First National Bank v. Lillard

Ellison, J. Under the theory upon which the parties tried this cause and the instructions of the court the verdict was for defendants. We have in the first instance examined the case from the standpoint of the theory upon which it was tried and have concluded that the judgment should be reversed and the cause remanded. That theory was based upon negligence in the plaintiff bank in taking the third note (the first forged note) in payment of the second genuine note and stamping the latter as paid. The whole negligence must, however, be based on the negligent acceptance of the forged note in payment of the genuine, since marking it paid is but the result of this. The court instructed the jury, at the instance of the defendants, on the hypothesis of such negligence. In order to justify such instruction there' should have been some evidence tending to prove the negligence thus instructed upon. Now, from the record here there does not appear a syllable of such testimony. On the contrary the testimony on the part of plaintiff shows, without pretense of contradiction, that the signatures to the forged note were exactly like those to the genuine note and that they could not be distinguished. Nor was there any evidence upon which the idea could be based that it was negligence in plaintiff in not inquiring whether the signatures of these sureties were genuine when the genuine note was surrendered and stamped, “paid.” In this respect, also, there was abundant affirmative testimony on the part of plaintiff that rebutted such proposition. Since the case is to be retried it is proper to add the following: We have not been able to see what bearing any question of plaintiff’s negligence can have on the case. If plaintiff’s act in surrendering the note to the principal debtor cancelled and marked paid, caused these surety defendants to forego or forbear [680] securing or indemnifying themselves from the principal debtor, in consequence of which forbearance they have lost available recourse on him by reason of his insolvency, then they are discharged, regardless of any negligence on the part of plaintiff. If the plaintiff has thus caused them to forego taking security or indemnifying themselves when they otherwise would have done so, then in such case plaintiff’s utmost care and prudence would be no answer to the injury done the sureties. Both parties in such case are innocent, but plaintiff is the party, notwithstanding, who caused the injury and must be the one to bear the burden of such injury. We have had occasion to pass upon the general proposition of law as to the release of sureties under kindred conditions to those now presented. We here state what we understand it to be. When a creditor who knows that one occupies the relation of surety to the principal debtor notifies such surety that the debt is paid, or cancels the debt, the surety being apprised thereof, and in consequence of such notice or cancellation changes his situation, as by surrendering security, or refraining from taking security which he could have taken and which he otherwise loould have taken, he is discharged. Triplett v. Randolph, 46 Mo. App. 569; Driskell v. Mateer, 31 Mo. 325; Carpenter v. King, 9 Met. 517. In Triplett v. Randolph, the act of the plaintiff caused the sureties ‘ ‘to forego” securing themselves. That is, the act of the plaintiff caused them not to secure themselves — was the reason why they did not. So the same may be said of Carpenter v. King. In the case at bar there is evidence tending to show that defendants could have secured or indemnified themselves at the time the genuine note became due and for a period thereafter; but there is no evidence [681] whatever that they would have done so, had it not leen for the fact of seeing the note marked paid in the hands of their principal. If any inference at all is to be drawn from this branch of th'e case as it now appears in the the record, it is that they would not have done so., They had been the sureties for this principal at other times and in other relations; and during a time, too, when one of them, at least, knew of his unsteady character and unbusinesslike habits. Conceding that if defendants had known that the note had been taken up by giving another with their names forged thereto they would have brought matters to an immediate adjustment, yet it must be remembered that they got no such information from plaintiff’s act in surrendering and cancelling the note; which act is all that gives them standing in court. The real question is, could they and would they have secured, or, otherwise indemnified themselves, if they had not been led to. believe that the note had been paid off and discharged and the matter of forgery was outside the case, except.for the purpose of avoiding the cancellation of the note in suit. As before stated, the evidence tends to show they could, but does not tend to show that they would. The latter showing is the very essence of the case. It may be that, if plaintiff had not cancelled the note, these defendants would have made no inquiry or effort' concerning it. We are, of course, uninformed what they would have done. The judgment is reversed and the cause remanded. All concur.