Waugh v. Cook

Hart, J., (after stating the facts). The unauthorized alteration of a promissory note by raising the rate of interest is a material alteration and avoids the note. Exchange National Bank v. Little, 111 Ark. 263, 164 S. W. (Ark.) 731; N. Y. Life Ins. Co. v. Martindale et al., 75 Kan. 142, 12 Am. & Eng. Ann. Cas. 677. In the case of McDougall v. Walling, 15 Wash. 78, 55 Am. St. Rep. 871, the court held: “1. An agreement extending* the time of payment made by the principal debtor with the holder of a note inust, in order to release the surety, be such an agreement as the principal debtor may enforce. ‘ ‘ 2. An agreement between tbe principal debtor and tbe bolder of tbe indebtedness to extend tbe time for its payment, made upon a false representation that the surety desired and consented to such extension will not release the surety, because the fraudulent misrepresentation employed in procuring it makes the agreement itself invalid, unenforceable, and not binding on the principal debtor.” In the case of Bangs v. Strong, 10 Paige (N. Y.) 11, the court held that where an agreement is obtained from the creditor by a principal debtor upon a false representation of the latter that the surety had authorized him to make it, and the surety afterward refused to assent to the agreement, the creditor will be.at liberty to repudiate it. It is contended by counsel for defendant that the testimony does not bring the case within the principles of law decided in these cases. They contend that the testimony amounts to no more than a representation by Compton that, in his judgment, the sureties would still be liable on the note. We do not agree with them in this contention. We think that the jury was warranted in finding that Compton represented to Martin that the sureties had agreed that the alteration might be made in the note. In other words, the jury might have inferred from-the testimony of Martin, considered as a whole, that Compton represented to Martin that the sureties to the note had assented to the new arrangement and that such representations were false. In such case the sureties would not be discharged unless the plaintiff had acted under the agreement after she was aware of the fact that it had been entered into without authority and that the sureties refused to assent to the same. In-the case of the State v. Churchill et al., 48 Ark. 426, the court said that there is no better settled principle than that to hold one bound by any word or act as a waiver it must be shown that he spoke or acted with a knowledge of all the facts and circumstances attending the creation of the right he is alleged to have waived. In 2 Cyc. 174, it is said: “Ordinarily, a plaintiff can not avoid the effect of an alteration of which he is chargeable with knowledge after he has brought suit upon the instrument in its altered form, since by suing upon the altered instrument he is deemed to. have ratified the alteration; but if the suit is brought without knowledge of the alteration this will not amount to a ratification. ”, The testimony on the part of the plaintiff tends to show that at the time she originally instituted this action she did not have any knowledge that the defendant, Waugh, had not assented to the alteration in the note. She testified that she did hot subsequently acquire such knowledge until after she instituted the suit, and that as soon as she found out that Waugh claimed that he had not assented to the alteration she repudiated any rights under the note as altered and filed an amended complaint In which she sought to recover upon the instrument as originally executed. The question of whether the alteration in the note was procured by the false representations of Compton to the effect that the sureties had consented thereto was submitted to the jury upon proper instructions. The court also submitted to the jury the question of whether the plaintiff ratified the alteration in the note by her subsequent assent or acquiescence after she learned that the defendant, Waugh, claimed that such alteration had been made without his knowledge or consent. Objection is made by the defendant to one of these instructions because he was singled out in the instruction. We do not deem it necessary to set out the instruction. It is sufficient to say that the particular reference was made to Waugh because he was the only solvent signer to the note and was the only real def endant to the action. Again, it is contended by counsel for defendant that the court erred in refusing to .give instruction No. 2, which is as follows: ‘ ‘ In order to vitiate a contract on the ground of fraudulent representation or fraud, the misrepresentation or fraud must relate to a matter material to the contract and in regard to which the other party had a right to rely, and did rely. If the means of information as to the matters represented is equally accessible to both parties, they will be presumed to have Informed themselves, and if they have not done so they must abide the consequences of their own carelessness.”- There was no error in refusing this instruction. It is not claimed by plaintiff that she made a contract with the defendant, Waugh, for a change of the rate of interest in the note. She seeks to recover on the ground that Porter, one of the original makers of the note, represented' to her that he had secured the consent of the sureties to make, the alteration in the note, and that by such fraudulent representations procured her consent to the change in the note. If her testimony was true, there was no valid and binding agreement entered into between her and Porter for an alteration in the note, and the act of Porter in -changing the note amounted to no more than the spoliation of it. Other assignments of error are urged upon us for the reversal of the judgment, but we have carefully considered the instructions given by the court, as well -as those refused by it, and are of the opinion that the respective theories of the parties were fully and fairly submitted to the jury. We find no prejudicial error in the record, and the judgment will be affirmed.