Johnston Harvester Co v. McLean

Tayloe, L The learned counsel for the appellant claims as one ground of error that the evidence shows that the note was given by P. H. McLean to the plaintiff to satisfy it for money which he had embezzled from it while acting as its agent. There is very little, if any, evidence upon that question. The only evidence in the case bearing upon it at all is the statement made by P. Ii. McLean that he told Thomas MeLean “ he wanted him to sign the note to prevent them [the respondent] from making him trouble for embezzlement in the use of funds.” This is hardly sufficient to justify either a court or jury in finding that the plaintiff received this note upon a corrupt and criminal agreement not to prosecute said P. El. McLean for embezzlement of its funds. We know of no law which prevents a party, whose funds have been embezzled by his agent, from demanding and receiving from such agent payment of the funds so embezzled, or from taking security for the payment of such money. There is no evidence in this case which has the most remote tendency to bring the case within the decisions of this court cited by the learned counsel. Swartzer v. Gillet, 2 Pin., 238; Fay v. Oatley, 6 Wis., 42; Ætna Ins. Co. v. Harvey, 11 Wis., 394; Melchoir v. McCarty, 31 Wis., 252; Barker v. Barker, 14 Wis., 131; Allard v. Lamirande, 29 Wis., 502. It is urged by the learned counsel for the appellant that the special verdict does not cover the whole case, and is not sufficient to justify a judgment in favor of the plaintiff. — 263 — We think the special verdict covers all the disputed facts in the case. There is no pretense on the part of the appellant that he did not in fact sign the note given in evidence. His only claim is that he signed the note with the understanding that it was a note for $45 instead of for $450, as it now appears to be. There was a dispute on the trial as to the fact whether the note was filled up in the shape it appeared when presented at the trial, when the appellant signed it. The other maker of the note testified that it was filled up as it now appears when the appellant signed it, and the appellant testifies that it was not so filled up, and that the place where the amount of the note is now written in was a blank when he signed it, and that the figures $45 were at the top left-hand corner of the note, with perhaps two ciphers, “.00,” to indicate that there were no cents. The jury have found the, fact to be as testified to by the appellant, and they have also found in substance that the note when received by the respondent was in its present form, and -that they [the officers of the respondent] had no knowledge that any change had been made in said note after it wras executed by the appellant and before it was received by them. Taking the facts as found by the jury and we have this case. The appellant, in order to accommodate P. H. McLean, a co-maker of the note in question, and enable him to arrange his accounts with the respondent, signed the note in question, leaving the amount thereof in blank, with the understanding that the blank should be filled by P. H. McLean so as to make it a' note for $45 and no more, and in violation of such understanding he filled the blank with “ four hundred and fifty dollars,” and annexed a cipher after the figures “ $45,” in the upper left-hand margin of the note, before delivery to the plaintiff, and that such change was made without the knowledge of the plaintiff. The learned counsel for the appellant claims that the filling — 264 — up of the note by P. H. McLean contrary to the understanding with the appellant was a forgery of the note, and,that, consequently, it is void in the hands of the respondent as to the appellant. On the other hand, it is claimed by the respondent that, having executed the note in blank as to the amount, with authority to P. II. McLean to fill the blank with the sum for which it was intended to be given, he was the agent of the appellant for that purpose, and could lawfully fill such blank in order to perfect the same as it was agreed it should be, and that having authority to fill the blank in the note with the particular sum agreed upon, his afterwards filling it with a different sum was not a forgery of the note, but a breach of his duty as the agent of the appellant, for which his principal must suffer, rather than ah honest holder of the note. Having executed the note in blank as to the amount with the intention that the blank should be filled before being negotiated by the person in whose possession he placed it after signature, third persons dealing with the person in possession have the right to presume that the authority to fill the blank was a general and not a special authority, and they are not bound by any private instructions as to the amount which should be inserted in the note. This latter view of the case was taken by the learned circuit judge, and he gave judgment for the plaintiff. We are of the opinion that this is the correct law of the case as declared by this court in Snyder v. Van Doren, 46 Wis., 602, and cases cited on p. 610; Walker v. Ebert, 29 Wis., 194-199; Blank v. Spence, 9 Ala., 800; Frazier v. Gains, 58 Tenn., 92; Johnson v. Blasdale, 1 S. & M. (Ky.), II; as well as in the long lists of cases cited by the learned counsel for the respondent in their brief. This rule, almost universally adopted, is clearly stated in the case of Bank v. Neal, 22 How., 107, as follows: “When a party to a negotiable instrument intrusts it to the custody of another with blanks not filled up, whether it be for the purpose to accom — 265 — modate the person to whom it-was intrusted or to be used for his own benefit, such negotiable instrument carries on its face an implied authority to fill up the blanks and perfect the instrument; and, as between such party and innocent third parties, the person to whom it was intrusted must be deemed the agent of the party who committed such instrument to his