International Bank v. Naughton

BOND, J. The change in the contract evidenced by the note and the signatures on the back thereof of seven persons, by the erasure of the name of one of them and without knowledge or consent of the others, while the note was in the possession of the payee, was such an alteration as avoided the liability of unconsenting parties to the contract under the established rule in this State. Morrison v. Garth, 78 Mo. 434; Allen v. Dorman, 57 Mo. App. 288; Briggs v. Glenn, 7 Mo. 573. It is insisted, however, by the learned counsel for respondent, that the principle upon which the foregoing rule is based, has no application to the facts of this record, since it was competent for the payee of the note to have compounded with one of the debtors thereon without releasing the others whose rights of contribution against the party released would be unaffected by his composition with 121 the payee of the note. R. S. 1899, sec. 897. It is true, the rights of the unreleased parties to the note to enforce contribution for any payment made by them, against their co-sureties or co-principals who had been released by the holder of the note, would not be cut off by such release under the saving of the express terms of the statute authorizing it, and the decisions of this State, Leeper v. Paschal, 78 Mo. App. loc. cit. 24, and cases cited; Labaum to use v. Sweeney, 17 Mo. 153; Van Petten v. Richardson, 68 Mo. 379. Put the difficulty in proving the .relationship of the parties would be materially increased after the destruction — by erasure — of documentary evidence afforded by the existence of the written signature of the released party to the common obligation expressed by the note. In other words, after the erasure of the name of Garrell to the present note, the defendants could only establish their right to contribution against him by matter in pais. Had no such erasure taken place, they would have been able to establish their community of relationship with him to the note in question by the simple exhibition of the instrument and proof of the signatures thereto. The cases in this State go to the extent that any alteration of negotiable paper which destroys the legal identity and effect, of itself releases all other unconsenting parties to the instrument. In the case at bar, the written evidence on the common contract made by defendants and Garrell was destroyed by the erasure of the name of Garrell by the payee, without the consent of defendants. This worked a release of them from any further liability on the. note. This does not prove that the payee might not have exercised his statutory right to release Garrell from further liability on the note by making a separate and independent agreement with him to that effect. .While the statute in question affords this privilege in the fullest measure, it does not permit that it shall be accomplished by the alteration, on a negotiable note, of the 122 contract expressed by its terms. Eor that could not be done without annihilating the rules intended to secure the integrity of such instruments. It was not the purpose of the statute to overthrow these in any respect; its sole object was to allow a common creditor, by a separate agreement, to release one of his debtors, without altering the liability of another and without impairing the right of such other to a full contribution from the released co-debtor. Such a composition can, therefore, only be made with one of the parties to a negotiable note by a separate and independent agreement between him and the payee; for if it is attempted to be done, by a change of the terms of the note — striking'out the name of the released debtor — the necessary result of such alteration is to destroy the probative force of the contract evidenced by the note; hence, necessitating the proof of such contract by other and more burdensome means than the exhibition of the writing itself. This is not 'warranted either under th,e terms of the statute, supra, prescribing that “no such release shall impair” the right of the unreleased debtor to contribution; or under the general rule avoiding liability on a negotiable note which has been materially altered without the consent of the parties sought to be charged. The result is that the learned trial court erred in refusing the declaration of law requested by appellants, which was substantially correct and was supported by the uncontradicted evidence adduced on the trial. It, therefore, should have been given. The judgment is reversed and the cause remanded, with directions to be tried in conformity to this opinion. All concur.