Smith v. Mace

Bellows, J. The principal question in this ease arises upon the instructions to the jury, that although the notes given for the price of the land would be rendered void by fraudulent alteration, yet the debt would still remain, and the plaintiff might recover upon the general count. The ground taken by the plaintiff is, that the notes were not payment of the price, unless so agreed hy the parlies, and that upon the production of the notes at the trial, or proof of their loss or destruction, the plaintiff might recover upon the original consideration. Assuming that the notes were to be regarded strictly as collateral security, the position of the plaintiff' might, perhaps, be tenable; but we think they are not to be so regarded, but rather as payment, upon condition that the notes are productive at maturity; and in the mean time suspending the vendor’s right of action; therefore in case the notes of a third person are received for the price of the property sold, the vendor is bound to use due diligence to charge such third person, or his laches will operate to discharge the original contract and the fact that no recovery can be had without producing or accounting for the note received, is inconsistent with the position that it is held in such cases strictly as collateral security. So also the discharge of the notes by a release would discharge also the original contract ;• and we think that the same effect would be produced by such a fraudulent alteration of the notes by the vendor a^ would render them void. In the case of such an alteration the policy of the law makes the note wholly void, upon the ground stated in Masten v. Miller, 4 D. & E. 345, that “ a man shall not take the chance of committing a fraud, and, when that fraud is detected, recover on the instrument as originally made.” This sound and salutary principle, based as it is upon high moral considerations, and long and well established in both the English and American courts, would be rendered entirely inert in respect to the original promisee, if, when detected in the fraudulent alteration of the written promise, he might recover, upon a promise implied bylaw, the amount of the original obligation. It would in fact be changed into a mere technical objection to the form of the action, which is utterly inconsistent with the policy which dictated it. These views are fully sustained by the well considered case of Martendale v. Follet, 1 N. H. 95, which is often cited, and, so far as we have observed, never questioned. The same doctrine is fully recognized in Wheelock v. Freeman, 13 Pick. 164. In 'both these cases notes were given for the price of property sold, and payable, the former in merchantable neat stock, and the latter in stock in [559] one year, or money in two. In both, the alterations affected the mode of payment, and in both it was decided that no recovery could be had upon the original consideration. In Arrison v. Hamstead, 2 Penn. St. 101, there was a deed of land, reserving rent, and after the delivery, it being in the hands of the scrivener, it was altered by the grantor; — Held, in an action for the rent, with counts for use and occupation, &c., that the plaintiff' could not recover, either on the deed or for use and occupation; for, although the land passed by the deed, the estate of the grantor was destroyed, as a penalty for the fraud in making the alteration. The case is well considered, and the court say: “If a bond, note, or other instrument for the payment of money, be altered, and. thereby avoided by the obligor, it has never been suffered, or even attempted to recover on the original contract; as, for example, for money lent. It is a mistake to suppose the evidence of title only is avoided. The whole contract becomes void, and it is held, as a principle of policy, that the fraudulent party may lose, but can gain nothing by his fraud.” See, also, Miller v. Gillieland, 9 Penn. St. 119. In White v. Huss, 82 Ala. 430, it is laid down that although a promissory note, not under seal, may not be a merger of the contract for which it was given,’yet the payee can not recover on the original consideration, when his recovery on the note is defeated by proof of material alteration by him, without the assent of the maker, which renders the note void. The court say, “ as the note was at first valid, there can be no recovery on the contract unless the note still continues valid, and is produced in evidence, or proved to have been lost by time or accident; and to allow the payee, after he had designedly made a material alteration in the note, without the assent of the maker, to recover upon the contract for which the note was given, would be to depart from the sound and just principle that no one shall be permitted to take the chance of committing a fraud without running any risk by the event, when it is detected.” In Whittier v. Frye, 10 