First National Bank of Commerce v. Merkel

Smith, T., delivered the opinion of the court. D. B. Holmes, life insurance agent, representing the New York Life Insurance Company, obtained from appellee an application for a life insurance policy. At the time of the making of this application, appellee paid Holmes the sum of five’ dollars in cash and executed and delivered to him his promissory note, due six months after date, in settlement of the first premium to become due on said policy. Contemporaneously with the execution and delivery of this note, appellee executed and delivered to Holmes a certificate, now lost, that, according to appellee, he had no “offset,” and, according to Holmes, the appellant’s cashier, that he had no “claim or offset,” against said note. This note was purchased by appellant upon the faith of this certificate immediately after its execution. Payment of this note’ having been declined by appellee, this suit was instituted, and from a judgment in his favor this appeal is taken. When the insurance policy was delivered, appellee declined to accept it, on the ground that it was not the policy that he had applied for, and this constitutes one of his defenses to appellant’s suit. The court erred in submitting this issue to the jury; appellee being estopped from setting up same by reason of the execution by him of the certificate above referred to, and the reliance thereon by appellant in the purchase of the note. It is immaterial whether he certified that he had no “offset,” or that he had no “claim or offset,” against the note; the effect of either language being the same. Either language constituted a representation that the note was a valid obligation, and warranting appellant in believing that the consideration therefor had been received. In order that innocent purchasers might not be deceived by this certificate, it ought to have disclosed that the consideration for the note had not been received, and its failure to [830] ■do so estopped appellee from pleading same. This certificate is not a waiver of our statute regulating the negotiability of promissory notes, but is a statement of a fact, the existence of which .a maker is estopped to deny, when acted upon by an innocent purchaser for value. Another of appellant’s defenses was that the note had been materially and fraudulently altered after its delivery to Holmes. 'This note was executed by the filling in of the blanks in the usual printed form for notes; the writing being done by Holmes. According to appellee, he had no' agreement with Holmes relative to the payment of interest, and when he signed the note the blanks therein relative to- interest were left unfilled. In the note as sued on, these blanks are filled in the handwriting of Holmes, making the note bear eight per cent, interest from date. According to Holmes, these blanks were filled before the signing •of the note. If these blanks were filled after the delivery of the note, the note was thereby materially altered, and such alteration ■constitutes a complete defense thereto, even in the hands of a bona fide- purchaser without notice. Simmons v. Atkinson, 69 Miss. 862, 12 South. 263, 23 L. R. A. 599. The court, therefore, committed no error in refusing the peremptory instruction requested by appellant. For the error hereinbefore referred to, however, the judgment ■of the court below is reversed, and the cause remanded. Beversed.