the alteration was made. The forgery creating a material change in the tenor and effect of the notes, of course the plaintiff cannot recover, nor could Henderson or his assignee fall back upon the original consideration. It is not a case of accidental [7] or of casual loss or destruction, where an action would lie on the original consideration upon accounting for the loss or destruction in such a manner as to repel all inference of fraudulent design; but an unlawful and criminal alteration of the note, by means of which the defendant is entirely discharged from the obligation. (See Blade v. Noland, 12 Wend., 173, etc.) Henderson having accepted the notes in payment, it is difficult to see how he could fall back upon the original consideration if he had altered them before maturity, for' the defendant had not agreed to pay the consideration before the notes became due. He could not recover after maturity, without returning the notes originally given, which could not well be done if altered, as the act itself of alteration destroys their validity. The plaintiffs theory upon this question is based upon the idea, that the notes were transferred to J. 0. Kennedy, the plaintiff’s assignee, before they were payable. This is in conflict with the referee’s finding, as I understand; and no exception being taken to this finding, it must be considered as conclusive. The plaintiff, therefore, is not in the attitude of a bona fide holder of the demand, but occupies the same position as the original holder. The claim to recover the balance of the original considei’ation for the sale of the property is defended also upon the ground, that damages were sustained by reason of the false representations of Henderson, and the referee has found, that the defendant has sustained damages by reason thereof to a considerable amount. As these representations, if relied upon, constituted actionable fraud, there is no reason why the damages arising by means thereof, should not be allowed by way of recoupment to the defendant. (Van Epps v. Harrison, 5 Hill, 63; Sandford v. Handy, 23 Wend., 260 ; Hazard v. Irwin, 18 Pick., 95; Buxton v. Cooper, 3 Atk., 383 ; Partridge v. Osborne, 5 Russ., 195; Smart v. Atwood, 1 Yon. R., 457; Dobell v. Stevens, 3 B. & C., 623; 1 Sug. on Vendors, 4.) This would reduce the plaintiff’s claim to a comparatively trifling amount in any contingency. As, [8] however, for the reasons given, an entire defence was made out to the action, this view of the case is unimportant. It follows that the judgment of the referee must be affirmed with costs. Judgment affirmed.