Mo. 348, it was held, that where a party by his own act alters an instrument, so that it can not be the foundation of any legal remedy, he will not be permitted to prove the covenant, or promise contained in it, by any other evidence; and that this principle will prevent a resort to the common counts in order to sustain the plaintiff’s right of recovery. This case is cited by counsel in White v. Huss, 32 Ala. 430, and was a case of a sealed instrument, but no stress was put upon that. See, also, 1 Greenl. Ev., sec. 568, and note 4; Newell v. Maybury, 3 Leigh 250; Mills v. Starr, 2 Bailey 359, cited in 2 Smith’s L. C. (5th Am. ed.), 961. So it is held that where a note, given at the time when the liability occurs, is usurious, and therefore void by the New-York law, no recovery can be had upon a general count for the sum justly due, for the whole transaction is infected; and yet the money justly due is good consideration for a subsequent express promise; but the law will raise no promise by implication. Rice v. Welling, 5 [560] Wend. 595; Early v. Mahone, 19 Johns. 147; Hammond v. Hofkin, 13 Wend. 505. In Blake v. Noland, 12 Wend. 173, the suit was upon a note, destroyed or lost, and for the work and labor of which the note was given ; and it was held that proof that the note was voluntarily and deliberately burnt will not authorize the secondary proof of its contents, or entitle the plaintiff to resort to the original consideration. Clute v. Small, 17 Wend. 238, takes a distinction between an innocent alteration, though unauthorized, and a fraudulent alteration. The court, Cowen, J., says: “ To allow a holder the privilege of destroying his note and thus bringing himself to the original consideration, would put it in his power to acquire an advantage by a wrongful suppression of testimony;” and he says of Atkinson v. Randon, 2 Ad. & El. 628, that the question arose upon pleading, and for aught that appeared the alteration was made under an honest mistake of right, and he says perhaps this distinction should be adopted. To the point that although, technically speaking, such note is not regarded as an extinguishment of an antecedent debt, yet is treated as payment sub modo ; or a payment on condition that the note prove to be productive, are the cases of Angel v. Felton, 8 Johns. 149 ; Burdick v. Green, 15 Johns. 247; Ward v. Evans, 1 Ld. Baym. 928. To entitle the vendor, then, to maintain a suit on the original promise, or for money had and received, the note must be produced and canceled at the trial, or otherwise accounted for; and regularly it should appear that the note, when so produced, still continues valid, and not discharged or avoided. Such is the doctrine distinctly of Martendale v. Follett, and also of White v. Huss, 32 Ala. 430. If fraudulently altered by the vendor its identity is destroyed, and he shall not be permitted to explain it by showing his own turpitude. The vendor therefore has lost the power to produce the note; and by his own fraudulent act designed to injure the vendee or debtor; and he can not, consistently with sound public policy, be permitted to recover on the original consideration, and thus, by merely changing the form of action, avoid the consequences of his crime. The rule which seeks to punish the offender by destroying the claim which is thus tampered with, has no such formal or technical foundation, but stands upon the broad foundations of public policy, which treats such an act as a virtual discharge of the debt, as much as if it had been released. We are aware that it is laid down (in Chit, on Bills 184), that in such cases the party may resort to the original promise, although it is said (on page 598) that where a party is discharged by the alteration of the bill, or the laches of the holder, the plaintiff can not resort to the general counts. The authority upon which Mr. Chitty relies for the position that he can not resort to the general counts, is Atkinson v. Randon, 2 Ad. & El. 628; but it appears upon examination that a fraudulent alteration was not alleged in the pleading; furnishing ground for the distinction suggested by Cowen, J., in Clute v. Small, 17 Wend. 238, before adverted to. The decision, moreover, was simply an [561] nounced by the court, and no reasons for it assigned. On the other hand, in Powell v. Divett, 15 East 29, it was held that a material alteration in a sale note avoids it, and that no action could be maintained on the contract evidenced by it. Reference has also been made to the case of alterations of bills and notes without a new stamp, but it wTill be seen at once that this class of cases is not in point, inasmuch as the alteration is not fraudulent; but, although made with the consent of both parties, is rendered void by positive statute. The other exceptions are all overruled, but, for errors in the instructions adverted to, there must be A new trial.