custody; or, in other words, it is the act of the principal and he is bound by it.” The learned counsel for the appellant does not seriously controvert the law as above stated, but insists that it is not applicable to the case at bar — First,- because there was an alteration of the figures in the margin of the note which was unauthorized, and therefore vitiates the note. The answer to this objection is that the figures were not a part of the note; and, further, that if any alteration of the figures was made, such alteration was not known to the parties receiving the note, and there was nothing on the face of the note which would indicate that such alteration had been made. 2 Parsons on Notes & Bills, 546; Poorman v. Mills, 39 Cal., 345-356; Schryver v. Hawkes, 22 Ohio St., 308; Smith v. Smith, 1 E. I., 399; Reiley v. Dickens, 19 Ill., 29; Garrard v. Lewis, 27 Alb. L. J., 130; 47 L. T. Rep. (N. S.), 408. Second. It is insisted that the rule as above stated does not apply to the case at bar, because the instrument executed by the appellant is not a negotiable note or bill. If it be admitted that the note sued is not negotiable, still the rule is the same as to the liability of the person signing the same in blank. See Vliet v. Camp, 13 Wis., 198-205; Van Etta v. Evenson, 28 Wis., 33; Frazier v. Gains, 58 Tenn., 92-96. If the contract upon which suit is brought be not a negotiable promissory note vrithin the meaning of the law, it is a contract for the payment of money only, and the amount to be paid having been left in blank by the appellant when he signed it, and having given his co-defendant the right to fill the blank, he must be treated as the agent of the appellant — 266 — for the purpose of filling the same; and as to third persons, having no knowledge of the limitations of the agency, the law presumes the agency a general one for that purpose. Third. It is urged with great ability by the learned counsel for the appellant that the plaintiff is not an innocent holder of the note for value, and therefore the appellant may defeat a recovery on the note by showing vvant of authority in fact on the part of his co-defendant to fill up the note for the sum of $450, or, if he cannot defeat a recovery altogether, he has a right to limit the recovery to the amount for which he intended to make himself liable; that as to this plaintiff he stands in the same condition as though it had notice of the limitation of the power granted to his agent in regard to filling the blank in the note. The evidence clearly shows that the appellant signed the note as an accommodation to the other maker of the same, for the purpose of giving the note credit, and for the purpose of being used by his co-maker in the settlement of a debt due from him to the respondent; and the fair inference from the evidence is that it was used for that purpose. If the respondent took the note in full payment and satisfaction of its claim against the other maker of the note, then very clearly it was an innocent holder for value. But this court has held that the acceptance of a promissory note, although it be the note of a third person, by the creditor from the debtor, for the amount of a pre-existing debt, is not of itself evidence that it is taken in payment of such debt, but that it is taken as security for such debt; and the respondent cannot, therefore, upon that theory be held to be an innocent holder for value. There is, however, another presumption which results from the taking of a note of the debtor for the amount of his debt then past due, especially when signed or indorsed by a third person and payable at a future day, viz., that the creditor extends the time for the payment of the debt until the day of payment — 267 — fixed in the note so received for the amount thereof. Weed S. M. Co. v. Oberreich, 38 Wis., 325; Robinson v. Dale, id., 333; Paine v. Voorhees, 26 Wis., 522-530; Blunt v. Walker, 11 Wis., 334-350; American Button-Hole Co. v. Gurnee, 44 Wis., 49-64, and cases cited on p. 64; Hoeflinger v. Wells, 47 Wis., 628-630. Extending the time of payment in consideration of giving the note of the debtor and another, either as indorser or joint maker, is held to be a valuable consideration therefor, and places the holder in the position of an innocent holder for value, with all the benefits of such position. See Bowman v. Van Kuren, 29 Wis., 209, 219; Body v. Jewsen, 33 Wis., 402, 409. In both these cases the court held, in' substance, that if there was an express or implied agreement on the part of a creditor to extend the day of payment on the delivery to him of a note as surety for ‘his debt, then the creditor receiving such note was an innocent holder thereof for value. The circumstances under which this note was received by the respondent from, its debtor are, we think, clearly sufficient to establish an' implied contract on its part to extend the day of payment on its debt until the note became due, if they do not'establish the fact that it was taken in payment of the same. In Bowman v. Van, Kuren, supra, Chief Justice DixoN, in speaking of the circumstances from which an implied agreement to give further time of payment might be found, says: “An implied agreement to that effect might possibly be shown by circumstances, as when the creditor is pressing his debtor for payment or security, and, upon the transfer being made, grants him indulgence, or forbears to urge his demand on account of it.” The evidence in the case shows that the note in questiou was received by the respondent upon account of a debt due to it from P. H. McLean, and it is sufficiently clear that it was received upon an implied agreement to extend the time of payment on such debt. The re — 268 — spondent, being an innocent bolder of the note for value, is not prejudiced by the fact that tbe blank in the note was filled with a larger snm than it was understood between the makers it should be. By the Court.— The judgment of the circuit court is affirmed.