Barton Sav. Bank & Trust Co. v. Stephenson

• Decision Date: 14 February 1914
• Citation: 87 Vt. 433,89 A. 639
• Court: Vermont Supreme Court
• Parties: BARTON SAVINGS BANK & TRUST CO. v. STEPHENSON et al.

89 A. 639

87 Vt. 433

BARTON SAVINGS BANK & TRUST CO.

v. STEPHENSON et al.

Supreme Court of Vermont. Orleans.

Feb. 14, 1914.

Exceptions from Orleans County Court; Wm. H. Taylor, Judge.

Action by the Barton Savings Bank & Trust Company against I. Stephenson and others. Judgment for plaintiff against defendant Stephenson and in favor of the other defendants, and plaintiff brings exceptions. Affirmed.

Argued before ROWELL, C. J., and MUNSON, WATSON, HASELTON, and POWERS, JJ.

Young & Young, of Newport, for plaintiff. Harland B. Howe, of St. Johnsbury, and J. W. Redmond, of Newport, for defendants.

MUNSON, J. The suit is upon a note, the body of which is as follows: "On demand after date for value received, we each as principal, jointly and severally promise to pay the Barton National Bank or order, at their banking rooms in Barton, Vt., seven thousand dollars, with interest payable semiannually on the first day of June and December each year." The note bears the payee's indorsement to the plaintiff. There are ten signers to the note, all of whom are defendants. The date of the note as originally drawn was June 1, 1908. The face of the note shows a change by drawing lines in ink across "June 1," and writing above this the words "December 1st." The part thus crossed remains perfectly legible.

From May, 1904, until the giving of the note in suit, the Barton National Bank held a note identical in terms with the note in suit, which was signed by defendant Stephenson and nine others, three of whom had deceased before the new note was given, and six of whom became signers on the new note and are defendants herein. The remaining signers on the new note were procured on the requirement of the bank to take the place of the former signers who had deceased. The note in suit was prepared by the cashier of the bank after the interest on the old note had been paid to June 1, 1908, and was mailed to Shephenson for the required signatures July 10, 1908. Several letters urging attention to the matter were written to Stephenson in the next four months. December 3, 1908, he paid the interest on the old note to December 1st. The note in suit was delivered to the bank by mail in exchange for the old note March 10, 1909. March 15, 1909, the plaintiff bank purchased from the liquidator of the Barton National Bank all its assets, including the note in suit. The first note was not presented to the commissioners on the estate of either of the three signers who had deceased. The three signers of the new note who were not on the first note are Horace S. Richardson, Homer W. Tillotson, and J. S. Brahana. Richardson and Tillotson were sons of deceased signers of the first note, and Brahana was the brother of a deceased signer. Richardson testified that he understood, at the time he signed, that his father was on the previous note. Noth ing further appears as to any knowledge of these signers regarding the first note. The signatures to the note in suit were procured at different times from July, 1908, to March, 1909. Subsequent to the signing of the note and just before sending it to the bank, Stephenson made the change above described, without the knowledge, authorization, or consent of any of the other defendants, unless the law implies such authority or consent from the conduct of the parties. Stephenson testified that he made the change to have the note correspond with the date to which interest had been paid on the old note.

The declaration contains the general counts and four special counts. The first special count declares on the instrument as a note dated June 1, 1908; the second declares on it as a note dated December 1, 1908; and the third declares on it as a note delivered to the Barton National Bank on the 10th day of March, 1909, without alleging a date. The plaintiff recovered a judgment against Shephenson, and the other defendants had judgment for their costs. In speaking of the defendants, the reference will be to the nine defendants who had judgment. The case antedates the operation of No. 99, Acts of 1912, known as the Negotiable Instruments Act.

The plaintiff claims that the court should have held, or permitted the jury to find, that the words "December 1st" were a mere memorandum of the time from which interest was to be figured, and not an alteration of the date. It is true that entries may be made on the face of a note, which, if made to serve the purposes of a memorandum and without an intention to alter the instrument, will not affect its validity. Carr v. Welch, 46 Ill. 88; Maness v. Henry, 96 Ala. 454, 11 South. 410. If Stephenson had written these words in pencil or red ink above the date and without crossing it out, the entry could doubtless be treated as a mere memorandum; but the writing of one in connection with the crossing out of the other, both in the same durable substance, forbids this construction. An inspection of the note shows an alteration in fact and Stephenson's testimony as to his purpose in making it cannot convert it into a mere memorandum.

