Barringer v. DINKLER HOTELS

• Decision Date: 01 August 1932
• Docket Number: No. 3279.,3279.
• Citation: 61 F.2d 82
• Parties: BARRINGER v. DINKLER HOTELS CO., Inc.
• Court: U.S. Court of Appeals — Fourth Circuit

61 F.2d 82 (1932)

BARRINGER v. DINKLER HOTELS CO., Inc.

No. 3279.

Circuit Court of Appeals, Fourth Circuit.

August 1, 1932.

D. Gordon Baker, of Florence, S. C., for appellant.

F. L. Willcox, of Florence, S. C. (Willcox, Hardee & Wallace and A. L. Hardee, all of Florence, S. C., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

SOPER, Circuit Judge.

This action was brought by Dinkler Hotels Company, Inc., against W. R. Barringer on three promissory notes, aggregating $8,057.38, executed by him at Atlanta, Ga., on July 28, 1930, and payable with interest at 6 per cent. in that city to E. S. Richardson, as follows: One for $3,057.38, on January 15, 1931; one for $3,000, on February 15, 1931; and one for $2,000, on February 15, 1931. The notes were indorsed by the payee. Barringer, admitting that he had executed the notes, and that they had not been paid, defended on the ground that the notes had been materially altered after their execution by some person other than himself, and without his knowledge, authority, or consent. He alleged that the words "after maturity," contained in the printed forms upon which the notes were executed, had been stricken out with pen and ink, with the result that the notes appeared to bear interest from date, whereas they bore interest only after maturity as originally executed.

When the case came on for trial before a jury in the District Court, the holder offered the three notes in evidence and rested. Barringer then proved that he had given the notes in connection with the purchase and assignment of a lease on a hotel in Jacksonville, Fla., held by Richardson; and that not having sufficient cash to close the transaction, Richardson at his request had arranged with the Dinkler Hotels Company, Inc., to accept the notes and pay the face amount thereof to the owner of the hotel on account of the rental of $10,000 for the ensuing month of August; that the words "after maturity" were in the notes when executed, and had been erased without his knowledge or authority. Barringer offered also to show that he had been induced to make the purchase by certain false representations by Richardson as to the earnings of the hotel, but this testimony was rejected because it was not shown that the holder of the notes had any connection with these representations. On cross-examination of Barringer, it was brought out that a check for $8,057.38, dated August 1, 1930, had in fact been given by Dinkler Hotels Company, Inc., the present holder of the notes, to the owner of the hotel to apply upon the August rent.

Both parties moved for a directed verdict. It is the settled rule, when the parties in an action at law take this course, that "`they thereby assume the facts to be undisputed and, in effect, submit to the trial judge the determination of the inferences proper to be drawn therefrom.' And upon review a finding of fact by the trial court under such circumstances must stand if the record discloses substantial evidence to support it." Williams v. Vreeland, 250 U. S. 295, 298, 39 S. Ct. 438, 439, 63 L. Ed. 989, 3 A. L. R. 1038. The District Judge directed a verdict in favor of the plaintiff for the amount of the notes with interest after maturity. It is obvious that he accepted the testimony of the maker as to the unauthorized alterations, for otherwise the verdict would have included interest from the date of execution. It has been suggested that the present holder would not have given a check on August 1, 1930, for the full amount of notes not payable until January and February of the following year, unless he was to receive interest for the use of the money in the interval; and that therefore it may fairly be inferred that the notes originally bore interest from date. The inference does not seem to follow as a matter of course since the evidence indicates that the notes passed through Richardson's hands before delivery to the present holder; but, in any event, it was not accepted by the District Judge for he limited the verdict to the amount of the notes according to their original tenor.

The exception taken by the plaintiff to the direction of the verdict by the District Judge raises the question under the Negotiable Instruments Law whether the holder of a note, proved to have been materially altered after execution without authority, may recover according to the original tenor of the instrument without showing that he had no share in the alteration. This question must be decided in accordance with the law of Georgia, for the notes were executed in Georgia and made payable in that state. Scudder v. Union National Bank, 91 U. S. 406, 23 L. Ed. 245; In re Quality Shop (C. C. A.) 205 F. 266; Williamson Daily News v. Linograph Co. (C. C. A.) 47 F.(2d) 523. Georgia adopted the Uniform Negotiable Instruments Law with some variances in 1924. Georgia Code of 1926, §§ 4294 (1) to 4294 (195). With regard to the alteration of negotiable instruments, section 4294 (124) provides as follows:

"Alteration of instrument; effect of. — Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration, and subsequent indorsers.

"But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor." Acts Ga. 1924, pp. 126, 151.

Section 4294 (125) declares, amongst other things, that any alteration which changes the sum payable, either for principal or interest, is a material alteration. The appellee in this case, not disputing that the alteration was material, contends that the Dinkler Hotels Company, Inc., was a holder in due course, not a party to the alteration, and was therefore entitled to enforce the payment of the notes according to their original tenor, as the District Judge directed. The defect in this contention is that the evidence fails to show whether or not the hotels company was a party to the alteration, for it was incumbent upon it in this case to establish the fact that it had no part in the change, in order to entitle it to a directed verdict in its favor; and consequently even if it be conceded that it acquired the notes as a holder in due course, the judgment must be reversed and the case sent back to the District Court for a new trial.

It was the purpose of the Negotiable Instruments Law to codify the law merchant in regard to negotiable instruments with certain...