Hackett v. First National Bank

Opinion of the court by JUDGE HO'BSON — Affirmino. Joseph Clark applied to the appellant, J. L. Haekett, to go his surety on a note for $500, payable at the American National Bank of Louisville, Kv. Haekett agreed to do so, and signed the note drawn by Clark for $500, but there was a space left in the note before the words “five hundred” and after them, and Clark- filled up the first space with the word “twenty” and the other with the -words “and fifty,” so as to make the note read as one' for $2,550. There was nothing on the face of the instrument to indicate the alteration, and Clark then discounted the note in this condition to appellee, the First National Bank, of Louisville, who paid him the money on it without notice of its infirmity. The fact's being undisputed, the court properly held that there was nothing to submit to the jury, as simply a question of law was raised as to the legal effect of the conceded facts. It is argued that there ivas enough on the face of the note to put the bank on notice, but, after a careful examination of the instrument, we are of opinion that this position can not be maintained. In Blakey v. Johnson, 13 Bush, 197 (26 Am. Rep., 254), it was held, following Woolfolk v. Bank, 10 Bush, 514, that where the drawer of a bill of exchange or the maker of a negotiable note has himself, by careless execution of the instrument, left room for insertion to be made without exciting suspicions of a careful man, he will be liable up>on it to a bona fide holder without notice, when the opportunity which he afforded has been embraced, and the instrument filled up wdth a larger [197] ■amount than it bore when he signed it, on the principle that he invited the public to receive it ; and should bear the loss, rather than an innocent purchaser. This case was approved in Newell v. Bank, 13 Ky. Law Rep., 775, and in Bank v. Haldeman, 109 Ky., 222 (22 R., 717), (58 S. W., 587) as stating the rule of law correctly. Although the question; nere raised was not presented in either of these cases they, at least evidence the acquiescence of the court in the rule that had been laid down. It is earnestly argued for appellant that the great weight of authority is the other way, and that these cases should be overruled. It is also urged that the question was really not presented in Blakey v. Johnson, but- in fact the judgment turns on this question alone, and no other was discussed by the court. The rule so declared is sustained by cases in Pennsylvania, Illinois, Missouri, Louisiana and Alabama. Brown v. Reed, 79 Pa., 370 (21 Am. Rep., 75); Yocum v. Smith, 63 Ill., 321 (14 Am. Rep., 120); Bank v. Armstrong, 62 Mo., 59; Isnard v. Torres, 10 La. Ann., 103; Young v. Lehman, Durr & Co., 63 Ala., 519. The decision has remained the law of the State for a quarter of a century. In the meantime business has been readjusted to it, and under the principle of stare decisis, we do not think it ought now to be departed from, for in matters of this kind it is not so important that the law should be rightly settled as that it should remain stable after it is settled; and, as has been well said, “attempts to change the course of judicial decisions under the pretext of correcting errors are like experiments by the •quack on the human body. They constantly harass, and •often jeopardize it.” South’s Heirs v. Thomas’ Heirs, 23 Ky., 63. Again, in Tribble v. Taul, 23 Ky., 456, the court after stating the same rule said: “In the supreme court of a State, as this is, possessing with but few exceptions ap [198] pedate judicial power coextensive with the State, the influence which its decisions must have is evident. Its mandates are conclusive, and even its dicta are attended to in ail the inferior courts. No sooner is a decision published than it operates as a pattern and standard in all other tribunals and as a matter of course, all other decisions conform to it. If, in this court, a settled course of adjudication is overturned, then the trouble and confusion of reversing former causes succeeds in the inferior tribunals; and even the credit and respect due to this court, is shaken by the phenomenon that A. has lost his cause on the same ground that R. gains his. And not only do these consequences follow, but some still more serious may ensue; for perhaps no court may strike the vitals of society with a deeper wound than a capricious departure in th'is court from one of its established adjudications.” Under the rule which, for a quarter of a century, has been recognized, it has not been necessary in this State for a purchaser of such paper, which is fair on its face, to make inquiry as to its validity before buying it, and much business has been done on this basis. In other jurisdictions, where the opposite rule prevails, the practice has been different, and it would be manifestly a violation of the principle on which the doctrine of star decisis rests, for this court, after the business of the State has adjusted itself to the rule which it has laid down, now to reverse itself, and lay down the opposite rule. Besides, the rule so declared seems in keeping with the spirit and purpose of our statute regulating paper of this character. Section 19 of the Civil Code of Practice as follows: “In the case of an assignment of a thing in action, the action by the assignee is without prejudice to any discount, set-off or defense now allowed; and if the assignment be not authorized by statute the assignor must be a parly, as plaintiff or defendant. This section [199] does not apply to bills of exchange, nor to promissory notes placed upon the fooling' of bills of exchange, noir to common orders or checks.” It will thus be seen that bills of exchange, promissory notes placed upon the footing of bills of exchange, and common orders or checks are placed upon a peculiar footing. The reason for this is that a large part of the business of the commercial world is done through bilis of exchange, bank checks, and notes placed upon the footing oif bills of exchange, which pass from hand to hand in many transactions, serving as a substitute for money; .and to promote this such paper in the hands of a bona fide purchaser is held free from defenses which might have been made between the original parties. By section 483, Kentucky Statutes, promissory notes, payable to any person or corporation, and payable and negotiable at any bank incorporated under the laws of this State or organized in this State under the laws of the United States, which shall be indorsed to and discounted by the bank at which the same is payable, or by any of the other banks above specified, are thereby placed on the footing of foreign bills of exchange. The note in question was placed on the footing ot' a bill of exchange. It was executed for the purpose of raising- money. The purpose of the Statute is to promote negotiations of paper of this character to facilitate commercial transactions and obviate the necessity of the use of currency. It is in keeping with the purpose of the statute that he who puts out paper whic-h is to pass in this way-in commercial transactions should exercise due care, for it is necessarily intended to be used in raising money; an-d the fair effect of the statute would be defeated if a defense such as that here made were allowed against the paper in the hands of a bona fide holder. Judgment affirmed. Chief Justice Guffy dissents.