The general proposition that any material alteration of a note will render it void cannot well be questioned. The rule governing the subject of the alteration of writings has been stated in these terms: "Any material alteration in a written contract, made without the consent of the party sought to be charged thereon, at any time after its execution by him, renders it void as to him, even in the hands of an innocent holder." The more recent statements of the rule confine it to changes made by a party to the writing or one claiming under him. Notes 10 Am. Dec. 267, 86 Am. St. Rep. 82. A material alteration is one which makes the instrument speak a language different in legal effect from that which it originally spoke; an alteration which produces some change in the rights, interests, or obligations of the parties to the instrument. 1 Green. Ev. § 565; note 86 Am. St. Rep. 86. An alteration in the date of a writing, if it results in altering the legal effect of the instrument, as by changing the day of maturity, is a material alteration. Ward's Pollock, on Con. 871; 2 Cyc. 201. The date of a note ordinarily evidences the inception of the undertaking, fixes the time of payment, and determines the period of limitation; and, when this is the case, any change in the date will impart to the note a new legal effect and operation. 2 Dan. Neg. Inst. §§ 1376, 1377; Newman v. King, 54 Ohio St. 273, 43 N. E. 683, 35 L. R. A. 471, 56 Am. St. Rep. 705; Lisle v. Rogers, 18 B. Mon. (Ky.) 528; Miller v. Gilleland, 19 Pa. 119.

But the plaintiff urges upon several grounds, that while a change in the date of a note may ordinarily be material, it cannot be so regarded in the circumstances of this case. The specific claims presented will be best stated and considered in connection with some reference to the cases. In referring to the authorities upon this subject, it is important to notice the relation sustained to the writing by the one making the alteration. In many of the cases the alteration was made by the payee of the note after its delivery. In other cases, as in the case submitted here, the alteration was made by one of several makers, after the note had been signed by others, and before it was delivered. In cases of the first class, the question manifestly relates to the effect of an alteration in a completed and existing contract. In cases of the second class, it may be said, as to those who had previously signed, that the alteration comes in to prevent the completion of a contract, rather than to avoid a contract which has come into existence. This view is presented by the defendants, and will be found in the reasoning of several decisions. Fay v. Smith, 1 Allen (Mass.) 477, 79 Am. Dec. 752; Draper v. Wood, 112 Mass. 315, 17 Am. Rep. 92; Blakey v. Johnson, 13 Bush (Ky.) 197, 26 Am. Rep. 254.

The argument of the plaintiff seems to raise the question whether Stephenson is to be regarded as a party to the writing within the meaning of the rule. Authorities are quoted which say that an alteration, to avoid an instrument, must be made by one who is entitled to some right or benefit under it, and that a joint promisor or maker is not such a party. Note 17 Am. Rep. 100; Fullerton v. Sturges, 4 Ohio St 529. But the rule is generally taken to apply to any party to the instrument; and it has been specifically held in numerous cases that an alteration by one obligor or principal, without the consent of his co-obligor or surety, discharges the latter. 2 Cyc. 150, 151, 154; Montgomery v. Crossthwait, 90 Ala. 553, 8 South. 498, 12 L. R. A. 140, 24 Am. St. Rep. 832; Britton v. Dierker, 46 Mo. 591, 2 Am. Rep. 553; Greenfield Sav. Bk. v. Stowell, 123 Mass. 196, 25 Am. Rep. 67; Goodman v. Eastman, 4 N. H. 455; Wood v. Steele, 6 Wall. 80, 18 L. Ed. 725. The writer of the note in 17 Am. Rep. 98, remarks that the case last cited was apparently not very well considered; but the decision has since been frequently cited by the state courts and been recognized as authoritative by the court which rendered it. Mersman v. Werges, 112 U. S. 139, 5 Sup. Ct. 65, 28 L. Ed. 641. And in Jones v. Banks, 40 Ohio St. 139, 48 Am. Rep. 664, it was remarked that all that was said by the writer of the opinion in Fullerton v. Sturges on the law relating to a material alteration was obiter. It is only in the case of a note that has been delivered that it can properly be said that an alteration, to be destructive, must be made by, or by the authority of, one who takes some benefit under it.

It is now almost universally held that the alteration of a written instrument by a stranger will not render it void; but courts have had some difficulty in determining who shall be considered a stranger. There is a class of cases where a note is procured by an agent, delivery to whom is delivery to the payee, but whose subsequent authority is limited to the custody and transmission of the writing; and alterations...